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What Are Debtor's Rights?

By Karize Uy
Updated May 17, 2024
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In general, debtor’s rights are rights entitled to a debtor, or a person who has borrowed a loan from a creditor. These rights make sure that creditors, such as banks, organizations, and individual loaners, do not carry out abusive or unreasonable actions towards debtors when the time comes to repay the debt. Situations that can make these rights applicable include debt collection, bankruptcy, and lawsuits. Many countries have a section in their constitution that extensively discusses a debtor’s rights, called the Fair Debt Collection Practices Act (FDCPA).

Debtors are usually given a certain period wherein they are expected to pay off their debts. Creditors can be abusive to debtors, especially when the latter is unable to pay on time. In these cases, a debtor’s rights include filing a complaint against a creditor for excessive actions such as calling during inappropriate hours, threatening and humiliating family members, or using profanity during discussions. A debtor also retains the right not to be evicted from his house when unable to pay the debt, as well as possession of his chattel or other properties. He also has the right to forward a written notice towards the creditor to discontinue any communication that does not involve the debt collection.

Debtors also have the right to dispute their debts, and the US FDCPA requires creditors to remind the debtors of this right. The debtor’s rights to dispute can apply in situations when he has settled his bills already and the collector still contacts him, or when he wants to contest the amount of debt stated. In some cases, a debtor can also dispute a debt that has a “time bar,” meaning the claim has a deadline in which the collector can obtain the debt, and the deadline has ended.

In relation to disputing the debt, the debtor is advised to give a written notice to the collectors to discontinue any communication, aside from informing the debtor that they will stop collecting the debt, or that they will take legal action against the debtor. If the creditor does otherwise, the debtor has the right to sue the creditor. He can be compensated for lawyer and other court fees.

If the debtor does not have any chance of repaying his debt, he has the right to file for bankruptcy. In the US, debtors can choose between a liquidation process or a plan for repayment, according to the law. Regarding bankruptcy, a debtor’s rights can include not having to repay creditors that are listed as discharged and choose which creditor he will repay. The debtor can also be entitled to an “earner plan” that redirects his partial wages to repay the debts.

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