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Are creditors required to notify me before turning a delinquent account over to collections?

Answer: The Truth in Lending Act and the Uniformed Commercial Code (UCC) requires any credit contract to come with a full disclosure statement that clearly spells out the terms of the contract. Many states also have consumer laws that speak to full disclosure.

If you have delinquent accounts, you would be well-served by talking to a Debt Help Lawyer.

Look at your credit disclosure statement for words similar to these: “If I fail to pay the amount that you think I owe, you may report me as delinquent and send the account for collection action.” Because you agreed to credit terms that included the above statement, most creditors send monthly statements with an “amount due” highlighted somehow. When your account is delinquent, and your regular statement shows the past due amount, consider yourself notified! Many creditors, as a courtesy, send a reminder or two of the past due debt and include a note that says the account will be sent to collections if you do not pay by a certain date.

Bottom line: Creditors do NOT always have to send a separate notice or call you before sending a delinquent account to collections. This includes co-signed credit contracts as well. If the primary borrower defaults, the account can be immediately sent to collections without notifying the co-signer. An exception to this would be if the disclosure statement calls for the creditor to notify the co-signer. If you plan to co-sign for a loan, make sure the terms of agreement include notifying you before the account is sent to collections.


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  1. I have been making payments on a hospital bill and the hospital is applying the payments to what ever account they choose. It is plainly stated on the check as to which account it should be applied. Is this legal? Also they have put a medical bill in collection because they have not been applying the payment to the correct bill.

    • I had this same situation, Kimberly. I had to enlist the help of my state Delegate’s office. They reached out to the hospital and suddenly the head of billing was reaching out to me in a very apologetic manner. Situation was resolved. I am in VA in case laws vary by state.

  2. I have a bill with a hospital here in Missoula Mt, I have been paying on it since the bill was incurred, but not the amount they are asking for. they want 105.00 per month and I can only pay 50.00 a month. when I got my first bill I called and attempted to make arrangements by doing 50.00 a month and was informed that my they would not accept my payments of 50.00 a month and was told that the account would age. I think they mean would go past what they thought would be the pay off date. anyway I received a letter today stating that if I did not pay the bill or make arrangements to pay the rest of the bill it would be sent to a third party IE: collection agency. my question is if you are paying on a bill and have so constantly can they legally send it to a collection agency.

  3. I received a phone call yesterday in which the message left was this: ( or as close as I can remember) “You must call immediately. Your name and Social Security number are on a notarized application for a court hearing. You must call this number immediately.
    So I called. The woman would not identify herself until I mentioned that I understood what she was saying and I asked three times who is calling. The name of the “consulting agency” was not clear and the only mention was that they were contacted by Spotloan. I do have an account and I have been in constant communication (written). She tells me that there is a court hearing… I explain what my situation has been, told her that I had just updated them two weeks ago! She transferred me to a man, whom I stated the same information and he said ok and to call back on Feb. 19th. Now, I called the same number from another phone and got the same man I talked to yesterday, “troy”
    In looking up this number, it has been showing up as suspicious on various call back sites.

    Thank you.

  4. I’m trying to help a close friend of mine right now who has had some issues on this very subject. I had no idea that this is something that must be spelled out clearly in his credit contract. This just reaffirms the importance of paying close attention when entering into contracts. Thanks for sharing, as this definitely has helped!

  5. I have an unusual situation that I have taken to the Mich. state Dept of Ins and Financial Affairs, who is in the process of investigating my issue. I had opted- out of my group coverage through my employer in 7-2014, because I was turning 65 and had signed up for Medicare. I did the paperwork with our HR mgr, and she stopped withdrawing premiums. Eight weeks later, she came to me and explained that she had received a call from a man at BCN stating that I could not opt-out and that I had to keep their coverage, even though I was 65, because I was still actively working; that BCN would be my primary coverage, and Medicare would be my secondary coverage. I objected and said that I had a right to choose my carrier. We disgreed. She said she would have to begin taking premiums out again. I commented to her that I know you will do what you think that you need to do, and so will I. So, I was “forced” to pay premiums once again to BCN and keep Medicare, as well.
    After a few weeks, a friend gave me the number for the Dept of Insurance and Financial Affairs, and I called them, the supplied me with complaint form, and I submitted a complaint against BCN. The outcome was in my favor; that I could opt-out, and all my premiums were refunded as well as my “fringe” benefit that I was entitled to and was not getting. But, it was in June of 2015, that I received letter and a statement showing the total of claims that BCN paid in my behalf, which was $8,280.00. The letter requested me to send a check in the above amount within 30 days, of $8,280.00 as reimbursement of these claims. I had no idea that these claims could be legally “taken back” from my healthcare providers, by BCN if only they requested it from them. Well, I received another statement less than a month later that stated a lower balance, and this continued each 2-4 weeks til the balance was at $4,952.00. this last statement was dated Nov. 2015, along with another letter requesting me to pay the current balance within 30 days. I couldn’t pay that amount, and began analyzing these statement over the next few weeks. I heard nothing again about this issue until late Feb. 2016, which came in the form of a phone message on my home phone, stating that “this call is an attempt to collect a debt, and the lady stated her name and the agency she represented, and that was in regard to the balance of a debt that I had with BCN. She asked for me to return her call. I did return her call and spoke several times to her over the next 6-8 weeks, as well as all my H.C. providers and working diligently to get them to “give back the claim funds, and each one told me that they needed to hear from BCN to request it back. Well, it appears that they had requested funds back from a few of the providers and then had turned over the balance to the collection agency. My last conversation with this lady was in late April of 2016, and I stated that if they re-claimed a portion of the claims, then why did they stop. I told her that this is definitely not my debt, and that I was not paying.
    This all snow-balled from a simple “opt-out” procedure that apparently went very wrong. I have since filed a continuing complaint against BCN with The Dept. of Ins. and Financial Services. I am asking today; Is this a legitimate debt that I owe. I haven’t signed any contracts with BCN, or made any payments on this so-called debtt that didn’t exist until BCN decided that it was a “debt”. I have searched all info about debts and collections that I can find, but, nothing that I have read pertains to any situation such as this. I await your quick reply. Thank you in advance.

  6. I owe 60.00 to the water company and I agreed to make payments until it is paid in full. I was told that if not paid in 10 days they would turn it over to a collections company. If I am making payments can they turn it over? I live in the state of Tennessee if this matter.

  7. it is Murfreesboro water company and I live in Tennessee

  8. sammy wahl I wrote a check to a payday loan company thru chase bank in April of 2012. to be cashed the following month my disability check was not for the amount I was getting, food stamp was garnishing my Social security check, so I ran into hard times I couldn’t,pay my bills Medical and other were leaving me dry thought I would File Bankruptcy but was advised to go credit repair, so I did and now after 4.5 years has gone by January of 2017 I’ ve been getting calls from a law firm. They would not give name of law firm. Ph#312-878-9634 person to whom I was speaking with called her self Jenifer White she threatened to have me arrested with felony charges, if I would not comply to their demands to pay the full amount of over 300%. The amount was over $1,300 ,to be payed by Friday of that week or there would be a warrant put out for my arrest. My wife was ill and went into the hospital. My wife talked with Jennifer to let her know the financial situation we were facing. Jennifer gave us to the 9th of February to come up with two payments of over $650. There is no way at this time we can come up with this amount of money. my wife is not able to work at this time and I am on disability. We live in the state of Louisiana. We want to know What the laws are for this state and what site on the internet would give us this information.

  9. Absent such language in your contract, or something particular about the debt under state or federal law, no; the original contract, your bills and/or the late notices are usually such warning. Who is your creditor, its collector (if any) and in what state do you live?

  10. I live in Michigan

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