Understanding Collection Laws & Exemptions: A Comprehensive Overview
Key Points:
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Familiarize yourself with your state's consumer debt protection laws and exemptions.
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Review the Fair Debt Collection Practices Act (FDCPA) and exemptions related to homesteads, automobiles, bank accounts, and wages.
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Find additional resources to learn about the specific laws in your state.
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Collection laws are in place to safeguard individuals from harassment by debt collectors and to establish guidelines for their communication methods, timing, and locations.
If you have debts that have been sent to collections, it's important to understand these laws and take action if a collector violates them. Here's what you need to know about collection laws for agencies and how to protect your rights.
Debt Collection Laws in the United States
Several laws govern collection agencies in the United States, with the primary one being the Fair Debt Collection Practices Act (FDCPA). Additionally, the Fair Credit Reporting Act (FCRA) and various state debt collection laws provide additional protections.
Collection Laws & Exemptions: | |||||
|---|---|---|---|---|---|
| FDCPA Applies to Original Creditors | Homestead Exemption | Vehicle Exemption | Bank Account | Wages | |
Alabama |
$5,000 (can double) | None | $3,000 | 75% | |
Alaska |
$70,200 | $3,900 | $1,820 or $2,860 | $456-7161 | |
Arizona |
$150,000 | $5,000 | $150 | 75% | |
Arkansas |
Unlimited (<1/4 acre) | $1,200 | $800 or $1250 | 75% | |
California |
Yes | $50,0004 | $5,000 (2x) | $0 | 75% |
Colorado |
$30,000 | $5,000 | None | 75% | |
Connecticut |
$75,000 (2x if married) | $1,500 | $1,000 | 75% | |
Delaware |
None (if both owe $) | None | $500 | 85%5 | |
D.C. |
Yes | Unlimited | $2,575 | $850 | 75% |
Florida |
Yes | Unlimited | $1,000 | None | 100%2 |
Georgia |
$10,000 (can double) | $3,500 (2x) | $600 | 75% | |
Hawaii |
Yes | $30,000 | $2,575 | None | 80% |
Idaho |
$50,000 | $5,000 | $800 | 75% | |
Illinois |
$15,000 (can double) | $1,200 | $2,000 | 85%6 | |
Indiana |
$7500 (can double) | None | $4,000 | 75% | |
Iowa |
Yes | Unlimited | $5,000 | $100 | 75%3 |
Kansas |
Unlimited | $20,000 | None | 75% | |
Kentucky |
$5,000 | $2,500 | $1,000 | 75% | |
Louisiana |
$25,000 | None | None | 75% | |
Maine |
$25,000 (ask) | $5,000 | $400 | 75% | |
Maryland |
Yes | None (if both owe $) | $5,000 | $6,000 | 75% |
Massachusetts |
Yes | $300,000 | $700 | $425 | 75% |
Michigan |
Yes | $35,300 or $52,925 if elderly or disabled | $3,250 | None | 75% |
Minnesota |
$200,000 | $3,600 | None | 75% | |
Mississippi |
$75,000 | $10,000 | None | 75% | |
Missouri |
$8,000 | $1,000 | $1,250 | 75% | |
Montana |
$60,000 | $2,500 | None | 75% | |
Nebraska |
$12,500 | $2,500 wildcard | 85% | ||
Nevada |
$125,000 | $4,500 | None | 75% | |
New Hampshire |
Yes | $30,000 | $4,000 | $8,000 | 75% |
New Jersey |
None (if both owe $) | $1,000 | $1,000 | 90%7 | |
New Mexico |
Yes | $30,000 (may double) | $4,000 | $2,000 | 75% |
New York |
Yes | Varies by county See CVP § 5206 | $4,000 | $2,5008 | 90% |
North Carolina |
Yes | $10,000 (may double) | $1,500 | $500 | 100% |
North Dakota |
$80,000 | $1,200 | $7,500 | 75% | |
Ohio |
$25,000 | $3,225 | $425 (2x) | 75% | |
Oklahoma |
Unlimited | $3,000 | None | 75% | |
Oregon |
Yes | $25,000 ($30K couple) | $1,700 (2x) | $400 | 75% |
Pennsylvania |
Yes | None (if both owe $) | None | $300 | 100% |
Rhode Island |
$150,000 | $12,000 | None | 75% | |
South Carolina |
Yes | $50,000 (can double) | $5,000 | $5,000 | 100% |
South Dakota |
Unlimited | $6,000 | 6k-Auto | 75% | |
Tennessee |
$5,000 ($7.5K cpl) | $4,000 wildcard9 | 75% | ||
Texas |
Yes | Unlimited | Unlimited | None | 100% |
Utah |
$20,000 (can double) | $2,500 or $3,500 | None | 75% | |
Vermont |
Yes | $75,000 (can double) | $2,500 | $1,100 | 75% |
Virginia |
$5,000 (+$500/kid 2x) | $2,000 | None | 75% | |
Washington |
$40,000 | $2,500 | $500 | 75% | |
West Virginia |
Yes | $25,000 (can double) | $2,400 | $800+ | 75% |
Wisconsin |
Yes | $40,000 | $1,200+ | $1,000 | 75% |
Wyoming |
$10,000 (can double) | $2,400 | None | 75% | |
Notes |
1. Alaska: $716/wk (head of family) or $456/wk (non-head of family) 2. Florida: 100% (head of family only) or 75% for non-head of household 3. Iowa: 75%, but yearly total limited 4. California: $50k (single), $75k (married), $125K (65 or disabled) 5. Delaware: 85% of disposable 6. Illinois: 85% of gross 7. New Jersey: 90% of gross, unless judgment-debtor earns more that 250% of federal poverty level, then court has discretion to use federal 25% exemption. 8. New York: Account contains directly deposited exempt benefits, including Social Security, SSI, Veterans benefits, disability, pensions, child support, spousal maintenance, workers compensation, unemployment insurance, Public Assistance, Railroad Retirement benefits, and Black Lung benefits. Otherwise, $1,740 on all other accounts. See the New York LawHelp Consortium Consortium for more information. 9. Tennessee: Up to $4,000 of any personal property, including a financial account, can be exempted. See Tennessee § 26-2-103 for details. | ||||
State-by-state collection laws.
Let's explore each of these laws and the rights they afford consumers:
1. Fair Debt Collection Practices Act (FDCPA)
The FDCPA is the most significant law providing consumer protection. It addresses the use of abusive, deceptive, and unfair practices by debt collectors and acknowledges the adverse consequences of these practices on individuals, such as personal bankruptcies and privacy infringements.
The FDCPA includes the following protections:
- Limitations on contact: Debt collectors cannot contact you before 8 a.m. or after 9 p.m., or at any other inconvenient time. They are also prohibited from contacting you at your workplace if your employer disallows it. Moreover, they cannot contact you more than seven times within a seven-day period, and once you speak to them by phone, they must wait at least seven days before reaching out again.
- Prohibition of harassment and abuse: Debt collectors are not allowed to harass, abuse, or use threatening language toward you. Examples of harassment include making continuous annoying phone calls or publicly disclosing your debts. Additionally, collectors cannot lie or misrepresent themselves as attorneys or government officials.
- Right to legal representation: If you hire an attorney, debt collectors must communicate solely through your lawyer and may not contact you directly once they are aware of your legal representation.
It's important to note that the FDCPA applies only to personal, family, and household debts and does not cover business debts.
2. Fair Credit Reporting Act (FCRA)
The FCRA is another federal law that safeguards consumers' rights. It specifically regulates how debt collection agencies and bill collectors report financial information to credit bureaus such as Experian, TransUnion, and Equifax.
Although this law does not directly address collection attempts against you, it prevents creditors from reporting inaccurate information that could negatively impact your credit score and long-term financial opportunities. The FCRA also requires debt collectors to maintain accurate records of your debts and notify credit bureaus if you dispute a debt.
3. State Laws for Collection Agencies
In addition to federal laws, many states have their own laws governing debt collection practices or laws related to unfair and deceptive acts, which may offer further protection. To find out if your state has specific laws, you can contact your state attorney general's office or seek guidance from a local legal professional.
Resources and Further Information
To access more detailed information about collection laws and exemptions in your state, refer to the Bills.com source provided. The chart includes information on protected amounts for various assets, such as homesteads, vehicles, bank accounts, and wages, along with footnotes for specific details.
Please note that while we believe the information provided to be accurate at the time of posting, it's advisable to consult an attorney in your state to obtain precise information regarding the laws and exemptions applicable to your unique circumstances.
