What You Need To Know About Debt Collection
Ahhh, debt collectors. A good portion of the population has had the unfortunate luck of dealing with a debt collector at least one time in their lives. If you are a part of that population, then you know how relentless they are. Hopefully after reading this article, you will be better able to keep them under control if you are ever in an unfortunate situation that requires debt collection in the future.
Most people aren't aware that there are actual "debt buyers" out there that can purchase your debt from creditors. You may have finally gotten your original creditor to stop calling you but, if they sell your debt, the calls will begin all over again. Even if you move, there are many data bases including some available from government agencies and credit bureaus that can help track you down.
What they do
If you are late with a credit card payment, expect your card issuer to contact you during the first six months using their in-house collection staff. If that original collector can't collect, the debt is outsourced to commission-based collection agencies and attorneys.
If they are still unsuccessful, the original issuer sells your debt, which leads to a third set of collectors. Some even resell the debt again.
In 2006 a large portion of complaints to the FTC (Federal Trade Commission) were complaints alleging that debt collectors were harassing consumers, often by calling them continuously. Another large portion complained that debt collectors had used profane or abusive language.
What you can do
Here is what you can do if you end up in this chain of events. It is imperative that you first are aware of two of your rights when it comes to debt collectors under the Fair Debt Collection Practices Act.
1. You may dispute a debt or portion of the debt in writing within 30 days of being notified. If you send a written dispute within 30 days, the debt collector must halt collection efforts until it provides written clarification of the debt. The debt collection also must notify you of this right
2. You can stop a debt collector from contacting by writing a letter to the collector telling him or her to stop. This communication MUST be sent by certified mail, return receipt requested. Once the collector receives your letter, he or she may not contact you again except to say there will be no further contact or to notify you of a specific action. This does NOT erase your debt.
Now that you are aware of these two very important rights, there are other things that may be done that will assist you in coping with this unfortunate situation.
Check with your state's attorney general for the limit on how long collectors legally can collect your debt. State limits generally range from four to 20 years according to Dennis Hammond, the president of the Debt Marketplace Inc. in Santa Fe Springs, California.
Here is a real tricky one so pay close attention. Be very cautious of any new credit offers from a creditor you never repaid. No matter how attractive it looks, this is only an attempt to get the statute of limitations clock to start ticking again. What this means is, once the creditor renews your credit relationship, if they weren't able to collect the debt because time ran out, they can now!
Be aware that interest on your old debt never stopped accruing. Don't forget about collection fees, attorney fees, and even tracing fees may be added. The longer the debt lingers, the debt you owe quickly multiplies with accrued interest and fees and that is what gives debt buyers the incentive to collect successfully.
Before you end up tangled up in this long line of debt collection processes, it is always best to try to avoid your past due debt getting this far. Give your creditors a call as soon as you realize that you are not going to be able to pay. More often than not, they will try to set up a payment plan that both of you can live with. There is also the possibility of the lender settling a debt with you for a lesser amount than what is actually owed because it is costly for them to pursue legal action.
