Answers to Common Debt Collection Questions

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Answers to Common Debt Collection Questions

If you find yourself in financial difficulty and are falling late on some of your bills, you may have some contact with collectors via mail or telephone. On several occasions, you may encounter some terms or business practices that were new to you. Here are some straight answers to some common questions about the debt collection industry. I hope you find this information helpful in dealing with the issues that may arise as a result of your financial hardship. I got a letter in the mail from a collection company regarding my credit card balance. Why do they have my information? Why am I not being called directly by the credit card company?

What has happened here is that your account has either been assigned or sold to a collection company for debt collection. This will usually occur after you have not made a payment for 3-6 months. A collection company will typically be much more aggressive at this point, and you can expect many phone calls and collection letters. You can either ignore their collection attempts, work out a payment arrangement with them, or possibly work out a settlement on the account for less than the full balance. Whatever arrangement you make, be sure to get it in writing before sending any payment.

I was just contacted by a collector for an unpaid account that I had more than 6 years ago. Do I still owe on this account?

The short answer is... it depends. In each state there is a statute of limitations for debt. The statute of limitations time-period begins from the date of last activity on the account. This could be the last payment you made, or in some cases, the last communication you had with the creditor. If it is beyond the statute of limitations, the creditor can no longer sue you for the past due balance on the account. They may still continue to attempt collections, however, there is little they can do beyond phone calls and letters.

I received a collection letter in the mail on law firm letterhead. Does this mean I am being sued?

No. Although the collection agency may be a law firm or attorney, this does not mean you are being sued. It also does not mean that they can do anything to collect the debt that cannot be done by any non-attorney collection agency. Any company or law firm acting as a debt collector has to abide by the Fair Debt Collection Practices Act (FDCPA). These laws protect you, the consumer, from unfair practices and harassment by debt collectors.

One of my creditors called me and said that my account will be "Charged Off". What does that mean exactly, and will I still owe the debt after it has been "Charged Off"?

Charge-off is a term that is used to classify delinquent accounts for tax purposes. The word "charge-off" is used to report the delinquent account as a loss for the creditor. A debt is usually charged-off after there has been no payment made for more than 180 days. Although an account has been charged-off, you do still owe the debt. A creditor will typically either assign, or sell the debt to a collector after charge-off. Another important thing to be aware of with a charge-off is that if the account is sold to a third party collector, that collector may also report the delinquent account on your credit. This may result in an additional negative trade line on your credit reports.

Use this knowledge to better prepare yourself in dealing with debt collectors.

Article Source: Credit Card Bad Credit People

About the Author

Jon Ochs is the President/CEO of Nationwide Debt Solutions, and a well respected authority on debt relief plans.

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If you find yourself in financial difficulty and are falling late on some of your bills, you may have some contact with collectors via mail or telephone. On several occasions, you may encounter some terms or business practices that were new to you. Here are some straight answers to some common questions about the debt collection industry. I hope you find this information helpful in dealing with the issues that may arise as a result of your financial hardship. I got a letter in the mail from a collection company regarding my credit card balance. Why do they have my information? Why am I not being called directly by the credit card company? 
What has happened here is that your account has either been assigned or sold to a collection company for debt collection. This will usually occur after you have not made a payment for 3-6 months. A collection company will typically be much more aggressive at this point, and you can expect many phone calls and collection letters. You can either ignore their collection attempts, work out a payment arrangement with them, or possibly work out a settlement on the account for less than the full balance. Whatever arrangement you make, be sure to get it in writing before sending any payment. 
I was just contacted by a collector for an unpaid account that I had more than 6 years ago. Do I still owe on this account? 
The short answer is... it depends. In each state there is a statute of limitations for debt. The statute of limitations time-period begins from the date of last activity on the account. This could be the last payment you made, or in some cases, the last communication you had with the creditor. If it is beyond the statute of limitations, the creditor can no longer sue you for the past due balance on the account. They may still continue to attempt collections, however, there is little they can do beyond phone calls and letters. 
I received a collection letter in the mail on law firm letterhead. Does this mean I am being sued? 
No. Although the collection agency may be a law firm or attorney, this does not mean you are being sued. It also does not mean that they can do anything to collect the debt that cannot be done by any non-attorney collection agency. Any company or law firm acting as a debt collector has to abide by the Fair Debt Collection Practices Act (FDCPA). These laws protect you, the consumer, from unfair practices and harassment by debt collectors. 
One of my creditors called me and said that my account will be "Charged Off". What does that mean exactly, and will I still owe the debt after it has been "Charged Off"? 
Charge-off is a term that is used to classify delinquent accounts for tax purposes. The word "charge-off" is used to report the delinquent account as a loss for the creditor. A debt is usually charged-off after there has been no payment made for more than 180 days. Although an account has been charged-off, you do still owe the debt. A creditor will typically either assign, or sell the debt to a collector after charge-off. Another important thing to be aware of with a charge-off is that if the account is sold to a third party collector, that collector may also report the delinquent account on your credit. This may result in an additional negative trade line on your credit reports. 
Use this knowledge to better prepare yourself in dealing with debt collectors. Article Source: <a href="http://www.allbestarticles.com" target="_blank">Credit Card Bad Credit People</a> About the Author: Jon Ochs is the President/CEO of Nationwide Debt Solutions, and a well respected authority on <a href="http://www.edebthelp.com">debt relief plans</a>.