Debt Collection Laws in Arizona: Know Your Rights
Arizona residents have strong protections against aggressive debt collectors through the FDCPA and the Predatory Debt Collection Act. You can report violations to the Arizona Attorney General or the FTC. Settling your debt for a reduced amount is often the best way to resolve collection issues and avoid a lawsuit.
Respond to LawsuitAre you being hounded by a relentless debt collector? Does the sound of your phone make you cringe? You have laws that protect you from aggressive collection practices in Arizona.
Understanding debt collection laws will equip you to deal with collectors. You can report unlawful debt collectors to the Arizona Attorney General or the Federal Trade Commission. The best way out of your debt is to settle it for a fraction of what you owe.
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Answer the LawsuitDebt Collection Laws in Arizona
Your debt collector likely purchased an old debt from a creditor. Now it might stop at nothing to collect, even if that means using shady business tactics.
Thankfully, Arizona residents are protected by the Fair Debt Collection Practices Act (FDCPA). The FDCPA strictly regulates what debt collectors are allowed to do.
Debt collectors are not permitted to engage in the following:
- Calling you more than once per day.
- Calling you earlier than 8 a.m. or later than 9 p.m.
- Using threatening or intimidating language, such as threatening arrest.
- Speaking with friends, family, or coworkers regarding your debt.
- Posting about your debt on social media.
- Continuing to contact you after receiving a Cease and Desist Letter.
- Declining to validate your debt.
- Filing a debt lawsuit after the Statute of Limitations has expired.
While collection agencies are often legitimate, there are plenty of debt collection scams. Learning about the Statute of Limitations and your rights helps you avoid scam artists.
Debt Collection Agencies Must Be Licensed in Arizona
Ariz. Rev. Stat. § 32-1055 states that debt collection agencies must obtain a license with the Arizona Department of Insurance. Debt collectors are prohibited from threatening to sell a debt to force payment.
Arizona debt collection agencies must notify the department within ten days of any name change. Debt collection agencies frequently change names to make their practices easier. Knowing about this law can help you stand up for your rights.
Statute of Limitations on Debt in Arizona
Debt collectors cannot file a lawsuit once the Statute of Limitations expires. The deadline varies depending on the type of debt you owe.
| Debt Type | Deadline |
|---|---|
| Credit Card | 6 years |
| Medical | 6 years |
| Auto Loan | 6 years |
| Student Loan | 6 years |
| Mortgage | 6 years |
| Personal Loan | 6 years |
| Judgment | 10 years |
Most consumer debts fall under the category of written debts. Credit card debt, personal loans, and home equity loans have a Statute of Limitations of six years in Arizona.
The Arizona Predatory Debt Collection Act Limits Medical Debt Collectors
Arizona’s Predatory Debt Collection Act, known as Prop 209, was passed in 2022. The act protects Arizona families from the severe impacts of medical debt and aggressive collection practices.
Here are the key protections the act provides:
- Increased Homestead Exemption: The exemption for home equity protected from creditors rises to $400,000. The amount adjusts annually for cost of living.
- Protection of Personal Assets: The act shields up to $5,000 in bank accounts. It protects $15,000 in household goods. Vehicles up to $15,000 in value are protected ($25,000 for disabled drivers).
- Capped Interest Rates on Medical Debt: Interest rates on medical debt are limited to 3%.
- Wage Garnishment Limits: The act decreases wage garnishment limits to 10%. You can maintain basic living standards despite owing debts.
The Predatory Debt Collection Act prevents financial devastation from medical emergencies. Healthcare Rising Arizona and other prominent organizations support the act. The law specifically protects against losing homes, vehicles, and essential funds due to emergency medical debt.
How to Report Debt Collectors in Arizona
If a debt collection agency has violated the FDCPA or Predatory Debt Collection Act, you can report them. Contact the Arizona Attorney General’s Office using the online form for consumer complaints.
You can also call for help at these numbers:
- In Phoenix: 602-542-5763
- In Tucson: 520-626-6504
- Outside Phoenix or Tucson: 800-352-8431
You can report FDCPA violations to the Federal Trade Commission (FTC) at 877-382-4357. You can also report violations to the Consumer Financial Protection Bureau at 855-411-2372.
How to Respond to Debt Collectors in Arizona
Now you understand your rights. You’re better equipped to handle debt collectors who may be calling you. Here’s what to do the next time your phone rings.
Do Not Agree to Pay Without Checking the Statute of Limitations
Debt collectors may pressure you to create a payment plan. Think hard about your next steps before you do that. You could unwittingly reset the Statute of Limitations on your debt.
For instance, if your debt is five years old and you make a payment, your debt collector now has six more years. You can settle your debt by going through additional steps. You’ll likely settle for a reduced amount.
Send a Debt Validation Letter
Your debt collector must identify themselves and provide contact details. You can then send a Debt Validation Letter. You’re requesting written details about the original debt. The letter should include the identity of the creditor and the amount owed.
A Debt Validation Letter is one of the most powerful tools you have against collectors.
Send a Cease and Desist Letter
You also have the right to send a Cease and Desist Letter. Once your debt collector receives it, the law prohibits them from contacting you further.
But be cautious. Sending a Cease and Desist Letter may give you temporary peace. It could expose you to a lawsuit if you lose track of your debt.
Settle Your Debt
The surest way to get debt collectors off your back is paying what you owe. But if you go about it wisely, you can settle for a steep discount.
In a debt settlement, you offer your creditor a portion of the total amount due. Usually at least 60% of the debt’s value. In exchange for a lump-sum payment, the creditor agrees to drop legal claims. You’re released from the remaining balance.
A creditor often considers negotiating if you promise a lump-sum payment. Debt settlement usually works best if you have some cash saved or expect money soon.
Settling your debt helps you avoid a judgment and wage garnishment. You’ll save money and move on from the experience.
If you decide to settle, get the terms of your agreement in writing. Pay the creditor before your court date. Our partner Solo can guide you through the debt settlement process.
Example: Mark had been drowning in credit card debt. Eventually, LVNV Funding sued him for nearly $4,000. After responding to the lawsuit, Mark used a settlement service to offer a payment that worked with his budget. In the end, he settled his debt for only 65% of the original amount. He’s now on his way to rebuilding his credit.
How to Respond to a Debt Collection Lawsuit in Arizona
If a debt collector files a lawsuit against you, you must respond. You have a limited time to file an Answer with the court. Typically, you have 20 days in Arizona to respond to a debt lawsuit.
Your Answer is a legal document that addresses each claim in the Complaint. Our partner Solo helps you respond to debt lawsuits in Arizona. You can draft your Answer and file it with the court before the deadline.
Responding to the lawsuit protects you from a default judgment. A default judgment allows the debt collector to garnish your wages. Acting quickly is your best defense against aggressive debt collectors.