Research and Statistics

How and when you can sue a debt collector


Even if you owe the debt, you may be on the right side of the law

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If you have ever found yourself to be the target of a debt collector, you may feel helpless to stop the barrage of calls, particularly if you legitimately owe the money. But you may, in fact, not only have the power to stop the calls, but to win a lawsuit against the collection agency in the process.

“You may owe money, but that doesn’t mean you’ve checked your civil rights at the door,” says Michael Rapp, an attorney with Consumer Legal Clinic in Kansas City, Kansas.  A number of federal and state laws limit what debt collectors can do. The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using unfair, abusive and deceptive practices against consumers.  Other laws such as the Telephone Consumer Protection Act (TCPA) and the Fair Credit Reporting Act (FCRA) govern how debt collectors can contact you and how they must report your debts.

Lawsuits filed under the FDCPA increased 14 percent between November 2014 and November 2015, according to WebRecon, a consumer litigation monitoring company.  In some cases, the penalties can be harsh.  In May 2015, a Missouri jury awarded Maria Guadalupe Mejia Alcantara $250,000 in damages and more than $82,000,000 in punitive damages for being hounded for a debt she didn’t owe.

Think you may have a case against a debt collector? Here’s what you can do about it.

Signs you might be able to sue
Your nagging suspicion that you are being treated unfairly may be right. Here are some common grounds for filing a lawsuit:

You may owe money, but that doesn’t mean you’ve checked your civil rights at the door.

— Michael Rapp
Attorney, Consumer Legal Clinic

1. When they can’t prove you owe the debt.  The FDCPA requires that debt collectors provide consumers with the name of the original creditor, the amount owed and  verification of the debt. When Rasheen Carbin of Arlington, Virginia, received calls claiming he owed a debt for a payday loan, “I didn’t know what they were talking about,” Carbin says. When he sent letters asking the company to prove it, “they would not validate that I owned that debt.” Repeated phone calls led Carbin to hire an attorney and file a lawsuit. The debt collector eventually settled, paying Carbin $500.

If it’s proven that you don’t owe a particular debt and the debt collector knowingly provides inaccurate information to a credit reporting agency, you may also have grounds for a lawsuit under the FCRA.

2. When you’ve been unreasonably hounded. The FDCPA forbids debt collectors from harassing you in any way. Examples of harassment include repetitive phone calls, the use of obscene language and threats of harm.

There are also legal ways that you can get debt collectors to stop calling you completely. For example, if you tell a debt collector in writing to stop calling you, they can only contact you again to tell you there will be no further contact and to let you know about any legal action being taken. Likewise, if you let a debt collector know you have an attorney, they must only contact the attorney. If debt collectors continue to call in those circumstances, they are violating the FDCPA.

Provisions under the FDCPA and the TCPA also let you tell a debt collector that certain numbers such as your cell phone or work number is off limits.

3. When the debt collector states an untruth.  If a debt collector lies to you, that’s also a violation of the FDCPA. For example, they may say you owe more or less than you owe, claim to be an attorney when they are not or threaten to sue you when they have no legal right to do so. Every state has a statute of limitations on how long a company has to sue you over a debt, says Rapp. If a debt is too old for you to be sued over and a debt collector threatens to sue you, he is breaking the law, Rapp adds.

Even if a debt collector makes a legitimate mistake when telling you how much you owe, you also could have grounds for a lawsuit, says Terry Lawson, managing attorney with Lawson Law Center in Kansas City, Missouri.  “If they misstate the debt by a dollar on a letter to you, that is technically a violation of the FDCPA,” Lawson says.

How to prepare
If there is even the slightest chance you might want to sue a debt collector, take the following steps:

1. Know how to respond. The Consumer Financial Protection Bureau has five letters consumers can use as samples when dealing with debt collectors, says CFPB spokeswoman Moira Vahey. They provide appropriate wording for requesting more information on the debt, disputing the debt and restricting how and when the debt collector can call.

2. Keep accurate records. If you file a lawsuit, communication between you and the debt collector would serve as your evidence in court. “I recorded conversations and wrote down the date and time anyone would call,” Carbin says. Also hold onto voicemails, letters and other forms of communication sent by the debt collector.

If they misstate the debt by a dollar on a letter to you, that is technically a violation of the FDCPA

— Terry Lawson
Lawson Law Center

3. Get an attorney. Don’t assume you can’t afford a lawyer. Many will work on contingency — meaning they’ll get paid from the settlement if you win the case. The National Association of Consumer Advocates has a database of attorneys who specialize in fighting debt collectors.

What to expect
Will suing a debt collector make you rich? Probably not. Alcantara’s $82 million judgment “was truly a flash in the pan because of all the facts that stacked up against [the debt collector],” Lawson says. In most instances, debt collection cases are “not get rich cases that anybody is going to make enough money to retire on,” Lawson adds.

If a debt collector is found guilty of breaking the FDCPA, a judge can order them to pay you up to $1,000. Your attorney’s fees will also be covered and “if you have actually been harmed over and above the actual violation taking place, then you would be subject to the actual damages,” Lawson adds.

There is one important caveat. You can win a lawsuit against a debt collector, but if you legitimately owe the debt, you could still be required to pay it back.

For those who have had their rights infringed upon by a debt collector, fighting back can not only bring relief, but provide a sense of empowerment. “It felt good to stand up for myself,” Carbin says.

See related: Can you sue an authorized user?, What to say (and NOT say) to debt collectors

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