Brought to you by: Breez DeGuzman

When debt collectors start calling, we might consider throwing the phone out the window. But that’s not the best way to deal with collection efforts. If you ignore them, they will keep calling for months or even years on end. And no one wants to live in fear every time the phone rings.

Debt collectors are rarely as unreasonable as we imagine them to be. They want to collect the money they’re owed, but they realize that they are more likely to succeed if they work with us. And the law prohibits them from threatening or harassing us. Here are five tips for effectively dealing with collectors:

1. Know your rights. It pays to familiarize yourself with the Fair Debt Collection Practices Act, which protects consumers from unscrupulous collection practices. If at any time you feel that your rights have been violated, you can report the incident to the Federal Trade Commission or file a lawsuit to collect damages.

2. Know how much you can afford to pay each month, and don’t let them convince you to pay more than that. Even if they take all of your obligations into consideration and tell you that you should be able to pay a certain amount, you may not be able to pay that much realistically. If the collector insists on not accepting less than a certain amount, you may want to seek legal advice.

3. Be honest. Let the collector know if there are extenuating circumstances that have caused you to fall behind or stop making payments altogether. This won’t stop them from trying to collect the debt, but it could buy you some time and make it more likely that they will work with you to get things resolved in a way that is acceptable to both parties.

4. Take notes. Each time you speak to the collection agent, write down the highlights of the conversation along with the date and time of the call. Keep these notes for future reference, and if the collector contradicts himself, you’ll have your notes to refer to. These notes will also be helpful if you end up filing a complaint or lawsuit.

5. If you reach an agreement, stick to it. As long as you keep up your end of the bargain, the collection agency can make no further efforts. If you find that you won’t be able to make a payment on time, contact the debt collector immediately and let him know when you will be able to pay.

No one looks forward to dealing with a collection agency. But if you are honest and reasonable, it’s rarely as bad as you think it will be. In most cases, you can work out a mutually agreeable arrangement, get your debt paid off and get on with your life.

Brought to you by: Breez DeGuzman

If you fail to repay a debt in full, it doesn’t just disappear. It’s usually sold to a collection agency, who may hound you about it for years. If that agency doesn’t collect payment, they may pass it on to another, and that agency may pass it on to another. And you may still get calls and letters about the debt years later.

Surprisingly few consumers know that debts are subject to a statute of limitations. This means that creditors and debt collectors have a certain time limit to collect the debt or sue. If this time limit lapses, they no longer have a case against the debtor. They can attempt to collect or even file suit, but if you use the statute of limitations as a defense, they will not prevail.

How Long Is the Statute of Limitations?

The statute of limitations varies according to the type of debt and the state. It may be as short as two years or as long as fifteen. Most states have different statutes for oral agreements, written contracts, promissory notes and open accounts.

Auto and installment loans are considered written contracts. Credit card debt most often falls under the open accounts category. But in certain instances, such as when the credit card was secured with a written agreement, it is considered a written contract. This is often a matter for the court to decide if there is any doubt.

When Does the Statute of Limitations Begin?

When the statute of limitations begins is a matter of some debate. Some say that it begins on the date of your first delinquency. Others claim that it begins when the creditor sends a demand letter, when the last payment was made or when the debt was written off.

In general, the statute of limitations begins when the creditor has a cause of action. This means different things according to the credit agreement. In some instances, this occurs when the creditor demands payment in full. In others, it occurs when you become delinquent on a debt. If you’re unsure, a consumer rights attorney can help you determine when the statute of limitation starts.

It’s important to note that the statute of limitations can be restarted under certain circumstances. This may occur if you use the account again. It may also occur if you make a partial payment or agree to a payment arrangement. If a creditor contacts you, you can protect yourself by refusing to acknowledge that you owe the debt or make any kind of payment or agreement. Simply state that the statute of limitations has expired. They will probably either leave you alone or take you to court, where you can defend yourself in the same manner.

The fact that a debt still appears on your credit report doesn’t change the fact that the statute of limitations may be up. Knowing the law in your state could save you from paying a debt that cannot be collected. For more information, contact a consumer rights lawyer.

By: Jon Ochs August 3rd, 2008

If you find yourself in financial difficulty and are falling late on some of your bills, you may have some contact with collectors via mail or telephone. On several occasions, you may encounter some terms or business practices that were new to you. Here are some straight answers to some common questions about the debt collection industry. I hope you find this information helpful in dealing with the issues that may arise as a result of your financial hardship.

I received a letter from a collection agency regarding a credit card bill. How did they receive my information? Why isn’t the credit card company contacting me directly?

The company or organization that you initially signed a contract with is referred to as the original creditor. For example, let’s say you obtained a credit card account with MBNA. If your account becomes past due, MBNA, your original creditor, will send reminders and call you in an attempt to get you to pay the amount due. When your account becomes more delinquent, approximately 180 days, MBNA may have an outside collection agency, ABC Acquisitions, attempt to collect payment. This company is a third-party collector. Keep in mind that your accounts may be assigned to or bought and sold by several collection agencies during the course of the collection process. You may find it helpful to keep paperwork organized and to track the process as each account changes hands.

A collector recently contacted me about an unpaid account that I incurred more than 6 years ago. Do I still owe really old debts?

On way to determine if you still owe the debt is to check the statute of limitations for your state. The statute of limitations varies depending on the state and the type of debt. As an example, a collection agency may still be allowed to attempt to collect the debt, but may not be allowed to file a lawsuit against you because too much time has passed. If a collector tries to persuade you to make a payment on an old debt, be sure you understand the consequences you could bring upon yourself by making a payment. If you do make a payment, you may be causing more harm than good since even the smallest payment can reset the statute of limitations for that account. This would inevitably lead to more aggressive collections and possibly lawsuits. In some jurisdictions, even an acknowledgment that the debt is yours is enough to reset the clock on the statute of limitations.

I received a collection letter from a law firm concerning a debt. Does this mean that I am being sued?

No. In recent years it has been shown that often a law firm or attorney can be more effective at collecting a debt than just a regular debt collection company. This is basically due to the fact that people are generally intimidated by attorneys and law firms. Keep in mind that in this case, the law firm or attorney is simply acting as a debt collector, and is subject to all the same rules as any debt collector as outlined in the Fair Debt Collection Practices Act (FDCPA). If you are in fact being sued, you will, in most cases, be served with a summons to appear in court.

One of my creditors called me and said that my account will be “Charged Off”. What does that mean exactly, and will I still owe the debt after it has been “Charged Off”?

Charge-off is a term that is used to classify delinquent accounts for tax purposes. The word “charge-off” is used to report the delinquent account as a loss for the creditor. A debt is usually charged-off after there has been no payment made for more than 180 days. Although an account has been charged-off, you do still owe the debt. A creditor will typically either assign, or sell the debt to a collector after charge-off. Another important thing to be aware of with a charge-off is that if the account is sold to a third party collector, that collector may also report the delinquent account on your credit. This may result in an additional negative trade line on your credit reports.

If you are in a financial position where you can no longer make the minimum payments on your credit cards, medical bills, or other unsecured accounts, there are programs available that can help you to resolve those accounts quickly and allow you to avoid bankrupcty. Here is a debt relief program we recommend.