Understanding Debt Collection in South Dakota: A Guide for Creditors and Debtors

Guy Benhanan
May 18, 2023

Debt collection is an essential part of the financial system, often seen as a last resort by creditors who attempt to recover funds owed by debtors. While it can be a stressful process for debtors, understanding the intricacies of debt collection laws can help navigate these murky waters.

The Basics of Debt Collection in South Dakota

South Dakota State

In South Dakota, like many states, debt collection is regulated by laws designed to protect consumers from unfair and deceptive business practices to collect, while balancing the rights of creditors.

South Dakota Codified Laws on Debt Collection

South Dakota Codified Laws on Debt Collection

The South Dakota Codified Laws Title 54, Chapter 04, Section 54-4-77 outlines the prohibitions on bad debt collection practices in the state. It explicitly forbids harassment, oppression, or abuse of a debtor, false representation of a bad debt, giving false credit information about the debts owed the debtor, collecting additional taxes or fees not allowed by the contract or state law, and more.

Rights of Debtors and Obligations of Creditors

As a debtor, you have the right to fair treatment and accurate representation of your debt. Creditors and debt collection agencies are obligated to respect these rights and adhere strictly to the stipulations of your contract and the law.

Debt Collection Process in South Dakota

South Dakota Mountain

The debt collection process typically begins with the initial contact from the creditor or the debt collection agency to collect it.

Initial Contact and Verification of Debt

Upon first contact, you have the right to request validation of the debt. The creditor or debt collection agency is required to show return receipt and provide you with the necessary information.

Actions Creditors Can and Can't Take

South Dakota law places specific restrictions on the actions creditors can take. For instance, they cannot harass or threaten violence, falsely claim to be an attorney, state agency or government representative, misrepresent the amount of money owed, or use deceptive means to collect the debt.

Understanding the Role of Debt Collection Agencies

Debt collection agencies serve as intermediaries between creditors and debtors. They are bound by the same laws as creditors and must adhere to ethical standards and practices.

Specifics of South Dakota Debt Collection

South Dakota Field

There are some specific aspects to debt collection in South Dakota that debtors and creditors should be aware of.

South Dakota Statute of Limitations on Debt Collection

South Dakota Statute of Limitations on Debt Collection

The statute of limitations is the period within which a person, a creditor or debt collection agency can sue to recover money for a debt.

Recognizing if a debt has exceeded its period of limitation requires knowledge of the debt's age. A debt's statute of limitation in South Dakota, if expired or nearing expiry, influences how you approach its settlement.

It's crucial to note that if the limitation period of bank account is about to end, you should refrain from making any deposit or any debt payments. The reason for this is that the limitation clock starts ticking from the moment you opened the account or from the date of your most recent payment.

Here are the limitation periods for various types of debts:

  • Medical Debt: 6 years
  • Mortgage Debt: 6 years
  • Auto Loan Debt: 4 years
  • Credit Card Debt: 6 years
  • State Tax Debt: 3 years

If a debt collector has been persistently contacting you about a debt that you suspect has exceeded its statute of limitations, you have the right to request cessation of these calls. A simple cease and desist letter to the debt collector contact name will ensure compliance with court order.

Post-expiry of the statute of limitations, legal action to collect you for debt recovery is not permissible. However, the debt is not absolved, and collectors may continue to contact you to collect, or report your non-payment of household debts to credit bureaus.

Legal action for debt post the expiry of its statute of limitations infringes upon the Federal Debt Consumer Protection Act. By understanding debt limitation periods, you can confidently defend against debt collectors.

Your Rights Under the Federal Debt Consumer Protection Act

South Dakota Debt Collection

The FDPCA governs the conduct of third-party debt collectors while attempting to collect debts from you. They must comply to the following regulations:

  1. Confidentiality of Debt: Debt collectors cannot disclose your debt to anyone other than your spouse or lawyer. This also implies that they cannot leave messages that could be overheard by others, or contact you at your workplace if such contact is prohibited.
  2. Limited Third-Party Contact: Debt collectors may only contact others in your life to obtain your contact details. They are forbidden from reaching out to third parties more than once.
  3. Debt Verification: If you demand debt verification, the collector must provide it. This request must be sent within 20 to 30 days of receiving the original verification notice.
  4. Cease and Desist Compliance: After receiving a cease and desist letter, the collector must stop contacting you. However, they may resume contact if they provide written verification of the debt.
  5. Prohibition of Harassment: Any oppressive or abusive behavior by a debt collector is a direct violation of the FDPCA. This includes threatening harm, revealing your debt publicly (excluding to credit bureaus), using obscene language, making calls to irritate you, or calling outside permissible hours.
  6. Honesty in Debt Collection: Debt collectors must not lie during the collection process. This includes misrepresenting themselves as government officials, lawyers, or credit reporting company employees, or misrepresenting the debt amount or the legal documents they send.
  7. Avoidance of False Claims: Debt collectors may not make false claims, such as threats of arrest, asset seizure, or legal action, unless legally permitted to do so.
  8. Fair Practices in Debt Collection: Debt collectors must not engage in unfair practices like charging unauthorized interest or fees, depositing post-dated checks prematurely, or threatening to take your property unlawfully.

Regulations and Protocols for Collecting Debt in State of South Dakota

South Dakota United States

Debt collection in South Dakota adheres to federal rules and standards, which impose penalties of up to $1,000 per infringement, along with potential court costs. However, wage garnishment protections in South Dakota are slightly more generous than federal guidelines, offering an 80% safeguard.

Additionally, these wage deductions are limited to 60-day pay cycles, but these pay and wages can be renewed indefinitely. It should be noted that pay from federal benefits or any other charge or funding from federal, state, or private sources is immune to garnishment.


  • Debt collectors may make respectful phone calls between the hours of 8:00 AM and 9:00 PM.
  • Debt collectors may continue to contact a debtor who has sent a written request to cease communication, but only for the purpose of making special payment arrangements.
  • If a debtor's home phone or address is unavailable, debt collectors may contact the debtor's employer without disclosing the purpose of the call.


  • Debt collectors are prohibited from suing a debtor with the aim of recovering debts.
  • Misrepresentation of the nature of the debt or any related circumstances is illegal.
  • Threatening the debtor or their family members, or using foul language, is strictly forbidden.

Seeking Legal Help for Debt Collection Issues

Seeking Legal Help for Debt Collection Issues

If you believe a creditor, attorney or debt collection agency is violating South Dakota's debt collection laws, you should consider seeking legal advice. Many attorneys specialize in debt collection issues and can provide guidance and representation.


Debt Collection in South Dakota

Understanding your rights and obligations in the debt collection and payment process can make a significant difference in navigating this often stressful experience. South Dakota's laws offer protections for debtors while maintaining a balance for creditors' rights.

Frequently Asked Questions

How long before a debt becomes uncollectible in South Dakota?

It's called the statute of limitations, which typically initiates when a payment on a debt is missed. In the case of South Dakota, the statute of limitations for bad debt spans six years. If a debt collector tries to recover a debt that you owe money that exceeds this age as per state law, you might have the legal right to file a lawsuit against them.

Is the state of South Dakota in debt?

During the 2019 fiscal year, South Dakota recorded a state debt of 3.94 billion U.S. dollars. In contrast, the debt held by local government was marginally less, coming in at 3.04 billion U.S. dollars. Source: Statista

How long are judgments good for in South Dakota?

Under South Dakota Codified Laws ยง 15-16-7, a judgment is transformed into a lien on real estate for a decade. There is also a provision that allows for the extension of this judgment for another ten-year period.

How much will debt collection agencies settle for?

Standard proposals paid for debt and fee settlement usually vary between 10% and 50% of the total debt amount. It should be noted that creditors are not compelled to agree to a debt or fee reduction offer, and payments apply irrespective of whether you are affiliated with a trustworthy debt and fee settlement firm.