frequently asked questions

The California Association of Collectors is the nation's oldest and largest statewide association representing third-party collection agencies.

Collection agencies are businesses that collect past due bills and accounts for other persons or businesses. These questions and answers will provide you with information about what to expect and what you should do if you are contacted by a collection agency concerning a consumer debt.

CAC members participate in education programs for both management and employees emphasizing legal issues and practices regarding professional conduct in accordance with state and federal law. The California Rosenthal Act and the federal Fair Debt Collection Practices Act (FDCPA) are two of the laws most relevant to consumer rights with respect to third-party debt collectors.

The federal Fair Debt Collection Practices Act (FDCPA) and the state California Rosenthal Act were enacted with the support of CAC and ACA International, CAC's national affiliate, to protect consumers from unfair and abusive collection practices. The federal FDCPA regulates all third-party collection agencies handling consumer debt (but may not apply to child support collections). The California Rosenthal Act governs all consumer debt collections incurred in California.

This information is not intended to be a complete or official summary of either of these laws, but simply an attempt to provide an understanding of the provisions of these laws as they pertain to a consumer when contacted by a third-party debt collector, and the most frequently asked questions following such contact.

Most of the information presented here applies only to collection agencies. The association is not able to assist in the handling of problems or disputes between a consumer and the original creditor.

Questions

  1. Must the creditor (the business or person to whom the original debt is owed) notify me before turning my account over to a collection agency?
  2. How can I find out what the bill is for?
  3. What do I do if a collection agency contacts me?
  4. Why can't I just continue making payments to the original creditor to whom I owed the money?
  5. When can a collection agency call me?
  6. Can a collection agency contact other people and discuss my bill?
  7. Can a collection agency contact my employer?
  8. Can a collection agency contact me at my place of employment?
  9. How do I stop a collection agency from contacting me?
  10. Does an agency have to accept partial payments?
  11. As long as I am paying something every month, doesn't the collection agency have to take my payment?
  12. The collection agency has agreed to take payments. Do I have to sign a contract?
  13. What about oral (unwritten) payment plans?
  14. The collection agency wants me to write postdated checks or pre-authorize payments from my checking account. Do I have to do this?
  15. May a collection agency demand the consumer pay interest on an assigned debt? If so, how much?
  16. What if I can't make the payments I agreed to make?
  17. What if the bill has been paid, I do not owe the bill, or I am not the person the collection agency is looking for?
  18. Can a collection agency sue me?
  19. Can a collection agency report my account to a credit bureau (i.e., Experian, TransUnion or Equifax, etc.)?
  20. What should I do if the agency has already reported my account to a credit bureau?
  21. If I pay a bill to the collection agency in full, are they required to delete their negative report on my credit?
  22. What if I have been the victim of identity theft and the debt is not mine?
  23. How do I file a complaint against an agency?

Answers

1. Must the creditor (the business or person to whom the original debt is owed) notify me before turning my account over to a collection agency?
The creditor generally is not required to let you know it's referring your account to a collection agency. There are rare exceptions to this rule.

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2. How can I find out what the bill is for?
Either in its first contact with you regarding an unpaid bill or in writing within five days after that contact, the collection agency must provide the following information to you: (a) the amount you owe, (b) the name of the creditor, and (c) the process to follow if you dispute the bill. The five-day notification period applies whether the collection agency's first contact with you is by telephone or in writing, but many agencies include this information on their initial written notice, whether or not they have telephoned first.

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3. What do I do if a collection agency contacts me?
It is important that you respond as soon as possible. If you don't, the agency may keep trying to reach you to collect what they believe is a valid debt. lf you legally owe the bill, you should arrange to pay it if possible.

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4. Why can't I just continue making payments to the original creditor to whom I owed the money?
In California, once the debt has been assigned to the collection agency, it is the collection agency that is entitled to receive all payments. The collection agency becomes the "owner" of the debt you owe. The collection agency is responsible for collecting the debt and is the only one who can agree to payment terms.

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5. When can a collection agency call me?
An agency may only call at hours presumed to be convenient for the debtor—generally, between 8 a.m. and 9 p.m. If these hours are inconvenient for you, you may ask the agency to contact you at other times. There is no law that specifically limits the number of calls an agency may make to you, but repeated calls over a short period, which may be annoying or harassing, are prohibited.

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6. Can a collection agency contact other people and discuss my bill?
Although a collector may call others to try to locate you, he or she may not discuss your account or debt status except for your spouse, attorney or person necessary to enforce a judgment. He or she must give his or her name, but not the name of the agency unless they are specifically asked for it.

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7. Can a collection agency contact my employer?
An agency may contact an employer, but only for the following reasons:
  1. To communicate with you at your place of employment.
  2. To verify your location.
  3. To garnish your wages once you have been taken to court and a judgment was entered against you.
  4. To find out whether you have medical insurance to cover a medical bill.

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8. Can a collection agency contact me at my place of employment?
Yes, unless the debt collector knows, or has reason to know, that your employer prohibits you from receiving such communication. However, if you do not want to be contacted at work, you can request that they not telephone or send you notices at work. Be sure to make your request in writing to protect yourself. If the agency does send you a notice at work, it must be marked PERSONAL & CONFIDENTIAL. If you request no further contact at work and the agency is unable to contact you at home, the agency may have no other option but to file a civil lawsuit for the amount of the bill it is collecting.

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9. How do I stop a collection agency from contacting me?
If you want to stop all contact from the agency you may request that they not contact you again—IN WRITING. Your letter should be sent by certified mail, "return receipt requested," so you have proof of its delivery. Once the agency receives your letter, its employees can only contact you one final time to explain what action they plan to take. After that, contact must stop. Remember, though, that if you request no further contact in any way, except for certain messages allowed by law, you may leave the agency with no choice but to file a civil lawsuit against you.

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10. Does an agency have to accept partial payments?
No. A collection agency has the choice of demanding the whole amount or taking payments on the bill. It will want to know your actual ability to pay the debt. The agency can set what it is willing to take for the amount of the payments and how often you will be required to make them.

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11. As long as I am paying something every month, doesn't the collection agency have to take my payment?
No. The agency's responsibility is to collect the debts assigned to it. The agency will want to have payments made pursuant to an agreed plan, so it knows when to expect payment, and when the debt will be paid in full.

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12. The collection agency has agreed to take payments. Do I have to sign a contract?
You don't have to sign any contract with a collection agency. However, if the collection agency wants the payment agreement to be in writing, they have the right to require you to sign a contract as a condition of accepting payments. This can be a protection for both of you as long as you make the payments under the contract.
If you make your payments on time and pay the agreed amount, the agency cannot change the way they are collecting the bill or demand more money. But, if you fail to make the payments according to the contract, the collection agency could then demand payment of or sue you for the entire remaining balance, not just the defaulted payment.
The contract may also be in the form of a promissory note. These are both legal documents by which you will be bound—do not promise more than you can pay, and do not sign one just to appease an agency. A contract is a legally enforceable agreement.

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13. What about oral (unwritten) payment plans?
The same conditions apply to unwritten agreements as do the written agreements. Both are contracts between you and the collection agency.

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14. The collection agency wants me to write postdated checks or pre-authorize payments from my checking account. Do I have to do this?
No, you are not required to give postdated checks or pre-authorized payments to a collection agency. However, many consumers and collection agencies have found that this is very efficient means of structuring a repayment plan as it requires little ongoing maintenance by either party. Writing or accepting postdated checks or pre-authorized payments are not illegal so long as you plan to cover them when they are cashed or presented. The agency is required to send a notice of intent to deposit letter prior to deposit of any check.

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15. May a collection agency demand the consumer pay interest on an assigned debt? If so, how much?
When assigned the debt by the original creditor, the collection agency can demand and collect interest from the debtor to the same extent that the consumer would be obligated to pay interest to the original creditor. The obligation to pay interest is not changed by the debt being assigned to a collection agency.
If a collection agency does demand and collect interest, it should be shown as a separate amount from the principle when it is first demanded from the consumer. Subsequently, each additional amount of interest should be shown as a separate increase to the total balance due at that time.
The obligation to pay interest exists whether a contract you signed included a promise to pay interest, the contract you signed was silent with respect to the amount of interest which would become due, or there was no written contract for the monies, goods, or services you obtained from the creditor. California law provides for these three situations, if there is not a specified legal rate of interest, then it shall be 10 percent per annum for debts incurred after January 1, 1986. A creditor or collection agency may demand and collect a higher rate of interest if a written contract on which the debt is based includes a provision for higher interest (i.e., credit card company contract you signed provides for an 18 percent interest rate, then the collection agency may demand and collect the 18 percent interest), so long as that higher rate of interest could properly have been part of the contract with the original creditor.

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16. What if I can't make the payments I agreed to make?
If possible, contact the agency before you miss a payment or send a partial payment. Explain the problem and what you plan to do to solve it and catch up on your payments. Many agencies will work with you, especially if you've already made several payments on time.

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17. What if the bill has been paid, I do not owe the bill, or I am not the person the collection agency is looking for?
If you do not owe the bill, or if the bill has already been paid, send the agency a written explanation along with copies of receipts, cancelled checks and any other information to back up your claim. It is important to send your letter within 30 days after your first contact from the collection agency. Once the agency receives your dispute letter, it must stop further attempts to collect the debt until it sends you written verification to show that you do owe the bill and that the amount of the bill is correct. If you are questioning only a part of the bill, the agency may not continue to collect on that part until it has provided verification, but you must make arrangements to pay the rest of the bill.
If you are not the person the agency is looking for, write and explain the mistake. You may be asked to provide a driver's license or social security number to prove that you are the wrong person. If you are unsure about your legal responsibility for a debt, check with an attorney.
If the collection agency is unable to obtain verification that you owe the debt, it may return your account to the creditor and stop collection efforts.

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18. Can a collection agency sue me?
Yes. The agency, represented by its counsel, may file a civil lawsuit against you in Superior Court. A collection agency may not sue in small claims court. If a judgment is obtained by the agency you may be liable for additional expenses for court costs and/or attorney fees.

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19. Can a collection agency report my account to a credit bureau (i.e., Experian, TransUnion or Equifax, etc.)?
Yes. Most collection agencies, though not required by law, provide a brief period after receiving your account before reporting it to the credit bureaus. Therefore, it is important that you make immediate contact with the agency to resolve the matter before any negative information is reported about your past due account.

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20. What should I do if the agency has already reported my account to a credit bureau?
If you owe the debt you should pay it. Payment of the debt will allow the agency to report your account as paid in full to the credit reporting agencies. If you dispute the debt you should send written notification to the agency together with supporting documentation to substantiate your position.

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21. If I pay a bill to the collection agency in full, are they required to delete their negative report on my credit?
No. They are required to show it as "paid collection." The credit reporting agencies prohibit deleting a reported debt merely because it was paid.

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22. What if I have been the victim of identity theft and the debt is not mine?
There are certain steps you must take if you have been the victim of identity theft. You can contact the California Association of Collectors for more information about this subject.

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23. How do I file a complaint against an agency?
If you feel, after reading this information, that your rights have been violated by a collection agency, you can file a formal complaint with CAC. However, you should always try to work out any problems with the collection agency yourself before you file a complaint.

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You can contact CAC if you have any questions about the material on this page or want a complaint form sent to you.

To file a complaint, download: Consumer Complaint Form

Fill it out and fax or send back to CAC.

You can also call the Consumer Hotline at
1-800-316-2262.

The association can respond to questions and provide you with information over the telephone on how to file a complaint, but the actual complaint must be in writing. The complaint form will ask you for specific information and will explain how your complaint will be processed. Your complaint form will be forwarded to the agency's owner.

NOTE: The association provides this service with respect to third-party collection agencies. Complaints with creditors or credit reporting agencies are not within the scope of this service.