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To help consumers during the debt collection process, the Department of Consumer and Worker Protection (DCWP)* created this glossary, which includes commonly used terms in debt collection communications plus references (laws, agencies) important for consumers to know. Bilingual glossaries in the top 10 languages spoken by New Yorkers with limited English proficiency are available in section above and at nyc.gov/dca.
*DCWP is the Agency’s new name. In all references, DCWP also means DCA (Department of Consumer Affairs), the Agency’s old name. The Agency is in the process of implementing the legal name change in public information. In the meantime, DCWP and DCA are the same City Agency.
Swear words (or curse words) or any words that insult or offend.
A debt collector may not use abusive language when attempting to collect a debt. This includes in writing or when speaking to consumers.
A record or file of a debt.
A debt collector often refers to an account when claiming a consumer owes money.
The amount of interest (cost to borrow money or purchase goods and services on credit) added to a debt, which increases the amount of money a borrower owes.
Consumers have a right to request an itemization of a debt showing accrued interest and to dispute a debt.
An unpaid and overdue debt.
A court order that means a consumer does not have to pay a debt and a creditor or collector may no longer attempt to collect the debt.
Better Business Bureau (BBB)
A private nonprofit organization that promotes ethical marketplace practices.
In addition to filing a complaint with DCWP, consumers can file a complaint about a debt collector with BBB.
Cease communication letter
A letter a consumer may send to a debt collector demanding that the collector stop any further contact with the consumer about an account. A consumer may send the letter at any time in the collection process.
Instructions and a template Cease Debt Collection Communication Letter are available at nyc.gov/dca.
Any amount that a creditor no longer expects to be repaid and writes off as a bad debt for accounting purposes even though the debt is still owed.
A charge off appears on a consumer’s credit report.
The process of seeking money claimed to be owed.
Debt collectors must obey federal, State, and New York City laws and rules about what they can and cannot do in the collection process.
A fee (or charge) that a debt collector adds to the amount it attempts to collect from a consumer. The fee must be authorized by an agreement or permitted by law.
Consumers have a right to request an itemization of a debt showing any collection fees and to dispute a debt.
Collector (See Debt collector)
In all letters and conversations with consumers, debt collectors must disclose:
In all letters to consumers, debt collectors must include their DCWP license number. An example is 1234567-DCA.
Consumer Financial Protection Bureau (CFPB)
A U.S. government agency that enforces federal consumer financial laws and protects consumers in the financial marketplace.
In addition to filing a complaint with DCWP, consumers can file a complaint about a debt collector with CFPB.
Consumer Reporting Agencies (CRA) (See Credit Bureaus)
Contact and call frequency restrictions
A debt collector may contact a consumer at most two times in a seven-day period and only between 8:00 a.m. and 9:00 p.m. Eastern Standard Time (EST).
Debt collectors may not contact consumers at work if the collector is aware that a consumer’s employer does not allow such contact.
Contest a debt (See Dispute a debt)
The ability of a consumer to borrow money with the promise to repay it, plus any interest and fees, at a later date. As examples, credit includes loans and credit cards.
Credit Bureaus (also Credit Reporting Agencies, Consumer Reporting Agencies)
Private companies that collect and share consumer credit information and make it available on credit reports.
The main credit bureaus in the U.S. are Equifax, Experian, and TransUnion.
Consumers can dispute incorrect information on their credit report, including if they have been a victim of identity theft.
A record of a consumer’s credit history, as reported by creditors and other sources, including:
Credit Reporting Agencies (See Credit Bureaus)
Creditor (also Original Creditor)
A person, company, or entity to whom the debt is claimed to be owed. The original creditor is the person or business that provided the original service, product, or credit that is the source of a debt collection attempt.
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.
DCWP license number
A number assigned by DCWP to a licensed debt collector. An example is 1234567-DCA.
Debt collectors must include their DCWP license number on all written communications.
The money a consumer owes, or is alleged to owe, a creditor.
Consumer debt is debt related to personal, family, or household purposes.
Consumers have a right to request an itemization of a debt and to dispute a debt.
Debt collector (also Collector, Debt Collection Agency)
A private company or person—including a debt collection attorney or law firm—that attempts to collect personal or household debt from New York City residents. The debt collector may:
Debt settlement or payment plan
An agreement by the debt collector to accept from the consumer an amount less than the originally claimed balance either as a payment in full or as scheduled partial payments.
The debt collector must send the consumer, within five business days, a letter confirming the agreement which must include:
A consumer who owes or is claimed to owe money to a creditor.
Default (also Defaulting on a debt)
Failure to meet the repayment obligations on a debt.
A default can occur when a consumer:
A court decision against a consumer who fails to answer or defend a lawsuit brought by a creditor or its debt collector.
A default judgment is different than default or defaulting on a debt.
A consumer may seek to have a default judgment vacated (removed) by making a request to the court after the default judgment is entered.
Defaulting on a debt (See Default)
An account on which a payment is past due.
A creditor may report the past due account to a credit bureau.
If an account becomes sufficiently delinquent, the consumer may be in default and a creditor may charge off the account.
Dispute a debt (also Contest a debt)
Consumers who do not recognize a debt or do not agree that they owe the amount of debt claimed may contest all or part of the debt verbally and/or in writing.
Under federal, State, and New York City laws, in disputing a debt, consumers have a right to:
Money that may not be taken by most creditors or debt collectors to satisfy a judgment.
Consumers may choose to use exempt funds to pay a debt, but a creditor or debt collector cannot freeze or forcibly take these funds from consumers’ bank accounts to pay a judgment.
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 taken by debt collectors.
Under the EIPA, if any funds in a consumer’s bank account are frozen, the bank must provide the consumer with certain forms, called Exemption Claim Forms. The consumer may use these forms to claim that the frozen funds are exempt.
The following funds (in alphabetical order) are typically exempt from being frozen or garnished:
Fair and Accurate Credit Transaction Act (FACTA)
Federal law that allows consumers to request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit bureaus.
Note: Due to COVID-19, consumers can visit AnnualCreditReport.com to get free online reports more frequently than once a year. Monitor the website for updates.
Fair Credit Reporting Act (FCRA)
Federal law that promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies and gives consumers the right to see their own credit reports and to dispute errors.
Fair Debt Collection Practices Act (FDCPA)
Federal law governing collection activity by debt collectors that:
The Act also:
Fake debt (See Phantom debt)
Federal Trade Commission (FTC)
A federal government agency that enforces consumer protection and U.S. antitrust laws.
In addition to filing a complaint with DCWP, consumers can file a complaint about a debt collector with the FTC.
Garnishment / Income Execution
The act of requiring a debtor’s employer to withhold a portion of the debtor’s wages to pay a creditor that has obtained a court order. Unless otherwise authorized by law, a debt collector must obtain a court order or judgment to carry out a garnishment or income execution.
The use of pressure, annoyance, intimidation, or abuse in the attempted collection of a debt.
Debt collectors may not harass consumers. Examples of illegal conduct are:
The cost of borrowing money or buying goods or services on credit. It is typically calculated as a percentage of the amount due.
Itemization of a debt
A list or breakdown that must include:
A debt collector must give consumers an itemization of each debt upon request.
An order issued by a court stating the outcome of a lawsuit.
Limited English Proficient (LEP)
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.
A statement that debt collectors must use at the beginning of any communication with a consumer, both in letters and calls. The warning lets consumers know that anything they say and any information they give may be used to collect the debt, including in court.
Most debt collectors record collection calls.
The use of false, deceptive, or misleading practices in debt collection.
Debt collectors may not make misrepresentations to consumers, including:
Original Creditor (See Creditor)
Outstanding Balance (See Current Balance)
A high-interest loan borrowed against a consumer’s next paycheck.
Payday loans are illegal in New York.
Phantom debt (also Fake debt)
Debt that is entirely made up and that a consumer does not owe.
Phantom debt schemes have typically involved individuals or businesses that use fictitious names that imply they are lawyers or affiliated with a law firm. The schemers threaten serious consequences if consumers don’t pay, including:
The schemers generally do not hold DCWP licenses.
Consumers have a right to request verification of a debt from debt collectors.
The initial amount of the debt or the amount that remains unpaid by a consumer. It does not include collection fees and interest.
Statute of Limitations (also Time-barred debt)
A certain time after which a debt collector may no longer sue a consumer to collect a debt.
Debt collectors may not attempt to collect an old debt whose statute of limitations passed unless they tell consumers:
Substantiation of a debt (See Verification of a debt)
Time-barred debt (See Statute of Limitations)
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:
A letter a debt collector must give consumers within five days after first contacting them that contains general information about the debt and consumer rights.
This notice must tell consumers they have a right to dispute a debt and to request verification of a debt from the debt collector. Other required disclosures include:
Verification of a debt (also Substantiation of a debt)
A consumer has a right to request that the debt collector provide documentation to show that the debt belongs to the consumer and/or that the amount is correct.
In response to a consumer’s request for verification of the debt, the debt collector must do the following:
Debt that is very old and no longer owed but that a debt collector suddenly seeks to collect.
Zombie debt may include:
Consumers have a right to dispute a debt and request that the debt collector provide verification of a debt.