Debt Collection Laws: What Seniors Need To Know

Debt Collection for Seniors

Many older Americans carry debt into retirement. For those living on a fixed income, paying their debts and daily living expenses can be difficult. When senior citizens don’t pay their outstanding bills, they eventually end up in debt collection.

Any type of unpaid consumer debt, such as credit cards, medical bills, personal loans, and auto loan debts, can go to collections.

Understanding how debt collection works can help you protect your rights and navigate the process more confidently. This guide covers what to expect when your debt goes to collections and the elderly debt collection laws that protect you as a consumer.

How Debt Collection Works

Creditors can start contacting you by letters, emails, or phone calls as soon as you miss a payment. Once your debt is 180 days due, the lender can send your debt to a debt collection agency. Their job is to collect the money you owe.

Legally, a debt collector is required to identify themselves and provide specific information about the debt they’re trying to collect the first time they call you. This allows you to determine whether the debt in question is yours. The information includes your name, mailing address, the original lender’s name, account number, and the amount you owe.

Debt collectors can try to contact you in person, by mail, text message, or email. However, they’re required to follow specific elderly debt collection laws when trying to collect.

Types of Debt Collectors

A debt collector is a term used for any business or individual attempting to collect an unpaid debt. However, there are several types of debt collectors, including:

• First-party debt collector: The original lender that provided you with a credit card, loan, or any other service is considered a first-party lender.
• Third-party debt collector: The original lender may hire a company or third-party to collect a debt in exchange for a percentage of the amount collected or a flat fee.
• Debt buyer: A business that purchases debts from the original lender and tries to collect them is a buyer. Debt buyers may also hire a collection agency to collect debts.
• Debt collection agency: A company or business that profits solely from collecting unpaid debts.
• Debt collection attorney: A lawyer hired to help companies take legal measures, such as collection lawsuits, to collect debts.

How Are Seniors Protected From Debt Collectors?

Navigating elderly debt collection laws can be confusing for many older individuals. However, if you’re receiving harassing phone calls or letters from collection agencies, protections are in place to help seniors.

Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects the rights of consumers against unethical and illegal collection practices. The FDCPA doesn’t allow debt collectors to harass you or engage in the following types of practices:

• Calling you at work
• Calling you repeatedly
• Using threatening or obscene language
• Threatening to harm you or your family members
• Calling you before 8 a.m. or after 9 p.m. without prior permission

The FDCPA also has a provision that requires debt collectors to immediately stop contacting you once you send them a cease-and-desist letter.

State-Specific Regulations

Other than the FDCPA, most states also have elderly debt collection laws that dictate what debt collectors can and cannot do. Some state laws may also cover the original creditor in addition to the collection agencies.

Many states also have unfair and deceptive acts and practices laws that can apply to collections. Each state also has a specific statute of limitations, beyond which debt collectors can’t take legal action for an outstanding debt.

Are Seniors Judgment-Proof?

Being judgment-proof means debt collectors cannot legally garnish certain income sources, such as Social Security, VA benefits, and federal pensions. In such situations, debt collection agencies may not bother filing a lawsuit against seniors because they’re unlikely to recover their money through garnishment.

Sources of income that are exempt include:

• Social Security
• Supplemental Security Income (SSI)
• Veterans Administration
• Alimony or child support money
• Civil Service Retirement System
• Federal Employee Retirement System
• Federal Railroad retirement, sickness, or unemployment

How Seniors Can Deal With Debt Collectors

While it’s essential to be aware of debt collection laws, it’s also important to know that you shouldn’t ignore a collection agency’s attempt to contact you. Instead, there are ways to deal with debt collectors in a safe and informed manner.

Consider the following options to manage debt collectors:

Validate Your Debt

When a debt collector contacts you for the first time, be sure to validate the debt. Debt collectors are required to provide you with information that allows you to verify the amount you owe, the original creditor, and other details about the debt. Don’t provide any financial or personal information until after debt validation.

Send a Cease-and-Desist Letter

If you’re finding debt collector calls stressful, you can send a cease and desist letter to stop them. Once they’ve received your request, they must stop contacting you.

Debt collectors violate the law if they try to call or send voicemails after your request. You can register a complaint against them at the Consumer Financial Protection Bureau (CFPB).

Dispute the Debt

When a debt collector sends you a validation letter with information about the debt they’re trying to collect, you can verify the details to ensure they’re accurate. Within 30 days of receiving the validation letter, you must send a debt dispute letter requesting the debt collector to prove that you owe the amount in question.

This requires the debt collector to provide relevant documents and detailed information to prove the amount you owe. If you fail to send the dispute letter within 30 days, the debt is considered valid.

Consider Debt Settlement

If your debt is legitimate, you must pay it. Fortunately, there are several senior debt relief options to choose from. If you’re unable to pay the full amount, it is possible to negotiate a lower amount.

For example, seniors carrying credit card debt can offer a lump sum payment to settle their accounts. Seniors can do this on their own or work with a debt relief organization, often saving up to 50% of their total debt (before fees).

Debt settlement allows you to save a considerable amount of money and will put a stop to further collection attempts. Debt settlement may impact your credit score. However, you may be able to pay off debt faster using this method, so it's important to weigh the pros and cons before negotiating a settlement on your own or with a company.

Examples of Harassment and Unethical Behavior by Debt Collectors

Some debt collectors may use aggressive tactics to collect the amount owed to them. However, others may engage in unethical behavior and harassment, which is against debt collection laws.

Here are a few examples of unethical behavior and harassment:

• Engaging in inappropriate language, threats, and harassment over the phone.
• Using threats to garnish government and retirement benefits.
• Threatening to sue over a debt after the statute of limitations has passed.
• Attempting to collect a debt owed by a deceased spouse.
• Trying to collect a debt that you don’t owe.

If you're facing this kind of treatment, consider contacting the Consumer Financial Protection Bureau and filing a complaint. 

Protect Yourself From Debt Collectors

While the information in this guide can protect seniors from harassment and unfair treatment from debt collectors, paying off debts can put elderly adults in a stronger financial position.

If you’re not sure where to start, seek financial assistance such as senior stimulus programs and other relief options for seniors.

If you’re struggling with debt in collections, a nonprofit credit counselor or legal expert can help you find the best path forward. But if a collection agency has filed a lawsuit against you, get legal advice as soon as possible.

It’s never too late to seek debt relief and come up with a feasible repayment plan so you can enjoy a debt-free retirement.

TurboDebt® Helps Seniors Get Relief from Debts

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