The only way that a debt collector can threaten such a thing is if they have gained prior approval from the original creditor that they bought the debt from, and they are literally ready to file suit against you in the next day or so. Other than that, no, they cannot threaten such a thing.
When a debt is sold to a third-party, this company is subject to the dictates of the Fair Debt Collection Practices Act (FDCPA). This is a federal law which regulates the extent to which a collection agency can collect on a debt. The prohibitions are clearly marked and defined, making a great variety of activities that debt collectors normally engage in unlawful. The problem though is twofold: 1) most people don’t even know that such a law exists, and 2) most collection agencies rarely follow the rules of the statute. In fact, most debt collection agencies flout the law habitually. They have determined that such adherence is not necessary, if for no other reason than because their threatening tactics work. If you are being harassed by an individual who calls you night and day, and who is scaring you with talk of law suits and garnishments, then chances are you will somehow find the money to make them go away. The problem (amongst many) is that such a thing is illegal.
If when the collection agency bought the debt (for pennies on the dollar) from the original creditor, the original creditor gave it explicit approval to sue for non-payment, then the collection agency would in the right to make such a claim. But this is rarely the case. Let’s think about this for a moment: if you owe an old hospital bill of $300 that has now been passed onto collections, and the debt collector is threatening to garnish your wages, we can assume that this is an idle threat. It would cost them way more to hire an attorney and/or for the filing fee with the court. So the chances of them actually filing suit against you is slim to none. But if in fact they do make such a threat, and there was no explicit approval (and especially if the original debt was so low), then they have violated the FDCPA. If a violation can be shown, the damages that the agency has to pay is roughly $1,000. That amount of money will of course not change your life, but it is something. In addition, the statute states that any attorney fees have to be paid by the creditor. This means that there are no upfront fees to you.
One other possibility to look into would be whether or not you might need to also file for a Missouri bankruptcy. Whether it is a St. Louis Chapter 7 bankruptcy or a St. Louis Chapter 13 bankruptcy, all unsecured debts (like credit cards, medical bills, payday loans, etc.) are taken care of forever. The affordable St. Louis bankruptcy attorneys at Brinkman & Alter, LLC have been making sure that our client’s needs are taken care of for years. Our goal is to help guide you through the entire process from start to finish, and get you back on the road toward financial freedom.