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Credit and Debt Rights: What Collectors and Credit Bureaus Can't Do to You

Updated:
By Sarah Kim · Reviewed for legal accuracy by Legal Editorial Team

Debt is stressful. Debt collectors make it worse — and many of them count on you not knowing the rules they’re required to follow. Meanwhile, credit report errors affect tens of millions of Americans and can cost you loans, jobs, and housing without you even knowing.

This guide explains your rights when dealing with debt and credit — specifically, what debt collectors are legally prohibited from doing, how to dispute errors on your credit report, and how the statute of limitations limits how long collectors can legally sue you for old debts.

Table of Contents

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Your Rights Under the FDCPA (Debt Collection)

The Fair Debt Collection Practices Act (FDCPA) is a federal law that applies to third-party debt collectors — collection agencies, debt buyers, and attorneys who regularly collect debts. It does not apply to original creditors collecting their own debts (though many states have laws that fill this gap).

What debt collectors CANNOT do:

What you can do:

State Debt Collection Laws (Beyond the FDCPA)

The FDCPA only covers third-party debt collectors. Many states have enacted their own laws that go further — covering original creditors, adding higher penalties, or providing additional protections. Key states:

Your Rights Under the FCRA (Credit Reports)

The Fair Credit Reporting Act (FCRA) governs how credit bureaus and creditors handle your credit information.

Your key rights:

Understanding Your Credit Score vs. Your Credit Report

Your credit report and your credit score are different things:

Credit report — a factual record maintained by Equifax, Experian, and TransUnion listing your accounts, payment history, inquiries, and public records. You have a legal right to this for free.

Credit score — a number (typically 300–850 for FICO) calculated from your report data by scoring models (FICO, VantageScore). You do not have a blanket right to a free score under the FCRA, though many banks and credit cards now provide them voluntarily.

What affects your score most (FICO model, approximate weights):

Rapid rescore — if you have disputed an error and are waiting for it to be removed, some mortgage lenders can process a “rapid rescore” through the credit bureaus to update your score quickly before a loan closing.

How to Dispute a Credit Report Error

  1. Get your free credit reports at AnnualCreditReport.com
  2. Identify the specific inaccurate item (account number, amount, date, etc.)
  3. File a dispute directly with the credit bureau(s) reporting the error — online, by mail, or by phone
  4. Include supporting documentation (account statements, payment records, identity theft report if applicable)
  5. The bureau has 30 days to investigate and respond
  6. If the item is not corrected and you believe the bureau failed to investigate properly, you can file a complaint with the CFPB and potentially sue under the FCRA

Medical Debt and Your Credit Rights

Medical debt has different rules than other consumer debt:

The 2023 CFPB rule — In April 2023, the CFPB finalized rules removing medical debt from credit reports entirely. Under this rule (finalized in January 2025), medical debt can no longer appear on consumer credit reports. This affects tens of millions of Americans who had medical debt on their reports.

Surprise billing protections — The No Surprises Act (effective January 2022) prohibits balance billing for emergency services and certain out-of-network services at in-network facilities. If you received a surprise bill you didn’t consent to, you may have the right to dispute it through the federal No Surprises Help Desk.

Charity care and financial assistance — Nonprofit hospitals are required by federal law (ACA § 501(r)) to have financial assistance policies and to screen patients for eligibility before referring accounts to collections. If you received care at a nonprofit hospital and were not informed of financial assistance options, you may have grounds to dispute the bill.

State medical debt laws — Several states (CA, CO, CT, IL, MN, NV, NY, OR, WA) have additional medical debt protections including income-based billing caps, extended repayment plans, and restrictions on wage garnishment for medical debt.

Statute of Limitations on Debt by State

The statute of limitations is the window of time during which a creditor can sue you in court to collect a debt. After this window closes, the debt is “time-barred” — a collector can still ask you to pay, but they cannot legally win a lawsuit against you.

This is critical: Making a payment or even acknowledging a debt in writing can sometimes restart the statute of limitations clock. Know your state’s rules before responding to collectors about old debts.

Common limitation periods range from 3 years (in states like Texas for written contracts) to 10+ years in others. Credit card debt, medical debt, and written contracts may have different limitation periods in the same state.

Comprehensive Statute of Limitations Table by State (2025)

The table below shows the limitation period for the most common consumer debt types. “Written contract” typically covers credit cards (the cardholder agreement is a written contract in most states) and personal loans. “Oral contract” covers informal agreements with no written documentation.

StateWritten ContractOral ContractNotes
Alabama6 years6 years
Alaska3 years3 years
Arizona6 years3 years
Arkansas5 years3 years
California4 years2 years
Colorado6 years6 years
Connecticut6 years3 years
Delaware3 years3 years
Florida5 years4 years
Georgia6 years4 years
Hawaii6 years6 years
Idaho5 years4 years
Illinois5 years5 years
Indiana6 years6 years
Iowa5 years5 years
Kansas5 years3 years
Kentucky5 years5 years
Louisiana3 years3 years
Maine6 years6 years
Maryland3 years3 years
Massachusetts6 years6 years
Michigan6 years6 years
Minnesota6 years6 years
Mississippi3 years3 years
Missouri5 years5 years
Montana5 years5 years
Nebraska5 years4 years
Nevada6 years6 years
New Hampshire3 years3 years
New Jersey6 years6 years
New Mexico6 years6 years
New York3 years6 yearsCredit card SOL reduced to 3 years in 2022
North Carolina3 years3 years
North Dakota6 years6 years
Ohio6 years6 years
Oklahoma5 years3 years
Oregon6 years6 years
Pennsylvania4 years4 years
Rhode Island10 years10 yearsOne of the longest in the US
South Carolina3 years3 years
South Dakota6 years6 years
Tennessee6 years6 years
Texas4 years4 years
Utah6 years4 years
Vermont6 years6 years
Virginia5 years3 years
Washington6 years3 years
West Virginia10 years5 years
Wisconsin6 years6 years
Wyoming8 years8 years

Important: These periods reflect when the creditor can sue you. The debt may remain on your credit report for 7 years from the date of first delinquency, regardless of the SOL. They are two separate timelines.

What to Do If You’re Being Sued for a Debt

If a debt collector files a lawsuit against you, do not ignore it. Failing to respond results in a default judgment against you, which allows collectors to garnish wages and levy bank accounts.

  1. File a written response (“Answer”) with the court before the deadline (typically 20-30 days)
  2. In your answer, raise any defenses you have, including that the debt is time-barred
  3. Request documentation from the collector proving they own the debt and that the amount is accurate
  4. Consider consulting a consumer protection attorney — many handle debt collection suits on contingency

Wage Garnishment: What Collectors Can and Cannot Take

If a creditor wins a judgment against you, they may be able to garnish your wages. But federal law (the Consumer Credit Protection Act) limits how much:

Earnings per WeekMaximum Garnishment
Under $217.50 (30x federal min. wage)$0 — fully exempt
$217.50 to $290Amount above $217.50
Over $29025% of disposable earnings

State protections are often stronger. Many states limit garnishment further or exempt more income. For example: Texas, Pennsylvania, South Carolina, and North Carolina prohibit wage garnishment for consumer debts entirely (except for child support, alimony, student loans, and taxes). Florida protects 100% of wages if you are the “head of household.”

What cannot be garnished at all (federal law):

Bank account garnishment — Different from wage garnishment. If a creditor has a judgment, they can also levy your bank account. Federal law protects two months’ worth of federal benefits deposited by direct deposit — but you must assert this protection with your bank.

Identity Theft and Your Credit Rights

If someone opens accounts in your name, you have strong federal protections:

Credit freeze (security freeze) — The most powerful protection. A credit freeze at all three bureaus (Equifax, Experian, TransUnion) prevents new credit from being opened in your name until you lift it. Freezes are free and must be placed and lifted within one business day online or by phone. This is the gold standard for preventing new account fraud.

Fraud alert — A less restrictive option. A fraud alert requires lenders to take extra verification steps before opening new credit. Initial fraud alerts last 1 year; extended fraud alerts (for confirmed identity theft victims) last 7 years.

FTC Identity Theft Report — File a report at IdentityTheft.gov. This creates an official identity theft report that entitles you to place an extended fraud alert, block fraudulent information from your credit report, and stop debt collectors from collecting debts that resulted from the theft.

Blocking fraudulent information (FCRA § 605B) — Once you have an identity theft report, you can send it to the credit bureaus along with a request to block any information resulting from the theft. The bureau must block the information within 4 business days.

Frequently Asked Questions

Can a debt collector call my family members? A collector can contact a third party once to locate you (get your address or phone number), but cannot reveal the existence of a debt or call repeatedly. They cannot contact your employer except to verify employment or to garnish wages after a judgment. If a collector is calling your relatives repeatedly or revealing your debt to them, this is an FDCPA violation.

What if a debt collector sues me for a time-barred debt? Filing a lawsuit on a time-barred debt is itself a violation of the FDCPA in most circuits — you can counterclaim for statutory damages ($1,000), actual damages, and attorney fees. You must respond to the lawsuit (don’t ignore it), raise the statute of limitations as a defense in your Answer, and consider consulting a consumer protection attorney.

If I dispute a credit report item and the bureau “verifies” it, what can I do? You can request the bureau provide you with the procedure they used to verify the item and the name of the furnisher who verified it. If the investigation was superficial (as many are — often just a code sent to the original creditor who confirms their own record), you may sue under the FCRA for failure to conduct a “reasonable reinvestigation.” Many FCRA attorneys take these cases on contingency.

Does paying off a collection account improve my credit score? Under older FICO models (8 and below), a paid collection account still hurts your score almost as much as an unpaid one. Under newer models (FICO 9, FICO 10, VantageScore 4.0), paid collections are ignored. The impact depends on which scoring model your lender is using. Negotiating a “pay for delete” (where the collection is removed entirely upon payment) is better than simply paying — but collectors are not required to agree to pay-for-delete arrangements.

What is “zombie debt” and how do I handle it? Zombie debt is old, time-barred debt that collectors purchase cheaply and attempt to revive — often hoping you’ll make a small payment that restarts the statute of limitations. Never acknowledge a debt in writing or make a partial payment on an old debt without first determining whether it is time-barred. If it is time-barred, you can send a written notice to the collector that the debt is beyond the statute of limitations and demanding they cease collection activity.

Debt Collection Laws by State

Federal law under the FDCPA sets a baseline of protections for all Americans, but state laws vary significantly — some states extend these protections to original creditors, impose higher penalties, require collector licensing, or shorten the statute of limitations on how long a debt can be sued upon. The guides below cover both federal and state-specific rules for each state.

The information on this page is for educational purposes and does not constitute legal advice. Debt collection and credit laws vary by state and change frequently. Consult a licensed consumer protection attorney for advice specific to your situation.

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