Collection Agency Laws in Indiana (2026): Your Rights, Their Limits

Getting calls from a debt collector can feel overwhelming. Maybe even scary. But here is something most people don’t know: Indiana law gives you real, serious protections. You have rights. And collectors have limits.

Let’s break it all down so you know exactly where you stand.

What Is a Collection Agency?

A collection agency is any person or company that collects debts owed to someone else. That includes individual collectors, firms, and corporations.

Sound complicated? It’s actually not. Think of it this way: if a company buys your old debt or gets paid to chase it down, they are acting as a collection agency. Indiana law covers them.

Under Indiana Code Section 25-11, even someone who sends written demand letters on behalf of a creditor counts as a collection agency. Even if they use a fake name or a business name to make it look like a third party is involved.

Basic Collection Agency Laws in Indiana

Agencies Must Be Licensed

Here is something most people don’t realize. Indiana is one of only a handful of states that requires all collection agencies to be licensed.

Every collection agency must register with the Indiana Secretary of State. They go through the Nationwide Multistate Licensing System (NMLS) to get their license. They also must post a surety bond of $5,000 for each office they run in the state.

Not sure if the agency calling you is legit? You can ask for their license info. They are required to include it in their first written notice to you. If they don’t provide it, ask for it. This protects you from scammers pretending to be real collectors.

The Debt Validation Letter

Okay, this one is important. Within five days of first contacting you, a collector must send you a written notice. This is called a debt validation letter.

It has to include the amount you owe, the name of the original creditor, and your right to dispute the debt. This isn’t optional for them. It’s the law.

If you request verification of the debt within 30 days, the collector must stop all collection activity. They can’t call you, send letters, or try to collect anything until they prove the debt is real. Pretty straightforward, right?

What Collectors Cannot Do

No Harassment Allowed

Wondering if that aggressive collector crossed a line? They probably did. Indiana collectors are flat-out banned from harassing, abusing, or threatening you.

Here is what is specifically illegal under the Fair Debt Collection Practices Act (FDCPA) and Indiana law:

Threatening you with physical harm is illegal. Publicly announcing your name as someone who refuses to pay is illegal. Using offensive or abusive language is illegal. Calling you repeatedly just to annoy you is illegal.

Collectors can only call you between 8:00 a.m. and 9:00 p.m. Under federal rules updated in recent years, they cannot call you more than seven times in a seven-day period about the same debt. Once you actually talk to them, they have to wait another seven days before calling again.

No Lies or Deception

This part is huge. Collectors cannot lie to you. Period.

They cannot claim you will be arrested if you don’t pay. Debt is a civil matter, not a criminal one. They cannot threaten to take legal action they have no intention of taking. They cannot tell you the debt is larger than it actually is. They cannot use a fake name or pretend to be an attorney if they are not.

Many people assume this is just how collectors operate. They find out the hard way that these are actual FDCPA violations. Don’t be one of them.

No Contacting Third Parties

A collector generally cannot call your employer, neighbors, or family members to discuss your debt. They can contact a third party once to try to find your location. That’s it. They cannot spread the word about what you owe.

Statute of Limitations: When Debt Gets Too Old to Sue Over

Hold on, this part is important. Indiana puts a time limit on how long a collector can sue you for an unpaid debt. This is called the statute of limitations.

Once that clock runs out, they cannot take you to court. The debt doesn’t disappear, but their legal options do.

Here is how it breaks down in Indiana:

Credit card debt falls under oral/unwritten contracts. The limit is six years. The clock usually starts from the date of your last payment. This also means that if you make a payment on an old debt, the clock resets. Be careful with this one.

Written contracts like personal loans or promissory notes also carry a six-year limit in most cases.

Medical debt can range from six to ten years depending on how the contract is structured.

Contracts for the sale of goods and auto loan debts carry a four-year limit.

Court judgments last ten years. But a creditor can renew a judgment before it expires and get another ten years. That’s a long time.

What Collectors CAN Do

Let’s be honest about this. Collectors aren’t powerless. Knowing what they can legally do is just as important as knowing what they can’t.

A licensed collector in Indiana can contact you by phone, mail, and in some cases electronically. They can report your debt to the credit bureaus. They can sell your debt to another collection agency. And most importantly, they can sue you.

If they win in court, a judge issues a judgment against you. That judgment gives them serious tools.

Wage Garnishment

With a court judgment, a collector can garnish your wages. That means money comes out of your paycheck before you ever see it. In Indiana, they can take up to 25% of your disposable income.

This doesn’t happen overnight. They have to sue you first and win. But if you ignore a lawsuit, a judge will likely issue a default judgment. And then wage garnishment becomes very real, very fast.

Bank Levies and Property Liens

A judgment also lets collectors put a lien on your property. If you own a home in the county where the judgment was filed, they can place a lien on it. That means if you ever sell or refinance, you may have to pay the judgment first.

They can also levy your bank account with a court order. This is why ignoring a lawsuit is one of the worst things you can do.

Penalties for Violations

So what happens if a collector breaks the law? Good news: you can fight back.

Under the FDCPA, you can sue a debt collector in state or federal court. You have one year from the date of the violation to file your lawsuit.

If you win, you can recover actual damages. That includes things like lost wages or medical expenses caused by the harassment. Even if you can’t prove specific damages, a judge can award you up to $1,000 in statutory damages. On top of that, the collector may have to pay your attorney’s fees and court costs.

Think of it like a traffic ticket turned upside down. Instead of you paying, they pay you.

Indiana also has its own state-level enforcement. The Collection Agency Division of the Indiana Secretary of State handles complaints about agencies operating in the state.

Special Circumstances

Who Is NOT a Collection Agency Under Indiana Law

Not every debt-related contact comes from a collection agency. Indiana law carves out some exceptions.

Banks and financial institutions are not considered collection agencies. Regular employees collecting debts for their employer as part of their job are not either. Public utilities like electric, gas, water, and phone companies have their own rules. Attorneys collecting debts as part of their legal practice may also be exempt from some agency requirements.

However, many of these entities still must follow the FDCPA. So your protections don’t disappear just because the collector is not technically a “collection agency” under Indiana’s licensing law.

Debts That Are Not Covered by the FDCPA

Honestly, this is the part most people miss. The FDCPA only covers consumer debts. That means personal, family, or household debts.

Business debts are not covered. If you owe money for a business loan or business credit card, the FDCPA does not protect you in the same way. You may still have protections under other laws, but the FDCPA rules don’t apply.

Bankruptcy and the Automatic Stay

If you file for bankruptcy, something called an automatic stay kicks in immediately. This stops almost all collection activity right away. Calls stop. Letters stop. Lawsuits pause. Wage garnishments stop.

If a collector violates the automatic stay after you file, the court can order penalties against them.

How to Protect Yourself

You’re not alone in this. Millions of people deal with debt collectors every year. Here is what you should actually do.

Send a debt validation letter. Do this within 30 days of first contact. Send it by certified mail and keep the receipt. Ask for the amount owed, the original creditor’s name, and proof that they own the debt. This forces them to verify everything before they can keep collecting.

Keep records of everything. Write down dates and times of every call. Save every letter. Note what was said. These records are your evidence if you need to file a complaint or lawsuit.

Tell them to stop calling. You can send a written request asking a collector to stop contacting you. Once they receive it, they can only contact you to confirm they are stopping or to tell you they are taking legal action. After that, calls must stop.

Don’t ignore a lawsuit. If a collector sues you, respond within the deadline. In Indiana, you usually have 20 days if papers were delivered to you in person, or 23 days if they were mailed. Missing the deadline leads to a default judgment. That is the fastest way to end up with wage garnishment.

File a complaint if needed. If you believe a collector broke the law, report them. You can file with the Indiana Attorney General, the Consumer Financial Protection Bureau (CFPB), or the Federal Trade Commission (FTC).

Frequently Asked Questions

Can a debt collector call me at work? They can, unless you tell them your employer doesn’t allow personal calls. Once you inform them, they must stop calling your workplace.

Can I go to jail for not paying a debt? No. Debt is a civil matter. You cannot be arrested for unpaid consumer debt. Any collector who threatens you with arrest is violating the law.

What if the debt is not mine? Send a written dispute within 30 days of receiving the validation letter. The collector must stop all activity and investigate. If they cannot verify the debt, they must stop pursuing it.

Can a collection agency contact me if I have a lawyer? No. If you have legal representation and the collector knows it, they must communicate through your attorney, not directly with you.

How do I verify if a collection agency is licensed in Indiana? You can look up agencies through the Nationwide Multistate Licensing System (NMLS) at nmlsconsumeraccess.org. You can also contact the Indiana Secretary of State’s office directly.

Final Thoughts

Now you know what collection agencies can and cannot do in Indiana. The laws exist to protect you. They are real, and they have teeth.

Know your rights. Keep your records. Respond to lawsuits. And when in doubt, talk to a consumer protection attorney. Many of them work on contingency for FDCPA cases, which means you pay nothing upfront.

Stay informed, and don’t let a debt collector bully you into thinking you have no options. You do.

References

1. Indiana Code Section 25-11 – Collection Agency Licensing: https://iga.in.gov/laws/2024/ic/titles/25#25-11
2. Indiana Secretary of State – Collection Agency Division: https://www.in.gov/sos/securities/collection-agencies/
3. Fair Debt Collection Practices Act (FDCPA) – Federal Trade Commission: https://www.ftc.gov/legal-library/browse/rules/fair-debt-collection-practices-act-text
4. Consumer Financial Protection Bureau – Debt Collection: https://www.consumerfinance.gov/consumer-tools/debt-collection/
5. Upsolve – Debt Collection Laws in Indiana (Updated May 2025): https://upsolve.org/in/debt-collection-laws/
6. Indiana Attorney General – Consumer Complaints: https://www.in.gov/attorneygeneral/consumer-protection-division/file-a-consumer-complaint/