Money & Debt

When debt collectors contact you, it can be stressful. But don’t let them intimidate you. Take your time and understand your rights before making a decision.

Who are debt collectors and original creditors?

When you borrow money, the company that gave you the loan is called the original creditor. If you miss payments, the creditor might try to collect the debt themselves. Sometimes, they give your debt to another company, known as a third party. This third party debt collector could be:

• a collection agency hired to collect the debt, or
• a debt buyer, who buys your debt.

What happens if I don’t pay my debt?

If you do not make payments, the original creditor or the third-party debt collector might hire a collection law firm to file a lawsuit against you to collect the debt. If they obtain a judgment against you in court, they can then take steps to enforce the judgment debt. This includes having your employer pay them part of your paycheck, or having your bank freeze your funds and turn them over to the collector. Though some funds, property, and benefits are protected from collection.

They can also report the debt to the credit bureaus, but the collector should contact you before they do so. Once information about a debt is on your credit report, paying it will usually not remove the information. But you can enter into an agreement with the debt collector that, if you settle it by paying a reduced amount, they will not verify it if you dispute the debt with the credit bureaus.

Learn more about dealing with a debt collection lawsuit, or what a debt collector can take from you if they win the lawsuit.

Consider Bankruptcy

If you're facing a judgment for unpaid debt, you may be worried about wage garnishments, bank account freezes, or even the forced sale of your property. If you are not collection-proof, bankruptcy could be an option to stop these collection efforts and help you regain control of your finances. Chapter 7 bankruptcy can discharge most unsecured debts like credit card bills and medical debt, while Chapter 13 bankruptcy offers a structured repayment plan. However, bankruptcy can impact your credit for years, so it's important to weigh this option carefully and consult with a financial advisor or attorney before making a decision. Bankruptcy can provide relief, but it is not a good fit for everyone. Read more about bankruptcy eligibility.

Watch out for scams

Fake Debt Collectors

Some scammers pretend to be legitimate debt collectors and send fake bills. You can follow the advice of the CFPB to figure out if you’re dealing with a scam company. It’s important to verify that the debt is legitimate. Debt collectors are required by law to provide you with information about the debt, but it’s up to you to make sure everything is correct.

Debt settlement and credit repair scams

Many debt settlement companies and credit repair companies charge a lot of fees and do not provide very helpful services. You can negotiate with your creditors on your own and send credit reporting dispute letters. Many of these companies might leave you in a worse position than when you started. Some law firms might also charge you a lot of money for something you can do yourself, and will not help with your case if a debt collector sues you.

There are Illinois laws that protect you from these companies including the Debt Settlement Consumer Protection Act and the Credit Repair Services Organization Act. The Federal Credit Repair Organization Act also sets rules for these companies. Talk to a consumer advocate laywer if you think you’ve been scammed by one of thes companies and report them to the Illinois Attorney General.

The FDCPA: a Federal law that protects you

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects you from unfair practices by third-party debt collectors and collection law firms. The FDCPA says what these collectors can and cannot do and provides you with specific protections. This law does not apply to original creditors.

Who is covered?

The FDCPA only applies to debt collectors, not to everyone who might ask you to pay money you owe. A debt collector is someone who is hired or works for a company to collect money on debts you owe or owed to another person or business. For example, if you didn’t pay a credit card bill and the credit card company hires another company to get the money from you, that company is a debt collector. The credit card company can also sell the debt to a debt buyer, and the debt buyer is a debt collector. However, the original business you owe money to, like the credit card company itself, is not considered a debt collector under this law.

The law firms that regularly sue to collect debts are also covered by the FDCPA.

What Debts Are Covered?

The FDCPA only covers personal, family, or household debts, such as credit card bills, medical bills, or loans for personal items like cars or furniture. Business-related debts, child support, fines for parking or code violations, and damages from accidents are not covered by this law.

How and When Can a Debt Collector Contact You?

• Debt collectors can contact you by phone, mail, or other means between 8:00 AM and 9:00 PM unless you agree to other times.
• Debt collectors must follow the 7-in-7 rule, which limits debt collectors to seven calls to a consumer within seven days. They also cannot contact you within seven days after talking to you about the debt.
• They can also contact you at work unless they know your employer prohibits it. 
• They cannot reveal to your employer or coworkers that you owe money.
• A debt collector can contact other people to locate you, but can’t reveal that you owe a debt

If you have a lawyer, the debt collector must contact your lawyer instead of you. If you don’t have a lawyer, you can send a letter to the collector asking them to stop contacting you, or to only contact you at certain times and in certain ways. Once they receive your letter, they can only contact you to confirm they will follow your instructions, or to inform you of any specific legal action they plan to take.

What Information Must a Debt Collector Provide?

 Within five days of first contacting you, the debt collector must send you a written notice with:

• The debt collector's name and mailing address,
• The consumer’s name and mailing address,
• The name of the original creditor,
• The account number,
• The name of the current creditor,
• An itemization date and amount of debt,
• The current amount of debt,
• information about consumer protections, and
• The end date of the validation period, which must be at least 30 days plus five business days from the date the notice was sent. This is the time within which you can send a special letter demanding that the debt collector take certain actions.

How can I verify the validity of the debt?

Once you receive the first notice, you have 30 days to ask the collector to validate the debt. This means they must prove that the debt is yours and that the amount is accurate.

If you’re unsure about the debt, write a letter to the debt collector within 30 days of their first contact. In the letter, ask them to provide documentation showing that the debt is valid. You can ask for details like:

• Proof that the debt belongs to you (e.g., signed contracts or account statements),
• The name and contact information of the original creditor, and
• An itemized statement showing how the amount was calculated.

Use our EasyForm to send a letter to the debt collector asking them to stop contacting you.

Always send your validation request by certified mail with a return receipt if you can afford it. This way, you have proof that the collector received your request.

Once the collector receives your letter, they must stop trying to collect the debt until they provide verification. This includes ceasing phone calls, letters, or other attempts to collect until they respond with proof.

The debt collector’s response should include enough information to show that the debt is valid. This includes:

• The original account number.
• The total amount owed, including interest, fees, and any other charges.
• Proof that the debt was sold or transferred to the current collector, if applicable.

If the collector provides this information and it all checks out, you can begin negotiating a payment or settlement. However, if the information is incomplete or incorrect, you may dispute the debt further.

If you believe the debt is not yours or the amount is wrong, you can send a dispute letter to the debt collector. In this letter, explain why you believe the debt is incorrect and provide any evidence you have, such as payment records or contracts.

Once a debt is disputed, the collector must investigate the issue. If they cannot verify the debt, they are required to stop collection efforts and remove the debt from your credit report. They must also report the debt as disputed on your credit report. If they don’t, that’s a violation of the FDCPA.

If you want, you can send the collector a letter doing all three things at once:

• Demanding that the collector send you information about the debt (validation),
• Demanding that the collector stop contacting you, or contact you only in specific ways,
• Disputing the accuracy or legitimacy of the debt.

What Actions Are Illegal for Debt Collectors? 

Debt collectors cannot:

• Place an account on your credit report before trying to communicate with you.
• Harass or abuse you, such as by threatening violence or using obscene language.
• Make false statements, such as pretending to be a lawyer or misrepresenting the amount you owe.
• Contact you in a way that you requested not to be contacted.
• Use unfair practices, like pretending to be affiliated with a court, or threaten you with arrest.

Make sure to keep a record of all of your communications with any debt collector.

What to Do If a Debt Collector Breaks the Law

If a debt collector violates the FDCPA, you can take legal action against them. You have one year from the violation to sue the collector, and if you win, you may be awarded damages, lawyer fees, and court costs. You should talk to a consumer advocate lawyer if you think this happened to you.

You can also file a complaint with the Consumer Financial Protection Bureau (CFPB), and report the issue to the Illinois Attorney General. 

Special rules for collection agencies

Sometimes a debt is not sold, but instead is just sent, or “assigned,” to a collection agency to collect. The Illinois Collection Agency Act is a state law that says debt collectors must be licensed by the state and follow specific rules when contacting consumers. The ICAA ensures that debt collectors act fairly and do not use deceptive or harassing practices to collect a debt.

Under the ICAA:

• Collection agencies must send a written notice of the debt within five days of the initial contact. The notice must include the amount of the debt, the name of the creditor, and a statement about the consumer's right to dispute the debt.
• Collection agencies cannot threaten violence, use abusive language, or harass you through repeated phone calls.
• Collection agencies must stop contacting you if you send a letter requesting them to stop, except for certain legal notices.

If a collection agency violates the ICAA, you can file a complaint with the Illinois Department of Financial and Professional Regulation. You can also speak to a consumer advocate lawyer.

Charged Off Debt

When a debt is charged off, it means the creditor has declared the debt as a loss in their accounting. This typically happens after the debt has been delinquent for 180 days (six months). However, a charge-off doesn't erase the debt—you still owe the money, and the creditor or a debt buyer can continue to pursue collection, including filing a lawsuit. A charge-off also negatively affects your credit report.

Credit Reporting

Learn more about how debts can impact your credit score and reports, and how to dispute information on your credit reports.