*This article includes some Minnesota specific regulations and guidelines in addition to the federal Fair Debt Collection Practices Act.
Creditors trying to collect on debt can make your life miserable. They can be overbearing and irritating, making you even more frustrated and humiliated with your financial situation. Sometimes peace of mind, serenity and comfort are all you need to thoughtfully consider your financial troubles and develop a plan for managing or eliminating your debt. For this reason and others, you are protected from creditor harassment by the Fair Debt Collection Practices Act (federal protection) and various state regulations. There are also options available for stopping creditor harassment and other collection actions completely.
Debt is debt. If you borrowed money you are responsible for paying it back according to the terms you agreed upon. Your creditors are going to hold you to your contract and begin collection actions if you are not making timely or complete payments. There is a law that protects you from creditor harassment. However, even if creditor harassment and collection actions stop, you will still be responsible for paying off the debt you incurred.
Unlawful Collection Tactics
Unacceptable Communication
Debt collectors may not contact you:
- Before 8:00 am or after 9:00 pm
- At work if they have been notified that your employer doesn’t allow it
- If you have a lawyer (they must contact the lawyer directly)
Illegal Garnishment Actions
Creditors cannot take more than 25% of your paycheck. Additionally your home, car, furniture, employee benefits and insurance proceeds are protected from creditors up to a certain amount.
If you choose to receive public assistance, creditors cannot garnish your wages for 6 months after this help has been issued to you. Public assistance includes:
- Minnesota Family Investment Program (MFIP)
- Emergency Assistance (EA)
- Work First Program
- Medical Assistance (MA)
- General Assistance (GA)
- General Assistance Medical Care (GAMC)
- Emergency General Assistance (EGA)
- Supplemental Security Income (SSI)
- Energy Assistance (EA)
Harassment & Abuse
Debt collectors may not threaten you with violence or harm, publish your name (or that of any other consumer that doesn’t pay off debt) on any lists, use explicit and offensive language or call you to the point of exasperation.
Misleading Statements
Debt collectors must be completely honest with you about their identity, your debt and any actions they are planning to take against you. For example they may not:
- Say or imply they are attorneys or government representatives
- Say or imply you have committed a crime
- Falsify or slant your debt amount
- Say or imply they are planning to take action, when they have no intention of doing so
- Use a false name
- Pass false credit information along to anyone
- Send you imitation official documents when they are not
Unfair Practices
According to the Office of Attorney General Lori Swanson, the Minnesota Attorney General, “collectors may not use unfair or unconscionable means to collect a debt. Specifically, they cannot collect any amount greater than your debt, deposit a post-dated check prematurely, deceive you into paying for collect calls, threaten to take your property unless they can legally do so, contact you by postcard or apply your payment to a debt other than the one you have indicated.”
Permitted Collection Methods
Acceptable Communication
Debt collectors may contact you to collect on your debt but they are limited by the methods and tactics they use. Contacting you can be done via mail, telephone, telegram or fax between 8:00 am and 9:00 pm.
If you don’t want debt collectors to contact you this way you can write a letter asking them to stop. Once this letter is received by your debt collectors, further collection actions must stop. From this point forward creditors are only allowed to contact you to inform you that they are stopping collection efforts or that they are pursuing legal action.
Debt collectors may also contact other people, such as your family and friends, but only to find out your address, phone number or place of employment. They may not tell anyone except you that they work for a debt collection agency and they may not disclose your financial situation or indicate in any way that you owe money.
Allowed Garnishment Actions
If creditors sue you they can garnish your wages. Creditors must send you a “Garnishment Exemption Notice and Notice of Intent to Garnish” form 10 days before the garnishment begins. If you are receiving public assistance (see list under Illegal Garnishment Actions) you may complete, sign and return this form within 14 days to your bank and the creditor’s attorney to become exempt from garnishment.
If exemptions are not claimed, creditors can take a portion of your paycheck for the next 70 days. The portion they can garnish excludes child support and allows you to keep 75% of your net amount or 40 times minimum wage, whichever is greater.
Talk to a bankruptcy attorney for specific information regarding your situation or review the Fair Debt Collection Practices Act for a detailed list of all actions prohibited for debt collectors.
Report Creditor Harassment
If a debt collector or creditor is engaging in prohibited actions you may report it to the Attorney General’s office and the Federal Trade Commission.
Minnesota Attorney General’s Office
1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101
(651) 296-3353
1-800-657-3787
Federal Trade Commission (FTC)
www.ftc.gov
1-877-FTC-HELP (1-877-382-4357)
If you are interested in learning more about debt consolidation and options available to you, download our free ebook:
Resources:
The Office of Attorney General Lori Swanson
http://www.ag.state.mn.us/Consumer/Finance/debfactsheet.asp
