Last updated July 28, 2017.
If you’ve ever fallen behind on your bills, you know that creditors and debt collectors can get aggressive. Ohio debt collection laws don’t place significant limits on collection practices. Fortunately, there’s a federal law, the Fair Debt Collection Practices Act (FDCPA), that limits the actions a debt collector or debt buyer can take.
The law doesn’t apply to original creditors, and it doesn’t stop third-party debt collectors from pursuing collection. But, it does protect consumers against abusive and deceptive debt collection practices.
- How the FDCPA Protects You
- FDCPA Violations: My Rights Against Debt Collectors
- Ohio Debt Collection Laws: Protections from Debt Collectors
- Bankruptcy Stops Creditors from Harassing You
- How long do I have before creditors start calling again?
- What if a creditor violates the automatic stay?
- Speak to an Ohio Bankruptcy Attorney
How the FDCPA Protects You
The FDCPA – 15 U.S.C.A. § 1692(e) – took effect in 1978. The statute provides a wide range of consumer protections, including:
- Requiring a debt collector to promptly notify the consumer of certain rights, such as the right to dispute the debt
- Prohibiting the debt collector from using deceptive practices, such as pretending to be a lawyer or misrepresenting the legal status of the debt
- Prohibiting abusive practices such as using obscene language, making threats they can’t legally carry out, or publishing a list of debtors as a pressure tactic
If you believe a debt collector has broken the rules, you can submit a complaint to the Consumer Financial Protection Bureau (CFPB). You may also be able to file a lawsuit against the debt collector that is violating your rights.
See also: Help! Creditors Are Calling My Mom!
FDCPA Violations: My Rights Against Debt Collectors
Unfortunately, many debt collectors continue to violate the law and harass or mislead debtors. In part, that’s because most of the people they’re contacting don’t know their rights. When you know your rights under the FDCPA and other consumer protection statutes, you can protect yourself against debt collector abuses. You can also be part of the solution, since lawsuits and reports to federal agencies that enforce consumer protection laws shine a light on illegal practices and can help stop bad debt collectors.
In 2021, the CFPB negotiated a consent order with Yorba Linda Capital, a debt collector that had been accused of threatening legal action it did not intend to take, falsely asserting that debtors had committed crimes, and falsely threatening arrest if debts were not paid. According to the CFPB complaint, the company had sent consumers papers titled LITIGATION NOTICE. These “notices” included case numbers similar to the type you would see on a court filing. When consumers phoned the company in response to these notices, they report being met with threats of lawsuits (and sometimes arrest). However, according to the CFPB, the company didn’t employ lawyers and had no history of filing debt collection lawsuits.
It’s easy to see how alarming this sort of notice and phone call could be to a consumer who didn’t now their rights–and that’s how dishonest and abusive debt collectors get away with and even profit from their illegal actions.
Because some consumers were aware of their rights and contacted the CFPB, the agency was able to take action against the company, which is now under court order to clean up its act. And, thousands of U.S. consumers received compensation checks in connection with this case.
So, what legal action can debt collectors take?
Debt collectors can’t legally lie to you, use abusive language, threaten violence or other illegal actions, or ignore their legal obligations regarding notices and processing of disputes. But, that doesn’t mean every unpleasant action by a debt collector violates the FDCPA. For example:
- Debt collectors can call you to ask you to pay your debt. However, they can’t call you repeatedly for the purpose of harassment or call you at work if they know your employer objects. And, if you properly notify them that you want them to stop contacting you, they must do so (with a few limited exceptions).
- Debt collectors can call other people to try to locate you. But, they can’t tell those people anything about your debt or the reason they’re calling. And, they can’t continue to make these calls to pressure you if they already know how to contact you.
- Debt collectors can tell you that they will transfer your file to their attorney for legal action, but only if they are actually going to do so. They aren’t allowed to threaten legal action they can’t or won’t take.
- Debt collectors can send you collection notices, but those notices must comply with the law. That means including required dispute information, providing accurate information about the debt, and not creating notices that have a misleading appearance, like the ones in the Yorba case.
If debt collectors are calling, keep a record of your contact with them. It’s a good idea to log the number the call came from, the name of the person you spoke with, the date and time of the call, and notes about what was said. You should do this even when the call is routine, since a complete record will likely be helpful if the debt collector escalates to violating the law. And, you may not always notice violations that an experienced FDCPA attorney would be able to identify.
If you believe that they have misled or mistreated you, speak to an experienced attorney about defending your rights under the FDCPA.
Ohio Debt Collection Laws: Protections from Debt Collectors
In addition to the protection the FDCPA provides against abusive practices, Ohio state law protects some of your assets from collection. If a debt collector wins a judgment against you, it can generally collect (with a court order) by garnishing your wages or bank accounts, seizing your property, or putting a lien on your home. However, they can’t take everything.
Debt collectors must leave 75% in pay each week alone, and more may be protected if your earnings are low. Unless your debt is to a federal agency, they also can’t take any government payments, such as Social Security, disability, or any state-administered benefits. They have to leave $4,450 in equity in your car. That means that if your car is worth $10,000 and you owe $7,000 on it, your equity is only $3,000 and debt collectors can’t seize the vehicle.
Using the same principles, Ohio law protects up to $161,375 of equity in your home. If you have more than $4,450 of equity in your car or $161,375 in your home, a debt collector may collect against those assets. But, the exempt amount is still yours. And, this is just a sampling of some of the most commonly-used exemptions. (Please note, these exemption amounts change regularly, so consult with an attorney for updated numbers.) R.C. § 2329.66
Federal and Ohio state law offer you some protection from the practices of debt collectors and from collection itself, but there is another way: filing for bankruptcy.
Bankruptcy Stops Creditors from Harassing You
It all happens thanks to a concept known as the automatic stay. What is the automatic stay? Bankruptcy is meant to give you a fresh financial start without turning you out onto the street. The automatic stay is one of bankruptcy’s most powerful tools for sheltering you from creditors while you reorganize your finances. It stops creditors and collection actions in their tracks. While your case is pending, creditors cannot contact you, or try to collect in any way. If they do, they are violating a court order and can face sanctions.
In most cases, this order is entered immediately when a new Chapter 7 or Chapter 13 bankruptcy case is filed.
The automatic stay stops creditors and others from moving against the debtor during the bankruptcy process. This includes calls, letters, collection, enforcement of a judgment against the debtor, garnishment, repossession, and foreclosure. 11 U.S.C. § 362(a). Creditors may not take any new action against the debtor and any actions in process must stop for the duration of the bankruptcy. The idea is to freeze the debtor’s finances so they may be reorganized as fairly as possible according to the rules of bankruptcy.
Collection on taxes and student loans must stop. Creditors have to stop any foreclosure process and can’t repossess your property. If they have already repossessed property but have not yet disposed of it, they may have to return it to you.
How long do I have before creditors start calling again?
How long the automatic stay remains in effect depends on the type of bankruptcy you file, whether and when you have previously filed bankruptcy, and how your case proceeds.
In a Chapter 7 case the automatic stay remains in effect until the case is resolved, unless:
- The debtor has had one or more other bankruptcy cases dismissed recently–this may limit the amount of time the stay is in effect or even mean a stay is not entered automatically, or
- A creditor successfully asks the court to lift the automatic stay–when this happens, the stay is lifted only as to that creditor for that specific debt
In a Chapter 13 case, the stay will remain in effect as long as the case is moving forward successfully unless a creditor successfully moves to have the stay lifted as described above.
What if a creditor violates the automatic stay?
A creditor might violate the stay inadvertently. “Violating the stay” may mean repossessing your property, continuing a foreclosure, or doing anything else the automatic stay prohibits.
Perhaps the creditor acted before it received notice of your bankruptcy filing or perhaps it made an honest error. If that happens, the creditor will have to correct its error promptly. A creditor might also violate the stay intentionally or refuse to correct its honest mistake within a reasonable amount of time. If that’s the case, the court may penalize the creditor.
Speak to an Ohio Bankruptcy Attorney
Bankruptcy is a complex process and the automatic stay is a crucial ingredient. Speak to an experienced attorney about how the automatic stay will apply to your case, whether you’ll fall under any important exceptions, and how the automatic stay and the bankruptcy process can benefit you.