Technology Perspective: Understanding Debt Collection Laws in Your Home State

Lex Patterson

Part of the commitment we make to our customers is that our debt collection software is fully compliant with collection regulations.

While we strive for compliance within the software, it is imperative that businesses and agencies that meet the legal requirements for debt collection also be fully conversant and compliant with debt collection laws. Why not start in your home state? Ours is Utah.

When it comes to debt collection, Utah laws and provisions reflect the national statutes for protecting the creditor as well as the debtor.

In addition to providing a quick overview of the debt collection laws and guidelines in Utah, it is wise to understand how our state’s statutes may differ from other states.

Creditors in the state have a number of legal avenues that they can take to collect a debt. In order to enact any of them, they must first receive a judgment from the court. This provides the creditor with the legal right to demand a wage garnishment, a bank account levy, and/or property lien.

In Utah, it is Rule of Civil Procedure 64D and federal law 15 U.S.C. 1673(a) that lays out the legal requirements and conditions for wage garnishment. Utah and most states go for the maximum amount of 25 percent for consumer debt and 50 percent for child support.

Since duration, percentages and actual amounts based on hourly wage can be more complex and vary by state, the creditor must fully understand the formulations before proceeding. It is the court that delivers the garnishment ruling and specifics to the employer via a legal notice, and garnishment can occur only after the person being garnished has received a 10-day notice of intent.

Utah creditors can levy debtor bank accounts in accordance with Utah state law with the statutes determining amounts, exemptions and types of funds, which can vary by state. Property Liens are also legal in Utah per Utah Code Section 78B-5-201 and Utah Code Section 78B-5-202. Utah allows judgment-creditors to place a lien on property. This is possible via A Writ of Execution for seizure of the debtor’s non-exempt real property or personal property in the debtor’s possession as explained in Rule of Civil Procedure 64E.

In Utah, the statute of limitations for debt collections on a credit card (Utah 78B-2-307-1b) as well as a spoken contract (Utah Title 78B-2-307-1a) is four years. A written contract (Utah Title 78B-2-309) is 6 years, and either a state or federal judgment is 8 years (Utah Title 78B-2-311). Each state has its own statutes of limitations.

It will always be the best course of action to attempt to work with the debtor to settle the debt under mutually satisfactory terms. While contacting the debtor via phone can be counterproductive and risks potential violation of the FDCPA, accounts receivable software for small, medium and large businesses has come a long way. Businesses and debt collection agencies have modern debt collection systems at their disposal as well as the option to contact the debtor via alternative means such as via email or letter while easily tracking changes and progress in status.