Can I Find Out How Much I Owe a Credit Card That Has Gone Into Collections?

Collection agencies are required to disclose the amount owed on a credit card account when asked. Another way to determine the amount owed on a credit card that has gone to collections is by ordering a copy of your credit report. If a creditor has not reported the debt to the credit bureaus, you'll have to refer to your own records or contact the lender for more information regarding the balance of your debt.

Reading Your Credit Reports

Order credit reports from each of the three major credit bureaus (Transunion, Equifax and Experian) using their websites or their customer service numbers. You are entitled to one free credit report every year from each of the bureaus, but you can also choose to pay a fee at any time to obtain a copy. The vast majority of credit card companies and collection agencies will report your debts to the credit bureaus on a monthly basis. You may compare the balances stated on your credit report with your own records to ensure that there are no discrepancies.

Contact Your Creditors

Contact the customer service department of the credit card company that owned the account that was charged to collection. Ask the company how much was owed on the account, and cross-reference with your own records (if you have them) and the entry on your credit report. Under the Fair Debt Collection Practices Act, your creditors are obligated to disclose how much you owe and to produce proof that you owe the debts at your request.

Disputing Amounts Owed

If the amount that the credit card company and the collection agency claim that you owe differ from your records, you may be able to dispute the debt successfully. Your records may not reflect the sale of the account to collections. In some cases, credit card companies will add fees to your balance for the account being charged off. If a credit card company made an agreement with you to reduce your balance in return for a payment, and if you can produce proof of that arrangement, you may be able to get the balance of your current debt lowered. Contact the credit bureaus using their online disputation forms and send copies of your records when requested to attempt to get the debt amounts corrected.

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Debt Payment Options

A word that seems to correspond with the current recession is "weight." There is the weight of worrying about losing a job, how to pay bills, and how to plan for an uncertain future. Americans spend around 14.3 percent of their income attempting to pay off debts, according to Time Magazine. A significant percentage of those payments go to interest, rather than whittling away at actual debt. There are ways, though, for Americans to take charge of paying off those debts.

Use Savings

The idea of using savings to pay debt is a scary feeling. What if the car breaks down or you have to make an emergency trip? Think about it, though. When the interest on your debt is at 12 percent, your savings and investments would have to be earning an 18 percent return before federal and state taxes just to break even with what you're paying on your debt. Paying a higher interest rate than 12 percent on debt? That makes the use of savings and investments an even better idea to pay it down or off.

Get In Front Of The Minimum

Somehow, break the habit of paying the minimum to your creditors each month. Paying the minimum is exactly what they want you to do. The longer you take to repay the principal, the more interest they earn and the less cash you have. If you don't already do so, shop in discount stores to help put a few extra dollars away each month. Have a garage sale to get rid of old junk that will put cash in your pocket. Be creative in finding ways to come up with extra funds toward your monthly payment.

Use The Snowball Plan

The principle of the snowball plan is to focus on one debt at a time. You'll continue to make the minimum payments on all other debt. Financial adviser Dave Ramsey instructs his clients to accumulate $1,000 cash as an emergency fund before beginning the plan. The snowball plan instructs debtors to list their debts in order, with the smallest payoff amount listed first. You're not to be concerned with interest rates or terms unless two of your debts have a similar payoff amount. In that case, list the debt with the higher interest rate first.

Remember, you'll continue to pay the minimum payment toward every debt while you're concentrating on the debt at the top of your list. Focus on that debt, adding extra to your payments when you're able. As soon as you've paid that debt off, you'll focus on the next debt on the list. The next debt will have an advantage. In addition to your regular payment to them, you'll add in the amount of money you customarily paid toward the first debt, paying the new debt off more rapidly. Once that debt has been satisfied, you'll look at the next debt on your list and begin the process over. Only this time, you'll have funds from the two previous debts to pay toward the third. As the name indicates, the snowball plan builds momentum as it progresses.

Borrow From 401(K)

Another option of paying off debt is to borrow from your retirement account. If you participate in a 401(K) retirement plan at work there is a chance that you can borrow up to 50 percent of the account's value, or $50,000, whichever amount is smaller. The interest rate is usually a point or two above prime, making it cheaper than interest rates found on standard credit cards.When you do pay back the loan to your 401(K), you're actually paying yourself, as the interest as it goes right back into your account.

Borrow From Family

As hesitant as most of us are to choose this option, borrowing money from friends and family is another way to pay off debt to a high-interest creditor. Remember, though, that you must repay whomever was kind enough to loan you money. There is nothing like an unpaid debt to ruin a relationship.

Borrow Against Life Insurance

Some life insurance policies have a cash value. If that describes your life insurance policy, consider borrowing against it to repay your debt. One important caveat: if you don't repay the insurance policy, it may be worthless in the event of your untimely death, leaving your loved ones with another financial burden.

Work With Creditors

Be honest with your creditors if you're having trouble making regular payments. Tell them that if you're unable to renegotiate the terms of your loan you may have no other course than to file for bankruptcy. Be polite as you ask for a new and lower repayment plan and a lower interest rate. A creditor who knows that you may file for bankruptcy is likely to want to protect against a total loss.

Bankruptcy

If all else fails, consider speaking with a bankruptcy attorney. She can tell you what your options are and give you a realistic picture of how bankruptcy might impact your financial future.

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The Statute of Limitations in Arizona for Collections

The statute of limitations is a legal concept that precludes a plaintiff from filing a lawsuit after a specified period of time has elapsed from the date on which his cause of action first accrued. Arizona, like other states, has established specific limitations periods for bringing civil actions in court for various legal causes of action, e.g., negligence, fraud or breach of contract.

Arizona Statute Of Limitations

Arizona has established two separate limitations periods for actions to recover debt owed. 12-548 of the Arizona Revised Statutes provides a six-year limitations period for actions where indebtedness is evidenced under the terms of a written contract. Arizona, like other jurisdictions, has a separate and distinct statutory limitations period for revolving credit card agreements, referred to in the statute as "open accounts." Arizona Revised Statutes 12-543 provides for a three-year limitations period for filing civil actions to recover debt based on a credit card agreement.

The Statute Of Limitations Period

Pursuant to the language of the Arizona statute, the statute of limitations clock commences upon the date "the cause of action accrued." For breach of written contracts, the cause of action accrues on the date the contract was breached. For revolving credit card agreements, the cause of action accrues on the date the account first went into default or delinquency. The statute of limitations period stops on the date an action for recovery of the default balance is filed in court by a creditor.

Significance

An action by a creditor that is filed outside the designated statute of limitations period is considered time-barred and must be dismissed by the court if the defense is properly raised by the debtor. Once the suit is dismissed, the creditor has no further legal recourse against the debtor.

Considerations

A debtor against whom a civil action has been filed for repayment must raise the affirmative defense of the statute of limitations, or he will be deemed to have waived it. The Arizona Rules of Civil Procedure require a debtor to plead the statute of limitations in his Answer to the Creditor's Complaint. Once timely raised, on request of the debtor, the court will dismiss the lawsuit.

Misconceptions

Operation of the statute of limitations does not extinguish the debt; it only prohibits the creditor from using the legal system to enforce payment. Even though a creditor's lawsuit for repayment is dismissed for failure to comply with the statute of limitations, he may continue -- however futile -- with traditional collection efforts such as dunning letters or phone calls.

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How to Stop Credit Card Collection Phone Calls

Struggling to pay your credit-card debt is difficult enough without being harassed by companies trying to collect money. Fortunately, the Fair Debt Collection Practices Act (FDCPA) protects consumers from collection companies. Arm yourself with knowledge of your rights to stop those annoying phone calls.

Instructions

1

Know the law. The Fair Debt Collection Practices Act (FDCPA) governs the ways in which collection companies can contact you, as well as your rights in dealing with collection companies. For example, collection companies cannot call you before 8 a.m. or after 9 p.m. in your time zone. They cannot continuously call you, nor can they call third parties to find you if they already have your contact information. Further, they cannot threaten or harass you or misrepresent themselves, and they cannot call you if you send a letter telling them to stop.

2

Start a call log. Whenever you get a call, get the person's name, the company's name, and phone number. If the person on the line refuses to give you information, let him know that you won't talk to him (you are not required to talk to collection companies). If the caller harasses or threatens you, he is violating FDCPA. Keeping good records is paramount to protecting yourself; a call log is proof of what transpired.

3

Request proof of the debt. By law, companies seeking to collect money must send you a debt-validation letter within 5 days of contacting you. Request this letter in writing from the collector. Send your request by certified mail with a return receipt. File a copy of the letter and return receipt for your records.

4

Verify the debt. The company's validation letter must show proof that it owns the debt, which includes a copy of the contract you signed with the creditor and documentation from the original creditor (if the debt was transferred). If the company fails to show proof, write back (by certified mail) indicating that the company hasn't given proof per FDCPA . Inform the company you will file a lawsuit if it does not cease collection efforts. The collection company cannot legally contact credit bureaus either, if it has not shown you proof of the debt. If the company proved the debt, but you wish to dispute all or part of the amount, you can do so in writing within 30 days. Failure to respond in 30 days will result in the company assuming that the debt is valid.

5

Ask for collection requests in writing. If you know you owe the debt, you can still stop calls simply by telling the company to send what it needs in writing. Follow up with a letter telling the company to stop calling (on all phones including those at work). Let the collector know that you know your rights and will take action if the provisions of FDCPA are violated. Communicate by sending a certified letter requesting a return receipt. Keep proof of your request in case the company ignores it.

6

Talk to a lawyer. If you have hired a lawyer to help you with your credit issues, refer the credit-card agency to him. At that point, the credit agency must contact the lawyer instead of you. Again, it helps to send the information in writing so you have a record if the agency fails to comply.

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How to Improve My FICO Score for Free

The FICO (Fair Isaac Corporation) score is derived from a specific analysis of your credit report. The score is generated from multiple factors including your payment history, number of delinquent accounts, ability to pay existing debt and length of time accounts have been opened. When your score is high, lenders are more likely to extend new credit to you, and better rates should be available.



You can raise your score by following a few simple steps. Credit repair companies cannot legally do anything that you can't do for yourself nor can they speed up the process.

Instructions

Check Credit Report and Dispute Errors

1

Obtain a copy of your credit report from all three credit bureaus. You are allowed one free report per year from each bureau -- TransUnion, Experian and Equifax. Free reports can be ordered by visiting the annualcreditreport website or by contacting the bureaus separately.

2

Review each report for accuracy. Creditors are not required to report to each of the three bureaus, so some accounts may not be listed on all credit bureau reports. This applies to negative and positive account information.

3

Dispute errors. Write a letter to the creditor upon initial notification of the debt, or write a letter to the credit bureau. The Federal Trade Commission has templates you can use, and all three credit bureaus also have online dispute forms. Disputing debt is free, and both the creditor and credit bureau must verify the debt before the collection effort or negative report mark is sustained.

4

Wait 30 days from the date of dispute. When disputing with the creditor or collection agency, the company has 30 days to provide verification to you that the debt is valid. If verification cannot be provided, the creditor cannot continue to attempt collection.

When disputing with the credit bureau, the bureau requests verification from the creditor. The creditor has 30 days to validate the debt or take no action. If the creditor takes no action, or is unable to validate the debt, the credit bureau must remove the item from your report.

Maintain Positive Payment History

5

Review payment history. If there are accounts that have late payments, get current with the reporting company. The late payments will stay on the credit report, but the past due balance will go down. Both past due balances and late payments negatively affect your FICO score.

6

Don't skip payments. If you cannot make a minimum payment, contact the creditor first to work something out before the late payment hits your report. Recent late payments hurt your FICO score more than old late payments.

7

Add positive accounts. If an account with good payment history does not appear on all three reports, contact the creditor and request the account be reported to all credit bureaus. This will increase your FICO score with the credit bureau receiving the new account information.

Manage Balances

8

Pay down revolving credit balances. Revolving credit accounts can be reused as payments are made. Credit cards are an example of revolving credit.

FICO scores go down when credit cards are maxed out. A balance that is no more than 30 percent of your available credit is ideal. For example, a card with a $1,000 limit and a $300 balance will have a better impact on your score.

9

Keep inactive accounts open. Do not close credit card accounts that are paid off even if you do not use them anymore. The myFICO website illustrates how available, but unused credit, improves your score and credit utilization ratio.

10

Do not move balances around. Transferring balances to new credit accounts does not help your score. Consumers are attracted to balance transfer options because of lower interest rates. However, when only minimum payments are being made, over time a consumer will actually pay much more than what was originally transferred. Transferring balances does not help your score or your budget.

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Bankruptcy Vs. Debt Management Plan

Bankruptcy and debt management are two options for dealing with debt; each has its own unique advantages and disadvantages. Which one you should choose depends upon your individual needs and financial circumstances.

Definition

Bankruptcy is a legal process in which debts are restructured or erased completely. Debt management restructures debt to make it more manageable.

How It Works---Bankruptcy

You present the court with a list of your debts and assets. After mandatory credit counseling and a meeting of creditors, your bankruptcy is discharged and your debts are relieved.

How It Works---Debt Management

Debts are consolidated into a single monthly payment and distributed to creditors through a third-party debt-management company.

Pros and Cons of Bankruptcy

Bankruptcy eliminates debt and offers a fresh start, however, it will destroy your credit rating.

Pros and Cons of Debt Management

Debt-management plans can save you money in interest and fees, but it can impact your credit negatively, as most debt-management plans require that you close the accounts included in the plan.

Which is Better?

Bankruptcy is best for those who have significant debt and few assets or means to pay. Debt management is best for those who need assistance in handling their debt load.

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Is It Worth Paying Back a Collection Agency?

When a creditor cannot collect from you, it will usually write off your account and transfer the account to a third party for collection. These third-party debt collectors, or "collection agencies," work in conjunction with creditors or alone to recover past due debts. Depending on your situation, paying a collection agency may not benefit you in any way.

Age of Debt

One incentive many consumers have for paying off past due debt is the possibility that, should they fail to do so, they could face legal action. Each state restricts the number of years a creditor has to seek recourse for unpaid debts through a lawsuit by setting a statute of limitations for legal action. If a collection agency can no longer sue you, leaving your debt unpaid will not result in a court judgment, garnishment, a lien or any other unpleasant consequence you may otherwise face as the result of debt-collection lawsuit.

If you make a partial payment on your debt, however, you could reset the statute of limitations, depending on your state's laws. When you reset the statute of limitations, the collection agency once again has the right to file a lawsuit against you -- even if you make regular payments.

Credit Reporting Period

Your original creditor and the collection agency both submit reports of your outstanding debt to the credit bureaus. These reports appear within your credit record and renders future creditors less likely to work with you, as individuals with poor credit ratings pose a higher than average lending risk.

Seven years and 180 days from the date you defaulted on the debt, the Fair Credit Reporting Act requires the credit bureaus to delete credit information connected to the debt from your file. Paying off the debt only benefits your credit if the collection agency removes its negative report as a result. Once the federal reporting period expires, however, the debt vanishes from your credit for good -- eliminating any incentive you may have previously had to pay off the collection account in exchange for early credit removal.

Moral Considerations

Even if paying the collection agency does not benefit you, that does not mean that you should necessarily leave the account unpaid. Unpaid debts are valid until resolved through payment or discharged in a bankruptcy -- regardless of whether the creditor can legally sue or the debt still shows up on your credit report. For many consumers, paying off debts is a matter of honesty. If unresolved debt leaves you with guilt, paying the collection agency is worth it -- regardless of how old the debt is and whether or not leaving it unpaid carries any consequences.

Eliminating Reminders

Just because the statute of limitations has expired in your state or the collection account no longer appears on your credit file, that does not mean that the collection agency automatically stops contacting you. Should you choose to ignore an old collection account, you can legally eliminate constant reminders that you have yet to pay the debt. The Fair Debt Collections Practices Act notes that you can send the collection agency a letter stipulating that it must stop contacting you. If the debt collection letters and calls continue after you request that the company discontinue its debt recovery efforts, you can sue the collection agency for harassment.

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