Illegal Lies Debt Collectors Tell

If you haven't been living in a mountain cave in Zambia for the past two decades, I don't need to tell you that debt collectors lie. You already know that. What you may not realize, however, is that some of these lies are illegal and, as such, violate federal consumer protection laws. This gives you the right to legal recourse should you choose to pursue it.

Illegal Lie #1. If you don't pay this debt, you'll go to jail

Unpaid debt won't land you in jail.
Once upon a time the state of Georgia was a debtor's prison. Australia started out this way too. In this day and age, however, no one is going to handcuff you and haul you away when you stop paying your credit card bills.

The Fair Debt Collection Practices Act is a lovely little document that gives you, the consumer, a summary of your rights and the collection agency's rights. One act that the FDCPA prevents is false representation.

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section...


The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action...


The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.

There you have it. Your nightmares about being tried, sent to the pen and dropping the soap are over. Not only can a collection agency not imprison you, debt collectors can't even threaten imprisonment while attempting to wrangle a payment out of you. They can't even tell you that you committed a crime. While not paying your debts isn't particularly responsible, it isn't illegal.

Illegal Lie #2. I'll tell your friends, family and/or employer about your debt. 

Anyone who ever attended middle school knows what a powerful motivator humiliation is, and unpaid debt
Collectors can't tell your boss about the debt.
is embarrassing. Even if your collection accounts are the result of circumstances that were completely out of your control, you'd rather go naked in public (okay, well, maybe not that far) than have your boss know that you shirked a hospital bill last year. Collection agencies are well aware of this and have been known to use it to their advantage. If you're out-of-your-mind afraid that your deep, dark debt secret will finally see the light of day, you're more likely to pony up whatever amount the debt collector asks for.

Fortunately for you, the FDCPA is very clear about this. Not only does this threat fall under the "false representation clause" above, debt collectors aren't even allowed to contact your loved ones unless its in an effort to locate you. And they certainly aren't allowed to tell anyone about the debt.

Believe me, no matter how personal it may seem between you and the collector who's been calling you night and day for months, you're just another number on a list of numbers he has to call every day. He's probably not stupid enough to put his job on the line. Probably.

Illegal Lie #3. I'll sue you and foreclose on your home, garnish your wages, levy your bank accounts, seize your 401k and repossess your car. So pay up. 

Fear, like humiliation, makes us do things we wouldn't normally do. Threatening to take your wages, savings and property is at attack on your very stability. The logic here is simple: If you don't pay, there are some horrific consequences coming your way--or, maybe not.

Only a judge can give collectors the right to seize assets.


It's true that a debt collector has the right to sue you for the debt. State laws vary but most will allow collection agencies who win a lawsuit to attach liens to your property and seize your liquid assets--but only some of them. Here's a list of just a few of the assets you may have that are exempt from debt collection (unless you owe a defaulted federal student loan, but if that's the case you're already familiar with the flames of financial hell and the fact that nothing is exempt doesn't faze you anymore) and that collectors cannot threaten to take:

  • Social Security
  • Your 401k
  • Most retirement benefits
  • Unemployment benefits
  • Welfare
  • Veteran's benefits
  • FEMA funds
  • Child support 
  • Your IRA

In a twisty bit of legalese, the FDCPA prohibits collection agencies from threatening to take an action they either cannot take or do not intend to take. No seizure of property can take place without a judgment and a judgment requires a lawsuit. Thus, if the statute of limitations has expired on your debt, threatening to sue you and/or seize your assets is a big no-no for collectors.

Filing a Lawsuit Against a Collection Agency for Lying 

People expect to get lied to by collectors. Like daredevil cab drivers and bad sushi, its an all-too-common fact of life for many Americans. Filing a lawsuit is too much work for most to bother with. If a debt collector decides to risk his job by lying to debtors and breaking federal regulations, odds are he'll get away with it.

The FDCPA still gives you the right to sue for infractions, but if the collection agency can prove that the violation was unintentional and that its policies don't allow for such behavior, the court can throw out the lawsuit.

Related Posts:

Debt Collection Lawsuits: Statutes of Limitations by State

The Debt Collection Lawsuit Threat

What Are Your Odds of Being Sued By a Collection Agency?




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Illegal Lies Debt Collectors Tell
Illegal Lies Debt Collectors Tell
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