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Virginia's debt collection laws combine federal protections under the Fair Debt Collection Practices Act (FDCPA) with state-specific rules. Key highlights include:
Debt buyers and sellers should prepare for the Medical Debt Protection Act by updating contracts to meet compliance and avoid legal risks.
In Virginia, debt buyers and collection agencies don't need state-level licenses. Instead, the state relies on federal protections under the FDCPA to regulate these entities. According to attorney Amy Loftsgordon:
"Virginia doesn't have an extensive set of fair debt collection laws".
This places the burden on debt collectors to strictly adhere to federal standards to avoid legal issues or complaints with the Consumer Financial Protection Bureau.
That said, Virginia does enforce criminal penalties for certain violations. For instance, sending documents resembling legal warrants, writs, or court notices to collect a debt is classified as a Class 4 misdemeanor. This applies universally to all debt collectors in the state, regardless of licensing status, and violators can face fines up to $250.
For medical debt buyers, things change dramatically starting July 1, 2026. While no license is required, they must sign a legally binding agreement with the medical creditor. This agreement caps interest rates at 3% annually and bans extreme collection methods like home foreclosures or property liens. This arrangement essentially replaces the need for a license by setting clear compliance rules.
Virginia keeps licensing requirements for debt buyers fairly minimal. A general collection license isn’t required, making it easier to operate in the state. However, Debt Settlement Services Providers, who negotiate debt forgiveness for consumers, must secure a license from the State Corporation Commission. The license application costs $500, and applicants must maintain a surety bond ranging from $25,000 to $350,000. Notably, Virginia does not issue licenses to standard collection agencies or creditor associations.
Medical debt buyers, however, must prepare for the Medical Debt Protection Act, effective July 1, 2026. Purchase agreements for medical debt must include clauses that limit interest to 3% and allow the debt to be recalled if the debtor qualifies for financial assistance. Buyers should update their contracts before this date to ensure compliance.
Additionally, businesses handling personal data from 100,000 or more Virginia residents - or 25,000 residents if over 50% of revenue comes from selling data - must comply with the Virginia Consumer Data Protection Act (CDPA). This law gives consumers rights to access, correct, and delete their personal data, adding another layer of compliance for larger debt buyers.
With licensing and data rules outlined, Virginia also defines clear boundaries for collection practices.
Virginia law sets firm rules for acceptable and prohibited debt collection activities. Under the FDCPA, collectors can contact debtors between 8 a.m. and 9 p.m., but they cannot call someone at work if they know the employer forbids it. Collectors may only reach out to third parties to locate the debtor, not to discuss the debt.
Certain actions are explicitly banned, such as using profane language, making violent threats, or repeatedly calling to harass someone. Collectors are also prohibited from threatening arrest or claiming they can issue a "body attachment" for unpaid consumer debt.
For medical debt, stricter rules kick in after July 1, 2026. Collectors must wait at least 120 days after the final invoice before pursuing extreme measures like foreclosures, liens, or wage garnishments for debtors who qualify for financial assistance. In the first 90 days after the invoice, no interest or late fees can be charged. Once that grace period ends, interest is capped at 3% annually.
| Practice | Legal | Illegal |
|---|---|---|
| Documentation | Sending standard invoices and letters | Sending documents resembling legal warrants or court orders |
| Medical Debt Interest | Charging up to 3% interest after 90 days | Charging interest before 90 days or exceeding the 3% cap |
| Third-Party Contact | Contacting others to locate the debtor | Discussing debt details with neighbors, friends, or employers |
| Harassment | Calling within 8 a.m. to 9 p.m. | Using profane language, threats, or excessive calls to annoy |
Consumers who experience FDCPA violations can sue for up to $1,000 in statutory damages and any actual damages. Complaints should be directed to the Consumer Financial Protection Bureau or the Virginia Office of the Attorney General. If sued, debtors must respond to the court to avoid default judgments, which could lead to wage garnishment.
These rules on collection practices align with regulations governing debt sales and transfers.
When buying or selling debt in Virginia, the rules differ based on the type of debt. Starting July 1, 2026, medical creditors can’t sell debt without a written agreement with the buyer. This agreement must include four key provisions: a 3% interest cap, a ban on extreme collection actions, a clause allowing debt recall for financial assistance eligibility, and acknowledgment that the seller remains responsible for the buyer’s actions.
This shared responsibility is crucial. Even after selling medical debt, the original creditor remains liable for how the buyer collects. While indemnification clauses can help limit exposure, they don’t fully eliminate it. Buyers should ensure their contracts clearly define roles and allow for debt recall if needed.
For state-owned debt, different rules apply. State agencies must send accounts receivable of $3,000 or more that are 60 days overdue to the Division of Debt Collection. Late penalties for these accounts are capped at 10% of the overdue amount. Smaller debts fall under separate provisions of the Virginia Debt Collection Act.
Debt sales must also comply with the Virginia Consumer Protection Act, which bans fraud, deception, or misrepresentation in consumer transactions. Sellers must disclose all terms, fees, and conditions to avoid prohibited practices. Before selling medical debt, creditors should check if the debtor qualifies for Medicaid or other financial aid to avoid violating collection restrictions.
Medical debt buyers should confirm their contracts include the required terms. Agreements must explicitly state that foreclosure or liens on personal property are off-limits. Additionally, patients must receive at least 30 days' notice before any extreme collection actions. These rules ensure accountability for both buyers and sellers in debt transactions.
Virginia Debt Collection Statutes of Limitations by Debt Type
In Virginia, creditors and debt buyers face strict deadlines for filing lawsuits, thanks to the state's statutes of limitations. Once these deadlines pass, the debt is considered "time-barred", meaning it can't be pursued through the courts. However, while collectors can still request payment, they are prohibited from threatening or initiating legal action. This legal framework plays a key role in determining how various types of debts are handled.
The clock starts ticking from the "cause of action" date, which is usually the first missed payment or default. Debt buyers are required to confirm this date before filing a lawsuit. Pursuing legal action on time-barred debt violates the Fair Debt Collection Practices Act (FDCPA). If a lawsuit is filed after the statute of limitations expires, the debtor must actively assert this as an affirmative defense in court. Without raising this defense, the court may still issue a judgment.
The statute of limitations can reset if the debtor makes a partial payment or provides a written acknowledgment of the debt. Keeping records of any such actions is essential to avoid unintentionally restarting the limitation period.
The type of agreement - written or oral - determines how long creditors have to take legal action. Virginia applies different statutes of limitations depending on the nature of the contract. For written contracts signed by the debtor, such as credit card agreements, auto loans, or personal loans, the statute of limitations is 5 years under Va. Code § 8.01-246. On the other hand, oral agreements or contracts without a debtor's signature are limited to 3 years.
Promissory notes, which include a written promise to pay, have a 6-year statute of limitations under Va. Code § 8.3A-118(a). Open accounts, like utility bills or certain store accounts, fall under a 3-year limit starting from the last payment or charge. Similarly, medical debt has a 3-year limit from the date of the final invoice or breach of a payment plan.
| Debt Type | Statute of Limitations | Virginia Code |
|---|---|---|
| Written Contracts (Signed) | 5 Years | § 8.01-246 |
| Oral/Unwritten Contracts | 3 Years | § 8.01-246 |
| Promissory Notes | 6 Years | § 8.3A-118(a) |
| Medical Debt | 3 Years | § 8.01-246(B) |
| Open Accounts | 3 Years | § 8.01-246 |
Judgments awarded by a court are an exception. Creditors have 20 years to collect on a judgment, and this period can be renewed, making judgments a powerful tool for long-term debt collection.
Auto loans and sales-related debts have specific rules. Auto loans generally fall under the 5-year statute for written contracts, as most vehicle financing involves signed agreements. However, debts tied to the sale of goods under the Uniform Commercial Code (UCC) have a 4-year statute of limitations. This period begins at the time of breach, often marked by the first missed payment. It's important to distinguish between auto loans governed by standard financing agreements and those under UCC sales contracts, as this affects the collection timeline. For contracts under seal - a less common scenario - the statute can extend to 20 years.
Certain circumstances can pause (or toll) the statute of limitations, such as when a debtor moves out of Virginia, files for bankruptcy, or if fraud or concealment is involved. These exceptions can extend the timeframe for collection. Proper documentation of these situations is critical to ensure compliance with the FDCPA.
Virginia offers safeguards to protect consumers from abusive debt collection practices, combining federal and state measures for a more comprehensive approach. These protections align with the regulatory framework, including licensing requirements and guidelines for collection practices. Under the Fair Debt Collection Practices Act (FDCPA), debtors have 30 days from receiving a validation notice to dispute a debt in writing. During this period, collectors must halt all collection activities until they provide proper validation of the debt. Debtors can also submit a written request to stop further communication, except for notices confirming the request or detailing upcoming legal actions. For consumer debts, wage garnishment is capped at 25% of disposable earnings per pay period.
If a debt collector violates these rules, the debtor can file a lawsuit seeking up to $1,000 in statutory damages, along with attorney fees and court costs. Additionally, under Virginia law (Va. Code § 18.2-213), sending documents that mimic official legal processes is a Class 4 misdemeanor, punishable by fines up to $250. These rights establish a foundation for addressing specific challenges, such as medical debt collection.
Starting July 1, 2026, Virginia's Medical Debt Protection Act (HB1725) will introduce stricter rules for medical debt collection. Creditors must wait at least 120 days after issuing the final bill before initiating aggressive actions like wage garnishment, property liens, or foreclosure. Before taking any of these actions, creditors are required to provide a 30-day notice summarizing their financial assistance policy. Importantly, the law prohibits wage garnishment for patients who qualify for financial assistance. These measures provide added security for individuals dealing with medical debt.
Virginia integrates FDCPA protections with its own legal measures to address debt collection issues. While the FDCPA allows individuals to file private lawsuits for damages, Virginia law criminalizes the simulation of legal processes. However, consumers cannot directly sue under this state provision; instead, they can report violations to the Virginia Office of the Attorney General. The table below highlights key differences between federal and state protections:
| Protection Category | Federal (FDCPA) | Virginia State Law |
|---|---|---|
| Simulating Legal Process | Prohibited as a deceptive practice | Prohibited as a Class 4 misdemeanor |
| Harassment/Abuse | Prohibited (e.g., excessive calls, threats) | Relies on FDCPA standards |
| Medical Debt Interest | No specific federal cap | Capped at 3% annually (Effective 2026) |
| Statutory Damages | Up to $1,000 | Criminal fines up to $250 for simulated processes |
Consumers who encounter illegal debt collection practices can report them to agencies like the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), or the Virginia State Attorney General's office. If harassment persists, seeking legal counsel can help direct all future communications through an attorney.
Trading debt portfolios in Virginia requires careful attention to state laws, especially when dealing with medical debt. Starting July 1, 2026, the Medical Debt Protection Act introduces rules that medical creditors must follow when selling debt. These include creating written agreements with buyers to prevent aggressive collection tactics, capping interest rates at 3% per year, and allowing debt recall if the debtor qualifies for financial assistance. Sellers remain responsible for buyers' actions but can negotiate indemnity clauses to protect themselves.
"A medical creditor that sells medical debt to a medical debt buyer under an agreement... remains liable for any actions taken by such medical debt buyer in relation to such medical debt, subject to any indemnification provisions as may be agreed to by such parties." - Virginia Code § 59.1-612
Additionally, the Virginia Consumer Data Protection Act (VCDPA) mandates secure handling of debtor information during transactions. Personal financial records must be securely destroyed - via shredding or incineration - and transaction records must be kept for at least three years after agreements end. These requirements ensure compliance while facilitating smoother debt portfolio transfers.
Debexpert provides a platform tailored to meet Virginia's regulatory requirements for debt trading. It ensures secure file sharing with end-to-end encryption, aligning with VCDPA standards for data protection. Sellers can list debt portfolios for auction in various formats - English, Dutch, Sealed-bid, or Hybrid - and monitor buyer activity in real time. Buyers benefit from portfolio analytics tools that allow them to review account details, interest rates, and collection histories before placing bids.
When dealing with medical debt portfolios, Debexpert's contract management tools help sellers include essential provisions, such as the 3% interest cap and the mandatory recall clause. The platform also features real-time chat, enabling buyers and sellers to address compliance questions directly. Notifications throughout the transaction process ensure transparency from start to finish.
Debexpert's analytics tools assist buyers in verifying compliance with Virginia's regulations. For example, buyers can confirm that medical debt portfolios adhere to the 90-day grace period and the 3% annual interest cap. The analytics dashboard provides insights into debt age, payment history, and debtor demographics, helping buyers assess the portfolio's quality and potential legal risks.
To protect sensitive data during transfers, the platform offers encrypted file sharing. Sellers can upload critical documents - such as creditor agreements, payment records, and financial assistance policies - through secure channels. This not only meets VCDPA data security requirements but also ensures that medical creditors have made reasonable efforts to determine Medicaid or financial assistance eligibility before selling debt. Audit trails track document access, providing accountability if compliance issues arise.
Debexpert's real-time tracking tools help buyers manage portfolios effectively. For instance, buyers can identify accounts where debtors qualify for financial assistance, triggering the statutory recall provision. This prevents buyers from unintentionally violating rules by pursuing prohibited collection actions against protected individuals.
Verification features ensure compliance with Virginia's legal standards. Buyers can check that medical debt was sold under valid agreements and that no aggressive collection practices occurred during the 120-day waiting period after the final invoice. For state-related debt, the platform helps monitor accounts over $3,000 that are 60 days past due, ensuring they are forwarded to the Division of Debt Collection as required. These tools minimize legal risks and help buyers operate within Virginia's regulatory framework.
Navigating Virginia's regulatory environment is essential for effectively managing debt portfolios. This overview highlights the importance of ethical practices, thorough due diligence, and proactive compliance to build trust among buyers, sellers, and debtors.
Virginia's debt collection rules require strict adherence to both federal and state regulations. The Fair Debt Collection Practices Act (FDCPA) serves as the primary guideline, as Virginia's state-specific collection laws are relatively limited. Additionally, the Medical Debt Protection Act, set to take effect on July 1, 2026, will bring notable restrictions on medical debt. Violations, such as simulating legal processes, can result in serious penalties, making compliance a non-negotiable priority.
For medical debt transactions, written agreements must include specific provisions. These include debt recall clauses for debtors eligible for financial assistance and indemnification terms to shield sellers from potential buyer violations. Furthermore, debt management and settlement agencies are required to meet strict licensing and transparency standards.
Adhering to these regulations is the foundation of ethical debt trading. Beyond minimizing legal risks, compliance helps cultivate trust among all parties involved. With the introduction of the Medical Debt Protection Act in 2026, staying up-to-date on regulatory changes will be crucial for anyone engaged in debt portfolio transactions in Virginia.
In Virginia, even a small payment on a debt can reset the statute of limitations. By making a partial payment or acknowledging the debt, you might inadvertently restart the clock, giving creditors more time to take legal action. Understanding this is crucial before deciding to make any payments on older debts.
If a debt collector takes legal action against you for a debt that's past its expiration under Virginia's statute of limitations, you need to inform the court. In Virginia, this time limit is usually 3 to 5 years, depending on the type of debt. You can also file a legal defense to halt the lawsuit. Acting quickly is key to safeguarding your rights.
Starting July 1, 2026, Virginia’s Medical Debt Protection Act will introduce new rules on how medical debts can be reported and collected. Under this law, certain healthcare facilities and collection agencies will no longer be allowed to report medical debts to credit bureaus. Additionally, extraordinary collection actions - like lawsuits or wage garnishments - will be prohibited unless consumers are given proper notice beforehand. The act also places restrictions on the types of medical debts that can be bought or sold within Virginia, aiming to offer stronger protections for consumers dealing with medical bills.
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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