Operating within the confines of the law is essential for any collection agency that wants to remain compliant. It’s also essential if you want to avoid repercussions like legal action or getting your license revoked. Collection agencies may threaten a wide array of actions. Many things they threaten to do are not possible or even legal, which is why the general public is confused regarding what collection agencies can and cannot do. What can collection agencies legally do to collect a debt?
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Ask for Payment
Debt collectors can ask for payment of the debt. They can send letters requesting payment, though they are required to send proof of their ability to collect the debt when it is requested by the debtor.
They can call debtors via whatever phone numbers they have, although debtors have the right to refuse to give out work details. Creditors are supposed to stop calling you at work if you ask them to stop. They cannot drain your bank account unless you give them access to the account, though once you give them access to the account, they may drain it for all it is worth regardless of what the person on the phone said they’d withdraw from it.
Repossess Secured Assets
If you haven’t paid your car loan, the creditor has the right to repossess the car. They can sell the asset and pursue you for the difference between what it sold for and what you owe. If you owe money on furniture and electronics, the creditor has the right to repossess those assets but not anything else. If you offered other property as collateral for a loan, the creditor is allowed to take it.If you’re leasing business equipment and miss a payment, the leased equipment could be reclaimed almost immediately.
What Can’t Collection Agencies Do?
If you owe money to a tax agency, they can seize your assets to get their money. For example, the IRS or your local jurisdiction could kick you out of your home and sell it for unpaid taxes. A private collector has no such authority.
They can repossess your car for an unpaid car loan, but they have no claim against your home. If you fail to pay child support, the state can suspend your professional licenses or driver’s license, but private credit collectors cannot. If you don’t pay your utility bills, the service provider can shut off service. However, you aren’t going to see your lights turned off or get evicted from your apartment for non-payment of a credit card bill as long as you’re paying the rent and utilities.
They are not allowed to threaten to harm you or your family, and they are not allowed to contact family members and friends seeking collection of the debts. Collection agencies should contact a group like Cornerstone Support to set up a debt collection program that doesn’t violate the law or risk getting them sued for violating statutes.
Understanding what debt collection agencies can and cannot do is important if you want to understand your rights and prevent harassment. It’s also essential for collection agencies that want to remain compliant and avoid legal action.