Restitution in Debt Cases: What Collectors Owe You When They Break the Law

A Denver debt collector garnished $475,000 from Washington consumers without proper licenses. The court ordered full restitution. Another firm charged fees on accounts they never collected a dime from. The attorney general forced them to refund $250,000.

These aren't isolated cases. Debt collectors violate the Fair Debt Collection Practices Act (FDCPA) thousands of times each year, and when they do, you can demand restitution—actual money returned to you, not just a slap on the wrist for them.

What Restitution Means in Debt Collection

Restitution is court-ordered repayment. When a debt collector breaks the law and causes you financial harm, a judge can force them to give you back what they took, plus damages. This is separate from fines (which go to the government) and separate from punitive damages (which punish the collector). Restitution puts you back where you were before the violation.

The FDCPA allows you to sue collectors who harass you, lie about what you owe, or violate your rights. If you win, you can recover:

• Any money they collected illegally
• Fees they charged without legal authority
• Statutory damages up to $1,000 per violation
• Your attorney fees and court costs

Restitution is the "make-whole" remedy. If they garnished your wages without a valid judgment, you get that money back. If they charged you bogus "processing fees," those get refunded.

When Courts Order Restitution Against Debt Collectors

Judges order restitution when collectors cause measurable financial harm. Common triggers include:

Operating Without a License

Most states require debt collectors to hold active licenses. If a firm collects from you without one, every dollar they took is subject to restitution. In the Washington case, Machol & Johannes operated without a license from 2011 to 2012. The court ordered them to return every payment collected during that period,no exceptions.

Illegal Garnishment Practices

Federal and state laws protect a portion of your wages and bank accounts from garnishment. Collectors must tell you about these exemptions and honor them. When they don't, restitution follows. The Washington firm garnished accounts beyond legal limits and never informed consumers they could protect certain funds. The court ordered $475,000 returned to 5,000 victims.

Charging Unauthorized Fees

Collectors cannot invent fees. If your original debt was $2,000 and they add $800 in "collection costs" without a contract or court order allowing it, that $800 is recoverable. The Machol & Johannes settlement included $250,000 in forgiven fees,fees the firm had no right to charge in the first place.

Collecting After the Statute of Limitations

If your debt is past the statute of limitations and a collector sues you anyway, any payment you make can be considered coerced. Courts have ordered restitution when collectors pursue time-barred debts without disclosing that you can't be legally forced to pay.

How Restitution Differs From Fines and Damages

The words get thrown around interchangeably, but they matter:

Restitution goes to you. It returns what the collector took illegally. If they garnished $3,000 from your paycheck without a valid judgment, restitution is that $3,000.

Fines go to the government. They punish the collector but don't compensate you. A state attorney general might fine a collector $50,000 for systemic violations. You don't see that money.

Statutory damages are a fixed amount the FDCPA allows you to collect per violation, even if you can't prove financial harm. You can win up to $1,000 per lawsuit under the FDCPA, regardless of whether the collector actually cost you money. This is separate from restitution.

Actual damages cover measurable harm beyond just the money they took,lost wages from court appearances, therapy costs from harassment, etc. These are harder to prove but stackable with restitution.

In a strong case, you can get all of these. The collector returns what they stole (restitution), pays you $1,000 for violating the law (statutory damages), covers your therapist bills (actual damages), and gets fined by the state (which doesn't help you but feels good).

How to Demand Restitution From a Debt Collector

You don't get restitution by asking nicely. You get it by documenting violations and filing a lawsuit or joining a class action.

Step One: Document Everything

Keep records of every interaction. Save voicemails, emails, letters, payment confirmations, and bank statements showing garnishments. Note dates, times, and names. If they called you at work after you told them not to, write it down. If they claimed you owed $5,000 when your original debt was $3,200, screenshot it.

Step Two: Check for FDCPA Violations

Common violations that trigger restitution include:

• Calling before 8 a.m. Or after 9 p.m.
• Contacting you after you sent a written cease-and-desist letter
• Threatening wage garnishment without a court judgment
• Misrepresenting the amount you owe
• Garnishing protected income (Social Security, disability, unemployment)
• Failing to validate the debt when you requested validation

If any of these happened, you have grounds to sue.

Step Three: File a Complaint or Join a Class Action

You have one year from the date of the violation to file an FDCPA lawsuit. You can sue in state or federal court. Many consumer rights attorneys work on contingency, meaning they only get paid if you win,and the collector pays their fees, not you.

If the collector's violations are widespread, a class action may already exist. Check PACER (the federal court database) or contact a consumer rights attorney to ask if others have sued the same firm.

Step Four: Negotiate or Go to Trial

Most FDCPA cases settle. Collectors know the law is against them and don't want the publicity. A settlement might include full restitution, statutory damages, and a promise to stop contacting you. If they refuse to settle, take them to trial. Judges are not sympathetic to collectors who break the law.

What Happens If a Collector Ignores a Restitution Order

Court-ordered restitution is enforceable. If the collector doesn't pay, you can:

• Ask the court to hold them in contempt
• Place a lien on the collector's business assets
• Garnish the collector's bank accounts (ironic, but legal)

In the Washington case, the attorney general's office monitored compliance. If Machol & Johannes failed to issue refunds, they faced additional penalties. Some states also revoke collection licenses for non-compliance.

What to Do If You've Been Harmed by a Debt Collector

If a collector has violated your rights, you have three options:

File a complaint with the CFPB. The Consumer Financial Protection Bureau tracks collector complaints and can trigger investigations. Go to consumerfinance.gov/complaint.

File a complaint with your state attorney general. Many AGs have consumer protection divisions that sue collectors on behalf of residents. If enough complaints pile up, they'll act.

Sue the collector yourself. This is the fastest path to restitution. Contact a consumer rights attorney who handles FDCPA cases. Most offer free consultations.

You can also explore whether bankruptcy makes sense for your situation. If you're drowning in debt and collectors are circling, Chapter 7 or Chapter 13 can stop the harassment and wipe out most unsecured debts. Our free bankruptcy screener takes three minutes and shows you whether you qualify.

Why Collectors Keep Breaking the Law

Because most consumers don't fight back. Collectors bet that you won't document violations, won't hire a lawyer, and won't sue. They're often right. When they're wrong, they pay,and you recover.

The FDCPA exists because debt collection was a lawless industry. Congress passed it in 1977 after hearing stories of collectors calling people's employers, threatening arrest, and lying about debts. The law gives you a private right of action, meaning you can enforce it yourself without waiting for a government agency to act.

When collectors face restitution orders, they change their behavior. The Washington case forced Machol & Johannes to overhaul their practices, train staff, and implement compliance monitoring. That's the point. Restitution doesn't just compensate you,it deters future violations.