Debt Recovery & Collection

The use of credit is a way of life for consumers and an income source for businesses. The credit card companies set credit limits, charge fees, offering consumers a way to obtain items. Loss of a job, a decrease in income, puts a strain on consumers to meet monthly obligations. Payments are delinquent and debt collectors insist on payments. The Federal Trade Commission has enacted the Fair Debt Collection Act offering consumers and collectors rights and responsibilities of debt recovery and collection.

identification

Debt recovery and collection consists of obtaining the funds to settle debts. The delinquent debts a consumer has not been able to pay. Debt collection agencies will purchase debts of significant amounts from the original business. Debts may be six months to four years past due and no payment attempts made. Debt recovery and debt collection is used interchangeably, both referring to the settling of a unpaid debt.

Facts

Credit Card use

Each state has a time limit that debts are collectible, when the time is up the debt is no longer collectible. However, debt collection agencies may research credit records without permission. Debts not paid can become the property of the collection agency. Now you owe the collection agency and the time starts over. Collection companies are in the business to earn a profit, interest rates may be applied to the debt.

Function

The primary purpose of debt recovery and collections is to settle debt. The means and ways are varied and include litigation. Courts set a judgment against you, garnish wages, consolidate valuables and agree on payment arrangements. However, debt recovery and collections cannot include taking what you need to live on. Collection agencies can take you to court, levy your accounts, settle your debt by collecting real property. Real property includes house, car, boat, trailer, motor home and jewelry with a value determined by the residence of jurisdiction.

Considerations

The Fair Debt Collection Act covers debts of credit cards, home and auto debts. Collectors are not allowed to harass, threaten you with jail or bodily harm, curse, lie or continue to call you when requested in writing to stop. As a consumer you have a right to privacy and to be treated fairly. A collection agency must contact you in regards to the amount of the debt, means of collections, offering you the opportunity to respond. Collection agencies may contact your friends, family, coworkers or employer for a current mailing address.

Suggestions

As a consumer you have the right to dispute debts, be treated fairly and with respect. Keep a record of all communication, including copies of correspondence, phone call dates and times, receipts for correspondence. Always send your correspondence with proof of mailing, a return receipt, keep this on file. Collection agencies must provide you with a record of your debt, proof that the debtor owns the debt. Use caution when using a debt consolidation organization, check the company out before you hire it to help. Most consolidation companies charge exorbitant fees and many do not help to manage the debt.