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Dealing with Debt: The Basics of Debt Collection

By Matthew Kreitzer


Student loans, credit cards, medical bills, cars, and furniture. What do these things all have in common? They are some of the most widespread sources of debt for consumers. Whether you are protecting consumers or chasing them down, it is important to know the basics.


This article will highlight sources of law related to debt, standard collection practices, and ways to defend your client.


Sources of Law

The Virginia Consumer Protection Act (Virginia Code §59.1-196 et seq., as amended) (the “VCPA”) and the Fair Debt Collection Practices Act (15 U.S.C. §1692 et seq.) (the “FDCPA”) are the two laws you need to be familiar with.


The VCPA manages transactions between suppliers and consumers. Suppliers are not allowed to engage in certain activities which are fraudulent, misleading, or improper. For example, a cabinet supplier cannot knowingly and intentionally mislead a residential homeowner into thinking that the composite cabinetry he or she is buying is actually hardwood.


The FDCPA manages transactions between debt collectors and consumers. Debt collectors are not allowed to engage in certain activities which are fraudulent, misleading, or threatening. For example, a debt collector cannot threaten to report a consumer to the police if the consumer refuses to pay his or her bills.


Both laws carry harsh penalties for violations, including treble damages and attorneys’ fees and may apply depending on the relationship between the parties. Make sure you inquire as to the nature of the debt and the relationship between the parties to determine which laws apply.


Standard Debt Collection Practices

The FDCPA requires debt collectors to send an initial demand letter and afford the consumer an opportunity to request verification of the debt. If a written request for verification is received, the debt collector must provide verification prior to any further action.


After verifying the debt, debt collectors may file a lawsuit either (a) where the debtor lives or (b) where the contract was entered into. After obtaining judgment, the debt collector should record the judgment in the circuit court where the consumer owners real estate and may seek to enforce the judgment by (a) filing a debtor interrogatory and forcing the consumer to answer final questions, (b) garnishing bank accounts or wages, or (c) forcing the sale of personal property or real estate.


If a consumer files for bankruptcy, the debt collector must file a Proof of Claim with the bankruptcy court in order to receive any funds that may be available from either a Chapter 7 asset case or a Chapter 13 case.


Common Responses to Debt Collectors

The first thing every consumer should do is demand verification. In order to be perfected, the verification request must be in writing and include the language found in 15 U.S.C. §1692(g)(b).


If a lawsuit is filed, pay close attention to any statute of limitations, off-set claims, or affirmative defenses. Debt collectors frequently seek to obtain judgment on cases past the statute of limitations. This may give rise to a counterclaim for violation of the VCPA by intentionally seeking judgment on a claim past the statute of limitations.


If you are past the judgment phase and a garnishment has already started, pay close attention to any exemptions your client may be entitled to. A list of exemptions can be found at Virginia Code §8.01-512.4, as amended. A consumer can file a Request for an Exemption and set the matter for a hearing. If there is no relevant exemption, then the consumer may have to either (a) file a homestead deed or (b) seek bankruptcy.

If the consumer files for bankruptcy, he or she needs to include all creditors on his or her creditor’s matrix and schedules or he or she risks the debt not being discharged.


Matthew Kreitzer is a criminal-defense and divorce lawyer in Winchester, Virginia. His other practice areas include adoption, bankruptcy, child protection, estate planning, probate, and personal injury, among others. He can be reached at