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Debt Collection – Know Your Rights

This article was produced by LARCC in cooperation with CLS, GHLA, NHLAA, and SLS.

Debt Collection – Know Your Rights

If you are behind in paying your bills, someone will probably contact you to collect the money you owe. You might owe money on a car loan, credit card accounts, medical bills, utility bills, home mortgage and others.

I've been contacted about a debt...what do I need to know?

You may be contacted by either a creditor directly or by a collection agency.

CreditorA company you owe money to
(example: a credit card company)
Both are
also called
debt
collectors
Collection
Agency
A separate company that is in the
business of collecting debts

Your rights can be different depending on whether you owe money to a creditor or to a collection agency. Creditors and collection agencies are also called “debt collectors.” Debt collectors will try to collect money from you even if you do not have the money or you think that you do not owe anything.

This booklet explains your rights about debt collection and

Repossession

A creditor can’t come into your house without your permission to repossess personal property such as furniture or appliances. If someone tries to break into your house or garage, call the police. If you leave your car parked in front of your house or in your driveway where the creditor can find it, the car can be repossessed easily. If a creditor threatens to repossess personal property, it is probably a good idea to talk to a lawyer. It’s easier to prevent a repossession than to get your property back after it has been repossessed.

Repossession Calendar

  • Day of repossession - Creditor takes back the item(s)
  • Within 3 days after repossession - Creditor must give you a written statement of the amount you owe and the costs of repossession and storage. You might get this written notice BEFORE the repossession.
  • 1 to 15 days after repossession - If you did not receive written notice before the repossession, you can get your item back by paying the amount you owe and cost of repossession and storage. If you did receive written notice before the repossession, you may be able to get your item back by working out an agreement with the creditor which may require refi nancing or paying off the full debt.
  • Before the creditor sells your item-Creditor must give you at least 10 days' written notice of the time and place of any public sale or the date after which they can sell it in a private sale. You can get your item back up to the date of resale if you work out an agreement with the creditor.
  • Day of Resale - Creditor sells the item.
  • 1 to 30 days after resale - Creditor gives you a written statement of how much the item sold for and how the money from the sale was spent.

What bills should I pay first?

If you cannot pay all your bills, you must decide which bills to pay. Think about what will happen if certain debts are not paid. Ask yourself, "What will affect my family the most?"

You might want to pay in this order:

1. Your family’s health.

Food, medication, health insurance, and more.

2. Your family’s housing.

Rent, mortgage, condo fees, real estate taxes, utilities (heat and electricity).

3. Your family’s other bills.

  • Car payments if the car is essential (for example you need a car to get to work),
  • Child support,
  • Income taxes, and
  • Government insured student loans.

If you have money left over after paying these bills, you can decide how much money you can pay each of your other debt collectors.

Budgeting

You might want to learn how to budget your debts.

Call or visit:

The University of Connecticut
Cooperative Extension System
305 Skiff Street
North Haven, CT 06473
203-407-3161

I do not think I owe the debt. What can I do?

You should not be billed for something you did not buy or that you already paid for. But, sometimes mistakes are made. Here is what you can do...

If a CREDITOR says you owe…

You have the right to dispute (disagree with) the charge.

To dispute it...

  • Look at the back of your monthly statement for instructions on how to file a dispute. It is best to put your dispute in writing.
  • You can use Letter A.
  • Include a copy of your monthly statement and circle the item you are disputing.

If a COLLECTION AGENCY says you owe…

  • You should immediately write a letter to the collection agency saying you don't owe the debt.
  • You can use Letter A.

Until they send you the proof, they must stop contacting you.

What can happen next?

  • If they send proof, but you believe it is wrong, you should
    • Send them another letter along with proof that you paid or that the debt is not yours.
    • If they continue to try to collect from you, call us at 1-800-453-3320 OR 1-800-296-1467 if you're over 60 or call a private lawyer.
  • If they do not send proof, you do not need to do anything. They must stop contacting you.

What if I owe the debt, but I cannot afford to pay it?

Debt collectors will try to pressure you into agreeing to pay more than you can afford.

  • If you cannot afford to pay the full amount, send the amount you can afford every month – even if they say it is not enough. If you pay something each month, it may stop them from suing you for the full amount of the debt. 
  • If you cannot afford to pay anything and you want them to stop contacting you, you can write a letter (see below).

Can they call me to ask for their money?

Yes, but there are limits on what they can do. They are trained to pressure you until you agree to pay something. You do not need to listen to their demands -- just hang up.

Can they send me letters demanding payment?

Yes, but you have the right to send a letter telling them not to contact you anymore.

How can I stop them from calling or writing me?

Write them a letter that says:

This letter is to notify you that I do not wish you to call, write, or
visit me at home or work about the money you claim I owe.

  • Include your account number and
  • Make a copy of the letter.

Important: You still owe the money even if they stop contacting you and they can sue you to try to collect the debt you owe.

Once they get your letter,

  • A creditor is still allowed to contact you, but they will often stop.
  • A collection agency is only allowed to contact you to tell you what action they will take. (For example, that they will sue you in court or they will not contact you again).

What can't debt collectors do to try to collect?

There are a many things debt collectors cannot do. They cannot abuse you, harass you, lie, or threaten you. They cannot talk about your debt to other people (including your neighbors, friends, relatives or employer). If they do any of these actions or those listed on the next page – they are breaking the law.

What can I do if the debt collector breaks the law?

You should contact us or a private lawyer right away. You may be able to sue the debt collector for breaking the law and get some money from the debt collector.

Call us at 1-800-453-3320 or 1-800-296-1467 (if you're over 60)

You can also file a complaint with the agencies listed below. See Letter B.

Consumer Affairs Division
State Banking Department
260 Constitution Plaza
Hartford, CT 06103
www.ct.gov/dob
860-240-8170
1-800-831-7225

Federal Trade Commission
Debt Collection Practices
Washington, DC 20580
www.ftc.gov
1-877-382-4357

Debt collectors CANNOT...

  • Use abusive, obscene, or profane language. If they begin to swear at you, call you names or speak to you abusively, you should hang up.
  • Call you an unreasonable number of times. They cannot keep calling over and over until you pick up.
  • Call you before 8 a.m. or after 9 p.m.
  • Call you at work if you have asked them to stop.
  • Threaten to harm you, your property or reputation, or someone else.
  • Threaten to tell someone about your debt.
  • Talk to other people about your debt without your permission.
  • Say that they will sue you when they do not plan to do so.
  • Lie about who they are or pretend they are a lawyer or the government.
  • Suggest that you have committed a crime, will be arrested, or go to jail if you do not pay.
  • Falsely state that the papers they sent you are legal papers from the court.
  • Suggest that they can take your money benefits (such as Social Security disability, pension, retirement, child support, alimony or any other protected funds). 
  • Ask you to pay more than you owe.
  • Share your debt information in other ways.
    For example, they cannot
    - send you a postcard that gives information about your debt,
    - put anything on an envelope that indicates the letter inside is about your debt, or
    - print information about your debts in newspapers or magazines.
  • Make you accept collect calls or pay for telegrams. (You should not accept the charges.)

What can debt collectors do to try to collect?

The things debt collectors can do depend on the type of debt.

Debt collectors CAN...

  • Talk about your debt with your spouse and your lawyer (if you told them your lawyer’s name).
  • Call your employer to confirm that you work there or to get your contact information.
  • Do other things depending on the type of debt. For example,
    • Rent. Your landlord can take legal action to try to force you to move. (See our booklet: Eviction)
    • Utilities. Your utility company can cut off service unless you pay the minimum amount due each month. But, the utility company
      - can never cut off service if you have a “life threatening” condition.
      - cannot cut off service during the winter (November 1 to May 1) if you qualify as a “hardship” case. (See our booklet, Help with Utility Problems.)
    • Items that can be repossessed (taken back) by the seller (for example -- a car). The debt collector can repossess the item from you.
      Mortgage. The bank can take your house by foreclosure. (See our booklet, Foreclosure When You’re Behind on Your Mortgage.)
    • Other items. The debt collector can sue you.

What happens if I am sued by the debt collector?

The debt collector will have you served with legal papers. You must respond to the lawsuit or the debt collector will win.

What can the debt collector do if he wins in court?

If the debt collector sues you and wins, the court will decide you owe the debt and order you to pay a certain amount of money each week. Then, if you don’t pay the court ordered amount each week, the debt collector can ask for a  court order to take money from your pay or bank account, or take your property. (Some of your money & pay are protected...see below.)

What can a debt collector do if he sues me and wins?

A debt collector CAN...

  • Take money from your pay (wage execution) UNLESS your weekly take home pay is less than 40 times the minimum wage ($348 as of 1/2014).
  • Take money from your bank account (bank execution) UNLESS your money is protected because it is a direct deposit and is from
    • Government benefits such as Social Security, unemployment, etc.
    • Child support
    • Alimony
    • Pension
  • Take your property (property execution) UNLESS you rent or you don't have any property to
    take.

If you receive ANY type of Execution…

► call us at 1-800-453-3320 OR 1-800-296-1467 if you're over 60
► call the Court Service Center at the court, or
► call a private lawyer. Call right away!

Is money in my bank account "protected?"

Some of the money in your bank account may be safe. But, you may have to file certain papers in court to protect it.

Debt collectors CANNOT take money from your bank account if it is a direct deposit and comes from...

  • Social Security benefits (retirement, disability, survivor)
  • Unemployment benefits
  • State welfare
  • Child support
  • Alimony
  • Pension
  • Disability benefits (SSI and SSD)

If you think your money is protected, tell them that your income is exempt (cannot be collected) and you don't want to be contacted. To do this:

  • Write them a letter that says:

This letter is to notify you that I do not wish you to call, write, or visit
me at home or work about the money you claim I owe. This letter is also
to advise you that all of my income is exempt from collection as established by law.

  • Include your account number and
  • Make a copy of the letter.

Limit on Amount of Money Protected

Two months’ worth of your direct deposits of child support, alimony, pension or government benefits or $1000 -- whichever is higher -- is automatically protected. If you keep more than this protected amount in your bank account, the debt collector may try to take that money through a “bank execution.” You will be able to get that money back if you file an exemption claim form.

Direct Deposit of Paychecks

Be careful if your paychecks are directly deposited. A debt collector CAN take that money from your bank account even if you make less than $348 a week. However, if you take home less than $348 a week, you will be able to get the money back after a court hearing.

TIP: Instead of getting your pay directly deposited, it might be a good idea to get a paper paycheck.

What if a creditor tries to take money from my paycheck?

It is common for a creditor or collection agency to threaten to take money from you paycheck. You may be protected -- see above. Also, see our booklet about wage attachments.

Should I think about bankruptcy?

In some cases, bankruptcy may be a good option for you. (See our article, Are You Thinking about Bankruptcy?)

Letter A

Letter B

This booklet was produced by the Legal Assistance Resource Center of Connecticut in cooperation with Connecticut Legal Services, Greater Hartford Legal Aid, New Haven Legal Assistance Association, and Statewide Legal Services.

The information in this booklet is based on laws in Connecticut as of 1/2014. We hope that the information is helpful. It is not intended as legal advice for an individual situation. Please call Statewide Legal Services or contact an attorney for additional help. ©January 2013

For more information, contact:

Statewide Legal Services: 860-344-0380 (Central CT & Middletown) or 1-800-453-3320 (all other regions).

Not from Connecticut?

Most of the information on this web site is for Connecticut residents only. Visit LawHelp.org to find a legal services program and/or a legal information web site in your area.