Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.
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Unlicensed debt collectors^^Summary: Are debt collectors coming after you for a debt you don't recognize? SoloSuit can help you take a stand against unlicensed collectors and win in court.
Debt collection can be a dicey business. Knowing the rules about how professional debt collection licensing differs by state can protect you from a debt collector acting illegally.
Attempting to collect debt without proper licensing can lead to some serious consequences for a debt collector and the company they work for.
Debt holders should also be aware of these laws since an unlicensed debt collector may be attempting to extract payment without the legal standing to do so.
Debt collection is highly-regulated on a federal level. It becomes even more complicated when state laws are considered because every state has the right to further regulate the practice of professional debt collection.
Before paying on a debt, protect your finances by knowing the local laws in the state you reside in.
Only a minority of states permit professional debt collection without a professional licensing number. The list of states that do not require a license for debt collection are:
Even within these states, there are exceptions. Most notably is the state of New York. While there are no statewide rules regulating licensing, debt collectors operating within some cities are required to be licensed. Some major cities that require licensing in New York are New York City, Buffalo, and Yonkers.
All states not included in the list above require professional debt collectors to be licensed. Failure to follow these regulations can lead to serious consequences. Here's a map of debt collection license requirements in the United States:
Regulations are subject to change, so collectors and debtors alike should make sure to keep up with changing laws. In the past, California did not require licensing. That changed recently, going into effect on January 1, 2022. Similarly, Mississippi will enact a new requirement for debt collection licensing beginning July 1, 2022.
It's possible for other states to follow suit in the future. Knowing how to respond to a debt collector in your state is the best way to achieve a successful outcome.
For every rule, there's an exception. Or, in this case, an exemption. Even in states that require a professional licensing number for debt collectors, some parties are exempt from this requirement.
Out-of-state agency exemptions might provide regulations based on whether a collector has a physical presence in the state and might also address the collection method being utilized.
Commercial debt is debt that solely exists between two businesses rather than between an individual and a business. Some states that require a professional licensing number for collecting debt from an individual also have commercial exemptions in place.
Some state regulations have exemptions in place for third-party debt collection agencies. These exemptions apply only to situations where the collector has purchased the debt they're trying to collect.
Other states allow regulation exemptions for collection attorneys and collection law firms. In some cases, the exemption only extends to cover firms and lawyers licensed to practice in that state.
If you live in a state where debt collectors must be licensed, you should always ask the collector for their professional license number when contacted about a debt. This is a great way to spot fraudulent debt collectors from real ones: real debt collectors will give you their license number without hesitation, whereas fake debt collectors will avoid the question and oftentimes even get aggressively defensive about it.
When a debt collector refuses to disclose their license number, consider it a red flag. It might mean that the collector is acting illegally without a license, or it might mean that the collector is fake and trying to scam you.
For individuals facing debt collection, being informed goes a long way. Know the signs of a debt collection scam, and know how to report a debt collector acting illegally.
When a debt collector is acting illegally, it's important to take action. Being proactive goes a long way towards helping you come out ahead when you're facing legal action over your debts.
If you're being sued for a debt, SoloSuit can help. Our automated software can help you prepare a response to a debt lawsuit. Don't risk losing a lawsuit because you don't know how to proceed. Get started with SoloSuit today.
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James
You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now or are just looking for support, we're here for you.
Here's a list of guides for other states.
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Need more info on statutes of limitations? Read our 50-state guide.
