Can I sue a company for sending me to collections?

Companies rarely want to concern themselves with the hassles of debt recovery, so it’s a regular practice for them to send debtors to collections. If you find out that a company has sent you to collections, is there anything you can do?

Yes! You can actually sue the company for sending you to collections. However, you can only do this under particular circumstances.

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On what condition can you sue a company for sending you to collections?

The law is keen on protecting your rights as a consumer and seeks to ensure fair and accurate credit reporting.

You can sue a company for sending you to collections for a debt that you don’t owe.

If a debt collector starts calling you out of the blue, but you know perfectly well that you made the payment in question, the law gives you the right to file an action in court against the company.

This is because companies have a legal duty to report truthful information on consumers’ credit reports. Wrongful debt reporting and collection reflect badly on consumers' credit scores. The law seeks to ensure that companies are honest in reporting and collecting debts. As a result, they provide options for consumers in the event that companies are dishonest in debt reporting and collection.

Applicable laws when a company wrongfully sends you to collections

A variety of legislation comes into play when a company wrongfully sends you to collections. While the state laws are dependent on the state involved, there are federal laws that apply nationwide. They include:

• The Fair Credit Reporting Act
• The Fair Debt Collections Practices Act
• The Consumer Credit Protection Act
• The Truth in Lending Act

So if you get sent to collections for a debt you don’t owe, these laws give you a right of action against the company. They also itemize the penalties awaiting companies that default on accurate reporting.

A successful lawsuit can help you recover:

• Damages
• Punitive damages
• Attorney’s fees

Dealing with the nuances involved in credit and collections can prove quite tiring. If you find that you’ve been wrongfully sent to collections, don’t worry. Just reach out to us—we’re the experts you need.