Yes, you can. This surprises a lot of people, but keeping your security deposit and sending you to collections are not mutually exclusive. If the total amount you owe for unpaid rent, damages, lease-break fees, or other charges exceeds your security deposit, the landlord can apply the deposit to the balance, and then pursue the remaining amount through a collection agency. The deposit is applied first, but it does not cap your liability.
Here is a simple example. Say you paid a $1,200 security deposit. When you moved out, you owed $900 in unpaid rent and the landlord documented $1,400 in damages beyond normal wear and tear. That totals $2,300. The landlord applies your $1,200 deposit, leaving a remaining balance of $1,100. That $1,100 can be sent to collections.
The landlord does not need a court judgment to place the account with a collection agency. They can do it as soon as they have calculated the final balance and the deposit has been applied. Understanding how this process works, what the landlord is required to do, and what your rights are can help you avoid surprises and deal with the situation effectively.
How the Security Deposit Is Supposed to Work
A security deposit is money you pay at the start of your tenancy that the landlord holds as protection against unpaid rent, property damage, or other lease violations. The deposit belongs to you until the landlord has a legitimate reason to keep all or part of it. When you move out, the landlord inspects the property, calculates any charges, applies them against the deposit, and returns whatever is left.
Every state has laws governing how this process must work, including how long the landlord has to return the deposit, what kinds of deductions are allowed, and what documentation the landlord must provide. These timelines vary significantly. In Florida, the landlord has 15 to 30 days depending on whether deductions are being claimed, under Florida Statute 83.49. In Texas, it is 30 days under Texas Property Code Section 92.103. In New York, it is 14 days under General Obligations Law Section 7-108. In California, it is 21 days under Civil Code Section 1950.5.
Regardless of the state, the landlord is generally required to provide you with an itemized statement of deductions, not just keep the deposit without explanation. If your landlord kept the deposit without providing this statement, they may have violated state law, which could give you grounds to challenge the deductions or even recover additional damages.
When the Balance Exceeds the Deposit
The situation that leads to collections is when the total amount you owe is more than what the deposit covers. This typically happens in a few common scenarios.
You broke your lease and moved out early. The landlord applied the deposit to unpaid rent for the months the unit sat vacant before a new tenant moved in, plus any early termination fee specified in the lease. The deposit was not enough to cover the full amount. ACB's article on can a landlord send me to collections for a broken lease covers this scenario in depth.
You left the unit with significant damage. Holes in walls, stained or damaged flooring, broken fixtures, or other issues that go beyond normal wear and tear can generate repair bills that exceed your deposit. The landlord documents the damage with photos and repair invoices, applies the deposit, and pursues the remaining balance.
You owed back rent when you moved out. If you fell behind on rent during your tenancy, the landlord applies the deposit to the unpaid balance first. Any remaining amount is collectible.
In each of these cases, the landlord kept the deposit because they were entitled to, and the remaining balance is a legitimate debt that can be placed with a collection agency.
What Counts as a Legitimate Deduction
Landlords cannot deduct for anything they want. Legitimate deductions generally include unpaid rent, damages caused by the tenant or the tenant's guests beyond normal wear and tear, cleaning costs if the unit was left in a condition substantially worse than when the tenant moved in, and specific charges authorized by the lease such as early termination fees or reletting fees.
Landlords cannot deduct for normal wear and tear. This is a critical distinction. A carpet that is slightly worn after three years of occupancy is normal wear and tear. A carpet with large stains, burns, or pet damage is not. Walls that need a fresh coat of paint after several years are normal. Walls with holes or unauthorized paint colors may justify a deduction. Scuffed floors from everyday use are normal. Gouged or scratched hardwood from furniture being dragged is typically deductible.
The landlord also cannot use the deposit for improvements or upgrades that were not necessitated by tenant damage. Replacing a 15-year-old appliance that reached the end of its useful life is not a valid deduction, even if the landlord chooses to upgrade at the same time.
What to Do If You Disagree With the Charges
If you believe the landlord is inflating charges, deducting for normal wear and tear, or sending you to collections for amounts you do not legitimately owe, you have several options.
Request an Itemized Statement
If you did not receive one, request it in writing. Most states require the landlord to provide an itemized list of deductions along with supporting documentation like receipts or repair estimates. If the landlord failed to provide this statement within the legally required timeframe, they may have forfeited the right to keep any portion of the deposit in some states. In Maryland, for example, failure to provide the itemized statement within 45 days means the landlord loses the right to retain any part of the deposit for damages under Maryland Code, Real Property Section 8-203.
Dispute the Collection Account
If the balance has already been placed with a collection agency, you have the right to dispute the debt in writing within 30 days of the collector's first contact. Under the Fair Debt Collection Practices Act, the collector must stop collection activity and verify the debt before continuing. ACB's article on what is a validation notice and why do I need one explains how this verification process works and what information the collector must provide.
When disputing, be specific. Explain which charges you contest and why. Provide any evidence you have, including your move-in condition report, photos from when you moved out, copies of correspondence with the landlord, and records of rent payments. The more documentation you can provide, the stronger your dispute.
File in Small Claims Court
If the landlord kept your deposit improperly and you cannot resolve the dispute through direct negotiation, small claims court is the most common remedy. Filing fees are typically modest, and you do not need an attorney. Many states also allow tenants to recover penalties when landlords violate security deposit laws. In New York, willful violations can result in the tenant recovering punitive damages. In California, a tenant can sue for up to twice the deposit amount if the landlord retained it in bad faith.
You can find your local small claims court information through your state's court system website or through LawHelp.org, which provides a national directory of free legal aid programs organized by state.
Can the Landlord Do Both?
A question that comes up frequently is whether the landlord can keep the entire deposit and still send you to collections. The answer depends on the math. The landlord should apply the deposit to the charges first, and only send the remaining balance to collections. If the deposit fully covers the charges and the landlord still sends you to collections, that is likely improper and you should dispute it.
However, if the landlord applied the deposit but the total charges legitimately exceeded it, pursuing the remainder through a collection agency is standard practice. This is not punitive. It is the landlord recovering a real financial loss that the deposit was not large enough to cover.
For landlords who want to understand how this process works from the creditor side, ACB's article on collecting unpaid rent: a guide for landlords covers the full recovery process, including how to document charges, apply deposits, and place remaining balances with a professional agency.
How to Protect Yourself Before You Move Out
The best defense against unexpected collection accounts is preparation before you leave.
Document the condition of the unit thoroughly when you move in. Take dated photos or video of every room, every surface, and any pre-existing damage. Store these records somewhere you will not lose them. When it is time to move out, do the same thing. Side-by-side comparisons between move-in and move-out condition are powerful evidence if a dispute arises.
Read your lease carefully before giving notice. Understand what charges you may face for early termination, what the cleaning expectations are, and whether there are specific move-out procedures you must follow. Some leases require professional carpet cleaning, and if you fail to comply, the landlord can deduct that cost from your deposit.
Request a pre-move-out inspection if your state or landlord offers one. California, for example, requires landlords to offer a pre-move-out inspection that gives tenants the opportunity to address issues before the final inspection. Taking advantage of this can prevent deductions that would have been avoidable.
Provide your forwarding address in writing. In many states, including Texas, the landlord's obligation to return the deposit does not begin until you provide a forwarding address. Failing to provide one can delay the process and make it harder to resolve disputes later.
How ACB Handles Security Deposit Balance Accounts
When landlords and property managers place accounts with Advanced Collection Bureau, the balance has already been calculated after the security deposit was applied. ACB does not determine what the landlord can or cannot deduct from the deposit. That calculation happens before the account reaches ACB. What ACB does is pursue the remaining balance through compliant, professional communication.
ACB operates on a contingency-only basis, so landlords pay nothing unless money is recovered. ACB reports to all three major credit bureaus twice per month and never charges interest on debts in its care. For consumers who dispute the balance, ACB follows all FDCPA requirements, including ceasing collection activity and verifying the debt when a written dispute is received.
If you have received a notice from ACB about a balance from a former rental and you believe the charges are inaccurate, contact ACB directly to discuss the account. If the landlord's deductions were improper, your dispute is ultimately with the landlord, but raising the issue with the collection agency is an important first step. ACB's article on how to pay a debt collection agency explains the resolution process, including payment plans and settlement options.
For landlords looking to understand the full recovery timeline, ACB's overview of the consumer debt collection action timeline outlines what happens at each stage from initial placement through resolution.
The Bottom Line
Your security deposit is the first line of defense against charges from your tenancy, but it is not a ceiling on your liability. If you owe more than the deposit covers, the landlord can and often will send the remaining balance to a collection agency. If the charges are legitimate, the most productive thing you can do is resolve the balance before it affects your credit and your ability to rent in the future. If the charges are not legitimate, dispute them promptly and provide documentation to support your position.
If you have questions about an account with ACB or want to discuss your options, you can reach Advanced Collection Bureau at (321) 633-4999 or visit advancedcb.com.
