Federal and state laws protect consumers from harassment or abuse by debt collectors. In the state of Minnesota, debt collectors are licensed and regulated by the Minnesota Department of Commerce, and the federal Fair Debt Collection Practices Act (FDCPA) protects consumers’ rights.
As a consumer, what rights do you have regarding debt collection in Minnesota?
Disputing a Debt
The debt collector must send a written notice within five days of first contacting you informing you the creditor owed and the amount of the debt. To dispute any part, you must submit a written letter to the debt collector within 30 days giving specific reasons for the dispute. Upon receipt of this letter, the debt collector must, by law, cease any collection activities until the dispute is investigated.
Stopping Telephone Calls and Letters
You have the right to have debt collectors stop calling and writing you. By sending a “Stop Contact Letter” that clearly tells them to stop contacting you about debt, which debt, and the account number they must cease all contact. However, it is important to note that a no-contact letter does not mean you can ignore court papers because doing so amounts to contempt of court and you may face jail time or fines.
Payment Plans and Multiple Debts
Many collection agencies will let you set up a payment plan and will oftentimes reduce or freeze interest charges as long as you make regular payments. Some creditors may even settle for less than the total amount owed. Whatever type of plan you and the debt collector agree on, make sure you get the details in writing. In some cases, debt collectors may try to collect on more than one debt. If you are on a payment plan, you can specify which debt you want you payment applied to, as long as it is not one in dispute.
A creditor or debt collector can sue you and obtain a judgment. If you ignore court documents about this, the debt collector can have your wages or bank account garnished for the amount of the judgment. In some cases, they can even force the sale of your property.
Protected Money and Property
Income from Social Security, pensions, veteran’s benefits, SSI, EITC, or other type of governmental needs-based program is protected from garnishment. If you are employed, your net wages up to 40 times the federal minimum wage are protected (about $1,240 per month), and, in most cases, a garnishment can only affect up to 25 percent of your net income.
Houses and vehicles can be taken in certain cases. If the debt is for a mortgage default and the house if in foreclosure, then you can lose it. Similarly, if you fail to pay your car loan, then repossession may occur. Otherwise, your house is protected under a Homestead Exemption if you have less than $390,000 in equity and it is your primary residence. You are allowed to keep personal property worth up to $10,350, and your vehicle that has up to $4,600 in equity.
Abuse and Harassment
Some unscrupulous debt collectors will try anything to intimidate debtors; however, they are not allowed to:
- Contact other people about your debt; however, they can call others to get your contact information. They may not state that they are a debt collector unless asked. If you have a lawyer, the debt collector can ONLY contact your lawyer.
- Use obscene or abusive language
- Threaten you with criminal charges or arrest
- Call you before 8:00 a.m. or after 9:00 p.m.
- Call you at work if they know your employer disallows personal/creditor calls
- Collect any cash without providing you with a receipt
- Send you correspondence pretending to be a lawyer, the court, or the government
- Refuse you give you the name of their agency
- Give you legal advice
- Threaten you with legal action they don’t plan on taking
If you have suffered from any of these abuses, maintain a careful record or all communications. You can file complaints with the Minnesota Department of Commerce and The Federal Trade Commission. If you are seeking legal recourse, you have one year to bring a suit against debt collectors for violating the FDCPA.
If you have any questions or for more information, please contact us.