Debt Collection Basics in Connecticut
Debt collection is a complicated process that is heavily governed by both federal and state law. Failure to understand the law can result in a debt collector’s agent harassing you or physically threatening you in order to collect a debt you owe.
Connecticut debt collection laws are primarily found in the Connecticut Unfair Trade Practices Act (CUTPA). CUTPA affords strong protections to consumers against merchant misconduct. The goal of CUTPA is to safeguard consumers from unscrupulous business tactics, and to provide consumers with a means of recourse if they suffer losses because of such conduct.
Generally, CUTPA bans "unfair or deceptive acts or practices in the conduct of any trade or commerce". Conn. Gen. Stat. § 42-110b(a). CUTPA broadly defines "trade" and "commerce" as:
"the advertising, sale or lease of goods, property, or services […] the distribution of goods or services whether by sale or lease […] the providing of services by any person […] [and] the offering to as well as financing, delivery or acquisition of all or any part of them." Conn. Gen. Stat. § 42-110a(4).
In the context of debt collection, CUTPA makes it illegal for a debt collector to mislead you into accepting their offer, or to take a portion of your funds to pay the debt, and it gives significant power to courts over the practices of these debt collectors . CUTPA allows for the recovery of actual damages, punitive damages, statutory damages, and attorneys’ fees. Conn. Gen. Stat. §§ 42-110g(a)-(c).
The Federal Debt Collection Practices Act (FDCPA) is also applicable in debt collection cases in Connecticut. The FDCPA is the body of federal law that governs debt collection practices. It was enacted to "eliminate abusive debt collection practices by debt collectors, to insure that debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses". 15 U.S.C. § 1692(e). Debt collectors found to have violated the FDCPA may be held liable for actual damages, statutory damages, and attorney’s fees and costs. Id. at §§ 1692k(a)-(b).
Both CUTPA and the FDCPA forbid a company from engaging in unfair or deceptive practices in debt collection. The Connecticut Department of Consumer Protection publishes detailed regulations that govern consumer protection laws including debt collection. The Department enforces consumer protection laws, collects information, and researches consumer issues.
Debtors’ Rights in Connecticut
Debtors have several rights under Connecticut law, and creditors must assume certain limits with respect to enforcement of their debts. Connecticut law prohibits abusive and harassing collection practices. If you obtain a judgment against someone, you cannot simply freeze their bank account, garnish their pay, or seize property on a whim. The law requires that you use the court’s process in order to legally attach property, and the statute controls the extent to which wages may be garnished. Connecticut law provides specific exemptions for certain personal items, such as household goods, and also protects the debtor from being forced to relocate in order to meet a debt obligation.
With respect to the statute of limitations, the following limitation periods are applicable to most debt obligations based on the type of agreement that was used:
To recover on a credit card account with an original balance or credit limit of less than $5,000, you must do so within 4 years from the due date of the last required payment;
For all other written contracts, you must file a lawsuit within 6 years after the debt was due;
If the statute of limitations has expired, a creditor may not file a lawsuit to recover.
The Connecticut Fair Debt Collection Practices Act
Like federal debt collection law, Connecticut State Debt Collection Law prohibits the use of abusive debt collection practices by debt collectors. The Connecticut Fair Debt Collection Practices Act, Conn. Gen. Stat. § 36a-801 et seq., implements additional consumer protections for citizens of Connecticut. Connecticut law is slightly more stringent than federal law in that it incorporates many of the provisions of the federal Fair Debt Collection Practices Act (FDCPA) as well as the Connecticut Consumer Collection Agency Act (CCAA).
For instance, the Connecticut law prohibits the collection of a debt without the debt collector being either licensed under the CCAA or a registered exempt respondent. Conn. Gen. Stat. § 36a-804. Registration with the Department of Banking serves to identify the debt collection agency and allows consumers to bring an action against the debt collector for violations. The registration also ensures that the debt collector has not had any prior revocation, suspension, restriction, or refusal to renew of previous license or registration, that no felony has been committed by a partner, officer, director, or member of a firm not less than five years prior to the filing of an application, and that the debt collector is in accord with all federal, state, and local laws ($ 36a-810). Further, debt collectors who are licensed but who fail to renew their license by the end of the license year are subject to civil penalties of up to $200 per violation. Conn. Gen. Stat. § 36a-54e.
In addition to the limitations outlined in the FDCPA (e.g. the prohibition against the debt collectors use of "harassment, oppression, intimidation, or the like"), Conn. Gen. Stat. § 36a-800 prohibits the use of any "unfair or unconscionable means" to collect or attempt to collect a debt including but not limited to:
(a) Falsely representing or implying that any person is an attorney or that any communication is from an attorney;
(b) Communicating or threatening to communicate with any person’s employer in an attempt to force payment of a debt unless permitted by law;
(c) Communicating with any person about the debt collector’s debt collection business through the use of visual or sound media, including signs, billboards, radio and television;
(d) Misrepresenting the amount, character, extent or legal status of a claim against a consumer;
(e) Misrepresenting that the consumer committed fraud or other illegal action in connection with the debt;
(f) Using criminal law to collect or attempt to collect a debt;
(g) Communicating with a debtor in a manner likely to adversely affect the debtor’s reputation or impair the debtor’s credit standing;
(h) In connection with the collection of a debt: (1) Communicating with the consumer in a manner which simulates legal or judicial process; (2) communicating with a consumer by postcard; (3) using any communication which resembles a bill, statement, notice or report which might create alarm or concern on the part of a debtor;
(i) Using other deceptive or misleading methods or practices;
(j) Failing, when required by law, to provide any information requested by a consumer concerning debts owed by the consumer;
(k) Failing to honor a consumer’s written request to cease communication regarding the collection of a debt, addressed to the address disclosed by the collector in its initial communication with the consumer;
(l) Making any other false representations concerning a debt or the collection thereof or the status thereof, including falsely representing that the debt collector is an affiliate, subsidiary, or partner of any person, corporation, association, agency, or entity which the debt collector is not;
(m) Communicating with someone other than the consumer or the consumer’s attorney as to the collection of the consumer’s debt; or
(n) Making any other false, deceptive, misleading, or unfair representation or using any other unfair or unconscionable means to collect or attempt to collect or recover a debt.
Disputing Your Debt
Steps for Handling Debt Collection Disputes
If you receive a written communication regarding the collection of a debt, you may dispute it as soon as possible by contacting the debt collector directly. This may be done via letter, phone, or even email. You have the right under the Fair Debt Collection Practices Act to request verification of the debt, and the debt collector is required to provide you with a copy of your account statements, proof of purchase, and the name of the original creditor within 30 days.
If the debt collector continues to contact you despite your written request—or verbally agrees not to contact you unless necessary—you should seek legal counsel. If the debt collector has violated state or federal laws, the debtor may be entitled to sue them and the debtor may be able to recover damages from their violation of these laws, along with their attorney’s fees.
If you believe that a debt collector has acted inappropriately, the following steps can be taken:
Some of the common errors a debt collector can make include misrepresenting the amount owed or the nature of the debt, contacting the consumer at inappropriate times, and contacting anyone who is not a dependent of the debtor.
How Creditors Can Collect Debt Lawfully
Non-judicially, this often happens when a creditor engages in self-help and tries to collect a debt without getting a judgment first. Connecticut law prohibits many forms of informal self-help such as:
• threatening to take action that is prohibited by law
• communicating with third parties about the debt
• contacting a debtor at unusual times
• communicating on a debtor’s date of birth
Connecticut debt collection regulations also provide debtors with the right to dispute the debt. If a debtor disputes the debt, the creditor must inform them how much they owe and that they owe it. While a debtor can do this informally, they may also send a written letter requesting the validation of debts. The Fair Debt Collection Practices Act also gives debtors a 30-day grace period to dispute a debt.
A creditor can legally collect a debt if they pursue a lawsuit to obtain a judgement in a Connecticut court. A lawsuit starts with a complaint. This document states who is suing who, outlines the plaintiff’s claims, and details the relief requested. An initial summons will also be attached to the complaint. A summons provides the court with jurisdiction and tells the party being sued (called the defendant) to respond to the complaint. A plaintiff must file the complaint and summons with the court and then serve it to the defendant .
When the defendant receives the complaint and summons, they must respond to the court. If they fail to respond, the case can move forward and the plaintiff may seek a default judgement (a judgement made because the defendant did not respond) or default judgment by admission (a judgement that relates to only the matters in the complaint).
A defendant can respond by either answering or filing a motion to dismiss. An answer is a response to the complaint and admits or denies the complaint’s allegations. If the defendant has good legal reasons for doing so, a motion to dismiss asks the judge to dismiss the case. The judge must grant the motion if the case is, for example, not the proper venue or if the statute of limitations expired. While an answer or motion to dismiss is pending, a plaintiff usually cannot attempt to collect the debt.
Once the court receives the answer or motion to dismiss, the judge sets a court date and sends the parties a notice with the date information and location. After the court date, the judge renders a decision.
A plaintiff who does not get a default judgement but does get a judgment in their favor can then attempt to collect the debt. If a defendant feels that a court’s decision was incorrect, they can appeal.
The Connecticut Attorney General’s Role
The Connecticut Attorney General plays an integral role in enforcing the state’s debt collection laws. Their Consumer Protection Division serves as a resource for consumers to report unscrupulous debt collection practices and investigate any fraudulent or unfair collection methods.
Consumers in Connecticut can file a complaint with the State Attorney General’s Office if they have experienced unfair debt collection practices such as harassment, unfair treatment, or the use of misleading debt collection agencies. The Attorney General will review and investigate those complaints to determine if there is sufficient evidence to investigate deeper into the practices of the debt collector.
Depending on the nature of the investigation into your complaint, the State Attorney General may take additional action against a debt collector or debt collection agency such as initiating a civil lawsuit or issuing a cease and desist against the company. Such actions can help ensure that the debt collector adheres to the Fair Debt Collection Practices Act and Connecticut’s debt collection laws while protecting your rights as a consumer.
It is important to note that the Connecticut Attorney General can only prosecute "criminal" debt collection violations or seek penalties against debt collectors for violating a Connecticut law, but can’t enforce violation of federal debt collection laws. If the Connecticut Attorney General decides not to take action against a debt collector, you may still have other options such as a private civil suit or arbitration.
New Developments in Connecticut Debt Collection Laws
Connecticut has seen an evolution in its debt collection laws to better protect consumers, while also providing necessary tools for creditors to collect the debts owed to them. In 2018, the Connecticut legislature passed the Debt Collection Act. This act requires that debt collectors provide written notice to consumers of their intent to begin collection activities and enables consumers to dispute the debts owed them.
Additionally, the act establishes a two-year statute of limitations within which creditors have to collect on their debts. This prevents creditors from indefinitely pursuing consumers for debts that may be long past due. Furthermore, with the prohibitions of "unreasonable collection tactics," Connecticut debt collection laws prohibit shaming or harassing consumers, such as by use of vulgar language, racial slurs, threats of violence, and being aggressive during collection activities.
However, notwithstanding these protections, Connecticut permits creditors to take legal collection action after a debt becomes delinquent . As a result, Connecticut has one of the highest rates of lawsuit filings related to debt in the country, with an estimated one in 10 Connecticut residents involved in debt collection lawsuits. Many of these suits are brought by payday lenders and collection agencies.
Nonetheless, Connecticut debt collection laws still provide some protection for consumers against frivolous collection suits. For example, Connecticut law prohibits creditors from engaging in unfair or deceptive acts in the course of debt collection. Connecticut judges will even lend the full weight of the law in cases where a consumer pays a creditor without an adequate attempt to collect the debt owed, such as when a creditor cedes to a consumer’s unreasonable demands.
In 2019, the Connecticut State Legislature passed it’s most recent debt collection law, Public Act 19-165, which codifies the suggested best practices of the National Consumer Law Center for debt collection. It also allows consumers a more straightforward method for disputing the debts owed to them, as discussed above. In addition, it prohibits phone harassment, limits the number of collection calls a collector can make, and increases a consumer’s opportunity to sue collectors.