State Debt Collection Laws

The federal Fair Debt Collections Practices Act is the main law that deals with debt collections through out the United States. Besides the federal statute, many states have their own debt collection laws.

State Debt Collection Laws

Many states have their own debt collection laws that supplement the federal Fair Debt Collections Practices Act. The state debt collection laws regulate the conduct and activities of creditors and debt collectors. They also give debtors the right to sue the creditor or the debt collector if they violate any provisions of the debt collections laws.

General Prohibitions

All state debt collection laws prohibit unfair practices in collection of debt. The creditors and debt collectors are prohibited from collecting any amount, including any interest, fee, charge, or expense incidental to the principal obligation, unless such amount is expressly authorized by the agreement creating the debt or permitted by law. They are also prohibited from taking or threatening to take any non-judicial action to effect dispossession or disablement of property if there is no present right to possession of the property claimed as collateral through an enforceable security interest or the property is exempt by law from such dispossession or disablement. They are further prohibited from contacting the debtors at the debtor’s work place and during certain hours.

Validation of Debt

Just like the federal statute, the state laws generally require the creditor or debt collector to validate the debt when the debt disputes the debt. The validation must be done within the time limit specified.

Debt Collection Statute of Limitations

Statute of Limitation is the time limit with which a creditor must initiate steps to recover the debt from you. This varies from state to state and also on the kind of agreement you have with the creditor. The Statute of Limitations does not cause your debt to go away after it expires. If the creditor files suit, you have an absolute defense. Generally, the Statute of Limitations starts the day you make the last payment for your account.

State

Oral

Written

Promissory

Open-ended Accounts

Alabama

6

6

6

3

Arkansas

5

5

5

3

Alaska

6

6

3

3

Arizona

3

6

6

3

California

2

4

4

4

Colorado

6

6

6

3

Connecticut

3

6

6

3

Delaware

3

3

3

4

DC

3

3

3

3

Florida

4

5

5

4

Georgia

4

6

6

6

Hawaii

6

6

6

6

Iowa

5

10

5

5

Idaho

4

5

5

4

Illinois

5

10

10

5

Indiana

6

10

10

6

Kansas

3

6

5

3

Kentucky

5

15

15

5

Louisiana

10

10

10

3

Maine

6

6

6

6

Maryland

3

3

6

3

Massachusetts

6

6

6

6

Michigan

6

6

6

6

Minnesota

6

6

6

6

Mississippi

3

3

3

3

Missouri

5

10

10

5

Montana

3

8

8

5

North Carolina

3

3

5

3

North Dakota

6

6

6

6

Nebraska

4

5

5

4

New Hampshire

3

3

6

3

New Jersey

6

6

6

3

New Mexico

4

6

6

4

Nevada

4

6

3

4

New York

6

6

6

6

Ohio

6

15

15

6

Oklahoma

3

5

5

3

Oregon

6

6

6

6

Pennsylvania

4

4

4

4

Rhode Island

10

5

6

4

South Carolina

3

3

3

3

South Dakota

6

6

6

6

Tennessee

6

6

6

3

Texas

4

4

4

4

Utah

4

6

6

4

Virginia

3

5

6

3

Vermont

6

6

5

3

Washington

3

6

6

3

Wisconsin

6

6

10

6

West Virginia

5

10

6

5

Wyoming

8

10

10

8

If you decide to make part payment, remember that the statute of limitation will start all over again from the date you make the part payment. If the creditor has agreed to accept part payment in full settlement of the debt, make sure you get it in writing.

Some collection agencies will agree to settle with you for far less than you owe and then turn around and hire another collection agency to collect the difference. However, in many states this is illegal. Once a creditor deposits or cashes a full payment check, even if he strikes out the words payment in full or writes "I don't agree" on the check, he can't come after you for the balance. The states in which this law is enforced:

  • Arkansas
  • Colorado
  • Connecticut
  • Georgia
  • Kansas
  • Louisiana
  • Maine
  • Michigan
  • Nebraska
  • New Jersey
  • North Carolina
  • Oregon
  • Pennsylvania
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • Wyoming

Some states have modified this rule. In the following states, if a creditor cashes a full payment check and explicitly retains his right to sue you by writing "under protest or without prejudice" with his endorsement, then he can come after you for the balance. But those exact words must be used. If he writes "without recourse," communicates with you separately, notifies you verbally or writes on the check that it is partial payment, it is not enough.

  • Alabama
  • Delaware
  • Massachusetts
  • Minnesota
  • Missouri
  • New Hampshire
  • New York
  • Ohio
  • Rhode Island
  • South Carolina
  • South Dakota
  • West Virginia
  • Wisconsin

Getting legal help

Debt collections laws have been enacted to protect the rights of debtors. Merely because you are a debtor, it does not mean that you have no rights. If you are being contacted by a credit or a debt collector, consult with an experienced debt attorney to know your rights and to enforce them.

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