Legal Debt Questions

The Fair Debt Collection Practices Act gives you the right to force debt collectors to prove that the debt they are trying to collect from you is legally yours, and that they have a right to demand payment. Although most people presumably know when they have borrowed money--and not paid it back--there could be instances of an obscure debt resurfacing from say, a decade ago. In a case such as that, asking questions about the legality of the debt is proper.

Debt Validation

Debt collectors trying to collect from you are required by law to send you what federal law calls a "written validation notice." The notice must be sent within five days of the debt collector first contacting you, and must specify how much the debt collector says you owe. You then have the right to force the debt collector to prove his claim by requesting in writing that he send you a copy of the contract or promissory note that you signed with the original creditor, or a copy of the last statement before the account was closed. Once you have received proper verification of the debt you can assume that it is legal and the debt collector is entitled to collect from you.

Spousal Issues

Generally, you cannot be held legally responsible for a spouse's debt, unless you were a co-signer on the account. However, there are some exceptions. In community property states, both parties are responsible for most debts incurred by either spouse during the marriage. The community property states are Texas, California, Idaho, Louisiana, Arizona, Nevada, New Mexico, Washington and Wisconsin. In the other common law states debts incurred solely by a spouse generally are that spouse's responsibility alone, unless the debt was for food, shelter or some other family necessity.
Federal law expressly prohibits debt collectors from misrepresenting the facts as they attempt to collect.

Statute of Limitations

Debt collectors can take you to court to prove the legality of a debt and seek a judgment against you. However, statute of limitations guidelines place restrictions on how long they can use this option. Statutes of limitations vary by the state, but generally expire after about six years. After that, the debt collector can continue trying to collect from you, but will not be able to successfully sue you in court. You'll still be responsible for showing up in court to answer any summons, but the case will be dismissed once you inform the judge that the statute of limitations on the debt has expired.

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How to Build a Credit Line

Building your credit is important. It is much easier to do if you plan ahead and know what makes a credit score go up or down. Teenagers should pay special attention to this so that they develop a good credit history by the time they are ready to buy their first home. Teenagers can begin working on their credit lines as soon as they are old enough to drive. It's important for each individual to take control of his finances.

Instructions

1

Apply for a Discover Card. Discover Card is one of the only credit cards that will agree to start teenagers off with a card. You will frequently find them on college campuses. Once you apply and get accepted with Discover Card, you can begin using your card. Don't buy anything you can't pay for. Just use the card even though you have cash. Set your cash aside and pay the balance when it comes in at the end of the month. Paying for items with cash will not establish to any other financial institutions that you are faithful in paying your bills. Using a credit card gives a verifiable record of consistent monthly payments.

2

Buy a used car from a place that offers financing. Again it is great if you have all of the cash you need to pay for your first car. You still want to establish your credit so that you can get a good credit rating. Use a place that offers financing and apply directly at the source. Pay them weekly or monthly, depending on your financial goals.

3

Always pay your school loan on time. You don't need good credit to get a school loan since the loan is based on your parents' salaries. You do, however, need to pay your student loans each month.

4

Consider using your parents as a co-signer. If you are looking at buying a brand new car, you could consider using your parents as co-signers. Just make sure you can make all the payments and that you don't stick your parents with car payments for a car they aren't using. Having a co-signer doesn't affect your credit in a negative way. You can still build a credit line and increase your credit score. You just have to make your payments on time.

5

Set up accounts at local department stores. They are usually more relaxed when it comes to credit rules, and you can get a few cards. Pay what you have in cash and pay off much of the balance at the end of the month. Keep a tiny revolving balance to establish credit worthiness, but never max a credit card out. This shows irresponsible usage to potential lenders.

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Government Assistance for Bills

If you are not making a lot of money or are unemployed, you might worry that you can't pay your rent or afford utilities such as heat or electricity. The U.S. government sponsors several programs to assist low-income persons with housing and utility bills. You must apply for assistance at the state level to begin receiving help. Whether you are having a temporary problem or need a longer-term solution, do not be ashamed to ask for help with your bills, especially for vital services.

Emergency Assistance Programs

Many states have emergency assistance programs for low-income customers who are about to lose electric or water service because of nonpayment of bills. Contact your state's Department of Human Services for more information about these programs. Most programs offer one-time emergency help such as paying the bill for the customer. Customers must submit a copy of the final notice with their application as well as proof of residence in the state or county offering assistance.

Home Energy Assistance Program

The Home Energy Assistance Program, or HEAP, assists customers with paying heating and cooling bills. Each state administers this program using federal funds. Families or individuals must make less than the federal income limits for HEAP to qualify for this program. As of 2010, HEAP recipients must make less than 110 percent of the federal poverty guidelines; families receiving other assistance automatically qualify. HEAP offers both emergency assistance and regular assistance with heating and cooling bills.

Section 8 Rental Assistance

Low-income persons may get assistance with rent via the Section 8 program. This program is administered by the Department of Housing and Urban Development, or HUD. You must apply for Section 8 housing via your state's HUD office. HUD then talks to your current landlord, who must agree to accept Section 8 vouchers. If the landlord does not agree, you may have to move to another apartment where the landlord will accept your vouchers. HUD must inspect apartments before a tenant can move in and pays a portion of the tenant's rent. The tenant is responsible for paying the rest of the rent each month.

Other Actions to Take

If you are having trouble paying your bills, contact the creditor immediately. Utility companies often offer financial assistance programs of their own, some of which may be government sponsored, and other creditors may be able to offer you reduced payments or spread out your payments over time so that you can pay back your debts. Most creditors prefer working with customers to the expensive and unpleasant business of collecting past due debts from them.

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Financial Services That Complement Credit Repair & Debt Settlement

Credit repair and debt settlement are two ways that consumers can improve their credit scores and reduce their credit obligations. There are other financial services that consumers can use that will complement those repair and settlement services, and offer further assistance in getting debt under control. As you plan your credit managing program, you should be aware of the many services available.

Credit Counseling

A credit counselor is someone who can help you put together a personal budget and help you develop a plan for saving money and paying off any remaining debt. Once you have your credit repaired, you will want to take the necessary steps to keeping that new credit rating as high as possible. With guidance from a credit counselor, you will be able to identify the areas where you can cut back on spending and apply extra money to savings and other debt.

Debt Consolidation

Debt settlement is the process of negotiating a lower payoff amount with creditors. It is done so that you can get your debt down to a level that you can handle each month. But when the process is done, you will still be left with several small accounts that you will have to make monthly payments to. A debt consolidation service will help you to pay all of those bad debts off and leave you with one monthly obligation. It will help you to satisfy the negotiated debt at an accelerated rate, which will show each debt as satisfied on your credit report.

Accountant

A certified professional accountant, or CPA, can be a tremendous help when it comes time to recover from debt settlement or to maintain your credit score after it is repaired. You can meet with a CPA on a quarterly basis to discuss any potential tax breaks you should be watching out for, any financial assistance programs you can take advantage of and better ways to invest the money you have to get a maximum return. This will help you to apply more money to paying down your negotiated debt, and it will also help you avoid any tax pitfalls that may come from debt negotiation. For example, the amount that is forgiven on your debt during a negotiation may be taxable as income. A CPA will help you plan for this and make sure you find workable solutions to your tax issues.

Financial Planner

Once you have your debt under control and your credit score repaired, you will want to start planning for your financial future. A financial planner will help you to create new accounts that will give you ways to save for future events such as retirement or the purchase of a home. You can save for your future without borrowing against the credit that you just had repaired and without missing payments on your negotiated debt.

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How to File a Property Lien

Filing a property lien against someone who owes you money should be your last resort to collect the debt. A property lien does not have to be paid until the debtor is selling or refinancing the property. If the debtor transfers the property to a family member or friend, the lien can stay with the property and it could be a very long time, if ever, that you get your money repaid. You will be able to collect interest on the lien until it is paid, however, most people are just happy to get their original loan repaid.

Instructions

1

Go to court and obtain a judgment against the party owing you money. You can file a lawsuit in court for the money that is owed you. Depending on how much is owed, you will probably go to small claims court. If you have all the proper documentation on the loan, you will be issued a judgment for that amount.

2

Go to your county clerk's office and get a certified copy of the judgment. After you have been awarded the judgment, it may take a week or so for it to be filed. You can then pick up a certified copy, which you will need to file the property lien. There may be a fee for this.

3

File the judgment in the land records in the county where the property is located. You must have the exact address of the property and your certified copy of the judgment. Not all judgments are allowed to be filed as property liens and this varies from state to state. Once the judgment is filed, it becomes a lien on the property. If the debtor owns more than one property, you may file on the others also.

4

File a mechanic's lien. A mechanic's lien is a record of cost of building or improvements to a home. It is called a lien claim or notice of lien. How and when contractors can file also varies from state to state, however, normally it is filed before the work starts on the property. After the work is finished and the contractor is paid, a satisfaction of lien is filed and the encumbrance to the property is removed.

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How to File a Complaint Against a Collection Company in the State of Arizona

If you want to file a complaint against an Arizona collection agency, you will do so with Arizona's Department of Financial Institutions (DFI). DFI not only oversees the licensing and registration of collection agencies, but also investigates complaints consumers have filed alleging collection agency misconduct. Its stated objective is to resolve complaints in a manner acceptable to both parties. After reviewing the complaint and the collection agency's response, the DFI will determine if a violation of law has occurred and take action based on that determination.

Instructions

1

Contact the collection agency's consumer affairs representative or its senior management to try to resolve the complaint directly. Getting in touch with the right person within that organization will sometimes yield faster results than waiting for DFI to complete an investigation.

2

Confirm the full name, address, phone number and fax number of the collection agency. This information is required in the complaint form to correctly identify the offending party. DFI maintains on its website a list of collection agents with active Arizona licenses and their contact information. If the debt collector has failed to obtain a required state license, that could result in sanctions, in addition to any consequences for improper actions against the complainant.

3

Visit the DFI website (azdfi.gov) and download the complaint form.

4

Complete the complaint form with all requested information. Describe in detail the basis for the complaint with names of individuals involved, dates and locations. Include copies of correspondence, receipts and any other supporting documentation. Sign and date the complaint form.

5

Mail the original signed complaint, together with a copy of the signed complaint and two copies of all supporting documents, to:

Arizona Department of Financial Institutions

2910 N. 44th St., Suite 310

Phoenix, Arizona 85018

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Montana Wage Garnishment Laws

Garnishment refers to a practice used by creditors to get money that you owe them. Rather than waiting for you to pay a delinquent debt, a creditor can take the money you owe directly from your paycheck. Montana wage garnishment laws have a number of rules regarding wage garnishment. Whether you have received a judgment or have one pending, knowing the law can help you sleep better at night.

Judgments

To get a garnishment, your creditor must first get a judgment. Montana wage garnishment laws limit the amount of time that a creditor has to obtain a judgment. Open accounts -- credit cards -- have a limitation of five years. Written contracts have a limitation of eight years. Judgments, once passed, have a statute of limitations of 10 years. This includes judgments both in and out of state. At the end of the 10-year period, your garnishment may be renewed.

Caps

Creditors may not take all of your money. Montana wage garnishment laws provide for a cap on the amount of wages that a creditor can take. This is 25 percent of your disposable income. In Montana, disposable income is loosely defined and is considered almost everything left after legally mandated deductions are taken. Alternately, you may have up to 30 times the federal minimum wage garnished. The cap is the lesser of the two figures.

Writs of Garnishment

Simply getting a judgment isn't enough for a creditor to garnish your wages. After obtaining a judgment, your creditor must return to court to get a second ruling. This ruling is known as a "writ of garnishment." Montana wage garnishment laws limit the amount of time that a creditor has to obtain such a writ, similar to the statute of limitations on obtaining the first judgment. Your creditors may not garnish your wages for any judgments older than six years.

Challenging Garnishment

It is difficult to challenge a wage garnishment. You cannot challenge your basic responsibility to pay the debt at the garnishment stage as this is something that was addressed by earlier hearings. It is not impossible to challenge a garnishment, either at the writ of garnishment stage or after the writ has been issued. Specifically, you can challenge the garnishment on the grounds of procedural impropriety, statute of limitations violations and mistaken information.

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