Can Collectors Freeze My Checking Account?

Many consumers have questions about the debt collection process creditors may use. Often, they are confused about what a collector can and cannot do in order to legally collect a debt. The collection process can lead to a creditor seeking your assets, and that includes your checking account under certain circumstances.

Court Orders

A debt collector must first win a lawsuit in court before they can freeze an asset like your checking account. Even after that, they must get an order from the judge in the case specifically allowing them to freeze your bank accounts, called a writ of execution. You will have plenty of warning this process is happening, because you will be served legal papers before the lawsuit.

Finding your Account

Once the creditor has an order allowing them to seize your assets, they need to find the bank where you have your checking account. If the creditor doesn't know where you live, they may hire a skip tracing company to try to locate you. The creditor may then call banks in the area to try to locate your account. The creditor will get a writ of execution, and have it served to local banks in an attempt to locate you. While the bank cannot give out your personal information, it is required to hold your money for the creditor. After about 21 days, it will release the money to your creditor to pay off the debt.

Compounding Problems

Having all of the money frozen in your checking account can cause quite a few problems. When the bank receives the order to withhold money from your checking account, any outstanding checks you have written will probably be returned unpaid. The bank still may charge you the non-sufficient funds fees it charges for a returned check. Since most or all of the money in your account will have been held out for debt payment, this is extra money you will need to pay. If your paycheck is direct deposited, you may not be able to stop the deposit soon enough, and you run the risk of having one or more paychecks deposited into the account. The creditor can take that money as well.

Prevention

Work out an arrangement with your creditors before the situation gets to this critical stage. Often, creditors will accept payments or they may work out a lump sum settlement with you. Creditors may also file a lien against your property or seek garnishment of your wages, so working out a settlement can help prevent these problems as well. If an account freeze is imminent, you may want to close the account and use cash or money orders for a while until the situation improves. If a creditor is seeking garnishment of your wages or a freeze on your checking account, filing for bankruptcy will stop these actions immediately.

Read More

How Bad Debt Affects Your Credit Score

Your credit score is an estimate, made available to lenders and other financial services companies, of the likelihood that you will pay off a new loan. The scores are developed by credit report agencies, which collect information on your financial history and enter it into a formula, calculating your creditworthiness. When you fail to pay back a loan according to its terms, this makes you appear less creditworthy and lowers your score.

Beginning Scores

According to the Fair Isaac Corporation, people with higher credit scores will actually see greater declines in their score if they incur bad debts as opposed to people whose credit scores are already relatively low. This is because incurring a bad debt is relatively consistent with the credit history of a person with a low credit score. However, a bad debt represents a major shift in the credit history of a person with good credit, requiring the credit reporting agency to make a more drastic correction.

Late Payments

According to the Fair Isaac Corporation, the company that pioneered the modern version of the credit score, a single payment that is late by 30 days can badly hurt your credit rating. Depending on the rest of your credit history and the size of the debt, this late payment can drop your score between 60 an 110 points.

Bankruptcy

One of the single most devastating effects on declaring bankruptcy is the damage to your credit score. When you declare bankruptcy, most of your debts are set aside and forgiven. This is the equivalent of having an enormous number of debts written off. According to the Fair Isaac Corporation, your score may fall by up to 240 points. Bankruptcies can only listed on a credit report for up to 10 years, but in most cases, your score can improve over that time with improved financial habits.

Debt Settlement

If your debt becomes unmanageable---meaning you cannot pay down the existing debt without suffering major personal or financial consequences---you may attempt to settle the debt. Under debt settlement, your creditors agree to accept less money than the person actually owes. The Fair Isaac Corporation states that a debt settlement can cost a person between 45 and 125 points, depending on the person's previous score and size of the debts settled.

Read More

How Can I Get a Title From the Bank Used as Collateral?

Titles to property, such as boats, recreational vehicles and automobiles, are often held by banks as collateral for loans. The bank establishes a value for the property through an appraisal and compares the value to the loan request. Loan approval is possible if the value of the titled property exceeds the requested loan amount. The bank will release the title after receiving all payments on the loan.

Instructions

1

Confirm that the title and loan are in your name. It is not possible for you to obtain the title if the loan is not yours. For example, a spouse may have obtained a loan by pledging the title to a motorcycle. In that case only the spouse can obtain the title. Exceptions are possible when the debtor is deceased and an estate is settling his affairs.

2

Review the billing statement if the loan and title are in your name. Determine the loan balance, and confirm it by calling the lender. Tell the lender that you wish to pay off the loan and retrieve the title offered as collateral.

3

Pay the payoff amount by sending a cashier's check or personal check. A money order or cash paid in person are other options. Obtain a receipt if paying in person.

4

Contact the bank's customer service department thee or four days after paying off the loan. This allows the time for the check to clear -- if you paid by check. Confirm that final payment was applied to the account, ending the balance. Request that the bank remove the lien placed on the title -- if it has not already done so -- and mail the title to you at your address.

Read More

Debt Reduction Planning

Some people come to the realization that they have too much debt before they get in over their heads, while others may reach a financial breaking point first. Getting into debt is easy, getting out is extremely tough. Too much debt is unsustainable, and it prevents you from reaching many financial goals in your life. With a bit of planning, effort and consistent work however, you can begin your personal path to debt reduction.

Stop Creating Debt

The most important first step in debt reduction planning is to stop creating new debt. If you have credit cards, cut them up and stop using them. If you have revolving credit accounts at department stores, stop visiting those stores or only allow yourself to go there with cash in hand. Make a personal pact with yourself to stop using every source of credit you have, so that you can stop increasing the amount of debt you must repay.

List Current Debts

Create a list of every single debt you currently have an outstanding balance on, regardless of how big or small the debt is. List personal loans from friends or family members, bank loans, mortgages, car finance contracts, credit cards and any other debts you may have. When you create the list, write down the name of the debt, the total outstanding balance, the minimum payment and the interest rate if applicable.

Create a Debt Payoff Plan

Reorganize your list of debts so that the smallest one is at the top, the next smallest is in second place and the next smallest is in third place. Continue ordering the debts from the smallest outstanding balance to the largest. This is the reduction order for your debt plan. Continue paying the minimum bill on every debt you have, but rearrange your personal budget so that you can pay extra on the first one in your list. The more extra you can add to that payment, the faster you will pay it off. Once that first debt is paid in full, apply the original minimum payment from it to the minimum payment of the next debt in your list. Continue rolling payments to the next debt as each previous one is paid off.

Get Counseling

If you are unable to adjust your personal spending habits or household budget in a way that allows you to contribute some small extra amount of money towards reducing your debts then you may want to consider getting professional credit counseling. Counseling is also helpful if you do not earn enough money to cover all of the minimum payments on your outstanding debts. Credit counselors can help you design a personal budget and adjust your debt payoff plan to better fit your personal lifestyle and financial limitations.

Read More

Can a Collection Agency Legally Add on Extra Fees?

If you have unpaid bills, you may find yourself receiving phone calls and correspondence from a collection agency. This is certainly not something you want to disregard; it is sufficient cause for concern. One important detail that may alarm you is the addition of interest fees and other charges to the amount you owe. While this may seem outlandish, a collection agency may be well within its rights to add on these fees, depending on your original agreement.

Function

The purpose of a collection agency is to collect the debt on behalf of the company to which you allegedly owe payment. Collection agencies come in many forms. It may actually be the same company who carries the debt, but using a different name and address to seem more intimidating. Another alternative is an attorney that specializes in collecting debts for clients. Mostly, however, it is simply a separate company that does all the leg work, either for hire or by buying out unpaid debts from other companies.

Legality of Extra Fees

According to Section 808 of the Fair Debt Collection Practices Act (FDCPA), upheld by the Federal Trade Commission (FTC), a debt collector may add extra charges and fees to the bill it is collecting if it meets the following criteria: the initial contract for the debt states that such fees may be charged over the term of the debt or during the collection process; or the charge is permitted by state law. In the alternative, if a contract states a debt collector can add such fees, but state law prohibits said fees, then the debtor is not legally bound to pay them.

Types of Fees

A collection agency may add extra fees to your initial bill during the collection process if the above criteria apply. Typically, these fees consist of interest, attorney fees and court costs. You will see interest added to a debt only if the original contract or subsequent bills from the company collecting the debt specifically state that a late payment will incur interest. Of course, the collection agency must be able to provide proof of such provisions in the contract.

Considerations

Even if the contract does not provide for attorney fees and court costs, or there was no written contract to begin with, the state court may permit the addition of reasonable fees as a means of reimbursing the debt collector for money it spent pursuing payment. For example, if the collection agency is pursuing collection on a bad check, it may add on a service charge if a sign posted on the merchant's property states that such a charge will occur, an implication that the debtor was aware of this possibility.

Read More

Statute of Limitations on Debt Collection in Oregon

A statute of limitations is a law that limits the amount of time in which a legal procedure may be enacted. After this period expires, the debt may not be legally challenged in a court. All states have a stature of limitations regarding debt collection, all with different lengths of time. The statute of limitations of debts in Oregon depends on what kind of debt is outstanding.

Judgments

A judgment is a result of a court case, both civil or criminal. Some judgements may involve a financial remedy. Such judgements will typically begin on the day the judgment is made. Judgements may be amended by the court on a later date. Normally, an individual has up to 30 days to pay the judgment. Judgements in Oregon, which may include any judgment within the United States, has a statute of limitations of 10 years. During this time, and after the initial 30 days, interest accrues at 4 percent over the interest rate of a Treasury bill.

Collection of Debt

This may include any secured or unsecured debts, such as a mortgage payment or a credit card bill. Mortgage payments are typically settled through a foreclosure, in where the house is seized by the lending institutions. Unsecured debts such as credit card debts, however, may be harder to settle. In Oregon, the statute of limitations for the defense of a lawsuit concerning debts is six years.

Contracts

These may be in the form of written or oral agreements between two individuals or companies. Most contracts have liability clauses. If such a liability clause is violated by one of the parties, the other party may be entitled to a financial remedy which may or may not be enforced by the law. Contracts in Oregon, both written and oral, have a statute of limitations of six years and are regarded under the same law as regular debts.

Collection of Rents

Laws involving the collection of rents involve the leasing of property. In the state of Oregon, the landlord or leasing agent has a period of up to one year to claim any past unpaid rents. This law has little to do with eviction, which is covered by another statute. A landlord my pursue a tenant for unpaid rent even if he is already evicted.

Read More

How Can I Freeze My Credit to Prevent Credit Fraud?

Credit fraud and identity theft are two of the fastest growing crimes in the world today, according to USAToday.com. While both of these crimes affect your bottom line, they take different routes to that end. The difference lies in whether the information stolen is to be used to charge illegal purchases on an existing card or if personally identifiable information will be used to open new credit in the victim's name.

Credit History Protection

Placing a freeze on your credit report prevents creditors, employers and others from accessing your credit history. Identity theft occurs when someone uses your personally identifiable information (e.g., Social Security number, name, address, etc.) to open new credit. Because your information was used, the unpaid bills are reported to your record at the major credit bureaus, affecting your score. Once the information is there, you have the burden of proof to have it removed. This can be a costly and long process.

According to Kiplinger.com, placing a freeze with the bureaus is a good strategy if you have reason to believe your information has been compromised. Most states impose a small fee to have this done, usually around $10. The freeze can limit your ability to get quick credit approval, but the information is safe. Each bureau will provide you with a personal identification number (PIN) that allows you to temporarily lift the freeze when you want to apply for credit. You can check FTC.gov to see if your state has passed laws yet providing for free credit freezes.

To place a freeze online, visit the sites for each major credit bureau and fill out the forms. See Resources for links directly to their freeze pages. If your state requires a fee, you can pay this with your credit or debit card. If you prefer to request the freeze through the mail, write each bureau individually at the following addresses and include a check for your payment. You will need to send copies of personally identifying information such as Social Security card, driver's license and a recent utility bill with your name and address.

Experian
P.O. Box 9554
Allen, TX 75013

TransUnion
P.O. Box 390
Springfield, PA 19064

Equifax
P.O. Box 740256
Atlanta, GA 30374

If you feel a freeze would be too drastic a measure for you, you can place an initial credit alert instead. This is free at all three bureaus and in all 50 states. The alert lasts 90 days, but it can be renewed any time you feel it's necessary. An initial alert is easy to place. Simply call one of the bureau's automated numbers and follow the prompts. This action prompts that bureau to alert the other two. The alert goes on your report immediately, so that when a lender pulls the report, it is notified that it must either call you for verification or get extra identification to ensure you are indeed the report owner.

Read More