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Creditor Harassment

Protect yourself from creditor harassment by knowing the law.

Regardless of whether the debt is owed, consumers who are the target of unlawful debt collection practices have legal recourse. [©Jupiter Images, 2009]
©Jupiter Images, 2009
Regardless of whether the debt is owed, consumers who are the target of unlawful debt collection practices have legal recourse.

Federal and state laws set specific guidelines prohibiting creditor harassment and abusive debt-collection practices, yet debt collectors receive the greatest number of complaints on the Federal Trade Commission Web site, according to the National Consumer Law Center. Regardless of whether the debt is owed, consumers who are the target of unlawful debt collection practices have legal recourse. According to the Federal Deposit Insurance Corporation, unfair, deceptive and abusive debt collection practices contribute to invasions of privacy, marital instability, loss of jobs and personal bankruptcies. Federal law allows consumers to collect unlimited punitive damages, up to $1,000 in statutory damages, attorneys' fees and injunctive relief. The statute of limitations is one year.

Third-Party Debt Collection vs. Creditor Collection

Consumers are protected from abusive collection practices by the Federal Debt Collection Practices Act and individual state laws. The federal law makes a distinction between debt collectors and creditors, and the law offers protection against debt collectors only. The law defines creditors as anyone who extends credit or is owed a debt. This definition does not include anyone who has acquired a debt for the sole purpose of collecting it. A debt collector is defined as someone whose principal business is the collection of debts. This can include a creditor who attempts to collect debts under a third-party name. Nonprofit credit counseling organizations that have been hired by the consumer are exempt from the debt collector definition.

Federal and State Laws

Every American consumer has rights under the Federal Debt Collection Practices Act. State laws may offer additional protection, although not every state has laws pertaining to debt collection. For example, California's Fair Debt Collection Practices Act contains laws pertaining specifically to debt collection agencies, which are not covered by federal law. Under federal law, creditors have three options when attempting to collect an unsecured debt: terminate the consumer's account and refuse future business with the consumer; report the consumer to a credit bureau; and sue the consumer in civil court, during which a judgment may be issued that allows the creditor to garnish a portion of the consumer's wages or seize property. Debt collectors working on behalf of creditors have no legal options other than requesting payment.

Laws pertaining to creditor and debt collector harassment are similar to other harassment laws. Federal law does not specifically define harassing acts in an effort to avoid limiting the law's application. The Federal Debt Collection Practices Act does, however, list the following practices as a violation of the law:

  • Using or threatening violence or other criminal means to harm someone, one's property or one's reputation
  • Using obscene, profane or otherwise abusive language
  • Publishing a list of consumers who are allegedly in default of a debt other than to a credit reporting agency
  • Advertising the sale of the debt in an effort to coerce payment
  • Repeatedly calling a telephone number with the intent to annoy, harass or abuse
  • Failing to disclose identity


Debt collectors are also prohibited from falsely representing themselves or stating actions they intend to take that cannot be legally taken. Creditors and debt collectors are required to disclose in both written and oral communication that they are attempting to collect a debt.

Avoiding Creditor Harassment

The National Consumer Law Center recommends the following eight strategies for dealing with creditor and debt collector harassment:

  • Negotiating with the creditor before the account is referred to a debt collector
  • Negotiating with the debt collector
  • Complaining about billing errors and raising other defenses
  • Writing a cease letter
  • Sending an attorney's letter
  • Complaining to a government agency
  • Suing the debt collector
  • Filing bankruptcy


When negotiating with either creditors or debt collectors, it is important for the consumer not to commit to paying more than what is manageable. Creditors may be willing to work out payment plans that take into consideration the consumer's current financial situation. Consumers should not pay a debt that isn't legally owed just to end harassment.

Calling into question billing errors or the validity of the debt legally obligates the debt collector to investigate the bill. Federal law allows consumers 30 days to question the validity of a debt following the initial contact by the debt collector. The debt collector must then obtain proof of the debt and provide the consumer with verification.

A cease letter is simply a written request for the debt collector to stop contacting the consumer. Although federal law requires debt collectors to obey these letters, a letter written by an attorney on behalf of the consumer may be more effective at ending harassment.

Seeking legal counsel may be the first step in a successful lawsuit against a debt collection agency. In addition to seeking help from an attorney, consumers have government resources available. The Federal Trade Commission's Consumer Response Center responds to complaints about harassing debt collection practices, as do local and state consumer protection agencies.

When filing for bankruptcy, the initial paperwork typically ends all collection activity. While the automatic stay period in bankruptcy is an effective means for ending debt collector harassment, filing bankruptcy should not be considered if the only objective is to end harassment.

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