Can Debt Collectors Collect if Unemployed?

Finding yourself among the unemployed can be a very frightening experience. With the economic uncertainty and loss of pay, many laid-off workers and job seekers fall behind on their debt obligations and creditors start calling. However, even though you may be currently unable to pay off the debt, there are ways to protect yourself from creditors and illegal debt collection practices.

Unemployment and Garnishment

Creditors have the right to sue debtors to collect payment. Oftentimes filing suit results in garnishing or placing a hold on a paycheck to pay off the debt. However, creditors cannot garnish state unemployment. But while your unemployment check may be safe, the sheer act of being unemployed does not eliminate the debt you owe; therefore, falling behind on payments will still result in a lower credit score and continuous creditor calls.

Knowing Your Rights

While creditors cannot garnish unemployment pay, they may still threaten to sue. Disreputable creditors also may try several collection tactics, such as calling at odd hours, talking to others about your debt, threatening you with arrest or misrepresenting the amount owed, all of which violate federal law. However, many debtors are not aware of their rights so knowing the law before paying a bill they do not owe or filing bankruptcy to stop creditor harassment is important.

Fair Debt Collections Practices Act

Even if a debtor knows all of his rights, some creditors continue to persist in their request for payment. Knowing the law can stop harassing creditors in their place. The Fair Debt Collections Practices Act was created to protect people from creditor harassment and intimidation. Under the law, debt collectors are unable to threaten debtors, use obscene language, publicly "out" a debtor, lie about the amount of debt or threaten to sue if they do not intend to. If a debtor feels that he is the victim of harassment, he has the legal right to sue the debt collector for violating the guidelines stated in the act.

Working With Creditors

Even if you are unemployed, creditors still can legally request payment. While knowing creditor rights is important, not all creditors abuse the law or use inappropriate debt collection practices. If you start to fall behind in your payments, call the creditors immediately and explain the situation. Many companies are willing to work with debtors and may offer a repayment or deferment plan, especially to those with a solid credit history or who have only recently started to fall behind.