A debt collector is a person or company that pursues payment of debts owed by individuals or businesses. In the US, a collector is usually either a third-party agency collecting on behalf of the original creditor, or a debt buyer that purchased the debt outright and now owns it.
Types of debt collector in the US
- Third-party collection agencies: hired by a creditor to collect on their behalf, usually for a fee or commission. The original creditor still owns the debt.
- Debt buyers: companies that purchase portfolios of charged-off debt at a steep discount and then collect the full amount themselves. They become the legal owner of the debt.
- In-house collections: the original creditor pursuing its own debt. Note that original creditors collecting their own debts are generally not covered by the federal FDCPA, though many state laws do cover them.
- Collection attorneys and law firms: these can file a lawsuit. A law firm collecting consumer debt is generally still a debt collector under the FDCPA.
The law that protects you: the FDCPA
The Fair Debt Collection Practices Act (FDCPA) is the main federal law governing third-party debt collectors. It is implemented through Regulation F and enforced by the Consumer Financial Protection Bureau and the Federal Trade Commission. Many states have their own debt collection laws that go further, and a number of states require collectors to hold a license. You can check licensing with your state attorney general or state financial regulator.
The validation notice and your right to dispute
Within five days of first contacting you, a collector must send a validation notice setting out the amount of the debt, the name of the creditor, and your right to dispute it. If you dispute the debt in writing within 30 days of receiving that notice, the collector must stop collection activity until it has sent you verification of the debt. This is one of the most useful rights you have, and it costs nothing but a letter.
What debt collectors can do
- Contact you by letter, phone, email or text message to request payment, within the limits set by Regulation F
- Sell or transfer the debt to another company
- Report the debt to the credit bureaus
- File a lawsuit to obtain a civil judgment if the debt is within the state statute of limitations
- Add interest and fees that were permitted under your original agreement or by state law
What debt collectors cannot do
- Call before 8am or after 9pm in your local time
- Contact you at work once you have told them your employer prohibits it
- Discuss your debt with third parties such as family, friends, neighbors or your employer, beyond limited contact to locate you
- Use threats, obscene language, or repeated calls intended to harass
- Misrepresent who they are, the amount owed, or the legal consequences — including falsely implying they are attorneys or government officials
- Threaten arrest or criminal prosecution for an ordinary consumer debt
- Sue or threaten to sue on a debt that is past the statute of limitations
- Keep contacting you after you send a written request to stop, except to confirm they are stopping or to notify you of specific action such as a lawsuit
How debt collection works in practice
When you miss payments on a credit account, the original creditor normally tries to collect internally first. For revolving credit such as credit cards, the account is typically charged off after around 180 days of non-payment — an accounting step in which the creditor writes the balance off as a loss. The debt does not disappear at charge-off. The creditor then usually either places the account with a third-party collection agency, or sells it to a debt buyer.
If the debt is sold, you should receive notice that a new company now owns it and that payments should go to them instead. Selling the debt does not change your original agreement — a buyer cannot add charges the contract and state law did not allow. Debt that has been bought and sold several times is also more likely to carry incomplete records, which is exactly why requesting verification matters.
Time-barred debt and the statute of limitations
Every state sets a statute of limitations for suing on a debt — commonly between three and six years, but it varies by state and by type of debt. Once that period expires the debt is time-barred: it still exists and a collector may still ask you to pay, but they cannot lawfully sue you or threaten to sue. Critically, in many states making a payment or acknowledging the debt in writing can restart the clock. Before paying anything on an old debt, check the statute of limitations in your state and get advice.
How to check a collector is legitimate
Ask for the company name, physical address, phone number, and the name of the original creditor, and insist on the written validation notice. Do not give bank or card details on an unsolicited call. Check whether the company is licensed with your state attorney general or state financial regulator, and search the CFPB consumer complaint database at consumerfinance.gov. If a caller refuses to provide written validation, pressures you to pay immediately, or demands payment by gift card, wire transfer or cryptocurrency, treat it as a scam and report it at reportfraud.ftc.gov.