The Federal Debt Collection Practices Act (FDCPA) in 1977 was enacted to impose rules on debt collection agencies and the way they deal with customers. A level playing field is also created under the FDCPA for debt collectors who follow the rules. Due to unethical debt collection techniques, defaulting debt collectors will no longer have an advantage over others.

There are restrictions on what debt collectors can do to recoup debts from consumers under the FDCPA. On the other hand, when collecting debts, a first-party or third-party debt collection agency also has legal rights. Let's clarify five of their abilities and limitations.

What Can Debt Collection Companies Do?

Debt collection companies have rights and can express such rights if necessary. Here are a few things debt collectors can do:

Collection of payments

Debt collection is challenging, particularly when considering concepts like the statute of limitations and past-due obligations. However, knowing these definitions enables you to determine whether a debt collection agency can demand payment or, worse yet, file a lawsuit against you.

First, all consumer debts are subject to statutes of limitations. Medical debts, credit card debts, student loans, mortgages, auto debts, and payday loans are just a few examples of these consumer debts. It indicates that a creditor or a debt collection agency has a certain window of time in which to file a lawsuit against you for debt repayment.

The debt collector or a third-party collector may file a lawsuit against you within four years, for instance, if the statute of limitations on your credit card debt is four years. A debt is deemed to have ended after four years. The debt expiring doesn't imply the debt collection company can't contact you to pay off the debt. With the above-mentioned terms clarified, debt collectors can reach out to collect what you owe them plus interest.

Remain in Regular Contact with Consumers

Prior to filing lawsuits, a debt collection agency will typically contact consumers to collect the debt. It's crucial to remember that the FDCPA was revised in 2021. According to the latest upgrade, debt collectors can now contact consumers via new channels like SMS, social media messaging, and emails. As long as they aren't threatening or harassing the customers, it is well within their rights to use all communication channels to persuade them to pay.

Negotiate Consumers' Debts

A debt collection agency may propose renegotiating the debt to collect what consumers owe. The corporation that purchased the debt for third-party collection may also engage in renegotiation.

The consumer could settle the debt for less than they initially owed.

Sue the Consumer over Unpaid Debts

A consumer who refuses to pay off their debts may be sued by fintech debt collection agencies. If you don't pay your debts, a debt collector or someone else who bought your debt may sue you. You must appear in court if you are summoned, or the judge may rule against you. As a result, the debt collector may levy your bank accounts or garnish your salary in order to collect the debt.

What Can't Debt Collection Companies Do?

There are prohibitions on how debt collection companies collect debts from consumers under the FDCPA. Here are five of those things debt collection companies can't do:

Harass customers in the process of debt collection.

The FDCPA was established to stop debt collection agencies from harassing customers. Therefore, debt collectors are not permitted to use any type of harassment when attempting to recover debts.

When someone harasses you, it means:

1. Calling customers repeatedly at odd times.

2. Threatening and harassing customers into paying

● Usage of profane words to the customers

● Sharing credit history with customers

● Show up at the client's place of business

First-party debt collectors or third-party debt collection agencies are not permitted to disclose

consumer credit information to other parties under the FDCPA. The third party could be a member of the family, friends, work team, or employer. Debt collectors are not allowed to visit a customer at work to collect the debt, harass them, or reveal their identity to their employers or coworkers.

Call the consumer whenever they like

Debt collectors are not permitted to call a consumer whenever they want. The consumer must be reached via phone from 8:00 AM to 9:00 p.m. local time. The consumer can report harassment under the FDCPA if a debt collector calls before or after the time specified above.

Detain the customer

Consumers cannot be arrested or threatened with arrest by debt collectors. The FDCPA shields consumers against debt collectors' arrests. That does not exclude summoning the customer to court, though. If the debt collector sues the defaulting customer, they will show up in court.

Try to collect debts the consumer doesn't owe

Debt collectors cannot collect debts that a consumer does not owe. The FDCPA mandates that debt collectors provide a validation letter while collecting a debt to safeguard the consumer. A debt collection agency is required to send a validation letter that fully describes the debt to the consumer. If the customer is still unconvinced, the debt collector is required to submit a confirmation letter addressing the customer's concerns.


In the lines above, it is clear that a third-party debt collection agency has certain rights to contact a debtor. In addition, they also have rules and regulations to follow under FDCPA guidelines that prohibit them from crossing any boundaries that are not meant to be while asking back for a debt.