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Debt Collection Laws – A Field Guide for Military Families

While there are many similarities, there are a few differences in collection laws and practices where military families are involved. The primary similarity is the application of federal law – specifically, the Fair Debt Collection Practices Act, which governs exactly how creditors can go about collecting any money they believe you have borrowed or are otherwise responsible for. There are also state laws that may provide you as a consumer with additional rights or put additional restrictions on collectors and skip tracers.

The differences primarily involve service members who have entered active duty since the time they borrowed money. In these cases, the service member generally falls under the provisions of the Soldiers and Sailors Civil Relief Act, which sharply limits how collectors can go about getting repaid – and generally prohibits evictions, foreclosures, repossessions and other negative actions pending a court review.

If you are military and experiencing trouble with one or more collectors, you can make an appointment with your command’s Judge Advocate General’s office. The JAG can help you apply the relevant state and federal statutes to your individual situation. Their advice is particularly important if bankruptcy, eviction, the loss of a clearance or foreclosure is a possibility.

The Fair Debt Collection Practices Act only applies to personal debts, such as credit cards, car loans, mortgages, and the like. It does not apply to business debts. So if you took out money to finance a business, you are generally entitled to fewer protections. In this case, if you are having trouble paying your obligations, you should generally contact an experienced attorney.

Federal law prohibits collectors from calling you prior to 8 AM, or after 9 PM your time, unless you specifically agree to it. Collectors may attempt to call you at work – but they must cease and desist if you inform them that you cannot take calls at work.

How to Stop Collectors from Contacting You

If you want your collectors to cease attempting to contact you, send them a certified letter, return receipt requested. This receipt gives you proof that the creditor received your request. From that point, they are prohibited from contacting you at all, except to confirm that they will make no further contact, or to inform you of any actions they are taking. However, if you direct them not to contact you any further, they may conclude they have no other recourse but to file a lawsuit to collect your debt.

Can Creditors Contact Anybody Else?

Yes. They can contact your attorney, if you have one. If you don’t have an attorney, they can contact other people they believe may know you. But they can only do so to find contact information for you. They generally cannot contact any third party more than once, and they cannot discuss your debt with anyone but you or your husband or wife, or your attorney.

Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

Contesting a Debt

Creditors and debt collectors can and do make mistakes. If you want to dispute the amount owed, or dispute that you owe anything at all, you can send a letter to the creditor to that effect. Consider sending it by registered mail, return receipt requested, so you have a record of your correspondence, and keep a copy of your letter. You must send that letter within 30 days of receiving the creditors’ “validation notice,” detailing the debt and two whom they believe you owe the money.

Prohibited Actions

Collectors are under strict limitations:

  • They cannot be verbally abusive to you or anyone else they contact.
  • They cannot use threats of violence.
  • They cannot publish a list of delinquent creditors.
  • They cannot use profanity or obscenity.
  • They cannot contact you under false pretenses.
  • They cannot pretend to be an attorney if they are not.
  • They cannot pretend that they are with a credit bureau such as Equifax.
  • They cannot accuse you falsely of criminality.
  • They cannot lie about the amount owed.
  • They cannot lie about whether any forms they send you are legal forms or not.
  • They cannot tell you that if you don’t pay, they will have you arrested (but there are cases of people actually serving time in jail for failing to pay debts – particularly child support payments).
  • Collectors also cannot tell you that they will garnish your paycheck or seize assets unless state law allows them to and they plan to use that power. Generally, however, they must obtain a judgment and a garnishment order in a court of law to execute a garnishment, or garnishee.
  • Collectors also may not provide false information to a credit bureau, or anyone else, for that matter.
  • They cannot disguise their correspondence as official-looking court documents or correspondence from a government agency.
  • They cannot use a fake name for their company.
  • They cannot take a postdated check and deposit it early.
  • They can’t use postcards to contact you.
  • They can’t invent new fees or interest rates other than those specified in your contract.

What about the “Do Not Call” list?

You can put your phone number off limits to most telephone solicitors by adding your number to the Do Not Call Registry. However, in most cases, the prohibition on calling your number does not apply to legitimate creditors. DNCR rules make an exception for any business that already has a business relationship with you within the last 12 months. If you owe a creditor money, guess what…you have a business relationship with them, and they have a right to attempt to contact you, even if you add your number to the DNC list, unless you tell them to cease calling that number.


Garnishment is a legal process in which the courts direct your employer to withhold a part of your paycheck and forward it to the creditor. In order to get a garnishment, the creditor must generally go to court and show the judge that you owe the money, and they have exhausted other remedies, or that a garnishment is the most appropriate and efficient way to collect the order.

In some cases, the courts will direct your financial institution to fork over the money.

You can only have your accounts or wages garnished as a result of a judgment your creditor obtains in a lawsuit, though. If you get a summons to appear in court, be sure to get an attorney, or go to court yourself. Otherwise, the court may grant a summary judgment against you and you lose your ability to fight the judgment or garnishment.

Federal law protects employees from getting fired due to garnishment over any one debt. However, employers may terminate workers if they receive garnishment orders for second or subsequent debts, under federal law.

Note: Military pay is generally exempt from garnishment, under the Fair Debt Collection Practices Act. However, if you are earning money from other sources, or if you are a military dependent or family member, you don’t get any such protection.

Garnishment procedures are generally determined under state law, not federal. There may be limits on how much your creditors can seize from your paycheck. Generally, they must leave you with a basic subsistence income at least.

The law allows the IRS, however, to obtain garnishment orders and seize property without a formal court proceeding in some cases.

Garnishment Exemptions

Federal law protects these items from creditor garnishment, but not from garnishment to satisfy delinquent tax obligations, child support or alimony obligations or federally guaranteed student loans:

  • Veterans benefits
  • Compensation for injury, death or detention of employees of U.S. contractors outside the U.S.
  • Civil service retirement pay
  • Military and merchant seaman pay
  • FEMA payments
  • Railroad retirement pay
  • Military pensions
  • Student assistance
  • Longshoremen and harbor workers death and disability benefits
  • Social Security and SSI benefits

What should I do if a collector violates the law?

First, take action quickly. Generally, you only have the right to file a lawsuit against a collector – whether in state or federal court – for one year from the date of the violation.

If you prevail in the lawsuit, a judge can order the creditor to pay you for whatever damages you can show. Generally, you have to show that you were harmed, somehow, by the illegal collection practice. However, you could receive an award of up to $1,000 if the collector violates the law, even if you can’t show actual damages.

You should expect you still have to repay the debt, though, even if the collector violates the law. Whether you rightfully owe the money is a separate issue.

Do I have any recourse if I think a debt collector has violated the law?

If a creditor, collector or skip tracer violates the law, you can report them to your state attorney general, or to the Federal Trade Commission.

You also have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.

What about state laws?

Obviously, state laws can vary substantially. You can find a breakdown of state collection laws via the Privacy Rights Clearinghouse.

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