Bill Collectors Going After Old Debt-How To Stop Them Cold
Posted by: Guest Author / Category: CreditThe phone rings and there is a recorded message from a debt collector on the other end. Typically the recording will tell you that they are attempting to collect a debt and ask you to call back and reference a case number. You know you have perfect credit. You have no missed credit card payments and your loans are current. Why is a collection agency calling you?
Some bill collectors are trying to optimize the collection process by going after people who are currently financially healthy but have an old unpaid debt from years back. These old credit contracts are inexpensive for the agency to buy and the collection process is highly automated. Bill collectors are counting on a sense of moral obligation or just ignorance on the part of the debtor.
Collection calls that involve older debt can be a dangerous minefield if not handled properly. An old debt can become a new debt if you aren’t aware of your rights It’s important to understand that an old debt cannot hurt your credit report as badly as new unpaid debt. After 7 years your credit history, good or bad, will roll off your report. More importantly, if the debt is older than your state’s statute of limitations, the collection agency can not sue or threaten to sue to collect it.
Bill collectors who threaten to sue or have your wages garnished on a debt that is not covered by the statutes of limitation are in violation of the Fair Debt Collection Practices Act and could be fined $1000 for each threat. If they are smart they know that and will play on your sense of moral duty to collect the bill.
If the collection agencies can’t legally collect the debt, what’s the problem? The problem is that in some states, if you simply acknowledge that the debt is yours, the old debt can become new debt and the statute of limitations starts over again. Your credit report may also reflect this “new” debt and your FICO will take a nose dive.
Silence is golden when dealing with an attempt to collect an old debt. Never acknowledge that the debt is yours. Don’t fall for the discounted lump sum settlement that the collection agency will try. Don’t pay anything unless you are prepared to pay all of it. The best way to deal with these efforts is in writing.
The best way to respond to a collection notice on an old debt is in writing. Under the law, a debt collector must send you a written notice telling you the amount of money you owe and the name of the creditor. If within 30 days of receiving this collection notice you write a letter back disputing the debt, a debt collector may not contact you again until they can verify the debt. Sending a verification letter forces the agency to investigate or give up. If they cant prove it, you dont pay.
A more direct route is to simply mail the bill collector and politely tell them to shove it. A cease and desist letter should reference the debt but not admit to the debt. What is important is that you make it crystal clear that the debt is no longer covered by the statute of limitations, and that you are aware of your rights and the penalties that can be applies to the collection agency under the Fair Debt Collection Practices Act.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
Tags: bill collector, collection agency, collection calls, collection law, collections, Credit, credit cards, credit repair, debt, debt collection, Finance, Loans