If you cease to pay a debt, you will likely discover that your account has been transferred to a collection agency, which will attempt to collect the debt. Even though you owe a debt, that does not give debt collectors the right to collect the debt from you by any means necessary.
The Law
The Fair Debt Collection Practices Act was established to combat increasingly abusive debt collection practices. If a collection agency violates the guidelines set forth by the act, you may file a lawsuit against it for any monetary damages you suffer. The collection agency may also be required to pay a fine of up to $1,000 to you for any violations of the FDCPA that you can prove in court.
Harassment
Harassment to collect a debt is common but also strictly prohibited. Harassment includes, but is not limited to: calling at odd hours, calling with the intent to annoy, threatening your person or property, using foul language, or contacting others about your debt to embarrass you. If you would prefer that the collection agency stop telephoning you, you can write a letter demanding that all contact with you be conducted via mail. The collection agency must comply with your request.
Debt Validation
Collection agencies hold large numbers of consumer accounts, and mistakes are common. Because of this, every consumer has a legal right to request validation of his supposed debt. If you dispute the validity of the debt in writing to the collection agency, it must prove to you that the debt is yours. The collection agency also needs to prove that it was assigned by your original creditor to collect the debt. Keep in mind that a simple printout of your name and the amount of the debt does not legally prove that you were the one who accrued the debt and are liable for it.
Statute of Limitations
Each state has a statute of limitations to regulate the amount of time a collection agency may legally collect on a debt. This usually averages three to five years for most states. After this time period has expired, a collection agency is not supposed to file a lawsuit against you, but many will attempt to do so anyway. If you receive a court summons for a debt that you know is outside the statute of limitations for your state, you must show up in court to present that fact. If you do not, you could end up with a judgment against you on your credit report.
Reporting Period
Once a debt has been delinquent for 180 days, the negative debt reporting period begins. The debt may only appear on your credit report for seven years from that date. After the reporting period is over, all evidence of the debt must be removed from your credit report. When your account is assigned to a collection agency, the agency will place a trade line on your credit report. This is a record of the negative debt. If you have negative trade lines on your report, watch the dates that the debts are scheduled to be removed closely.
Occasionally some collection agencies will alter those dates to leave their trade lines on your credit report for longer periods of time. This is against the law. If it happens to you, immediately contact the credit bureaus with documentation of the actual date the debt was to be removed to rectify the situation.
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