Collection Agency Questions and FAQ;s

Can a collection agency add interest?

Yes. The Fair Debt Collection Practices Act (FDCPA) allows a collector to add interest if your original agreement calls for the addition of interest during collection proceedings or the addition of such interest is allowed under state law. Every state authorizes the collection of interest, although the maximum amount allowed varies.

A collection agency sued me and won. What measures can they take against me?

Before obtaining a court judgment, a bill collector generally has only one way of getting paid: asking. This is done with calls and letters.

However, once the collector (or creditor) sues you and obtains a court judgment, the law allows it to take further steps to collect the debt. The collector can:

• Garnish up to 25% of your net wages.  The amount depends on where you live and how much you earn.
• Seize bank or other deposit accounts.
• Record a lien against real property. This lien will have to be paid when you sell or refinance your property. Technically, the creditor could also force a sale of your home in order to get the lien paid. However, creditors rarely do this because after the creditor pays the costs incurred in selling the home, other more senior creditors get paid from the proceeds (like mortgage holders), and the homeowner gets the amount of the state’s homestead exemption (most states allow homeowners to protect a certain amount of the equity in their home from creditors, called the homestead exemption), there is nothing left for the creditor.

Even if you're not currently working or have no property, the judgment won't disappear. Depending on the state, court judgments can last up to 20 years. In many states, it can be renewed for years beyond that.

A collection department at a local merchant is harassing me. Is there anything I can do about it?

No, unfortunately  the Fair Collection Debt Act laws applies only to the collection agencies and not to the creditors.

 

 

How to Dispute a Debt?

By Mary Guimont

You have a right to dispute a debt at anytime you want. No matter how much time has passed since the collection agency has had the debt  If the collection agency tried to tell you that you can not that is simply not true.

You have the right to dispute a debt, at anytime

When the collection agency contacts you which it is usually in a letter. In this first letter they are suppose to inform you where the debt came from and the balance that is due. Along with it they are suppose to inform you of this:

• That unless you dispute the debt within 30 days of the receipt of that letter, they can assume it is valid. That does not mean you cannot dispute the debt at all if you miss the 30 days. You can always tell them it is disputed. Also, just because they assume it is valid, that doesn't mean it is legally valid.
• That if the you notify the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment you if there is one, and a copy of such verification or judgment will be mailed to you by the debt collector. You can, within the first 30 days, demand that the collector validate the debt for you. That is, prove that there is a debt that you owe. If you send in a timely dispute, the debt collection agency must stop collecting the debt until they have provided that validation. Failing to do so, the debt collector violates the  Fair Debt Collection Practices Act   If you dispute the debt, then anytime the collector reports that debt to a credit reporting agency, then they must report that the debt is a disputed debt.

• A statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor. Lawyers collecting debts are under the same obligation to provide you validation. Remember, a debt collector presented with a timely (within 30 days of receiving your notice) demand for validation also must stop all collection activities until they provided the requested validation. Filing a lawsuit is a collection activity. That means they cannot sue you until they have validated the debt. You can dispute the debt in writing. Here is a sample letter

Can a Collection Agency Garnish Federal Benefits?

By Mary Guimont

Many federal benefits are exempt from being garnished. Such as.

b

• Social Security Benefits

• Supplemental Security Benefits

• Veteran's Benefits

• Civil Servants, Federal Retirements, Disability Benefits

• Military Annuities, Survivors Benefits

• Federal  Disaster Assistance

Federal Benefits may be garnished under certain circumstances such as, child support, taxes, student loans or alimony.

What is Bankruptcy?

The Statue of Limitations for a Old Debt

The Statue of Limitations For An Old Debt
By Mary Guimont

A creditor will give a debt to a collection agency after they have tried to collect the debt and have failed to do so. When a certain amount of time has passed the debt is considered time-barred debt. This is when the statue of limitations have passed and the debt collector can no longer sue for it in court of law. The time before a debt becomes time-barred varies from state to state. The amount of time may be different also from what kind of debt it is. Credit card debt, statue of limitations may be longer then other debts that are in collection. That is because some states make the statue of limitation longer for debts that are binding in a written contract.


Stature of Limitations for Each State


If a collection agency calls and threatens you with a lawsuit when the stature of limitations has passed. They are in violation of the Fair Debt Collections Act.

What happens if I don't pay on a time-barred account?

You still owe on the debt and even though the collection agency may not be able to take you to court to collect. They can still  call you and ask for it to be paid. If you write a letter to the collection agency and ask then not to call you any longer by law they are not allowed to.

Beware, when making a payment to the collection agency if the debt is time-barred.

If you make a payment on a time-barred debt. The statue of limitations becomes void in some states and starts all over again. If you sign a promise to pay with a collection agency with a time-barred debt. The statue of limitations may start all over again depending on the state.

You may decide to pay the debt.

You may decide to pay the debt because even though they may not be able to take you to court over it. It still remains on your credit report as owed for seven years. If you decide to do this. The collection agency may be willing to accept less then is owed just to settle the account. If you do this before making a payment make sure you have this in writing from the collection agency.

What should you do if you are sued in court for a time-barred debt?

Bring in documentation that proves the debt is time-barred and it will be dismissed.

If you go decide to go bankrupt.

Keep in mind this when considering going bankrupt on old debts. A bankruptcy stays on your credit report for ten years. A time-barred debt stays on your credit report only seven years.

The Fair Credit Reporting Act (FCRA) allows to get a free credit report

The Fair Credit Reporting Act (FCRA) allows you to get a free credit report.
By Mary Guimont

The Fair Credit Reporting Act (FCRA) requires the three credit reporting agencies, Equifax,  Experian and Transunion to give you your credit report for free at your request, once every 12 months. Get your annual report here: https://www.annualcreditreport.com/index.action

A credit report shows debts you owe, how you pay your bills, if you rent or buy your home, where you live. It will show if you have been sued or have filed for bankruptcy.

It is a good idea to request your credit report from these agencies because of fraud. Your credit report  will show all debts that you owe and if you see one that is not correct. You can dispute it to have it corrected or removed from your credit report.

How do you dispute a debt that is not yours on your credit report?

You should send a  letter to the credit agency that has the debt. In the letter,  clearly explain each item you are disputing and why. You should ask that the information be removed or changed. You may want to enclose with the letter a copy of the credit report. On the copy of the credit report circle each item that is incorrect. Send this letter certified: " return receipt when delivered"

Here is a sample letter you can send

.http://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report