If a United States consumer owes a debt to a credit card company, the company will usually sell the debt off within 120 days to a collections agency if it cannot collect the debt itself. After this point, the debtor can no longer pay back the original creditor and must deal exclusively with the debt collection agency. Consumers can resolve the debt with the collection agency through a number of remedies.
Pay
To prevent a debt from further damaging his credit score, a consumer can choose to pay off all debts owed to the collection agency. The agency will send the debtor a letter detailing the amount of the debt and the means by which the debtor can pay. Most agencies will accept a payment program that allows debtors to pay off their debt in monthly installment payments.
Ignore
Consumers can choose to ignore the notices that collection agencies send them but the collectors may try to collect the owed debt through a court of law. In addition, all states except North Carolina, Pennsylvania, South Carolina and Texas allow a creditor to legally garnish a debtor's paycheck to collect owed monies and creditors can have a court place a lien upon a debtor's house or car in most states. Under the Fair Debt Collection Practices Act, consumers can send a letter to the collections agency stating that they want no further written or verbal contact with the agency.
Settle
Since credit card companies sell debt to collection agencies for a fraction of the value of the debt, consumers can try to work out an arrangement with the agency for a reduced settlement. With a reduced settlement, a debtor pays a fraction of the debt owed. According to Credit Restoration of Washington, collection agencies routinely settle debts for 50 percent of the owed balance. Agencies most commonly accept reduced settlements if they believe that the debtor does not have the financial means to pay monies owed. Settling your debt for less than its value, however, will be a negative item on your credit report.
Know Your Rights
Under the Fair Debt Collection Practices Act (FDCPA), a U.S. debt collector must abide by certain rules when contacting a debtor. If the consumer believes he does not owe the debt, he can request a validation notice which verifies the owner of the debt and lists remedies the consumer can take. Collection agencies cannot harass consumers or make false statements, such as threatening the debtor with arrest or using obscenities over the phone. Consumers can receive up to $1,000 per violation of the FDCPA through the ruling of a local or state judge if the collection agency violates their rights under federal law.
0 comments:
Post a Comment