Elderly Debt Collection Laws and Debt Protections for Seniors

Not having money to pay bills is stressful. Calls from a collection agency looking for payment add a level of stress and anxiety that can be debilitating, particularly for seniors, who often have health or cognitive issues.

Unfortunately, credit card serious delinquency, which is payments 90 days late or more, is increasing for consumers over 60, and even more sharply for those over 70.

There were 121,700 debt collection complaints made to the Consumer Financial Protection Bureau in 2021, second only to credit reporting complaints. One in five of the complaints made by consumers who gave their age was by someone 62 or older. As elderly credit card debt and delinquency rises, debt collectors zero in on a vulnerable group.

Tactics aimed specifically at the elderly, like attempts to collect a deceased family member’s debt or threats about garnishing retirement or government benefits, are common (and illegal).

But there is debt protection for seniors. Elderly debt collection laws, combined with resources that help seniors deal with financial challenges and abuse, can help ease the stress of dealing with debt and debt collectors. To understand debt collection relief, it’s also important to understand how debt collection works, and what your rights are.

How Debt Collection Works

A creditor can start contacting you about an overdue payment as soon as it is late. The contact may be a phone call, email, or letter. It’s usually polite, maybe even asking if you forgot to pay. They’ll often give you a few ways to make the payment (phone, online, mailing a check).

The longer a debt is unpaid, the less friendly and polite, and more frequent, the contact gets. The lender, after 180 days, can send the debt to a collection agency. Collection companies, whether hired by the creditor or acting as the agent or for a debt buyer, have just one job: to collect money that’s owed.

There are differences to the tone and process of debt collection depending on the type of debt. A creditor seeking late auto loan payments will likely start the repossession process when payments are 60 days late.

Unpaid credit cards and loans spur nonstop telephone calls. Almost half of the debt collection complaints made to the CFPB in 2021 were about credit card accounts, and they’re also the most common type of account in collections.

Those who owe medical and student loan debt may find they get more letters than phone calls, at least at first.

Despite the differences, a debt collector seeking payment must send a validation letter that includes the debt collection agency’s name and address, the original creditor, the account number associated with the debt, how much you currently owe (fees, interest, payments and credits must be itemized), and information about your rights and how to dispute the debt, including a tear-off form to do just that.

All types of debt can go to collections. The most common are:

Examples of Harassment and Unethical Behavior by Debt Collectors

Debt collectors have one job, and that’s to make you pay the money they believe you owe. This focus can lead to aggressive tactics, some of which are legal, but others that aren’t and comprise harassment and unethical behavior. Some debt collectors even go after people for money they do not owe.

Some harassment and unethical behavior is unique to elderly debt collection; other tactics are aimed at any consumer. All of it is against the law.

Some of the most common ways seniors are targeted by debt collectors:

Harassment, threats, inappropriate language. One of the biggest complaints elderly consumers have about debt collection is harassment over the telephone. Debt collectors may believe seniors are more liable to give in to harassment, or less likely to know their rights. They are also more likely to answer the phone. Those with cognitive issues, including dementia or Alzheimer’s, are particularly vulnerable. The CFPB reported that complaints of debt collectors using harassing, oppressing and abusive tactics rose in 2022. A major issue is that collectors continued to engage, even after the person they were collecting from said they were feeling harassed, annoyed, abused, or agitated.
Threats to garnish retirement benefits. Unethical debt collectors may threaten elderly consumers with garnishing retirement or other government benefits. The threat is illegal because most retirement accounts are exempt from garnishment for unpaid debts.
Attempting to collect a debt owed by a deceased spouse or other family members. Debt collectors use this tactic, but a person is not liable for the debt of someone who has died unless they were a co-signer or agreed in writing to be liable.
Threatening to sue for a time-barred debt. Every state has a statute of limitations, after which legal action can’t be taken to collect a debt. These range from 2-6 years, depending on the state. Debt collectors in many states can still attempt to collect after that, but the debtor can no longer be sued. Still, some debt collectors will threaten legal action, despite the fact the debt is time-barred.
Attempting to collect a debt that isn’t owed. More than half of complaints about debt collections made to the CFPB regarded collections for a debt that was not owed. Some were actual debts, but owed by family members. Others were debts that never existed or were resolved years before.
Elderly debt collection scams. Scammers posing as debt collectors will ask for payment through wire transfer or gift cards. No legitimate debt collection company accepts payments this way. Scammers will pressure you to pay immediately. Legitimate debt collectors give you 30 days, or a similar time period, to pay.

Types of Debt Collectors

“Debt collector” is a catch-all phrase that can cover any person or business attempting to collect an unpaid debt. The type of debt collector is contacting you may be an indicator of how seriously your debt is being taken, and how aggressive the collection effort will be. A business or individual whose sole purpose is to collect money, and only gets paid once that debt is paid, will be aggressive in making people who owe the money, pay up.

Types of debt collectors are:

First-party debt collector. The original creditor that initially provided the goods, service, or loan. Their billing or collection office will contact you if a payment is late. Some businesses continue to handle the debt themselves, no matter how long overdue it is. Others send late payments to a debt collector or debt buyer, which they’re legally allowed to do, after the debt is 180 days late.
Third-party debt collector. A company hired by a business to collect the debt. The collector is paid a flat fee or percentage of the money they collect, but the debt still is owned by the original creditor.
Debt buyer. A business that buys debts for a fraction of what’s owed, and then attempts to collect it, or hires a debt collection agency to collect it. They make money once the debt is paid.
Debt collection agency. A business whose sole purpose is to collect debt. They may be hired by debt buyers, be a debt buyer, or be hired by the original creditor. Like a debt buyer, they make money only when the debt is paid.
Debt collection attorney: An attorney who helps a company collect debt by taking legal measures, including filing lawsuits.

Debt Collection Protections for Seniors

Because senior consumers are often targets of financial fraud, and also may be financially vulnerable in many ways, there are debt collection protection laws aimed at tactics that target seniors.

Some of the legal ways seniors are protected from unfair debt collection are:

Debt collectors can’t garnish income from retirement accounts, Social Security, VA, or other government benefits. They also can’t garnish spousal Social Security, or other income your spouse gets from retirement accounts or government benefits.
Debt collectors can’t collect debts owed by a deceased spouse, other relative, friend or companion unless you were a co-signer on the loan or account.
Debt collectors can’t collect debts that have exceeded the statute of limitations in the state in which you live. If the debt is owed to a creditor in a different state, your state of residence determines the statute of limitations.
Under the 2021 changes to the Fair Debt Collections Protection Act, a debt collector can’t threaten to file a suit, or sue, for a time-barred debt. Previously, it was up to the consumer to check and see if the debt was time-barred. This applies even if the debt collector didn’t know it was time-barred.

» Learn More: Can Social Security be Garnished for Credit Card Debt?

Is It True Seniors Shouldn’t Worry About Old Debts?

You may hear that seniors shouldn’t worry about old debts. This is partially, but not completely, true. Many seniors are “judgment proof,” which means their income is derived from retirement, Social Security, or other accounts that can’t be garnished. Debt collectors may not bother to take seniors in this situation to court, since they’re unlikely to get the money that way. That doesn’t mean, however, debt collectors won’t target seniors with harassing phone calls and other unethical tactics. Being judgment proof doesn’t mean you don’t have to pay money you owe.

Some elderly debt collection problems may occur when relatives or friends take advantage, sometimes in the belief seniors don’t have to worry about debt. If a friend or family member asks you to cosign a loan, don’t sign unless you can pay if they can’t (or won’t). If they don’t pay, you are stuck with the debt. Some elderly credit card debt can also be attributed to relatives. An AARP study found that people over 50 are more likely than younger consumers to pay for a relative’s car or home repairs, or even use their own credit card to pay off a relative’s debt. The cardholder is the one stuck with that debt.

Know Your Rights Against Debt Collection

All consumers, regardless of age, are protected from unfair debt collection practices by the Fair Debt Collections Practices Act (FDCPA). The FDCPA, passed by Congress in 1978, specifies consumer rights against debt collectors. It includes how and when debt collectors may contact people who owe money, what they can and can’t say, what information they must provide, and more. The FDCPA is frequently updated as technology and tactics change, with the most recent update in 2021.

Consumers can restrict how a debt collector contacts them by asking not to be contacted in a specific way, like by telephone or email, or ask them not to use a specific address or phone number. It’s not necessary to make these requests in writing. If you want the debt collector to cease all contact, you can, and they must comply, but you must do it in writing.

Under the FDCPA, a debt collector:

Can’t use abusive language or threaten arrest.
Can’t contact you at work if you tell them not to
Can only call between 8 a.m. and 9 p.m.
In a voicemail, they can’t say they’re a debt collector and are limited to the name of their business (that can’t be an obvious debt collector), a telephone contact, a request that you reply and other contact information
Can’t contact others about you except to verify where you live and work, and can’t tell others they are collecting a debt
Can only send a message to your work email, unless you previously contacted them through that email
Are required to send a validation notice within five days of first contact, with the current amount owed, their contact information, the original creditor’s information, information about your right to dispute the debt, and a tear-off dispute form
Can’t communicate through social media if the message can be seen by the public or your contacts
Must reveal they’re a debt collector if they send you a private message via social media or ask to be a contact through social media
Must have an “opt-out” option if they text or email you
Can’t require a fee for opting out
Can’t ask that you provide information other than your opt-out preferences

How to Manage and Respond to Debt Collection

There are ways to respond to debt collection that will protect you. You shouldn’t ignore debt collector’s attempts to contact you. It’s important to respond in an informed and safe way.

Everyone’s situation is different, so while some of these apply to you, others may not.

Validate the Debt

Whether you owe the debt, or think you may not, be sure to validate both the debt and the debt collector. They are required to provide enough information, in writing, so you can make sure both they, and the debt, are legitimate. Don’t provide any personal or financial information until you’ve confirmed you’ve been contacted by a legitimate debt collector.

If you don’t recognize the debt, and can’t find it in your records, you should find it on your credit report. Request free credit reports from the three credit reporting agencies by calling 1-877-322-8228 or visiting AnnualCreditReport.com.

Stop Debt Collection Calls

Nonstop calls from a debt collector can be mentally and emotionally damaging. As outlined earlier, you can stop collection calls by telling the debt collector to stop calling. If they leave a voicemail after you’ve made this request, they are violating the law. But don’t ignore it since it may have important information.

Dispute Collections

The debt collector must send you a validation letter that includes a tear-off form, allowing you to dispute the debt. You can also dispute by writing a letter. When disputing collections, follow all instructions carefully, particularly the deadline for disputing, usually 30 days.

Pay Collections

If the debt is legitimate, you should pay it (again, be sure to verify both the debt and the debt collection agency). Paying collections may be difficult, given your financial situation. It may be possible to negotiate a lower amount or monthly payments. Usually, debt collectors prefer a lump sum payment.

Credit Counseling

If you owe money and are being hounded by a debt collector, it’s a good time to take advantage of free credit counseling. Reaching out to a nonprofit credit counseling agency like InCharge Debt Solutions won’t cost you anything and can give you the tools necessary to get your finances in order. The counselor will go over your budget and finances and help you access your credit report. They will not judge or shame you. They’ll also review debt relief options with you, to help determine which is best for your situation, including:

Get Help with Debt Collection

The best debt protection for seniors is you. You must be your own best resource and find a way to get your finances in order that makes it possible to pay off the debt you owe. Imagine the relief you’ll feel once you have that weight off your shoulders. A nonprofit credit counselor, trained to address debt relief for seniors, can be the support you need to start the process. Once you choose a debt relief option, the calls from debt collectors will stop.

Counselors are required by law to give advice that’s in your best interest and can guide you to resources and information, including programs for seniors, who will help you understand your finances better.

It’s never too late to work toward debt relief. Working with a counselor at InCharge Debt Solutions can bring you the peace of mind that having a debt-free financial foundation provides.