When You Owe Money
Section 3 - Collection Agencies
A Publication of Prairie State Legal Services
Page Revised: May 25, 2006
Content Updated: January 2006
About These Materials
The following information is not meant to be legal advice or to replace the advice you should receive from an attorney. There are times when it would be wise to consult a lawyer and other times when it is essential to do so. Always remember, each individual case is unique. This information applies to general consumer situations and should help you to avoid many problems before they happen. If you have additional questions or want legal advice, follow this link to find the Prairie State office nearest you.
Collection Agencies
Collection agencies have often used unfair and abusive measures to collect
debts. For that reason, the federal and state governments have passed
strong laws to help consumers who are victimized by collection agencies.
The federal Fair Debt Collection Practices Act and the Illinois Collection
Agencies Act give you certain rights to stop the unlawful actions by
collection agencies.These laws also allow you to sue collection agencies
for damages if they engage in unfair practices against you. This part of
the booklet tells you about your rights and what you should do if you are
being harassed or abused by a collection agency. Remember that the
definition of a collection agency includes attorneys who regularly collect
or attempt to collect consumer debts for clients. It also includes
businesses that operate to collect debts of other businesses.
What Collection Agencies Cannot Do
Prohibited Contacts with You, the Consumer.
Unless you or a court has given permission, a collection agency cannot contact or communicate with you [or your spouse, parent or guardian] as follows:
- at unusual or inconvenient places or times [before 8:00 a.m. or after 9:00 p.m.];
- if they know that you are represented by an attorney;
- at work, if the collection agency knows or has reason to know that your employer prohibits such calls;
- if you notify them in writing that you refuse to pay or that you want them to stop communication with you. [Note: if you write such a letter, the creditor can use other methods to collect the debt, such as filing a lawsuit against you. Also, the collection agency can tell you what the creditor intends to do to collect.]
Prohibited Contacts with Other Persons.
Unless you or a court say it's okay, a collection agency cannot contact or communicate with anyone about you or your debt, as follows:
- the collector can contact others to find out where you are or to enforce a court judgment against you, but not for any other reason;
- a collector cannot tell anyone - including your employer - that you owe any debt;
- a collector cannot contact other persons without identifying him or herself and, if requested, identifying his or her employer;
- a collector cannot send to any other person a postcard or use any language or symbol on an envelope that shows they are engaged in debt collection;
- a collector cannot contact another person more than once, unless requested to do so by that person or unless the collector reasonably believes that what the person said earlier is wrong or incomplete and that the person now knows where you are;
- a collector cannot contact anyone to try to find you after learning that you are represented by an attorney.
Prohibited Harassment or Abuse.
A collection agency cannot harass or abuse you. Some examples of harassment or abuse which are forbidden include the following:
- using or threatening to use violence or other criminal means to harm you or your reputation or property;
- using obscene, profane or abusive language;
- publishing a list of consumers who refuse to pay debts, or advertising your debt in any way;
- causing the phone to ring repeatedly or other annoying, abusive or harassing behavior over the telephone, or calling you without identifying him or herself.
Prohibited False or Misleading Statements.
Collection agencies are forbidden to make false or misleading statements in any letter or other paper they send to you or in any conversation. Examples of statements which may be false or misleading include:
- saying that they are associated with the government in some way, or in any other way misrepresenting who they are. It is illegal to make their documents look like court papers or look like any other official documents in order to scare you;
- giving false or misleading information about the nature of your debt, or its amount, or its legal status. For example, they cannot tell you that they have a court judgment against you when they do not;
- telling you that you will owe the collection agency money for their collection services. "Service charges" or other such fees are illegal;
- stating or implying that any of their communications are from an attorney, when they are not;
- falsely stating that you can be arrested or put in jail. You cannot be jailed for failing to pay a debt, unless you are found in contempt of court for willfully not paying when you are financially able to do so;
- threatening to do anything that legally cannot be done or that is not intended to be done. For example, they cannot say that your property or wages can be taken or seized [unless the seizure would be lawful and the creditor actually intends to do that];
- falsely stating or implying that you have committed a crime.
Prohibited Unfair Practices.
Certain types of practices by collection agencies are unlawful. These include:
- collecting any amount not authorized by law or by your agreement with the creditor.
- soliciting, accepting or depositing a post-dated check from you.
- making you pay any charges for their contacts, such as collect phone calls or telegram fees.
- communicating with you by postcard or using any language or symbol on an envelope which indicates or implies that it is from a debt collector.
- threatening to contact your neighbors or employer to get personal information about you or to discuss your debt, or to make any sort of investigation other than to find out where you are.
What Collection Agencies Must Do
Besides avoiding doing the unlawful things discussed above, there are several things every collection agency must do for your benefit in order to stay within the law.
The Validation of Debt Notice.
The collection agency must send you a certain notice, in writing, within 5 days of its first contact with you. This notice must:
- tell you the amount of money you owe;
- tell you the name of the creditor to whom the debt is owed;
- tell you that if you do not dispute the debt within 30 days, the debt will be assumed to be valid. [But this does not prevent you from later disputing the debt.]
- tell you that if you write back disputing the debt within 30 days, the collection agency has to prove that you owe what they say you owe.
- tell you that if you request it, the collection agency will provide you with the name and address of the original creditor.
If You Dispute the Debt.
If, within the 30 day period, you dispute the debt, or any part of it, then the collection agency must stop collection of the debt, or any disputed portion of it. It cannot resume collection until it obtains verification of the debt or a copy of a court judgment and mails those things to you. If, within the 30 day period, you request the name and address of the original creditor, the collection agency must stop collection activity until they mail that information to you.
The Purpose Statement.
In the first written communication
with the consumer, and the first oral communication that comes
before it, the collection agency must state:
| "This is an attempt to collect a debt and any information obtained will be used for that purpose." |
If this statement is not made at those times, the collection agency is breaking the law. In all future communications, the debt collector must indicate that it is from a debt collector. In the the first written communication sent to the consumer, the statement usually, but not necessarily, appears at the bottom of the document.
What You Can Do if the Collection Agency Is Breaking the Law
If you feel that you are being subjected to unfair or unlawful practices by a collection agency, you should consider doing one of the following things:
- Write a Letter. You can stop all communications from a collection agency simply by writing them a letter telling them to stop contacting you. [You should keep a copy of the letter.] If a collection agency receives such a letter, they must stop all contacts with you, but the creditor then may use other methods to collect the debt. For example, the creditor may decide to sue you.
- Write Everything Down. If you are receiving telephone calls from a debt collector, keep a record of each call, including the name of the person who called, the date, and the time of day they called. And make sure you write down everything that was said!
- Save All Correspondence. Save any papers you receive from the debt collector, including letters [as well as the envelopes they came in], post-cards, telegrams, etc. These papers will be very important in proving violations of the law.
- See A Lawyer or Sue the Collection Agency. A lawyer can force the collection agency to stop contacting you if they didn't do so at your request. Also, you may be able to sue the collection agency. The law allows you to recover damages for any emotional or other injury you actually suffered, plus statutory damages of up to $1,000. Statutory damages are an amount a judge can give you even if you cannot prove any actual injury because of the collection agency's conduct. If the collection agency's conduct is particularly outrageous, you may also be able to collect an amount of punitive damages [which a court might impose to punish them and stop them from doing such things again]. If you are going to sue for any violation of the law, you must do so within one year of the date of that violation.
Copyright 2002 Prairie State Legal Services, Inc.
ALL RIGHTS RESERVED
For reprint permission contact Prairie State Legal Services, Attn:
Publications
975 N. Main Street, Rockford, IL 61103, (815) 965-2134,
publications@pslegal.org