Debt Collection Terms

Core vocabulary for dealing with collectors, collection agencies, and debt buyers.

• Wage Garnishment

  A court- or agency-ordered deduction taken directly from a debtor's paycheck to satisfy a debt.

• Debt Validation Letter

  A written request that requires a debt collector to prove a debt is valid and theirs to collect, under the FDCPA.

• Statute of Limitations (Debt)

  The state-law time limit within which a creditor or debt buyer can sue to collect a debt.

• Judgment-Proof

  A description of a debtor whose income and assets are legally protected from collection, making a judgment against them practically uncollectible.

• Default Judgment

  A court ruling entered automatically against a defendant who fails to respond to a lawsuit by the deadline.

• Debt Buyer

  A company that purchases delinquent debt from the original creditor, usually for pennies on the dollar, and then attempts to collect the full amount.

• FDCPA (Fair Debt Collection Practices Act)

  The federal law that limits what debt collectors can say and do when contacting consumers.

• Cease-and-Desist Letter

  A written notice under the FDCPA that requires a debt collector to stop contacting a consumer directly.

• Writ of Garnishment

  The court order a creditor uses after winning a judgment to direct an employer or bank to turn over a debtor's wages or funds.