Debts & Debt Collection

Debt and debt collection laws cover: the creation of debts; disputes regarding payment of debts; reporting of debt on credit reports; and the methods of collecting on unpaid debts. If you use credit cards, owe money on a personal loan, or are paying a home mortgage, you are considered a “debtor.” The most common types of debt are: credit card debt, car loans, student loans, and home loans. 

There are laws that protect you as a debtor during the various steps of the process. For instance, the “Truth in Lending Act” protects you when you are entering into a credit agreement by making sure the lender fully discloses all the details of the transaction. There are laws, like the Fair Credit Billing Act, that protect you when you have a dispute with a creditor regarding billing on your account. 

If you cannot pay your debts, creditors and debt collectors have a number of ways to try to collect on debts you may owe them. They may be able to: record a lien against your property; levy upon your bank account; garnish your wages; or repossess your car or other personal property. 

The Fair Debt Collection Practices Act (FDCPA) controls what a debt collector can and cannot do when trying to collect the debt. The Fair Debt Collection Practices Act is a federal law enacted to control the debt collection process and protect debtors from abusive conduct by debt collectors.  The FDCPA does this by imposing harsh financial penalties on debt collectors that violate the Act.  Aside from the FDCPA, there are other federal and state laws that prevent a creditor or debt collector from abusing the debt collection process or intimidating or harassing debtors into paying a debt. 

In March 2015, the New York Department of Financial Services enacted new regulations that offer some of the strongest protections in the country against debt collection abuses and unfair practices. 

Sometimes, a creditor may think a debt belongs to you, but it actually belongs to someone else.  This often happens in situations involving identity theft.  Identity theft is a crime in which another person steals your name, social security number, or other personal identification information and then opens credit accounts, uses your existing credit accounts, or uses your identity to obtain other benefits. Steps must then be taken to clear your good name and restore your credit history as a result. 

Legal Editors: Richard Klass and C. Jaye Berger, August 2015 (updated October 2018)