Debt collectors are a necessary part of a free market economy. But how they go about collecting debts – and where the line between persistence and harassment lies – is a source of vigorous debate.
For years, debt collectors have targeted federal employees and members of the military with security clearance threats. It’s no secret that defaults are the number one reason for security clearance issues, so a certain breed of debt collectors seek to take advantage of fears of job loss to pay. Historically, some debt collectors have even gone so far as to contact military commanders or debtors’ supervisors in an attempt to put pressure on the work.
abusive debt collection practices
Horror stories about these types of abusive debt collection practices have led to the enactment of provisions in the federal Fair Debt Collection Practices Act prohibiting certain debt collector conduct. Under the FDCPA, debt collectors are now prohibited from telling third parties such as military commanders, supervisors or security officials that you have a debt – although they can contact your supervisor or commander a times to get your contact details if they don’t already have them. .
Unfortunately, the FDCPA has not prohibited debt collectors from making threats to revoke a debtor’s security clearance or downgrade. Even though such threats are legally unfounded, many consumers do not have the legal knowledge to understand this. This creates situations where debtors who might otherwise have had a valid legal defense against a debt – for example, the amount claimed by the creditor as due is incorrect – feel pressured to simply pay.
Comprehensive Debt Collection Improvement Act
Earlier this year, the US House of Representatives passed the Comprehensive Debt Collection Improvement Act (HR 2547) in part to rectify this loophole in the FDCPA. Among other things, the law prohibits debt collectors from threatening military service members with consequences for non-payment such as loss of security clearance or demotion.
As of this writing, the law is awaiting a vote in the Senate and will still need to be signed by the President; therefore, it remains to be seen whether this actually passes into law. If you are interested, you can follow the progress of the Congress here.
In the meantime, the current law does not prohibit debt collectors from threatening security clearances – and even though HR 2547 is passed by the Senate and enacted, the relevant provisions appear to only cover members of the military service, and not civilian government employees or contractors.
The bottom line? Debt collectors are currently free to make bogus security clearance requests, but they cannot actually track them. Solve your debts in good faith, not through empty talk.
To learn more about this or to file a complaint against a debt collector, check out the Consumer Financial Protection Bureau‘s resources for security clearance holders and military service members here.
This article is intended for general information only and should not be construed as legal advice. Consult with a lawyer about your specific situation.
 While a debt collector does not have the power to deny or revoke a security clearance, the government can and frequently does for overdue debts. Settling overdue debts in good faith is essential to obtaining or maintaining a security clearance. But that does not mean that a debtor should give up a legitimate dispute over an amount owed due to threats from a debt collector.