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Debt Collection Laws in South Dakota

Dena Standley | September 22, 2023

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: South Dakota is one of the few states that fully adopt federal regulations for debt collection practices, such as the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. However, state law does not add any additional provisions.

South Dakota's Fair Debt Collection Practices Act and other consumer protection laws allow you to stop debt collector harassment. These laws also prevent creditors and debt collectors from contacting your employer, neighbors, and family. Moreover, you may impose monetary damages on debt collectors if harmed by unfair debt collection procedures in South Dakota.

For an average consumer paying high expenses, it makes sense that you want to avoid debt collectors. But here is a comprehensive overview of South Dakota's debt collection laws, from collection practices to statute of limitations, debt settlements, and wage garnishments. Let's explore.

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South Dakota collection laws can protect you

As part of the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act, debt harassment is governed by federal guidelines. Violations of harassment are subject to a penalty of $1,000 per violation and additional legal charges. As such, when collectors in South Dakota use continuous and multiple improper practices, debt harassment can be costly for them.

As for state laws, S.D. Codified Laws § 54-4-77 prohibits unfair debt collection practice and specifically declares that South Dakota debt collectors cannot:

  • Harass, oppress, or abuse you or anyone they contact
  • Threaten with violence or harm
  • Publicize consumers who haven't paid their debts, but they can share the information with other credit reporting agencies
  • Use vulgar or obscene language
  • Call repeatedly before 8:00 a.m. and after 9:00 p.m.
  • Present themselves as attorneys or government officials
  • Make a false accusation of a crime
  • Lie about their affiliation with a credit reporting agency or misrepresent your debt
  • Present papers as legal forms if they aren't
  • Threaten to arrest for failure to pay debt
  • Threaten to seize, garnish, attach, or sell your property or wages (unless allowed by the law) if you fail to pay
  • Threaten to take legal action against you if they can't or don't intend to take action against you
  • Threaten to collect interest, fees, or other charges if the contract that created your debt doesn’t allow it

In addition to this debt collection law, South Dakota's Attorney General's Office provides a Consumer Protection Division handbook that outlines and clarifies federal requirements.

South Dakota debt collectors must validate your debt

Within five (5) days of contacting you, a collector must send you a written validation notice of your debt and its details. If you dispute any of the information on this notice, you can send a Debt Validation Letter to formally request debt verification from the collector.

Under the FDCPA, a collection agency must cease all communication efforts once it receives a Debt Validation Letter from you — until it can provide the requested information. You can use the letter as a tool to stop debt collection phone calls and letters, at least until the debt is validated. You can also include a statement asking the agency not to contact you unless it intends to sue you.

To get the most out of your Debt Validation Letter, ask for the following information:

  • The name of the original creditor and the amount you owe.
  • A copy of the contract you had with the initial creditor.
  • The age of the debt compared to your state’s statute of limitations.
  • The last transaction made on your account.
  • Proof that Rash Curtis and Associates has the right to collect money from you.
  • A valid debt collection license number for your state.

Once the debt collection agency’s staff receives your Debt Validation Letter, they’ll review your account to see if they have all the information you requested. If they don’t, you shouldn’t hear from them again. However, you’ll want to monitor your credit report and dispute any related items. They should remove the adverse reports since they didn’t validate your debt.

Watch the following video to learn how to write a Debt Validation Letter to a collection agency in two steps.

The statute of limitations in South Dakota prevents old debt lawsuits

In South Dakota, the statute of limitations determines how long a creditor has to sue you for unpaid debt and specifies how long collection agencies can pursue debts. It is helpful to know the statute of limitations so you can determine whether the debt is too old for legal action.

If it’s a time-barred loan and a debt collector sends you a Summons and Complaint, you can include this information as part of your affirmative defense in your Answer to the court. The court will dismiss any lawsuit they file after the statute of limitations.

The following table highlights South Dakota's debt statute of limitations:

Statute of Limitations on Debt in South Dakota
Debt Type Deadline
Credit card 6 years
Medical 6 years
Student loan 6 years
Auto loan 6 years
Personal loan 6 years
Mortgage 15 years
Judgment 20 years
Source: S.D. Codified Laws § 15-2-6, § 15-2-7, and §15-2-13

Wage garnishment laws in South Dakota

The Consumer Credit Protection Act (CCPA) governs wage garnishment. The state's wage garnishment laws are outlined in Chapter 21 of the South Dakota Codified Laws and the South Dakota Rules of Civil Procedure.

If a debt has been reduced to a final judgment, garnishment procedures can be used to enforce it. Garnishment allows a creditor to obtain payment by taking property, usually wages or bank account balances, to satisfy a judgment.

Additionally, post-judgment garnishment (a writ of attachment) is allowed in cases where the debtor is likely to conceal or remove assets from the jurisdiction (SDCL Ch. 21-17A).

South Dakota Garnishment laws are generally more restrictive than those in the federal government. According to SD law, a debtor may garnish up to 20 % of their disposable income, while federal law allows up to 25%of their non-exempt wages to be garnished.

South Dakota’s wage garnishment laws and process

  • The creditor wins the debt collection lawsuit.
  • The creditor serves you and the employer a garnishee summons and affidavit.
  • Your employer sends the creditor an exemption request and a garnishment disclosure form (answer).
  • Either party may object.
  • In case you object, there is a trial.
  • Garnishment commences unless your wages are exempt.

The South Dakota standard exemption is also higher than the Federal standard exemption. Unlike Federal law, South Dakota's basic weekly earnings exemption is 40 times greater than the Federal Minimum Wage for one week (SDCL §21-18-51).

Typically, garnishment summons, affidavits, and disclosures are served on garnishees by certified mail or in the same way as summonses and complaints (SDCL 21-18-7). Judgment debtors must pay a continuing lien on their wages for 120 days (SDCL 21-18-14.1).

Judgment debtors have five days after service, or eight days if served by certified mail, to claim exemptions allowed by law in addition to their absolute exemptions, and if they fail to do so, those exemptions are waived (SDCL §21-19-3).

A supplemental judgment against the garnishee may be obtained if the garnishee fails to respond within 30 days (SDCL §21-18-39).

Settle your debt in South Dakota

In South Dakota, a settlement negotiation depends on the individual parties. Generally, a lump sum payment is typically included in these agreements to reduce or completely eliminate further payments.

But because of fraudulent debt settlement companies, this enticing option may be dangerous. Play safe and have direct negotiations with your creditor by using SoloSettle.

SoloSettle, powered by SoloSuit, is a tech-based approach to debt settlement. Our software helps you send and receive settlement offers until you reach an agreement with the collector. Once an agreement is reached, we’ll help you manage the settlement documentation and transfer your payment to the creditor or debt collector, helping you keep your financial information private and secure.

Check out this video to learn how SoloSettle can help you avoid wage garnishment and settle your debt.

What is Solo?

Solo makes it easy to resolve debt with debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt. SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

SoloSettle can help you contact your debt collector or creditor and negotiate the debt to settle for less, all online. It simplifies and streamlines the process to settling your debt.

No matter where you find yourself in the debt collection process, Solo is here to help you resolve your debt.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

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Civil law legal definitions

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