Most consumers pay their bills and are happy to do so. If the debt is a valid one, paying it off is usually in your best interest. The proper use of credit builds not only a good credit score, but also character. Unfortunately, you may sometimes be faced with collection efforts by bill collectors and creditors for erroneous debts; in this case, you have valid reason to dispute the debts and seek clarification before a payment.
The Debt Isn't Yours
Many individuals have the same or similar names, so it's important to ensure that a request for payment of a debt is valid. If a collection agency states that a debt belongs to you, send it a debt validation letter (DV). Under the Fair Debt Collections Practices Act (FDCPA), the collection agency is required to provide proof that the debt is yours. Never pay a debt that you believe belongs to someone else; if you do, you acknowledge responsibility for it and that could subject you to further collection activities.
Someone Stole Your Identity
According to the Federal Trade Commission (FTC), identity theft was the number one complaint filed by consumers in 2009. The Internet makes it very easy for criminals to steal your social security number and other identifying information. If you discover that you've been the victim of identity theft, file a police report immediately. Next, place a fraud alert on your credit report and notify all creditors of the crime. Keep the police report indefinitely, especially if your checks have been stolen.
The Debt is the Result of a Clerical Error
Data entry errors occur when numbers and letters are inadvertently transposed. Sometimes a creditor will catch these errors, but if it doesn't, a small debt can quickly balloon into a large one. With the click of a key, a $30 bill may become $300 or a $10 bill may become $1,000. Contact the creditor immediately if such an error occurs and provide proof of the actual bill amount. Don't delay, or additional penalties and interest for non-payment can accrue.
The Debt is Beyond the Statute of Limitations
All states have laws that limit the amount of time a creditor can collect on a debt. The laws vary according to the type of debt in question: credit cards, personal loans, judgments, etc. Once the statute of limitations has passed for that particular debt, you're no longer legally liable for its repayment. On the other hand, if a collection agency sues you for a debt that's beyond the statute of limitations, it may be able to obtain a judgment against you by default if you fail to show up in court to preserve your rights. Never ignore a lawsuit.
You've Already Paid the Debt
Believe it or not, businesses sometimes do a poor job of keeping their financial books. A creditor may not mark a bill as paid even though it is. In this instance, not only does the creditor think you owe the money, but it may turn the bill over to a collection agency if you don't pay it again. The fix is to provide proof to the creditor or agency that this debt was indeed paid. Canceled checks or a bill that shows a zero balance work well. If a negative mark appears on your report as a result, dispute that with the credit bureaus. Under the Fair Credit Reporting Act (FCRA), creditors are not allowed to place erroneous information on your credit report.
0 comments:
Post a Comment