Category Archives: Debt Relief

Can a Debt Collector Sue Me?

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Category : Debt Relief

Stop Debt Collectors from Harassing You

First and foremost! I would never talk to a debt collector over the phone. Your “Rights” are never served over the phone. I used to tell them, “Send it in writing!” and then I would hang up.  If you allow them to talk to you, many of the third party debt collection companies use scare tactics and make false statements to scare you into making a deal and paying them. Some of the lies they will tell you are:
– We’re going to send the Sheriff to get you. You can be arrested.
– We can come and get your belongings, your home or your bank account.
– §We’re calling because you owe a debt. You know it and we don’t have to prove anything.
– We’re going to call your employer and garnish your wages.
– You have committed a crime by not paying this debt.

None of that is true. They just want you to admit that you owe a debt. They like it even better if you make a deal to pay them a little money. Then you’re really hooked; you just made a new contract with them. I would never talk to anyone over the phone. If its not in writing, it didn’t happen.

You can see other violations in the Fair Debt Collections Practices Act. This is a Federal law and you can sue the third party debt collectors if they violate your rights in this law. This law is not intended for use with original creditors like the banks. Those companies are the original creditors. This law was created to prevent third party debt collection abuse.

See the law here: Fair Debt Collections Practices Act

What is a 3rd Party Debt Collector?

Third part debt collectors have merely purchased an alleged debt from your original creditor or from a clearing house. Sometimes these alleged debts are purchased in bundles. The bad news is that these debt collection companies, who prey on the uninformed, purchase these alleged debts for only “Pennies on the Dollar” and sometimes even less that a penny.

So for example, if you defaulted on a credit card account for $5,000, that debt collection company may have only paid $100 or $200 for it. Then they start calling you and harassing you to pay the full $5,000 plus interest. Does that sound fair?

Someone asked if you can contact the original bank to try and negotiate the original debt. Most times once an alleged debt has been sent off to a collection agency, the original creditor will have nothing more to do with that debt. This is why we call them third party debt collectors.

Never Speak to a Debt Collector on the Phone

None of that is true. They just want you to admit that you owe a debt. They like it even better if you make a deal to pay them a little money. Then you’re really hooked. AND the statute of limitations clock starts all over again. I would never talk to anyone over the phone. If it’s not in writing, it didn’t happen.

You can see other violations in the Fair Debt Collections Practices Act. This is a Federal law and you can sue the third party debt collectors if they violate your rights in this law. This law is not intended for use with banks, credit card companies, auto loans, etc. Those companies are the original creditors. This law was created to prevent third party debt collection abuse.

But Still, Can They Sue Me?

Yes they can, but that does not mean that they can win. They don’t have the proof.  If they were to win and get a judgment against a consumer, they could garnish wages or in some states take some belongings. But again, they would have to win. If a consumer does nothing to rebut the complaint, the collector will surely win.

Consumers have rights and the Fair Debt Collection Practices Act spells out these rights. Can the collector really validate the alleged debt? Short answer: NO.

Bob’s Bad Scenario

If Bob lives in Florida there is a four year statute of limitations on an open-ended accounts or credit card debts. If Bob defaulted on a credit card debt by making his last payment in March 30, 2002 the bank would likely have written it off by the end of September 2002. That debt would be dead by April 2006. A bank compliance officer that worked with us told me that after the bank writes it off, it gets sold out to the third party debt collectors.

In this scenario, Bob gets a call from a third party debt collector company that had purchased this alleged debt in 2009 (three years after the limit). If that company called Bob on the phone and threatened him, they would not really have any teeth, just bluster. BUT, if Bob didn’t know the Fair Debt Collections Practices Act, a U.S. Law, and paid them a small amount, he just made a new contract with them. Then he’s bound by that contract all over again. It’s a whole new valid debt. They could even sue him in court. The debt collection company made an offer and Bob secured the contract with a small payment. That never had to happen.

Send Validation Demand Letters Certified

When a consumer sends any correspondence to a debt collector or law firm it is a must that the letter be sent “Certified” with a return receipt request attached. The post office can provide the two small forms needed. The reason for this is to prevent a debt collector from saying that they did not receive the debt validation letter.

What is Zombie Debt?

Many collectors buy debts that are old and try to trick consumers into paying them.  Each state has statute that states a time limit on certain types of debts. In other words, debts has an expiration date. For instant in Colorado after three (3) years from the time of the last payment, a debt collector cannot sue for an alleged debt. That doesn’t mean they can’t try.

That doesn’t keep the third party debt collectors from buying and trying to collect on old debts. They are hoping that the consumer doesn’t know the statutes and the FDCPA law. Consumers have busy lives and normally don’t study this subject.

You can check your states statute of limitations on debt at: http://PersonalTouchCreditCounselors.com/statute-of-limitations

Why I don’t like debt settlement companies

Debt settlement companies probably don’t want you to know about this. I contacted a debt settlement company that was advertising on the internet. I won’t mention any names, but I’ll call this company “ABC company”. The man I spoke with said that they could reduce my credit cart debt by about 50%. When they added their fee on top of the 50%, it turned into about 65% to 70%. Then I found out that their fee would be paid before they would being paying my so-called creditors.

If it was going to take almost a year to pay their fee before they started paying the creditors. The BIG PROBLEM with this, I’m told, is that many banks write off an account if they can’t collect on it within 180 days (six months). A bank compliance officer told me that if the bank writes off an account, they sell it off to third party debt collectors or to a debt clearing house.

If the debt settlement company (ABC Company) isn’t paying the original bank until after their fee was paid, they would start paying a third party debt collector. In my way of thinking, if I don’t have a contract with a third party debt collector, then I don’t own them the full amount of the alleged debt! I suppose that “ABC Company” would negotiate the amount down some.

Remember that the third party debt collectors only paid pennies on the dollar for these alleged debts. Then they want a consumer to pay the whole original amount plus interest. I don’t know about you, but I don’t think that’s fair.

The same goes for debt consolidation companies.

Why I Would Never Borrow Against My Home To Pay Off Debt

You home is one of your most important assets. If I were to borrow against my home and something terrible happened and I couldn’t pay my debts, I would lose my home. Many states have homestead laws that protect your home against debt collection.

Bankruptcy is Not a Good Answer

A bankruptcy can stay on your credit report for seven to ten years (dependent on the type of bankruptcy and state obtained). It can make it very difficult to obtain future credit, buy a home or car and sometimes even get a job. Almost every creditor, lender, and employer asks if you have ever filed bankruptcy. Due to the severity of this option it should always be considered as a last resort.  https://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States

Fascinating Information Below

“The Money Masters” is a brilliant video about the how money was created and how the Federal Reserve works. Don’t miss this fascinating and historical documentary.  http://www.themoneymasters.com/the-money-masters/

“The Creature from Jekyll Island, A Second Look at The Federal Reserve”  Audio CD: “An Address by G. Edward Griffin.  Here is a close look at the Money Magicians’ mirrors and smoke machines, the pulleys, cogs, and wheels that create the grand illusion called money. Based on Mr. Griffin’s book of the same title”.  https://realityzone.com/product/creature-from-jekyll-island-lecture-1-cd/

“Two Faces of Debt” is a booklet in the fifth revision of “Debt – Jekyll and Hyde” originally published by the Federal Reserve Bank of Chicago in the November 1953 issue of its monthly review.  https://www.scribd.com/document/192190186/Federal-Reserve-Bank-Two-Faces-of-Debt

 


What if a Debt Collector Calls Me?

Category : Debt Relief

What if I get a call or a letter from the collection agency?

First, never speak with a debt collector over the phone.  Your rights are never served on a phone call.  You want the collection agency to validate and prove that it really is your alleged debt. You’ll want to send them a debt validation letter right away.  Send this letter via certified mail with a return receipt. That way they can never say that they did not get a response from you!!!  You must get this letter out right away because you only have 30 days to respond by federal law.  If you miss the 30 day deadline the debt collector has the right to report the alleged debt to the credit reporting agencies if you don’t challenge this. 

debt collector

You can search the internet for debt validation letters, but we have some very powerful letters with a lot of “legalese” to make the collectors go away.  So you ask, “why would they go away?”  Because they really and truly cannot legally validate an alleged debt without your wet-ink signature on a “contract”.  They don’t have it.  

In your validation letter, let the debt collector know not to send you a computer printout itemizing your outstanding debt, as this is not sufficient proof according to the Federal Trade Commission opinion letters. These letters are interpretation of the law written by FTC staff attorneys. Instead, ask the collector to provide you with a copy of the following:

  • Their bond and license to collect in your state.
  • A copy of the agreement authorizing them to collect debt on behalf of the creditor.
  • An accounting statement on how they reached the amount you supposedly owe.
  • A copy of the contract you signed with the creditor bearing your signature.
  • The name and address of the creditor.

If, within 30 days, the debt collection agency sends you what they construe as proof, you can try to settle the outstanding amount for pennies on the dollar. You have 30 days to conclude your deal with the collection agency.

Personally I would never negotiate with a debt collection agency because they can never validate.  I would send them a default letter stating that since they did not validate under oath with my signatures on a contract, they must cease collection activity and may NOT report to any credit agency.

If you decide to negotiate and you can’t reach an agreement with the collector within that 30 days, they can, by law, report the negative item to the credit bureau. If they fail to validate and still report the negative item to the credit bureaus, then they have violated section 809(a) of the Fair Debt Collection Practices Act. This Federal Act mandates that collectors give you a chance to dispute the debt before reporting.

P.S.  Get a copy of your 3-n-1 credit reports plus your scores for only $1. Click this link for the special offer: Get Your 3-n-1 Credit Reports

 

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Statute of Limitations for Debt Collection

Each State has a time limit associated with each type of debt. In other words a collector can only legally go after an alleged debt for a specified amount of time. Many third party debt collectors will try to collect on old outdated or time barred debt. The chart below lists the time limits.

Open ended accounts are associated with credit card debt where the balances change and credit is used over and over. The names”written contracts and oral contracts” are pretty self explanatory. Promissory notes are contracts that you signed for a loan, etc. by the way, any contract should have your signature as well as the signature of the lender.

Statutes of limitations by state
StateWritten contractsOral contractsPromissory notesOpen-ended accounts
Alabama 6663
Alaska 3333
Arizona6363
Arkansas5355
California4244
Colorado3333
Connecticut6363
Delaware3333
D.C. 3333
Florida 5544
Georgia6444
Hawaii 6666
Idaho5454
Illinois 105105
Indiana6666
Iowa105105
Kansas 5355
Kentucky155105
Louisiana1010103
Maine66206
Maryland 33123
Massachusetts6666
Michigan6666
Minnesota 6666
Mississippi 3333
Missouri10635
Montana 8555
Nebraska 5454
Nevada6434
New Hampshire3363
New Jersey6666
New Mexico 6444
New York6666
North Carolina 3333
North Dakota 6666
Ohio 8666
Oklahoma5365
Oregon 6666
Pennsylvania 4444
Rhode Island10101010
South Carolina 3333
South Dakota 6666
Tennessee6666
Texas4444
Utah6444
Vermont66146
Virginia 5363
Washington6366
West Virginia10565
Wisconsin66106
Wyoming108106

Just to be clear, a third party debt collector is a collector that has purchased an alleged debt. They are not the original creditor. The original creditor, as the name suggests, is the bank or finance company where you got your loan or credit card originally. Third party debt collectors can be made to back off with specific letters asking for true and lawful validation.