How to Sue a Debt Collection Company: A Step-by-Step Guide

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Dealing with debt collectors can be stressful, especially if they engage in unfair, harassing, or illegal practices. Fortunately, debt collection companies must follow strict laws when contacting consumers about debts. If a collection company violates these laws, you have the right to take legal action. This guide will walk you through the process of suing a collection company for violating your rights.

1. Know Your Rights Under the FDCPA

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects consumers from abusive and deceptive practices by debt collectors. It lays out specific rules that collection companies must follow when contacting you. Some common violations of the FDCPA include:

  • Harassment: Repeated phone calls, using abusive language, or threatening violence or harm.
  • False Statements: Claiming you owe more than you actually do, pretending to be law enforcement, or lying about the consequences of not paying.
  • Illegal Contact: Calling at inconvenient times (before 8 a.m. or after 9 p.m.), contacting you at work if prohibited, or discussing your debt with others.
  • Failure to Verify Debt: Not providing written verification of the debt within five days of the first contact.

If a collection company violates any of these rules, you may have grounds to sue under the FDCPA.

2. Gather Evidence of Violations

If you believe a debt collector is breaking the law, gathering evidence is crucial. The more documentation you have, the stronger your case will be. Consider the following:

  • Keep Records of Communication: Save all letters, emails, and voicemail messages from the collection company. Note the time, date, and nature of every phone call or contact made by the collector.
  • Record Phone Calls: In some states, you are allowed to record phone calls if you inform the other party. If legal in your state, consider recording calls from the debt collector to capture any abusive or illegal behavior.
  • Request Written Verification: If a debt collector contacts you, ask for written verification of the debt. The FDCPA requires collectors to provide this within five days of their first contact.
  • Document Harassment: Keep a log of any abusive behavior, threats, or harassment you experience, including the dates, times, and content of the calls.

3. Attempt to Resolve the Issue

Before filing a lawsuit, it’s often a good idea to try resolving the issue directly with the collection company. Send them a written notice explaining that their actions violate your rights and request that they stop immediately. Be sure to send the letter via certified mail and keep a copy for your records.

If the debt collector refuses to stop or fails to address the violations, you can escalate your efforts by filing a formal complaint.

4. File a Complaint with the CFPB

The Consumer Financial Protection Bureau (CFPB) is a federal agency that monitors and regulates debt collectors. If you are dealing with a collection company that is breaking the law, you can file a complaint with the CFPB. To file a complaint, visit the CFPB’s website and submit details about your experience.

Filing a complaint with the CFPB won’t get you monetary compensation, but it can hold the debt collector accountable and potentially lead to corrective action.

5. Determine if You Should Sue

If the debt collection company continues to violate your rights, or if you suffered harm because of their actions, you may choose to sue them. Here are common reasons to sue a collection company:

  • Emotional distress: Harassment by a debt collector can cause significant emotional stress and mental anguish.
  • Financial damages: If a collector’s false claims caused you to lose money (e.g., through wage garnishment or paying a debt you didn’t owe).
  • FDCPA violations: Any clear violation of the FDCPA gives you the right to sue for statutory damages.

You can recover up to $1,000 in statutory damages for FDCPA violations, plus any actual damages, including lost wages, legal fees, and emotional distress.

6. Decide Where to File Your Lawsuit

There are two main options for suing a debt collection company:

  • Small Claims Court: If you are seeking a small amount of compensation (usually under $10,000, depending on the state), small claims court is a good option. It’s a simpler, faster process that doesn’t usually require a lawyer.
  • Federal or State Court: For larger claims or more complex cases, you may file in a higher court. Hiring a consumer protection lawyer can increase your chances of success.

Make sure to file your lawsuit in the appropriate jurisdiction, typically where you live or where the collection company is located.

7. File Your Lawsuit

Once you have gathered your evidence and decided to move forward, the next step is filing your lawsuit:

  • Draft a Complaint: The complaint is the document that starts your lawsuit. It should explain how the collection company violated the FDCPA, the harm it caused, and what you’re seeking in damages.
  • Pay Filing Fees: Most courts require you to pay a filing fee when submitting your lawsuit. This fee varies depending on the court and your location.
  • Serve the Debt Collection Company: After filing your lawsuit, you must officially notify the debt collection company that they are being sued. This process is called “serving” the defendant, which is typically done through certified mail or a process server.

8. Prepare for Court

Once your lawsuit is filed, both parties will have the opportunity to present their arguments in court. Be prepared to:

  • Present Your Evidence: Have all your documentation, records, and any expert testimony organized and ready to show the court how the collection company violated the law.
  • Explain the Emotional and Financial Harm: Be ready to describe how the debt collector’s actions affected your life, whether emotionally, financially, or both.

If you win the case, you may be awarded statutory damages (up to $1,000), actual damages, and even legal fees.

9. Consider Settlement or Mediation

Before the case goes to trial, the collection company may offer to settle out of court. Settling can result in a faster resolution, and you may be able to negotiate favorable terms, such as debt forgiveness or compensation. Mediation is another option to consider, where both parties work with a neutral third party to reach a settlement.

Final Thoughts

Debt collection companies are required to follow strict laws when pursuing debts. If they violate your rights, you have the power to take legal action. Whether you choose to resolve the issue through a complaint or sue the company for damages, understanding your rights under the FDCPA is crucial to protecting yourself from abusive practices.

If you’re dealing with an aggressive or illegal debt collection company, Rapid Small Claims is here to help you file a lawsuit and hold them accountable. Our team can guide you through the small claims process, so you don’t have to face it alone. File your small claims now and take the first step toward reclaiming your peace of mind.

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