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Updated on Author: Contributor: Sergei Lemberg

Can a Debt Collector Charge Me With a Crime?

“You are nothing but a common thief, and if you don’t pay up I will get the police! There are places where they handle deadbeats like you!”

Having an irate debt collector screech these words in your ear can make your blood run cold. The last thing you want to hear when you are struggling financially is that your inability to pay your bills will land you in prison, adding yet another layer of shame to your predicament.

Part of our fear stems from history. There was a time, not too far in the past, when people were sent to prison for not paying their debts. Called debtor’s prisons, they were horrific, crowded places where men and women sometimes shared one big cell, and unlucky inmates either had to do forced labor to work off their debt, or languish until a family member paid it off for them. Like most prisons in the past, they were overcrowded, overrun with disease, filthy, and food was scarce. Being sent to a debtor’s prison was often a death sentence. People went in, but never came out.

But that was in the past. Today there are no debtor’s prisons, and under 15 U.S.C.§ 1692e it is illegal for a debt collector to make “false or misleading representations.” This means they cannot threaten to have you arrested and thrown in jail unless they plan on doing so, and owing a debt is not a crime. If it was, the entire court system would be overrun and the prisons overflowing.

That doesn’t prevent collection agencies from using this as a threat, however.  In Turner v. Oxford Management Services, a debt collector threatened a mother with jail and losing custody of her children if she didn’t pay her debt. She retaliated by suing the collection agency in the Southern District of Texas alleging they violated the FDCPA with their threats. The court agreed,  awarding her $56,143.47 in costs and fees. Turner v. Oxford Management Services, 552 F.Supp.2d 648, S.D.T.X. (2008).  In re McLaughlin, a couple that filed for bankruptcy was harassed by a debt collector threatening to criminally charge the couple and have the husband arrested. These cases demonstrate violations of § 1692e(7): “The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.”

Can a Debt Collector Take My House or Car?

A second tactic debt collectors commonly use is threatening to seize property or other assets to pay the debt. This is a violation of § 1692e(4): “The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.”  To be in violation of this provision of the FDCPA, one must first determine whether the debt collector has the power to seize the property at issue.

Property can be lawfully seized if it was used as collateral to secure the loan that created the debt. A good example is a car loan. The car is collateral for the loan you took out on the vehicle. If you fail to pay your car loan, the lender will eventually repossess the car. Another  example is a mortgage. A mortgage is a loan taken out with a house as collateral. If you fail to make a payment on your mortgage each month as agreed, the lender who issues the mortgage can foreclose on the house. These are common examples of lawful property seizures, and collection agencies acting on behalf of your lender for a car or house loan can legally threaten to take your property provided they are serious about it and prepared to do so.

However, a debt collector cannot threaten to seize your car to pay your cell phone bill, or your delinquent student loan. They cannot threaten to take your house because you ran up your credit card bill then lost your job and was unable to make payments. Debt collectors can only threaten to seize your property and your assets if they have the power to do so. A random collection agency popping up out of nowhere seeking payment plus interest of a co-pay from a doctor’s visit many years ago that you don’t even remember cannot lawfully threaten to take your house. A threat like that is a violation of this provision of the FDCPA. Unfortunately, despite the fact that these kinds of threats are against the law, debt collectors continue to use them because they have found them to be an effective way to motivate a consumer to pay.

Can a Debt Collector Call Me a Criminal?

Short answer, NO.  Under § 1692 (e) 7 of the FDCPA, you cannot be shamed by a debt collector or subjected to criminal accusation. With many of us being one paycheck away from homelessness and abject poverty, it is easy to find yourself unable to pay for the living room set that you bought in better times. Deep down, you may feel ashamed of your financial situation. Therefore, you may secretly believe the debt collector is right when they call you a thief or a criminal for not paying your bills, because you feel like one. And that is exactly the reaction the debt collector is trying to invoke by making these accusations, shame and embarrassment.

Realize that beating yourself up because you have fallen onto hard times is not a productive way to handle the problem, nor is allowing a debt collector to abuse and shame you. Financial difficulties can happen to anyone, and many times they are not your fault and the circumstances that caused them were out of your control, and no one has the right to degrade and demean you for it. Do not allow a collection agency to browbeat you into making your financial problems worse by borrowing money you may not be able to pay back to pay the debt. Put them in their place. It is not legal for a collection agency to verbally and emotionally abuse you. They are deliberately trying to make you feel worse about your situation and no one has the right to do that. This was demonstrated in McMillan v. Collection Professional, where a debt collector sent a letter stating “you are either honest or dishonest, you cannot be both,” to the plaintiff. See McMillan v. Collection Professional, 455 F.3d 754, 7th Cir. (2006). The court held that this was a violation of the FDCPA, and awarded damages.

1692 (e) 7 of the FDCPA protects you from being shamed by a debt collector or subjected to criminal accusation including:

  • Falsely Accusing You of Fraud
  • Blaming You For Disregarding Good Business Practices
  • Telling You They Are Not Going To Just Go Away
  • Criticizing You For Being Dishonest

Anyone can fall on hard times. Do not allow your inner feelings of shame and embarrassment at your financial predicament translate into allowing a debt collector to take advantage of you and trample over your rights. You deserve better.  If you have reason to believe a debt collector has crossed the line in their communications with you and violated the law, don’t just take it. 

About the author:

Contributor: Sergei Lemberg

Sergei Lemberg is a consumer rights attorney, practicing since 2006, whose practice focuses on consumer law, class actions and personal injury litigation. He is known for a United States Supreme Court case (Facebook v. Duguid) defending consumers from autodialers under the Telephone Consumer Protection Act of 1991 to send unsolicited text messages. He is also the author of Defanging Debt Collectors, a book that teaches consumers how to battle debt collectors and win.

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