Debt has different consequences in different states

As a consumer, it is important to understand your rights and responsibilities. This is particularly true if you fall behind on debt payments.

The Fair Debt Collection Practices Act (FDCPA) outlines some hard and fast rules that apply no matter where you live in the U.S. For example, the FDCPA states that a collector may contact you only between 8 a.m. and 9 p.m. Collectors are also forbidden from lying or engaging in unfair practices, such as communicating with you by postcard.

In addition to the Federal laws, each state sets laws as to what, and how, a creditor can collect on a delinquent account. Some states permit a creditor to garnish a debtor’s wages; others don't (like Texas). Some states exempt just about all assets a debtor has from seizure by a creditor to satisfy the payment of a debt. Other states can force you to sell some of your assets to satisfy a judgment.

While I don’t recommend packing your bags and moving to Texas to avoid potential wage garnishment, I do recommend knowing what is and is not possible in your state of residence. Unfortunately, learning about your state collection laws is not as easy as it sounds. There are a few law firm Web sites that offer a breakdown of state laws; however, most have disclaimers stating that the information may not be accurate or complete. Laws change constantly making it hard for anyone to maintain a list that is up-to-date.

The Federal Reserve has the role of protecting consumers (though Congress is currently considering the creation of a new Consumer Financial Protection Agency) and their Consumer Help Web site contains some good general information about consumer issues. For more specific information about your state laws, you can research state statutes related to debt collection or you can contact your local consumer protection office. A list of state and county consumer protection offices can be found on the Federal Citizen Information Center's Web site.

For more on this topic, also see:

Consumers ask about debt collection & their rights
Dealing with someone else's collection calls
How to resolve three common consumer complaints

My turn for a disclaimer: I am not an attorney. For legal advice, it is always best to seek legal counsel.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
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