Posted: Tue Nov 15, 2005 8:27 am Post subject: Debt Collection agencies need to dig up old mistakes
I found some interesting information on debt collection. Hope you find it informative, just as I did.
Collection companies are nowadays becoming greedy with purchasing old debt. A decade ago, when most people fail to fulfill any debt obligation, they could rest after several years passed, since only a few creditors tried to collect on old bills, especially for a small amount of money.
Today, debt collection is a rapidly expanding industry. Companies are always into buying charged-off credit card accounts from the original lenders for pennies on the dollar. Then, they use credit scoring and various technologies to determine the debtors who are most likely to pay. The participants in this "junk debt" market vary from fly-by-night outfits to well-to-do companies funded by Wall Street investors.
The amount paid by companies for bad debt depends on the type and age of the account.
Type of accounts:
Accounts that are slightly older, and on which a collection agency or two have by now taken a whack: 1.5 cents to 2 cents on the dollar.
Year-old debts:
A growing number of companies have found out that the year old accounts, once thought to be uncollectible, are just the opposite. Squeezing even a small amount from debtors can make collection activities worthwhile.
An opportunity or an abuse:
Where some find it profitable enough, others are spotting abuses. Consumer attorneys believe that explosive growth of this industry is a factor responsible for the violations of the federal Fair Credit Reporting Act and the Fair Debt Collection Practices Act. Some collectors can do anything and everything to harass people and defraud them."
The worst practices seen till now are given below.
The creditors threaten to sue over year old debts even if the statutes of limitations have long expired.
The collectors often tell credit bureaus that an old debt is, in fact, a new one. They actually intend to extend the seven-year limit on reporting negative items, and hence give more pressure on the consumer.
Promising to remove a negative item from the consumer credit report in return for a token payment.
Not only does the collector fail to follow through, but also the payment can revive the statute of limitations and lead to a lawsuit. Even if the collector backs off, the unpaid debt can be sold off to another company which may restart the collection activity.
Some credit card companies have offered borrowers low-rate credit cards, and then included old, charged-off debts into the balance. These old debts may have been taken from other lenders.
Consumers are cursed, abused and called up repeatedly by collection agencies. These are violations of federal laws.
Paying off can hurt your credit score:
Repaying an old debt can damage a consumer's credit score. And, there is no guarantee if the collection agencies would stop harassing the consumer. The collector may also settle the debt for a higher amount and in this case, other agencies may try to collect the unpaid debt. There are also collectors who can inform the Internal Revenue Service that a consumer has received income in the form of forgiven debt.
If collectors contact consumers for payments on old debts, here's what consumer attorneys advise:
Know about the statute of limitations:
Check up the statute of limitations in the state where you reside. But it's the statute of your current state that applies.
Enquire about your rights:
The debt collectors are actually not obligated to inform consumers about your rights.
Negotiate with the collectors carefully:
If the statute of limitations has not expired, you may want to negotiate for a settlement rather than carry out the risk of a lawsuit.
Keep a watch over your credit report:
If your credit report displays that the collection agency has lied about the date when your payments went delinquent, you should dispute the entry. You can also demand a written proof from the collector. But the collector may not have the proof. In such a case, an attorney experienced in debt collection can provide the necessary help and support.
[Edited by Jessica as per forum rules. Thanks.] _________________ Cliff and Sandra
Loan Officers
Conventional & Sub Prime Specialists
Loans done in 50 states
That is a wonderful topic to discuss. It will definitely show a way to people who are often harassed by these collectors.
Yes I agree with you that this has been an alarming problem today throwing dirt on the mortgage industry. I think ignoring, as you said, is the best policy to get rid of this harassment.
Thanks, for highlighting and helping us with this problem.
Finding out information like that really helps when someone is being hounded by these professional collectors. Whatever information I find I will be sure to post them here. Everyone should be informed. Glad you guys found it helpful.
Thanks for the comments _________________ Cliff and Sandra
Loan Officers
Conventional & Sub Prime Specialists
Loans done in 50 states
We are really honored to have a person like you with so much knowledge and helpful nature amongst us.
We would eagerly wait for the next news from you. It is indeed sad that this type of cheap business has come into existence damaging the image of the industry.
Statutes of limitations on debt collection has been implemented to help the debtors with some fair measures so that -
The debtor need not worry of getting sued for the rest of his/her life.
The debtor can get a chance to defend himself.
Of course, that doesn't indicate that the creditor can't file suit against the debtor after the expiry of the statute of limitations.
These limitations on debt depend on the debt type and your state's civil debt collection codes.
Generally an unsecured debt gets expired 3 to 6 years after the last missed payment. The number of years during which various types of debts can be collected in Virginia -
Posted: Wed Oct 15, 2008 8:20 pm Post subject: Protect Yourself
Learn the Rules for Debt Collection, one of the best that you can use is getting the address of the collection agency, send them a letter, telling them that they are NOT to call you again. This is one of those rules that the debt collectors, especially the scumbag one, do not want you to know.
Most of these agencies today call you without sending you written notice, this is ILLEGAL. Use the site fair-debt-collection dot com to inform yourself of what is and is not legal. If they call you, demand a written notice before you will talk to them, then send the letter. This won't stop all calls, but it will force them to move on to another agency. Get the name and if possible, the address of the agency, AND the name of the parasite calling, on the FTC site you can file a complaint about illegal calls and harassment.
Cliff
