The Guide to Arizona Debt Collection Law
Understand Your Rights
Arizona, like every state, prohibits debt collectors from engaging in tactics that are abusive and harassing. Arizona also requires that the debt collector that is contacting you to be licensed in the state of Arizona in order to collect on that debt in this state.
Like many states, Arizona adheres very closely to the federal law governing the collection of debts called the Fair Debt Collection Practices Act or FDCPA. However, in Arizona, the statute that mirrors the federal statute is a criminal statute so a consumer can not sue a collector based on the Arizona statute and must sue under federal law. The FDCPA is a good tool to use in order to obtain a favorable settlement on your debt but usually does not erase the debt in totality because the damages associated with the FDCPA are not very great. However, it is a great negotiating tool.
Some of the few items that both the FDCPA and the Arizona statutes point out as deceptive are the following:
– sending any written communication or verbally communicating that a legal process is in action when there is none
– misrepresenting the amount of the debt owed
– continuing to call the debtor over and over again to a point where it becomes harassment
The Process
What a lot of people do not realize is that collectors can not force you to pay your debt simply through sending you letters and calling you everyday. In order to force your hand at collection, the creditor must take an extra step and actually bring a lawsuit against you in court. There are exceptions to this rule:
- 1. If you owe money where you bank, your bank may have the right to take money from your checking account to pay the debt
- 2. Federal debts such as federal student loans, taxes and military credit cards have the right to collect without bringing a lawsuit
For most creditors, they must bring a lawsuit in a local Arizona court within 6 years from your last payment. A suit is time-barred after 6 years because that is the Statute of Limitations for written contracts in Arizona. If they do bring a suit within this time frame, they can bring the suit in one of three courts: Small Claims Court, Justice Court or Superior Court. For a creditor to bring a claim in small claims court, the claim must be under $3500. Any claim for damages over $10,000 is reserved for Superior Court and below $10,000 can be brought in Justice Court.
A lawsuit is started by the creditor filing a summons and complaint with the court. Once the lawsuit is filed, the creditor must try to personally serve you. If the creditor can not personally serve you, but can show the court, that they have made attempts to do so, the creditor can ask the court for a motion to serve you alternatively, which, if granted, would allow the creditor to mail to you or post the summons and complaint.
Once you are served the lawsuit, you will have 20 days to file an answer with the court. If you do not file an answer, the creditor will file a motion with the court asking them to enter a default judgment against you. You will still have 10 days before the judge enters a judgment against you to still file an answer.
Once a judgment is entered against you, this gives the creditor the right to garnish wages at up to 25% per pay period and to levy bank accounts. Also, if the judgment is properly recorded, a lien can be placed on your home that would require the creditor to have to be paid from the sale of the home.
Settlement can still be obtained post-judgment but by not responding to a lawsuit and letting the creditor obtain a judgment, you are giving all the power to the creditor by forfeiting your legal defenses. Make sure that you contact a knowledgeable attorney when you are presented with a lawsuit so that your rights are protected.