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Louisiana debt collection laws are stricter than federal regulations, applying not only to third-party collectors but also to original creditors. Key points include:
Compliance is essential to avoid severe penalties. This guide outlines Louisiana’s debt collection rules to help you navigate its legal requirements effectively.
Louisiana Debt Collection Statute of Limitations by Debt Type
Louisiana's debt collection laws combine federal guidelines with state-specific provisions, primarily governed by the Louisiana Consumer Credit Code. These rules are designed to strengthen protections for consumers. To navigate debt collection in Louisiana, it’s important to understand how state laws align with federal regulations like the FDCPA.
The FDCPA establishes federal rules for debt collection, but Louisiana takes it a step further by applying its regulations to original creditors, not just third-party collectors. According to Louisiana Revised Statute 9:3562, even creditors involved in consumer credit transactions must comply with these state-specific rules.
While federal law preempts state law only in cases of direct conflict, Louisiana’s more protective standards remain enforceable. Both the FDCPA and Louisiana’s laws focus solely on debts related to personal, family, or household purposes.
In Louisiana, the time limits for pursuing debts through the courts are called "prescriptive periods." These periods generally begin when the breach of obligation is discovered. The table below outlines the prescriptive periods for common types of debts:
| Debt Type | Prescriptive Period | Statutory Reference |
|---|---|---|
| Open Accounts (Credit Cards) | 3 years | Civil Code 3494 |
| Promissory Notes | 5 years | Civil Code 3498 |
| Written Contracts | 10 years | Civil Code 3499 |
| Mortgage Contracts | 3 years | Civil Code 3494 |
| Domestic & Foreign Judgments | 10 years | Civil Code 3501 |
These deadlines are firm - debts that exceed their prescriptive period cannot be pursued in court. However, collectors can still request voluntary payments. Be cautious: even small payments on an expired debt can reset the prescriptive period, restarting the clock for legal action.
Debt collectors must provide a written validation notice within five days of their first contact. This notice must include the debt amount and the name of the creditor. Additionally, collection efforts must pause if the debtor disputes the debt or requests verification.
Debt buyers have additional obligations. They must obtain a written assignment agreement for the debt and include a copy of it when filing a lawsuit. To operate in Louisiana, debt buyers are required to register with the Louisiana Secretary of State and post a $10,000 surety bond. If a debtor does not object to the assignment before filing an answer in court, the assignment is presumed valid. This registration process ensures that debt buyers have the legal authority to conduct business and file claims within the state’s courts.
Louisiana has clear rules in place to protect consumers from unfair debt collection practices. These laws apply to both third-party collectors under federal law and original creditors governed by state law. Violators can face serious consequences, including refunds of finance charges and damages amounting to three times those charges for intentional misconduct. Below, we’ll explore prohibited behaviors and the penalties tied to these actions.
Debt collectors are barred from using harassment, abuse, or deceptive tactics. For example, they cannot:
If a collector intentionally violates these rules, Louisiana Revised Statute 9:3552 allows the consumer to recover all loan finance charges, plus three times those charges as damages, along with reasonable attorney's fees. To pursue these penalties, the consumer must send a written notice via certified mail to both the collector and their registered agent. The collector then has 30 days to address the violation.
Beyond harassment and misrepresentation, Louisiana law also places strict limits on how collectors can contact debtors.
Louisiana law, under RS 9:3562, limits who collectors can contact about a debt. Generally, they are prohibited from discussing the debt with anyone other than:
The only exception is if the person contacted is part of the debtor’s household. Collectors are not allowed to reach out to neighbors, relatives, or coworkers about the debt unless the debtor gives explicit consent.
If a debtor sends a cease-communication request via certified mail, collectors are restricted to sending one mailed notice per month and making up to four personal settlement contacts. During these interactions, they cannot make threats of illegal actions. However, once a creditor files a lawsuit and secures a judgment, these restrictions no longer apply.
Debt collectors also face additional penalties for failing to respond to a consumer’s written complaint within 30 days, which can result in $100 in out-of-pocket expense claims. Moreover, Louisiana law prohibits creditors from requiring consumers to reimburse fees paid to a collection agency. These regulations emphasize the importance of adhering to Louisiana’s strict debt collection laws to avoid penalties and legal repercussions.
In Louisiana, strict licensing and compliance standards are essential for debt collectors and buyers to operate legally. These requirements ensure that all entities involved in debt collection meet the state's legal standards before conducting business.
Debt collectors and collection agencies must register with the Louisiana Secretary of State, regardless of whether they have a physical office in the state. This rule applies to both in-state and out-of-state entities collecting debts from Louisiana residents, as well as individual collectors conducting such activities. Since June 22, 2006, the regulatory authority for this process shifted from the Louisiana Office of Financial Institutions to the Secretary of State.
"Any collection agency or debt collector doing business in this state shall register with the secretary of state." - RS 9:3534.1
The registration process includes several fees: an initial registration fee of $200, a $200 investigation fee, and a requirement to maintain a $10,000 surety bond. For agencies with branch offices, there are additional fees of $100 for both initial registration and annual renewal. Attorneys in Louisiana are exempt from these registration requirements.
| Fee Type | Amount |
|---|---|
| Initial Registration | $200 |
| Investigation Fee | $200 |
| Annual Renewal | $200 |
| Surety Bond | $10,000 |
| Branch Office (Initial/Renewal) | $100 |
Once registered, agencies must maintain accurate records and follow internal controls to ensure compliance with state laws.
After obtaining licensure, debt collectors must adopt practices that align with Louisiana's legal framework. For instance, all debt assignments must be documented in writing to uphold the legal right to pursue court action. When filing lawsuits, collectors should include a copy of the formal assignment with their petition to establish its validity.
To stay compliant, collectors should maintain detailed records, particularly those documenting communications with debtors. Louisiana law limits contact with debtors after a cease-and-desist request to one mailed notice per month and up to four in-person settlement contacts.
The state also provides a 15-day correction window for errors discovered by collectors themselves. If an error is identified, the collector must notify the consumer in writing and correct the issue within 15 days to avoid civil liability. Regular internal audits can help identify potential issues early. Additionally, if a consumer submits a written complaint, creditors are required to provide a written response within 30 days.
Louisiana law prohibits creditors from requiring consumers to reimburse fees paid to collection agencies. Furthermore, attorney fees in consumer credit transactions are capped at 25% of the unpaid debt after default. These restrictions must be clearly reflected in agreements and communications throughout the collection process.
Once a creditor secures a court-issued money judgment in Louisiana, they can utilize specific legal tools to recover the debt. Two of the primary methods available are wage garnishments and property liens, each governed by its own set of rules and limitations.
In Louisiana, creditors can garnish wages, but only after obtaining a court judgment. This process begins with filing a garnishment petition - commonly referred to as a writ of fieri facias. Afterward, the court notifies the debtor's employer with an order and interrogatories. The employer must respond under oath within 15 days, after which the court issues a final judgment instructing the employer to withhold a portion of the debtor's paycheck.
For most types of debt, creditors can garnish either 25% of the debtor’s weekly disposable earnings or the amount exceeding 30 times the federal minimum wage - currently $217.50 per week. However, different rules apply to child support and federal student loans:
Disposable earnings refer to wages left after mandatory deductions like taxes and Social Security. Voluntary deductions, such as 401(k) contributions or health insurance premiums, are not included in this calculation. Certain income sources, such as Social Security benefits, unemployment compensation, workers' compensation, and most pensions, are entirely exempt from garnishment.
Creditors must act quickly - garnishment judgments must be obtained within 180 days of the employer's response to the court’s interrogatories. If not, the garnishment automatically ends. Costs for garnishment range from $40 to $500, and judgments in Louisiana accrue interest at a rate of 9.75% annually.
In addition to garnishing wages, creditors can pursue debt recovery through judgment liens.
In Louisiana, judgment liens - also known as judicial mortgages - apply exclusively to real estate, including land, buildings, and other improvements. Unlike some states, Louisiana does not allow general judgment liens on personal property like vehicles or equipment. To create a lien, a creditor must file the court judgment with the parish recorder of mortgages (usually the clerk of court) in every parish where the debtor owns property.
A judgment lien remains valid for 10 years from the date it is finalized. Creditors can extend this period by filing a revival motion with an affidavit of non-satisfaction before the lien expires, adding another 10 years. The lien applies not only to property the debtor currently owns but also to any real estate acquired in the same parish while the lien remains active.
Creditors have several options for enforcing liens, such as negotiating a settlement, waiting for the debtor to sell or refinance the property (which requires clearing the title), or initiating a sheriff’s auction. However, liens are effective only in the parishes where they are recorded. If a debtor owns property in multiple parishes, creditors should file liens in each relevant location. Before proceeding with a sheriff’s sale, conducting a title search is recommended to identify any superior liens, such as property taxes or first mortgages, that could affect the sale proceeds.
Louisiana law provides certain exemptions to protect debtors. For example, the homestead exemption safeguards up to $35,000 in equity for a primary residence, covering up to 5 acres in a municipality or 200 acres in rural areas. Additional exemptions include up to $7,500 for one motor vehicle and up to $5,000 for wedding or engagement rings. These protections may limit the amount creditors can recover through liens or other enforcement actions.
In Louisiana, trading debt portfolios comes with specific legal requirements. Proper documentation and strict adherence to statutory rules are essential for staying compliant with state laws.
Louisiana mandates registration with the Secretary of State for all debt collectors or collection agencies operating within the state, including debt buyers acquiring portfolios through assignment - even if they don't maintain a physical presence in Louisiana. Along with registration, collectors must also post the required bond as per licensing guidelines.
To establish legal standing in court, debt buyers must ensure the assignment is in writing. Louisiana law defines a valid assignment as a written agreement where the collector commits resources to pursue the debt and agrees to pay the credit grantor a net percentage of the amount collected. The statute clarifies:
"In any suit brought by a collection agency or debt collector to collect a debt acquired from a client or customer via assignment, an agreement in writing by the such collector to expend time, effort, money, or other resources in pursuit of such debt, and to pay the credit grantor a net percentage of the amount collected on the debt shall be deemed a valid and enforceable assignment."
When filing a lawsuit, the assignment is considered valid if a copy is submitted with the court petition. If the debtor does not challenge the validity of the assignment before filing an answer, the assignment is conclusively presumed valid. This makes maintaining accurate and thorough documentation crucial for debt buyers seeking to establish legal standing.
To navigate Louisiana's debt trading laws effectively, debt buyers should adopt robust compliance measures. Start by reviewing the statute of limitations before acquiring any debt portfolio. Louisiana has relatively short timeframes for debt enforcement: 3 years for open accounts like credit cards and utilities, 5 years for promissory notes, and 10 years for written contracts. Older debt, such as expired credit card accounts, may no longer be enforceable in court, though collectors can still request voluntary payments.
Another key step is verifying the chain of title for each debt assignment. Louisiana law requires assignments to include the specific "net percentage" payment clause to the original creditor, as outlined in LA Rev Stat § 9:3534.1. Additionally, debt validation notices must be sent to debtors within five days of initial contact, clearly stating the amount owed and the name of the original creditor.
For commercial debts (business-to-business), Louisiana does not impose statutory licensing requirements, although federal regulations remain applicable.
Finally, implement a correction protocol to address errors within 15 days of detection. This proactive approach can help avoid civil penalties, especially since intentional violations allow consumers to recover all finance charges plus three times that amount. Proper compliance not only minimizes risks but also ensures smoother operations when trading debt portfolios in Louisiana.
Debexpert uses technology to simplify the complex task of adhering to Louisiana's debt collection laws. Compliance in this state means paying close attention to registration, documentation, and statutory deadlines. By addressing these challenges, Debexpert's platform helps ensure legal adherence while making debt portfolio transactions more efficient.
Debexpert offers several tools designed to meet Louisiana's regulatory needs:
Debexpert makes buying and selling debt portfolios easier with its auction tools, designed to meet Louisiana's compliance standards. Sellers can create auctions - whether English, Dutch, Sealed-bid, or Hybrid - while transparently providing details like debt age, creditor information, and assignment documents.
The platform also includes a chat and notification system, enabling direct communication between buyers and sellers. This feature is especially useful for discussing specifics like Louisiana's 9.75% legal interest rate on judgments. Buyers are notified when portfolios matching their preferences become available, allowing them to quickly assess enforceability and compliance. By reducing administrative hassle and ensuring access to necessary documentation, Debexpert helps buyers and sellers stay aligned with Louisiana's strict regulatory requirements.
Louisiana's debt collection laws apply to both original creditors and third-party collectors, with requirements that go beyond the federal FDCPA standards. Every collector must register with the Secretary of State and secure a $10,000 surety bond to operate legally. The state also enforces strict communication rules - collectors are prohibited from contacting individuals outside the debtor's household unless legally permitted. If a certified cease-and-desist letter is issued, creditors are limited to only one mail notice per month and no more than four in-person settlement attempts.
The state sets specific timeframes for debt collection: 3 years for open accounts and 10 years for written contracts and judgments. Additionally, any debt assignment must be documented in writing and filed with court petitions to maintain its validity. Post-judgment remedies, like wage garnishment, are available, but Louisiana law protects 75% of a debtor's disposable earnings from garnishment. Violations of these laws come with serious repercussions - intentional breaches may result in a refund of all finance charges, triple damages, and attorney fees.
Understanding these rules is essential for ensuring compliance in debt recovery efforts.
Adhering to Louisiana's regulations is critical to avoiding expensive penalties. While registration fees are relatively low, the financial consequences of non-compliance, including triple-damage penalties, can be severe. Collectors do have an opportunity to mitigate risks - if violations are identified and corrected within 15 days (and before a consumer complaint is filed), liability for civil remedies can be avoided.
Operating within Louisiana's legal framework requires balancing compliance with operational efficiency. Tools like Debexpert simplify this process by verifying registrations, filtering portfolios for enforceability, and securely managing assignment documentation. Compliance isn't just a legal requirement - it’s a fundamental part of effective and responsible debt recovery operations.
In Louisiana, a creditor cannot file a lawsuit after the legal time limit, known as the prescriptive period, has expired. This statute of limitations sets a deadline for initiating legal action based on the type of debt involved. Once this period ends, the debt becomes time-barred, meaning creditors lose the right to sue to collect it.
In Louisiana, making a payment on a past-due debt can reset the clock on the statute of limitations. Essentially, the time frame for legal action starts over from the date of that payment. However, for this to happen, the payment must be voluntary and made after the debt is already overdue.
If a debt collector reaches out to your family or employer, let them know they are prohibited from discussing your debt with third parties unless you’ve given explicit consent. Such actions may breach the Fair Debt Collection Practices Act (FDCPA) or Louisiana-specific laws. If this happens, you might want to report the incident to the relevant authorities.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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