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Debt Collectors

July 7th, 2008    Subscribe To Our Feed

With today’s economic downturn, more and more people are falling behind on their payments and becoming targets of aggressive debt collection agencies.  In the last few years, complaints against debt collectors have risen dramatically.

One way for debt collectors to make money is to buy up debt from companies and then actively pursue the individuals who owe the debt in the hopes of recouping losses and collect commissions.  Credit card companies, banks, car dealerships, stores, any business who extends credit will refer their past due account to debt collectors.

The Fair Debt Collection Practices Act (FDCPA), which is administered by the Federal Trade Commission (FTC), regulates third-party debt collection agencies.  The regulation is in place to protect consumers from abusive or unfair debt collection practices.  Unfortunately there are some third-party debt collectors who ignore and disregard the rules.

Know your rights so you aren’t harassed by debt collectors.  Collectors can contact you in person, by mail, telephone or fax.  They are only supposed to contact you after 8:00 a.m. and before 9:00 p.m.  They can not contact you at inconvenient times or places.  A debt collector can not threaten you with violence or harm.

If you are contacted by a debt collector, ask them for proof that you really do owe the debt.  They should be able to produce a document that has your signature that shows you applied for the debt.  You might be mistakenly contacted because you have the same name as the person that owes the debt or because you have a phone number that once belonged to the individual they are looking for.  So make sure you get proof of the debt.  Even if you do owe the debt, check with your state and find out what the statute of limitations are for repayment.  In some states a debt can no longer be collectable if the statute of limitations has expired, which can range from three to fifteen years.  Make sure you find out your debt’s expiration date because once you pay a portion or initiate a payment plan, the clock starts ticking all over again.

Make sure you get everything in writing which includes any repayment plan you’ve negotiated and the names and numbers of people who have contacted you.  You will also want to keep copies of any letters you send or receive and track all your correspondence with certified mail and return receipt.

If you don’t want to be harassed by a debt collector, use a pay phone instead of your cell or home phone.  They will not be able to get your phone number on a caller ID if you use a pay phone.  If you want to stop a debt collection agency from contacting you at all, send them a letter telling them to stop.  After the collection agency receives your letter, they can not contact you again.  Of course, this doesn’t mean that the debt has gone away; it just means that you won’t be harassed by phone calls.  If you do have problems with a debt collector, report problems to your state attorney general’s office.

Debt Collector Tactics

July 5th, 2008    Subscribe To Our Feed

There are several legal methods that creditors can use to collect money owed to them.  One debt collector tactics is to turn the delinquent account over to a collection agency.  A collection agency is a business that makes money collecting debts.  Usually the agents who work for these businesses are on a commission basis and are therefore very motivated to collect the debt.  The law does regulate the collection practices of these agencies.

Another legal debt collector tactics is a wage garnishment.  Garnishments will never occur without the debtor’s knowledge because a court hearing will be held before a wage garnishment is ordered.  A wage garnishment is when a court enters a judgment against the individual who owes the money in favor of the creditor.  After the judgment is entered a certain portion of funds are automatically taken out of the debtor’s salary and sent to the creditor.  A wage garnishment is different than a wage assignment.  A wage assignment is when the debtor’s voluntarily gives consent to have a part of his pay sent directly to the creditor.  Be very careful because many creditors will attempt to get the debtor to consent to this method of repayment.

A foreclosure is another debt collector tactic.  A foreclosure occurs when the debtor has failed to make mortgage payments.  Most banks don’t want to foreclose on your home because it is a long and costly process.  Unfortunately, most foreclosed homes are sold at auction for less than what is owned to the bank which makes the homeowner still responsible for the difference between the sale price and the amount of the outstanding loan.

The best way to avoid debt collector tactics is to make your loan payments or pay for your debt as agreed.  Most creditors appreciate knowing there is a problem beforehand and will try to work out an agreement

Debt Assistance

June 18th, 2008    Subscribe To Our Feed

A debt assistancecompany could help you if you’re spending a lot of your time ducking debt collectors and using one credit card to pay off the debt on another card.  Debt assistance companies advertise they can work with your creditors to slash the interest rate you are paying, reduce your overall debts and also help establish a debt management plan for you.

Here’s how the debt assistance company can help you out:

• Help with creating and sticking to a budget.

• One-on-one credit counseling and advice on how to manage your debt.

• Negotiate and enroll you in a debt management plan that has been approved by your creditors.  The debt management plan will require you to deposit an agreed amount with the debt assistance company and they will use those funds to send payments to the individual creditors.

Creditors are more willing to waive late fees, renegotiate the terms of the debt and reduce interest rates if they are working with a reputable debt assistance company because they know they will be receiving monthly payments of time.

It usually takes somewhere between three to six years for most people who are in a debt management plan to pay off their debts.  A reputable debt assistance company will continue to provide ongoing budget counseling and educational materials about managing debt.  As your debts get repaid, your credit score will improve.

Beware!  Some debt assistance companies take advantage of people who are desperate for help.  They will take your monthly payments and not repay the creditors as they had agreed to do.  Following are two warning signs that you are not dealing with a reputable credit assistance company:

• They promise to clean up your credit report.  This is illegal – skipped or late payments will stay on your credit report up to seven years.  The only way to improve your credit rating is time and a steady pattern of repayment.

• They charge a huge monthly fee or might even demand a portion of your savings.  Nonprofit debt assistance companies will help you for a very small fee or for free.  These companies receive government grants and have fund-raising activities that help pay their cost.

Make sure you check with the Better Business Bureau and your state Attorney General before you sign on with a debt assistance company.

Debt Collection Laws

June 12th, 2008    Subscribe To Our Feed

The Fair Debt Collection Practices Act (FDCPA) is a debt collection law that dictates how a debt collector can and can not treat consumers.  This law applies to personal debts, including money owed for an auto loan or home loan, for medical care and for credit card accounts.

According to the Federal Trade Commission (FTC), under the FDCPA debt collection laws a debt collector:

• Can not call you be 8:00 a.m. or after 9:00 p.m.

• Can not call you at work, especially if the debt collector knows that your employer would not approve of these types of phone calls

• Can not lie or falsely accuse you of a crime

• Must tell you who they are by identifying themselves on the phone

• Must respect a written request from you to stop any further contact

Debt collection laws are enacted to protect the consumer from unwanted harassment or abuse by debt collectors.  Many states also have debt collection laws that regulate the collection and credit industry.  Some states have debt collection laws in place that prohibit collecting from its citizens unless the collection agency has complied with licensing or bonding.  If you have questions, contact your individual state and find out exactly which debt collection laws are applicable.

Debt Stress

June 10th, 2008    Subscribe To Our Feed

The stress from deepening debt is becoming a major pain in the neck, back, head and stomach for millions of Americans.  When people are dealing with mountains of debt, they are more likely to report health problems.  Most people appear to be handling their debts all right, there are somewhere between 10 to 16 million people who are suffering terribly due to their debts.  Those are the people who reported high levels of debt stress and suffered from at least three stress related illnesses.

The current tough economic times and rising costs of living seem to be leading the increasing debt stress which is approximately 14 percent higher than in 2004.  People with high debt stress are reporting such health problems as:

• Ulcers or digestive tract problems

• Migraines or other headaches

• Severe Anxiety

• Severe depression

• Heart attacks

• Muscle tension

People who have high debt stress also reported having trouble concentrating and sleeping.  The more debt someone has, the more likely health problems will arise.

Debt Collector’s Tactics

June 3rd, 2008    Subscribe To Our Feed

Do you have a debt collector calling you making harassing phone calls, threats or using obscene language?  Some debt collector’s tactics can be one of the most stressful experiences you will have.  A collector may embarrass you by getting in touch with your employer, family or neighbors.  Even though a debt collector is trying to do their job, there are limits on how far a debt collector can go.

Understanding how the collection process works will help you understand your rights and how to deal with the debt collector’s tactics.  If you are being contacted by a collection agency it usually means that you have missed more than one payment on a debt.  The collector is either hired by the company who is attempting to collect the debt or has purchased the debt from the original company for less than what is owed and then will attempt to collect the entire amount.  Typically if a collection service is contacting you, it means the creditor has taken a loss on your account and this negative information may show up on your credit report.

Unfortunately, another reason a debt collector might be contacting you is because someone has stolen your identity and obtained credit under your name and then defaulted on the debt.  This is a crime known as identity theft.  Even though you are not responsible for the debt because of some of the debt collector’s tactics you might have a hard time convincing them that you are not liable.

Learn your rights and the different debt collector’s tactics that might be used.  Even if you owe a debt, a collector owes you fair treatment and respect for your privacy.  Insist that the debt collector only contact in writing and that you are the only person they are to contact.  You do have rights and you don’t have to let the debt collector make your life miserable.

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Credits: Work From Home | Matteo Turchetto | Andreas Viklund