Can You Sue for Being Wrongfully Sent to Collections?

For many Americans, there's nothing more stressful than being repeatedly harassed by debt collectors, especially for debts that they don’t owe. Unfortunately, debt collectors can be persistent and frustrating in their harassment.

But you’re protected under legislation like the FDCPA. Furthermore, debt collectors may sometimes be sued, especially if they wrongfully pursue you for a debt that you shouldn’t have to pay. Read on for more information.

What Does it Mean to Be “Sent to Collections”?

When a consumer or debtor doesn’t pay down a debt or loan, the original creditor – such as a mortgage lender, car lender, bank, etc. – doesn’t normally keep the debt or keep pursuing it. Instead, the original creditor sells the debt to a collection agency. The collection agency purchases debts to make money off them by collecting the original debt amount plus interest from the original borrower.

So, when a debt is "sent to collections," it means the debt was sold or transferred to a debt collection agency. The debt collection agency assumes the right to pursue the debt and tries to get it paid back in legal ways.

Sometimes, debt can be sent to collections improperly or erroneously. For instance, a creditor might confuse your identity with someone else’s and send a debt to a collection agency with your information. Alternatively, you might have already paid off a given debt, but the creditor accidentally sends the debt account to a collection agency anyway. In these cases and more, you could be contacted by debt collectors for no good reason.

Your Rights Under the FDCPA

All consumers are protected by the Fair Debt Collection Practices Act or FDCPA. This federal law governs all debt collection practices, including collecting debts for mortgages, credit cards, medical loans, etc.

Under the FDCPA, you have certain rights that are always protected, which prevent debt collectors from harassing you or engaging in immoral or unlawful collection practices. Here are some examples:

• Debt collectors can only contact you about debt at reasonable times and places. Debt collectors can’t contact you before 8 AM or after 9 PM
• Debt collectors are not allowed to harass you or anyone else in any form of contact
• Debt collectors must identify themselves and must list your rights when contacting you, including the right to file a dispute letter, the amount of money you owe, and so on
• Debt collectors can never threaten you or use physical violence to try to collect money

If a debt collector attempts to collect money from you and violates any of these rights in the process, you could have grounds for a successful lawsuit.

Sending a Dispute Letter

One of the most important rights under the FDCPA is the right to send a dispute letter to a debt collection agency. If, for instance, a debt collector contacts you about an unpaid debt, but you don’t believe the debt is yours, you have the right to send them a letter stating this and requesting further information proving that the debt is yours.

According to the FDCPA, you may send a collection agency a dispute letter within 30 days of receiving information from the debt collector. The debt collector must then investigate and provide you with the requested information within another 30 days.

Say that you believe a debt was sent to a collection agency improperly. Maybe you already paid off the debt, or maybe the debt isn’t yours at all. If you note this in a dispute letter, the collection agency then has to investigate its records and prove that the debt is yours before it can continue debt collection attempts.

What if a Collector Doesn’t Cease Harassment?

If a debt collector doesn’t stop harassing you about debt that isn’t yours, or if they do not provide you with information proving that the debt is yours after sending a dispute letter, they are in violation of the FDCPA. As a result, you can sue them for damages in state court or small claims court.

When Can You Sue a Debt Collector?

You can sue a debt collector in a variety of circumstances and for different reasons. Here are some examples:

• The debt collection agency has violated at least one part of the FDCPA. This can include not identifying themselves, contacting you at an inappropriate time, or continuing to contact you about a debt that is demonstrably not yours
• The debt collector ignores the fact that your debt was wrongfully sent to collections. For instance, if you made a final payment for a debt to the original creditor, but the creditor sent the debt to collections anyway, you should not have to pay the debt twice. If the debt collector receives this information and continues to harass you, they’re liable for a lawsuit
• The debt collection agency does not investigate dispute letter claims within 30 days. When you submit a dispute letter, the collection agency has to stop collection attempts for 30 days or until it provides you with the requested information

Suing a Debt Collector in State Court

If you choose to sue a debt collector, you can do so in state court. Most lawsuits require you to prove that the debt collection agency violated the FDCPA. If your lawsuit is successful, you could collect up to $1000 in statutory damages or more depending on the harm you may have suffered from FDCPA violations.

To maximize your chances of a successful lawsuit, it’s a good idea to contact a consumer law firm like Fair Credit. The right attorneys on your side can help you gather the appropriate evidence, represent you effectively in court, and have your back throughout the legal process, minimizing the frustration you may feel.

Furthermore, state court lawsuits require that you, the consumer, be represented by an attorney. Any damages you receive will help to cover attorney fees and costs. Note that you only have one year from the date of any given FDCPA violation to sue a debt collector in state court.

Suing a Debt Collector in Small Claims Court

You can also sue a debt collector for a debt wrongfully sent to collections in small claims court. In small claims court, you can represent yourself and go through an expedited process. However, your damages will be much more limited, and you may not recover as much money as you would through a state court lawsuit.

Can You Sue an Original Creditor?

If a debt is wrongfully sent to collections and results in harassment by a debt collector, you might wonder whether you can sue the original creditor. Say that a debt collector starts to harass you about a car loan you never took out. Suing the debt collector is one thing, but the entire issue wouldn’t have happened if the car lender didn’t wrongfully send the debt to collections in the first place.

Unfortunately, your grounds for a successful lawsuit against an original creditor are much thinner. While it’s possible you may be able to bring a successful lawsuit against a creditor for wrongfully sending a debt to collections (for whatever reason), it’s less likely to succeed compared to suing a debt collector for violating the FDCPA.

Again, knowledgeable credit repair attorney or debt harassment lawyer will be able to advise you one way or the other whether this is a wise course of action.

Wrap Up

If a debt is wrongfully sent to collections and your rights under the FDCPA are violated as a result, you have the right to sue a debt collector/collection agency. Consumer law firms like Fair Credit can help you stop debt collection harassment and secure damages from a collection agency that doesn’t abide by the FDCPA. Contact us today to learn more.