The Fair Debt Collections Practices Act, a federal law, offers protection from debt collectors and creditors. The law clearly specifies what debt collectors can and cannot do as they attempt to collect a debt. However. creditors and debt collectors have many resources for collecting debts, including filing lawsuits in small claims court.
Lawsuits
Civil lawsuits are possible once creditors send delinquent accounts to debt collectors. The threat of a lawsuit is the debt collector's biggest weapon, and can result in a court judgment and bank or wage garnishment. It's impossible to predict if a debt collector will file a lawsuit, and not every delinquent account leads to court action. However, The New York Times reports that as of 2010, credit card companies and other lenders are increasingly turning to lawsuits to collect bad debts. Judgments are a legal order signed by a judge ordering a defendant to pay a specific amount of money.
Validation
Debt collectors must prove they have the legal right to collect on a specific debt when challenged by the debtor at the start of the collections process. This is important for debtors because by law, the debt collector must cease all debt collection efforts -- including the possible filing of a lawsuit -- until it provides the information. Debt collectors can prove they have legal authority to collect a debt by sending the debtor information such as the last billing statement or copies of charges made on the account. In some instances it can take several weeks or even months for the debt collector to provide the information. Debtors seeking validation are required by law to request it within 30 days of first receiving a written notice about the debt from the debt collector.
Default Judgments
Debtors who have received so-called "default judgments" can, in certain instances, petition the court to remove, or vacate the judgment. Default judgments occur when debtors fail to respond to a legal notice about a debt lawsuit, such as a request for the debtor to respond to the lawsuit in writing or to appear before a judge. Help from an experienced consumer affairs attorney is advisable when trying to vacate a judgment. Vacating a judgment allows for a near hearing on the case, but does not end the debtor's responsibility for the debt.
Location
A debt collector filing a lawsuit must do so in the state and county in which the debtor lives. Some debt collectors work on commission, with some delinquent accounts bouncing around from one debt collection agency to another -- although legally, only one agency can collect on the account in a given time. A creditor who transfers the account to a law firm in the debtor's state may be contemplating a lawsuit.
State Statutes
State statue of limitation laws determine how long debt collectors have to win a debt lawsuit. Debts beyond a state's statute of limitations laws are considered too old for considerations by the court system. Some debtors avoid judgments by informing the judge during a debt lawsuit that the lawsuit is invalid because of state laws. State statute of limitation laws vary by the state, but the average is about six years. Debtors can contact a local office of their state attorney for specific information about statute of limitation laws.
Considerations
There are no provisions in state or federal laws to allow a debtor to escape a debt he legally owes, or to prevent creditors from seeking judgments. Creditors and debt collectors may offer payment plans or settlements, but they are not required by law to so.
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