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Glossary of Common Debt Collection Terms
Glossary of Common Debt Collection Terms
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About the Glossary
The Department of Consumer and Worker Protection (DCWP) licenses and regulates businesses that collect personal debt from consumers living in New York City. DCWP also enforces laws and rules to protect consumers from abusive debt collection practices.
To help consumers during the debt collection process, DCWP created this glossary. It includes terms that are often used in debt collection communications. The glossary also contains references (laws, agencies) that are important for consumers to know.
Note:
- Italicized words in descriptions indicate words that are defined elsewhere in this
- The headings also include:
- Related headings in bold for further clarification. (For example, “See heading also”.)
- Headings in bold which refer to the full definition of a term. (For example, “See heading”.)
- Alternate headings in italics. (For example, “Also term”.)
- Unless stated otherwise, all descriptions reflect New York City laws and regulations.
- This glossary is not intended to be legal advice.
- Consumers can file a complaint against a debt collector by visiting nyc.gov/consumers or calling 311.
Quick Links
Jump to section for terms that begin with the letter:
A | B | C | D | E | F | G | H | I | J | L | M | O | P | S | T | U| V | Z
A
Abusive language
Swear words (or curse words), derogatory language, insults or offensive language.
A debt collector may not use abusive language when attempting to collect a debt. This applies to communication in writing or when speaking to consumers.
Account
A record or file of a specific consumer’s debt maintained by the original creditor or debt collector.
Accrued interest
The amount of interest already added to a debt, increasing the total amount of money a borrower owes.
Consumers have the right to receive an itemization of a debt that shows accrued interest or fees added to the amount of the debt.
Answer (See Judgment, Legal Complaint, and Lawsuit also)
A legal document that a consumer (a Defendant in a case) must file in response to a Summons or Legal Complaint filed by the owner or collector of the debt (the Plaintiff in the case). The Answer will state whether the Defendant/consumer agrees or disagrees with the claims and list any defenses.
It is important to seek legal help immediately if you receive a summons or Legal Complaint.
If the Defendant/consumer does not file an Answer after receiving a Summons or Legal Complaint, the court may enter a default judgment against the Defendant/consumer.
Arrears
An unpaid and overdue debt.
Assignment
When a creditor or debt owner sells or transfers the right to collect a debt to another company, such as a debt buyer.
B
Bankruptcy discharge
A court order stating that the consumer does not have to pay a debt. Creditors or debt collectors may no longer attempt to collect the debt.
C
Cease contact request
This informs a debt collector to stop any further contact with the consumer about a debt.
Consumers may make this request by phone or in writing at any time.*
Charge off
When a creditor writes off a debt as unlikely to be collected through normal billing practices.
The debt is still owed and may be sent to collections, sold, transferred or pursued legally. It may also appear on the consumer’s credit report.
Collections (See Charge off also)
The process of attempting to collect on an overdue debt.
Collections may be handled by the original creditor, a debt collection agency, a debt buyer who has acquired that debt, or an attorney/law firm.
Collection communications (See Communication disclosures, and Cease contact request also)
Phone calls, letters, emails, or texts from a debt collector.
In New York City, a debt collector may contact a consumer no more than three times* in a seven-day period as long as:
- contact is by telephone or electronic means, such as email, texts or instant message;
- contact is only made between 8:00 a.m. and 9:00 p.m. Eastern Time (ET); and
- consumer did not respond.
If a consumer does respond, a debt collector may reply to the consumer without that counting towards the three-time limit.
There is no limit on the number of collection letters a debt collector can send to a consumer via U.S. mail.**
Collection fees (See Itemization of a debt also)
A fee (or charge) that a debt collector adds to the amount it attempts to collect from a consumer. Collectors may only add fees if the original contract creating the debt permitted those fees, or if allowed by law.
Communication disclosures (See Collection communications also)
Information that must be disclosed to consumers by debt collectors in any collection communications.
In all letters and conversations with consumers, debt collectors must disclose:
- that the communication is from a debt collector and is an attempt to collect a debt;
- whether the communication is being recorded on a phone call;*
- that any information the consumer provides may be used to collect that debt;
- specific details about the debt, such as the name of the original creditor and the amount of the debt at the time of the communication;
- contact information for responding to the debt collector, including a callback number and the name of the person to contact*; and the debt collection agency's DCWP license number (only required to be included in letters to consumers).
Consumer Reporting Agency (CRA) (See Credit bureau)
Credit bureau (See Consumer Reporting Agency also)
A private company that collects and shares consumer credit information and makes it available on credit reports.
The main credit bureaus in the U.S. are Equifax, Experian, and TransUnion.
Under the Fair Credit Reporting Act, consumers have the right to dispute incorrect information on their credit reports, including if they have been a victim of identity theft.
Credit report
A record of a consumer’s credit and payment history.
Under the Fair and Accurate Credit Transaction Act, consumers can get a free weekly online copy of their credit report from each credit bureau at AnnualCreditReport.com.
Debt collectors must send consumers a written notice before reporting any negative debt information in their credit report to the credit bureau. They must also inform consumers that their data will be shared with the credit bureau.
Creditor (See Original creditor and Current creditor also)
A person, company, or entity who claims ownership of the debt.
A creditor may collect debt on its own, or use third-party debt collectors to attempt to collect a debt.
Current balance (Also Outstanding balance)
The total amount claimed to be owed.
Consumers have a right to request an itemization of a debt that shows the current or outstanding balance.
Current creditor (See Creditor also)
A person or business that currently owns the debt and may collect it.
D
DCWP license number
A number assigned by DCWP to private companies or organizations registered with the City of New York as licensed debt collection agencies. Licensed debt collection agencies must provide their DCWP license number in all collection communications with the consumer.
In-state and out-of-state debt collection agencies must possess an active DCWP license and comply with New York City laws and regulations. To check if a debt collection agency is licensed, consumers can:
- Visit nyc.gov/consumers.
- Contact 311 (212-NEW-YORK outside NYC) and say “Business Background Check.”
Debt (See Collections also)
The money a consumer owes, or is alleged to owe, to a creditor or owner of the debt.
Consumer debt refers to money owed for personal, family, or household purposes. This includes credit cards, car loans, medical bills, student loans, mortgages, and other household debts.
Debt buyer (See Debt collector also)
A company that purchases debts from original creditors and current creditors and may attempt to collect them.
All debt buyers must be licensed as a debt collection agency by DCWP to collect debts from New York City consumers.
Debt collection agency
A company or entity hired to collect debts on behalf of a current creditor or debt owner. Debt buyers, collection attorneys, and collection law firms also fall under the category of debt collection agencies.
All debt collection agencies must be licensed by DCWP.
Debt collector (See Debt buyer, Debt collection agency, Creditors also)
A private company or individual, including a debt collection attorney or law firm, that seeks to collect overdue personal or household debt from NYC consumers. The debt collector may:
- own the debt (for example, if they are the original creditor or if they purchased the debt from a creditor) and collect the debt on behalf of itself; or
- be hired by a creditor or other company to assist in collecting the debt.
Debt collectors must follow all NYC Laws, Rules and Regulations.
Debt settlement or payment plan
An agreement by a debt collection agency to resolve the debt owed, either as a reduced payment in full, or as scheduled partial payments.
After a consumer accepts to resolve the debt through a debt settlement or payment plan, the debt collection agency must send the consumer a letter confirming the agreement within five days. The letter must include:
- name and address of the consumer;
- date the agreement was made;
- name of the original creditor;
- amount due and the due date of each payment;
- name of the debt collection agency;
- name of the debt collector employee, or the employee’s supervisor, who reached the agreement;
- address where the consumer should mail payments; and
- any other terms or conditions of the agreement.
Debt verification
Documentation that a debt collector provides to a consumer to show that a debt is valid, is owed by a consumer, and that the amount is correct. All consumers have the right to request this information from any debt collector at any time during the collection cycle. If a consumer requests verification, the debt collector must stop all collection activity until verification is provided.
Debt collectors must provide verification within 60 days of a consumer’s request or dispute, or they lose the right to collect on that debt (except original creditors).*
In response to a consumer’s request for debt verification, the debt collector must provide original account documentation issued by the original creditor confirming the transaction that created the debt. For example, a copy of a final statement (bill) by the original creditor showing the amount owed.
Debtor
A consumer who owes or is claimed to owe money to a creditor.
Default
Failure to meet repayment obligations on a debt.
Default judgment (See Judgment also)
A court ruling/decision against a consumer who did not respond to or did not appear in a debt collection lawsuit. A consumer may ask the court to vacate the default judgement within a certain amount of time.
A default judgment alone is not enough for a debt collector to provide as debt verification in response to a dispute or request for verification. *
Dispute a debt (also Contest a debt or Request verification of the debt)
Consumers who do not recognize a debt or disagree that they owe the amount of debt claimed by a debt collector may contest all or part of the debt in oral and/or in written format at any time.
When disputing a debt under federal, state, and New York City laws, consumers have a right to:
- say they do not recognize the debt or owe the debt as claimed;
- request the name and address of the original creditor if different from the current one; and
- request that the debt collector provide information to show that the debt belongs to the consumer and/or that the amount is correct. (See debt verification.)
E
Electronic communications
Methods of contact other than verbal communication or hard copy mail. Electronic communications include email, text messages, instant messages, and social media.
Debt collectors must obtain consumer consent before contacting consumers by electronic communications to collect a debt.*
Excessive calling (See Collection communications and Harassment)
Exempt funds
Money that cannot be taken to satisfy a judgment. This can include but is not limited to Social Security, child support, and unemployment payments
Exempt Income Protection Act (EIPA)
New York State law that automatically protects a certain amount of money in a consumer’s bank account from being frozen or seized by debt collectors.
Under the EIPA, the bank must provide a consumer with an Exemption Claim Form before freezing the consumer’s bank account. The consumer may use this form to claim that the frozen funds are exempt.
The following funds (in alphabetical order) are typically exempt from being frozen or garnished under the EIPA:
- Black lung benefits
- Child support payments
- Public assistance (for example, Temporary Assistance for Needy Families)
- Public or private pensions
- Railroad Retirement Board benefits
- Social Security, including retirement, survivors, and Disability benefits
- Spousal support or maintenance
- Supplemental Security Income
- Unemployment Insurance
- Veterans Affairs benefits
- Workers’ compensation
F
Fair and Accurate Credit Transaction Act (FACTA)
A federal law that allows consumers to request and obtain a free weekly credit report from each of the three nationwide consumer credit bureaus.
Consumers can visit AnnualCreditReport.com to get their free online report.
Fair Credit Reporting Act (FCRA)
A federal law that promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. The FCRA also gives consumers the right to see their credit reports and to dispute errors.
Fair Debt Collection Practices Act (FDCPA)
A federal law to protect debtors from abusive, unfair or deceptive debt collection practices.
Fake debt (See Phantom debt)
Financial assistance policy (See Medical debt also)
A program all hospitals in New York must offer to eligible consumers in order to reduce or forgive charges for medical goods or services.
All hospitals in New York City must have a financial assistance policy. All debt collectors collecting on behalf of hospitals must have the hospital’s financial assistance policy available.
Frequency of contacts (See Collection communications)
G
Garnishment / Income execution (See Judgment also)
When a Court orders an employer to withhold wages to pay a creditor. A debt collector must obtain a court order or judgment to carry out a garnishment or income execution.
H
Harassment
Using pressure, annoyance, intimidation, or abuse to collect on a debt.
Debt collectors may not harass consumers. Examples of illegal conduct are:
- Threatening violence;
- Threatening criminal action;
- Using obscene, profane, or abusive language; and
Repeated or continuous phone calls or texts.
I
Interest (See Itemization of a debt also)
The cost of borrowing money or buying goods or services on credit. Interest is typically calculated as a percentage of the amount due. The law may allow interest to be added to the collectable amount of the debt, such as when interest is included in the amount awarded in a judgment.
Itemization of a debt
In a validation notice, a list or breakdown of the moneys owed that must include:
- original amount owed when debt collection practices began;
- amount of any accrued interest;
- amount of any other collection fees and charges; and
- any payments made by the consumer.
J
Judgment (see Lawsuit, Default judgment and Garnishment/income execution also)
A court order stating the outcome of a lawsuit.
A judgment allows a creditor to collect from a debtor for up to 20 years, including by wage garnishment or property seizure.
L
Language access services (See Limited English Proficiency also)
Any service made available to consumers in a language other than English. This includes translation.
Lawsuit (See Judgment and Answer also)
A case before the New York State court to determine an outcome on the debt collection claim.
Legal Complaint (See Lawsuit, Answer, and Judgment also)
A legal document submitted by the creditor/debt owner or an attorney representing them that initiates a collection lawsuit to recover an alleged debt.
Limited English Proficiency (LEP) (See Language access services also)
A term that refers to individuals who do not speak English as their primary language and who have a limited ability to read, speak, write, or understand English
Litigation (See Lawsuit)
M
Medical debt(See Financial assistance policy also)
A consumer’s alleged obligation to pay for health care services, products, or devices provided by a hospital, a health care professional, or an ambulance service.
Medical debt doesn’t include debt charged to a credit card unless the credit card is issued specifically for the payment of health care services, products, or devices.
Mini-Miranda warning
A statement that debt collectors must deliver at the start of any collection communication with a consumer, whether orally or in writing.
The warning informs consumers that the communication is from a debt collector attempting to collect the debt, that anything they say may be recorded, and any information they provide may be used to collect the debt.
Misrepresentation
The use of false, deceptive, or misleading practices in debt collection.
Debt collectors may not make misrepresentations to consumers, including:
- falsely representing or implying that the debt collector is an attorney, legal office, government agency, marshal, or sheriff;
- falsely representing or implying that the consumer committed a crime, or that nonpayment of any debt will result in the consumer’s arrest or imprisonment or the seizure, garnishment, attachment, or sale of the consumer’s property or wages unless the action is lawful and the debt collector or creditor intends to pursue it; or
- reporting, or threatening to report, inaccurate credit information to a credit bureau.
O
Old debt (See Time-barred debt and Statute of limitations)
Original creditor (See Creditor also)
A person or business that provided the original service, product, or credit that is the source of a debt collection attempt.
Outstanding balance (See Current balance)
P
Payday loans
Short-term, high-interest loans that consumers are required to repay on their next paycheck.
Payday loans are illegal in New York State.
Phantom debt (also Fake debt)
Debt that is made up and that a consumer does not owe.
If a consumer does not recognize a debt or believe they owe that debt, they have a right to dispute a debt and receive debt verification from debt collectors.
Principal
The initial amount of the debt or the amount that remains unpaid by a consumer. It does not include collection fees and interest.
S
Scams
A scheme to defraud or trick a consumer into paying a fake debt the consumer does not owe. Scammers may threaten consumers with criminal charges or refuse to give information about the debt collection agency, the original creditor, or the debt.
Legitimate debt collectors must provide their company name, mailing address, telephone number, DCWP license number, and information about the debt. It is good practice to always ask for information to be sent in writing to the address that the debt collector should already have on file before you discuss the debt.
Statute of limitations (also Time-barred debt or Old debt)
A certain time after which a debt collector may no longer file a lawsuit to collect on a debt. The New York time limit to sue for consumer debt is three years.
Debt collectors may not attempt to collect an old debt whose statute of limitations has passed unless they first inform consumers in writing that*:
- the legal time limit (statute of limitations) to sue to collect the debt has expired,
- it is illegal under federal law to sue or threaten to sue a consumer for an old debt; and
- if sued illegally, consumers may defend the case by informing the court that the statute of limitations has expired to prevent the creditor from obtaining a judgment.
Substantiation of a debt (See Debt verification)
T
Time-barred debt (See Statute of limitations or Old debt)
Tradeline
A term for a credit account on a consumer’s credit report. There is a separate tradeline each time a consumer is approved for credit. Tradelines include, but are not limited to:
- credit limits;
- current balance;
- payment history; and
- lender or original creditor names and addresses.
U
Unverified debt notice
A written notice that the debt collector must send within 60 days of receiving the consumer’s dispute or debt verification request.*
Consumers should save a copy of this notice and send it to any other collector that attempts to collect on the debt.
V
Validation notice
A letter a debt collector must mail to consumers within five days after first contacting them in relation to a debt that discloses general information about the debt and the consumer’s rights.
This notice must tell consumers they have a right to dispute a debt and to request debt verification from the debt collector at any time in the collection process. Consumers can dispute a debt or request debt verification orally or in any of the ways that the debt collector uses to collect upon a debt.
Z
Zombie debt
Debt that a debt collector suddenly seeks to collect after a long period of time. The term refers to the debt’s resurrection from the dead.
Zombie debt may include:
- debt already settled;
- debt from a bankruptcy discharge;
- time-barred debt;
- debt that no longer shows up on a consumer’s credit report; and
- debt that was never owed.
Consumers have a right to dispute a debt and request that the debt collector provide debt verification.
* Takes effect on September 1, 2026.
** Takes effect on September 1, 2026. Before the effective date, a debt collector may contact a consumer no more than two times a week.