Credit Card Debt Continues to Rise
As credit card debt continues to rise, so does the rate of defaults. With the aggressive tactics of debt collectors, let’s review your rights under the Fair Debt Collection Practices Act.
Updated on February 17, 2025.
Key Points:
- Household debt nationally continues to rise, especially credit card debt.
- Compared to the previous year, credit card debt has increased $129 billion, resulting in an increase in late payments.
- If you are receiving phone calls from creditors and debt collectors, the Fair Debt Collection and Practices Act protects you.
Household Credit Card Debt Continues to Rise
The latest data from the Federal Reserve Bank of New York’s Center for Microeconomic Data can be concerning as household debt surges.
The Federal Reserve’s data reveals that consumer credit card debt is at $17.69 trillion, an increase of $129 billion from the previous year.
With rising debt and consumers maxing out their credit cards, late payments have also increased. In this case, 1.54% of all balances are at least 90 days late.
What To Do Before You Fall Behind on Your Credit Card Payments
When debtors have fallen behind on credit card payments, contacting debt settlement or relief companies is common. This could be a way to consolidate your debt into one monthly payment, which helps with budgeting.
Debt relief companies may even be able to lower the balance and even freeze the interest rate. Generally, payments are structured on a five-year plan, similar to Chapter 13 bankruptcy.
You can also contact credit card companies and negotiate a payment restructuring. However, with multiple companies involved, it might not be easy, especially if one creditor isn’t flexible in the negotiation process.
What Happens When You Stop Making Your Credit Card Payments
Creditors and debt collection companies do have the right to contact you to attempt to collect the debt. This means a creditor can email you, send letters and text messages, and call you to collect payment. However, certain restrictions are in place to help protect you as a consumer.
The Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) was passed in 1977. The FDCPA is federal law and limits the practices of debt collectors to protect consumers. However, there are limitations to The Fair Debt Collection Practices Act.
For example, the FDCPA focuses on personal debts, not business debts. It also doesn’t apply to the original lender but to debt collectors.
Your Rights Under the Fair Debt Collection Practices Act
You have the right to tell a debt collector to stop calling you. Nowadays, because of technology, software programs can generate endless phone calls, and once you answer the call, you are connected to a live person. Back in the “old days,” the creditors had to dial your number, and of course, if they could not contact you, it could be a while before you heard from them again.
That is one of the downsides of technology, but the upside is that you can also block the number. No law obligates you to talk to your creditors.
Note that at some point, the debt collectors will call you from numbers that match your area code. I know it’s tricky on their part, but it’s legal.
Personally, I never answer the phone if I don’t know who it is.
However, just because a debt collector is no longer calling you doesn’t mean they can’t pursue legal action. Generally, creditors try to settle the debt to avoid a lawsuit.
If there is no agreement on settling the debt, then they have the right to pursue a civil case against you, and if they win, they can enforce the money judgment by garnishing your wages, getting a levy against your bank accounts, and putting liens on your assets.
Creditor and Debt Collector Contact Under The Fair Debt Collection and Practices Act
You can tell creditors and debt collectors to contact you at specific times. Generally, debt collectors can contact you between the hours of 8 a.m. through 9 p.m. For example, if you work from 8 a.m. to 5 p.m., you can tell the debt collector to call you after 5 p.m. when convenient.
Debt Collectors and Social Media
We have all seen people posting negative things about others on social media, but that doesn’t mean a debt collector can. A debt collector can contact you via social media, but it must be done privately.
For example, they will not be allowed to post on your Facebook page to contact them, but they could privately message you.
Harassment by Debt Collectors
Creditors are also prohibited from harassing you or others you know; however, the problem is defining harassment.
Some forms of harassment are straightforward, such as obscene language and using profanity. Creditors can’t threaten physical harm or violence either. But can numerous calls be considered harassment? That’s where it gets tricky.
If the creditor is calling you with the intent to annoy, abuse, or harass you, then yes, it would be considered a violation of the Fair Debt Collection Practices Act. But, calling to collect on the debt would not be considered harassment.
What Not to Do with a Creditor or Debt Collector Sues You
A common reaction I see with clients and debtors when they get sued by creditors or debt collectors is to do nothing. The problem is that ignoring a lawsuit will not make it go away.
Once you’re sued by a creditor or debt collector, even if you ignore the lawsuit, the lawsuit will continue to move forward. The result is a wage garnishment or a levy against your bank account. You can imagine the problem this creates when you don’t have sufficient funds to pay your bills, or now your bank account is overdrawn.
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The information posted on this site does not constitute legal advice and does not establish an attorney-client relationship
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