What you need to know about Indiana’s debt collection laws

Despite the fact that Indiana is in the bottom 20% of all states when it comes to credit card and mortgage debt, this does not mean that life is easy for anyone in the state. Many cannot make monthly payments regularly, and some continue to have difficulty reducing their debt no matter how many payments they make. 

For those struggling with debt, Indiana has debt relief options to help them get rid of debt. During these challenging times, one does not need the added pressure that debt collectors put on consumers. Even though many methods of debt collection in Indiana are within the law, there is a certain limit that collectors are not allowed to go beyond. The FDCPA was enacted by Congress to prevent creditors from unlawfully treating their customers. Consumer protection statutes are in place in some states, such as Indiana, to safeguard citizens from such misconduct.

What debt collectors in Indiana can and cannot do

You must understand and know your legal rights when dealing with debt collectors. These organizations follow the rules. You may have grounds to file a lawsuit against the debt collector for violating consumer protection regulations if they don't. Debt collectors are prohibited from using these tactics:

Harassment

Debt collectors in Indiana are prohibited from communicating or behaving in a way that would be considered harassment, oppression, or abuse. In addition, they are not permitted to:

  • Threatening to hurt you physically, hurt your reputation or damage your property.
  • Put your name on the list of those who "refuse to pay their bills," publicly announcing that you have a financial obligation you cannot meet. However, this does not prevent debt collectors from reporting factual information to credit bureaus.
  • Use foul language and slurs.
  • Ring your phone nonstop, which could be interpreted as invasive or upsetting.
  • Try to contact you before 8:00 am or after 9:00 pm. 

Debt collectors cannot legally threaten you, but they can harass you with daily phone calls, letters, and threats of legal action to get you to settle the debt. 

Falsify statements

Debt collectors cannot:

  • Mislead people into thinking they are government officials or lawyers when they are not.
  • Impose the idea that you've done something dishonest by avoiding your financial obligations.
  • They give the impression that they own or are affiliated with a credit bureau when they don't.
  • Deliberately exaggerate the amount, nature, or legitimacy of a debt.
  • They falsely assure you that the papers they provide are valid when they are not.
  • They intentionally mislead you by claiming the paperwork they're handing you is not legally binding when it is.
  • They claim they will take legal action against you when they do not intend to or cannot do so legally.

However, as a last resort, debt collectors can file a lawsuit to get their money back from you if you fail to pay back the debt. Since debtors rarely appear in court, wage garnishment is the norm in these situations. With a judgment order against you, they can garnish up to 25% of your disposable income. 

Be unfair

Debt collectors cannot:

  • Attempting to collect more than the amount you legally owe is unlawful unless it is permitted by law.
  • Deposit a post-dated check more than five days before the stated date without informing you. 
  • Ask for a post-dated check and then threaten legal action or cash it early.
  • Charge you for expenses such as telegrams and collect calls when they are not required. 

With a court order, they can seize your assets and your bank accounts to get paid for your debt. Moreover, you can be arrested if you fail to attend court when you are summoned. 

Indiana statutes of limitation

Indiana debt collection laws have different time limits for oral and written contracts. The statute of limitation begins to take effect either on the date your payment is due or the most recent time you made a payment before default. 

Let's see the different statutes of limitations on debt in Indiana:

Indiana has two different debt statutes of limitations:

  • Limitations on unwritten contracts
  • Limitations on written contracts

Unwritten contracts

Indiana debt collection law specifies a six-year statute of limitations for filing suit against a debtor for breach of an oral agreement or implied contract. This clause covers personal property recovery, damage from property detention, and credit card debts. 

Written contracts

A written contract is an agreement between a debtor and a creditor that is signed and contains information about the amount of debt, the type of debt, and the maturity date of the debt. Other types of written contracts, such as promissory notes and bills of exchange, are also included in this category. The statute of limitations for collecting debts arising from written contracts is six to ten years. 

Let's have a look at some of the most common written contracts:

  • Medical Debt: Medical debt has a statute of limitation of six to ten years.
  • Promissory Note: Promissory notes have a limitation of six years. Student loans and home loans come into this category.
  • Contract for the sale of goods: This has a limitation of four years. According to Indiana debt collection laws, the statute of limitations may be shortened by the parties' agreement or the court, but it may not be extended. This means that the time frame can be reduced to two years, or even one, but never below a year.
  • Auto loan debt: This contract has a statute of limitation of four years.

In Indiana, statutes of limitations can be restarted

If the debtor voluntarily pays or acknowledges in writing that they owe the money before the statute of limitations expires, the clock will start over. The debt collector may seek a judgment to buy more time to collect payment from the customer.

The statute of limitations for judgments in Indiana is ten years but can be re-established, prolonging the collection period. A creditor has up to ten years from the date of charge to collect on a judgment. If the creditor acts before the ten years, the judgment can be renewed for another decade.

  • The date of your most recent charge for an unpaid debt.
  • The date the judgment was entered or,
  • The end of either occurrence.

Judgments expire if they aren't renewed on time or if the debt collector doesn't take any steps to enforce them. Once an assessment has passed, the debt collector can no longer take the debtor to court for nonpayment of the debt. Therefore, the debt collector is prohibited from:

  • Confiscating your property
  • Wage garnishment
  • Demand your presence at an examination
  • Confiscating your bank account

Bottom line

Having debt can be an extremely stressful burden to manage. Debt can put anyone in a corner and make them embarrassed because of the constant harassment from debt collectors. But debt can be managed if you can be focused and vigilant. You should always be aware of your rights and all the vital information regarding your debt. You can get the help of an attorney who can guide you through the process of handling debt collectors. They can help you understand your rights and what the debt collectors are allowed to do and not do. You can also take the help of credit counselors, who can provide various methods and programs to help you pay off your debt.

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