Restitution in Debt Collection: What You Need to Know
Restitution is court-ordered compensation paid to victims of wrongdoing. If debt collectors violate the FDCPA, you may receive up to $1,000 per violation. Never ignore debt collectors or lawsuits, and always request debt validation in writing to protect your rights.
Answer Your LawsuitSummary: Restitution means compensation ordered by a court. Debt collectors who break the law may have to pay you restitution. Here’s how it works in debt collection lawsuits.
Restitution is court-ordered payment from one party to another. It compensates victims for damages caused by wrongdoing. All US states require convicted defendants to pay restitution to victims. You need to understand how this payment form works.
Sued by a Debt Collector? Respond in 15 Minutes
You have limited time to respond to your Summons and Complaint. Draft your Answer quickly and file it correctly to avoid default judgment and wage garnishment.
Respond to Lawsuit NowWhen Does Restitution Apply?
Courts don’t award restitution in every case. However, restitution may be ordered if:
- Rehabilitation requires it
- The victim needs to be made ‘whole’ again
- The victim suffered financial losses from the defendant’s actions
Restitution applies in various contexts, especially personal injury cases. Examples include sexual assault, drunk driving, and identity theft.
Real Examples of Restitution in Debt Collection
The Fair Debt Collection Practices Act governs debt collector activities. Collectors who violate this act face fines. Courts may also order restitution for certain offenses.
In summer 2021, a Washington state court ordered Machol & Johannes to return approximately $475,000 to 5,000 consumers. The Denver-based debt collection agency also had to forgive $250,000 in fees.
Washington State Attorney General Bob Ferguson filed the lawsuit. The collection company failed to offer consumers garnishment exemptions required by law. They charged consumers fees despite collecting no money from them.
Investigations revealed the company operated illegally without a license between 2011 and 2012. The company failed to inform consumers about asset protections from garnishment. The agency garnished more than debt collection laws allowed.
The ruling required the company to return money collected without proper licensing. The reasoning was simple: unlicensed companies shouldn’t collect from consumers.
Restitution vs. Fines: What’s the Difference?
Both involve financial payments, but they serve different purposes. Restitution compensates crime victims. Fines punish defendants for their crimes.
How to Protect Yourself from Debt Collectors
Many debt collection companies violate consumer rights across the country. They often get away with it because consumers don’t know their rights. Some consumers fear debt more than confronting illegal collection practices.
Understanding how to protect yourself is increasingly important. Here’s what you should do:
Never Ignore Debt Collectors
Debt collectors will contact you repeatedly unless you ask them to stop. Ignoring them won’t make them go away. It gives them more reasons to use aggressive tactics.
Request Debt Validation in Writing
Ask debt collectors to verify the debt in writing. The collector must prove you owe the debt when you request verification. Our partner Solo can help you send a proper Debt Validation Letter. Your request buys you time to evaluate your options.
Know Your Legal Rights
The FDCPA protects you from unfair debt collection practices. Debt collectors cannot:
- Continue calling after you ask them to stop
- Discuss your debt with anyone except you or your attorney
- Report false information on your credit report
- Use aggressive or abusive language
- Contact you before 8 a.m. or after 9 p.m.
- Threaten violence or jail time
- Lie about their identity
- Misrepresent the amount you owe
If a debt collector violates the FDCPA, you may receive restitution up to $1,000 per violation.
What Happens If a Debt Collector Sues You?
Debt collectors can’t contact you after you ask them to stop. The exception is when they inform you about legal action. They’ll usually notify you about plans to file a lawsuit.
You’ll receive a Summons and Complaint if they sue you. The Summons confirms you’re being sued. The Complaint explains why you’re being sued.
You have 14 to 35 days to respond to the lawsuit. The deadline depends on your state. After the deadline passes, the court may grant a default judgment. Default judgments allow collectors to garnish wages or place liens on property. Never ignore a debt collection lawsuit.
Your response should address each allegation in the Complaint document. You can admit, deny, or claim you don’t understand the allegations. The other party must prove you owe the debt.
Our partner Solo makes responding to debt lawsuits straightforward. You can draft your Answer in just 15 minutes. No complex paperwork or confusion about where to file.