Debt Collection Consolidation and Settlement

Let Me Ask My Lawyer…

By: Greg Garcia
Of the many types of fraud in the United States, advance fee schemes are among the most devious and frustrating for authorities. This is because these scams, where someone asks for money upfront with the promise of a big payoff later, are only limited by the imagination of the person committing the fraud. Some variations of advance fee schemes that are more common than others include:
  • Debt Elimination Fraud. These scams target people with existing debts and are difficult to distinguish from legitimate debt consolidation services. Generally, these scams involve collecting an upfront fee or payment in exchange for the promise of negotiating away your existing debts. Most people caught in these scams lose the fee they pay to the scammer and also suffer the consequences from their existing debts not being paid.
  • Nigerian Fraud. This scam is so common that it is almost folklore in the United States. In this scheme, someone poses as a government official or other authority figure and asks for help in transferring funds out of Nigeria (or some other country) in exchange for a percentage of the funds. Despite the popularity of these schemes, creative fraudsters are still able to still defraud new victims each year in the U.S.
  • Investor Fraud. These scams often involve emails inviting victims to purchase bonds or other securities and are sent from email addresses containing .gov, .org, or .us. You should always be skeptical of any such email that comes from address that does not END in .gov, .mil, or fed.us.

This is only a small sampling of the types of advance fee fraud out there in the world today. Fortunately, regardless of the form the scam takes, there are a few things you can do to protect yourself in all of these situations. First, always ask to see documentation around anything someone is trying to sell or offer to you. A legitimate business or organization will almost never be concerned with this request. Second, and this is one of my favorite tricks to avoid scams, always tell someone you need to have something reviewed by your attorney. Even if you don’t have an attorney, or don’t actually want to have one you have review what you are looking at, simply mentioning this can be a powerful tool to help weed out fraud. If someone refuses to let you take the time to speak to your attorney, or even worse, asks that you sign something PREVENTING you from doing so, walk away… and maybe talk to your lawyer.

Exploring Student Loan Repayment Options

By: Mercedes Pineda

The Consumer Financial Protection Bureau (CFPB) reports that more than 40 million borrowers owe on federal and private student loans, with the average student debt around $23,000. I, like many of you, am one of those 40 million borrowers. Student loan debt can be a stressful financial burden for most people. However, armed with some knowledge and a helpful toolkit, we can make these loans more manageable.

Why is paying back student loans so difficult? The CFPB’s recent report highlights many of the problems student borrowers experience when trying to repay their student loans. These problems include (but are not limited to): a lack of flexible repayment offerings for distressed borrowers, lack of information regarding repayment options, paperwork processing delays, and inconsistent instructions from servicers. Below I outline the best way to approach repayment and the various options available to borrowers. 

How Do I Find Information About My Loans?

The best place to start is the National Student Loan Data System (https://www.nslds.ed.gov/nslds/nslds_SA/). This is a government database that keeps track of all your federal loans. Speak to your school’s financial aid administrator about any information they may be able to provide you about your loans. Additionally, check your credit report. Student loans are often listed on your credit report. You are entitled to a free copy of your credit report from each of the three major credit-reporting agencies. (www.annualcreditreport.com). However, please be aware that student loans may look confusing on your credit report. Loan servicers often sell loans, and it may be difficult to determine which servicer owns your loan now and how much you owe. I highly recommend going over your credit report with a trained financial counselor. Take advantage of your local or county community services that provide this resource!

What Are My Repayment Options?

  • Standard Repayment Plans
    • Payments are generally a fixed amount over the course of a certain amount of years
  • Income Based Repayment Plans
    • If you have federal loans, flexible repayment options may work best for you. These plans take into account your yearly income and the payments are a certain percentage of your discretionary funds (that is the money you have available after paying rent and bills). Payments are recalculated every year. Generally, outstanding balances are forgiven after a minimum of 20 years.
    • Learn more about these plans here: www.studentaid.ed.gov/sa/repay-loans/understand/plans
  • Consolidation
    • Allows you to simplify repayment by combining loans into one payment. Not all federal loans are eligible for this option, and it may not be the best option for your situation. You cannot consolidate federal and private loans into one payment. You cannot “undo” consolidation.
    • Beware of “Debt Relief” scams! Many scammers try to charge you fees to help consolidate your loans. They can often leave you with a loan that was worse than your original loan! Federal debt consolidation is an option you can apply to for free via studentloans.gov
    • Get more information about consolidation here: http://www.bouldercounty.org/doc/hhs/student-loan-consolidation.pdf and here : studentaid.ed.gov/sa/repay-loans/consolidation
  • Refinancing
    • To refinance you take out a new loan, and you use that loan to pay off the existing loans. With this option you can change the terms of your loan. By doing this you can lock in a different interest rate and save money over the life of your loan.
    • The government does not offer refinancing. You can refinance your federal loans into private student loans. BUT, you may give up benefits such as income based repayment options or eligibility for student loan forgiveness programs by converting your loan.
    • However, like consolidation, there are some scams out there for loan refinancing. The following to sites are reliable and have resources such as a refinancing calculator to help you explore this option:
  • Student Loan Forgiveness
    • The most common of these is the Public Service Student Loan Forgiveness Program. This program allows federal student loan borrowers a chance to qualify for loan forgiveness after committing 10 years to public service work. To find out if you may be eligible for this option use the chart at the following site: bouldercounty.org/doc/hhs/public-service-loan-forgiveness.pdf
    • There are VERY limited other situations in which your loan may be forgiven. To learn more about them visit this site: studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation
    • Please be aware that this is another option that sees many scams. Your federal loans can only be forgiven by the federal government. Please visit the government site listed above or reach out to your servicer directly to figure out if you qualify for a forgiveness program.

Summary:

I hope the above information will help borrowers explore and consider the right repayment options. I highly recommend seeking out local resources, such as a financial counselor at your community services center, who can help you understand the repayment process and help pick the best option for your situation.

Handling Phone Calls With A Debt Collector

By: Andrew Merchant

The Consumer Financial Protection Bureau estimates that over 77 million people in the U.S. have at least one debt in the collection phase. For these 77 million people it is quite possible that a debt collector may be contacting them regarding the debt. But even if you are not one of those 77 million people, you may still be contacted by a debt collector. This is because records can become mixed up, data entered wrong, or maybe even you have the same name as the actual debtor. Whatever the reason, debt collectors have been known to contact people who don’t even have a debt due.

So whether you have a debt in collection or not, you should be aware of best practices when a debt collector contacts you. This blog takes a look things you can do to protect your interests when on the phone with a debt collector.

In Colorado, the law says that a debt collector who is calling you must identify himself within 60 seconds of making contact with you. While it is difficult to ever know whom you are speaking with, once you realize you are talking to a debt collector, keep track of whether the debt collector identified himself and how long it took to do so.

When you’re on the phone with the debt collector, be firm but polite and try not to give them more information than necessary. While you should never lie, it is not illegal for you to keep your financial, employment and other information private. Part of the debt collector’s job is to find out how much they can get you to repay. Keeping your information protected and confidential may give you leverage when it’s time to negotiate a repayment amount.

Don’t be afraid to ask the debt collector questions. Knowledge is power, and the more you know about what they know can help you. Also, asking questions can help you keep better notes of the conversation with debt collector. For example, if a debt collector were to threaten you with a lawsuit it would be good to ask him when and where he plans on doing so. If the debt collector then back peddles with no good answer, it might mean he is threatening you with an action which he doesn’t intend to follow through on – in some cases it’s illegal for the debt collector to threaten something he doesn’t intend to do.

In discussing the debt being collected, be very cautious in committing yourself to any plan or in even acknowledging any debt. You have a right to request verification from the debt collector, and in almost all cases you should make the written request necessary for the debt collector to verify the debt. And there is no need to immediately commit to a payment plan over the phone – take the time to consider the plan thoughtfully and if possible ask a legal or financial expert.

No matter what, take detailed notes during and after your phone call. Not only is it important to keep track of the facts the debt collector shared, it is also important for you to document any false or illegal things the debt collector might have stated. Having a good record will help you in the event you file a complaint or bring your own legal action against the debt collector. At a minimum, be sure to note:

  • The name of the person on the other end of the line
  • The company he or she works for
  • The date and time of the phone call – and how long it lasted
  • The things discussed like timelines, debt amounts, or any other notable comments (such as threats or abusive language)

Armed with the above information you should feel competent to handle a discussion with a debt collector.

Handling Phone Calls With A Debt Collector

By: Andrew Marchant 
The Consumer Financial Protection Bureau estimates that over 77 million people in the U.S. have at least one debt in the collection phase. For these 77 million people it is quite possible that a debt collector may be contacting them regarding the debt. But even if you are not one of those 77 million people, you may still be contacted by a debt collector. This is because records can become mixed up, data entered wrong, or maybe even you have the same name as the actual debtor. Whatever the reason, debt collectors have been known to contact people who don’t even have a debt due.

So whether you have a debt in collection or not, you should be aware of best practices when a debt collector contacts you. This blog takes a look things you can do to protect your interests when on the phone with a debt collector.

In Colorado, the law says that a debt collector who is calling you must identify himself within 60 seconds of making contact with you. While it is difficult to ever know whom you are speaking with, once you realize you are talking to a debt collector, keep track of whether the debt collector identified himself and how long it took to do so.

When you’re on the phone with the debt collector, be firm but polite and try not to give them more information than necessary. While you should never lie, it is not illegal for you to keep your financial, employment and other information private. Part of the debt collector’s job is to find out how much they can get you to repay. Keeping your information protected and confidential may give you leverage when it’s time to negotiate a repayment amount.

Don’t be afraid to ask the debt collector questions. Knowledge is power, and the more you know about what they know can help you. Also, asking questions can help you keep better notes of the conversation with debt collector. For example, if a debt collector were to threaten you with a lawsuit it would be good to ask him when and where he plans on doing so. If the debt collector then back peddles with no good answer, it might mean he is threatening you with an action which he doesn’t intend to follow through on – in some cases it’s illegal for the debt collector to threaten something he doesn’t intend to do.

In discussing the debt being collected, be very cautious in committing yourself to any plan or in even acknowledging any debt. You have a right to request verification from the debt collector, and in almost all cases you should make the written request necessary for the debt collector to verify the debt. And there is no need to immediately commit to a payment plan over the phone – take the time to consider the plan thoughtfully and if possible ask a legal or financial expert.

No matter what, take detailed notes during and after your phone call. Not only is it important to keep track of the facts the debt collector shared, it is also important for you to document any false or illegal things the debt collector might have stated. Having a good record will help you in the event you file a complaint or bring your own legal action against the debt collector. At a minimum, be sure to note:

  • The name of the person on the other end of the line
  • The company he or she works for
  • The date and time of the phone call – and how long it lasted
  • The things discussed like timelines, debt amounts, or any other notable comments (such as threats or abusive language)

Armed with the above information you should feel competent to handle a discussion with a debt collector.

Handling Phone Calls With A Debt Collector

By: Andrew Marchant 

The Consumer Financial Protection Bureau estimates that over 77 million people in the U.S. have at least one debt in the collection phase. For these 77 million people it is quite possible that a debt collector may be contacting them regarding the debt. But even if you are not one of those 77 million people, you may still be contacted by a debt collector. This is because records can become mixed up, data entered wrong, or maybe even you have the same name as the actual debtor. Whatever the reason, debt collectors have been known to contact people who don’t even have a debt due.

So whether you have a debt in collection or not, you should be aware of best practices when a debt collector contacts you. This blog takes a look things you can do to protect your interests when on the phone with a debt collector.

In Colorado, the law says that a debt collector who is calling you must identify himself within 60 seconds of making contact with you. While it is difficult to ever know whom you are speaking with, once you realize you are talking to a debt collector, keep track of whether the debt collector identified himself and how long it took to do so.

When you’re on the phone with the debt collector, be firm but polite and try not to give them more information than necessary. While you should never lie, it is not illegal for you to keep your financial, employment and other information private. Part of the debt collector’s job is to find out how much they can get you to repay. Keeping your information protected and confidential may give you leverage when it’s time to negotiate a repayment amount.

Don’t be afraid to ask the debt collector questions. Knowledge is power, and the more you know about what they know can help you. Also, asking questions can help you keep better notes of the conversation with debt collector. For example, if a debt collector were to threaten you with a lawsuit it would be good to ask him when and where he plans on doing so. If the debt collector then back peddles with no good answer, it might mean he is threatening you with an action which he doesn’t intend to follow through on – in some cases it’s illegal for the debt collector to threaten something he doesn’t intend to do.

In discussing the debt being collected, be very cautious in committing yourself to any plan or in even acknowledging any debt. You have a right to request verification from the debt collector, and in almost all cases you should make the written request necessary for the debt collector to verify the debt. And there is no need to immediately commit to a payment plan over the phone – take the time to consider the plan thoughtfully and if possible ask a legal or financial expert.

No matter what, take detailed notes during and after your phone call. Not only is it important to keep track of the facts the debt collector shared, it is also important for you to document any false or illegal things the debt collector might have stated. Having a good record will help you in the event you file a complaint or bring your own legal action against the debt collector. At a minimum, be sure to note:

  • The name of the person on the other end of the line
  • The company he or she works for
  • The date and time of the phone call – and how long it lasted
  • The things discussed like timelines, debt amounts, or any other notable comments (such as threats or abusive language)

Armed with the above information you should feel competent to handle a discussion with a debt collector.

Beware when looking up advice online

By: Sierra Moller 

In today’s digital age, there are hundreds of thousands of articles on financial advice. A quick Google search of “credit repair” or “debt consolidation” will populate hundreds of millions search results from blogs all over the Internet. In all the noise of available advice on the Internet, how do you know what resources to trust?

In my quest to assemble great consumer tips and tricks on debt consolidation and credit repair, I came across many sites that had content that seemed like good advice, but also seemed like it was trying to guide me towards a particular product or service.

As it turns out, for every well-intentioned article available on the Internet, there are dozens of articles geared towards advertising a particular product. This form of marketing is called native advertising, and it’s rampant throughout the Internet today. Native advertising is the concept that corporations pay to have content about their products included in articles that align with the publication in style and tone, making it very difficult for readers to spot. [1]

Financial websites such as Forbes, have been participating in native advertising for several years. For instance, Forbes has a program called BrandVoice, which allows marketers to produce articles for Forbes.com and the magazine, which often resemble the look and tone of regular articles. [2] The articles contain general advice, but often also embed a “plug” for a particular brand or service. To their credit, Forbes maintains a staff of sponsored content specialists to work with the advertisers to ensure the article remains valuable to readers.

Forbes is not alone. In fact, other prominent financial websites use native advertising. For example, Fortune.com and Money.com work with Impact Partnership, a marketing organization, to pair advice on retirement and financial planning with native content from financial advisors across the country.[3]

Native advertising works. In fact, it might work too well. Click-through rates tend to be much higher than typical advertisements and readers are usually more engaged in the content. However, it can be problematic when readers, who are reading the articles for advice, rely on those articles, not realizing it was an advertisement.

This practice has garnered both positive and negative attention. On the one hand, the practice has arguably created a whole new business model for companies such as Forbes by creating new sources of revenue. On the other hand, consumer protection organizations call the practice is deceptive to consumers because readers may not always realize when the content is an ad. [4]

The practice has also raised eyebrows at the Federal Trade Commission. The FTC is currently considering implementing regulatory measures on native ads, including plans to monitor the market to ensure that native advertising is being used in a manner than benefits consumers.[5]

For now, the FTC has not issued formal guidance on requiring disclosure, but there are rumors that it plans to do so. Additionally, industry organizations such the Interactive advertising bureau (IAB) has issued their own warnings to advertisers. They suggest that brands respect consumers and clearly label sponsored content as advertising. [6]

Until the FTC issues more rules and guidance on native ads, here are a few commonly accepted labels to help spot native ads.

  • “Advertisement” or “AD“ (Google, YouTube)
  • “Promoted” or “Promoted by [brand]”
  • “Sponsored” or “Sponsored by [brand]” or “Sponsored Content”
  • “Presented by [brand]” and “Featured Partner”

Lastly, its important to note that the advice provided in sponsored articles is not necessarily wrong or even bad advice. In fact, most of the advice in these articles is legitimate. But it is important that when your searching for advice on the internet, you use sources of information that you trust. Or at the very least, you should know when your reading an article that is intended to be an advertisement or promotion for a product. Be on the lookout for content in articles that promotes one specific product or service over others.

[1] http://www.wordstream.com/blog/ws/2014/07/07/

[2] http://blogs.wsj.com/cmo/2015/01/04/forbes-takes-native-ads-to-new-level-with-att-sponsored-cover/

[3] http://www.prnewswire.com/news-releases/impact-partnership-expands-relationship-with-fortune-to-include-money-fortune-knowledge-group-300022824.html

[4] http://www.bloomberg.com/bw/articles/2014-08-05/ad-industry-execs-weigh-in-on-john-olivers-native-advertising-takedown

[5] https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-revised-endorsement-guides-what-people-are-asking

[6] http://www.iab.net/iablog/2015/01/what-happens-if-the-ftc-provides-native-advertising-guidance-in-2015.html

 

Buddy System For Debt Freedom

By: Sierra Moller 

A while back my friends and I were talking about our debt problems. In today’s world, it seems like everybody has them. But each of us had different kinds of debt problems. One friend had credit card debt, another had an expensive mortgage, another had a car loan, and I had student loans. It is an exciting time in our lives, but these money surprises add up quick.

Buying your first home, moving to a new city, getting an education or buying a car are all GOOD things (in theory) for your financial future, but only if you can manage to stay financially floating. Whether we like it or not, these exciting events require establishing and maintaining good credit.

None of us had a clue how to get on track, so we decided to buddy up to help each other save. After all, its no fun when you feel everyone is out having fun and you’re stuck at home because you can’t afford to enjoy an evening out with friends.

Turns out, research by the National Endowment for Financial Education finds [i] that having a financial buddy is a great tool to help you stay on track.

“A financial buddy can be anyone: a spouse, a trusted friend, a family member or a co-worker, and it doesn’t have to be someone with whom you share all of your financial information,” says Paul Golden, spokesperson for NEFE. “It is similar to having a workout buddy. You want someone to help you stay the course, reach short- and long-term goals and remember that you are not alone. And if you both have similar goals, you can share your respective struggles and triumphs along the way.”[ii]

It makes sense. If you have a few friends that all decide to pay off their debt and hold each other accountable together, suddenly, it becomes a lot easier to find new ways of having fun that are affordable. Free entertainment is typically the best way to get over your debt-paying blues.

Here are a few fun, money saving ideas to do with friends:

  1. Hang out at the park. Throwing around a frisbee or a football is a great way to spend an afternoon with friends.
  2. Go on a hike. Lucky for my friends and I, we have an unlimited number of nearby trails to explore. Check out Trail Finder to find an good place to hike near you.
  3. Game night. We started this a few years ago and take turns hosting it at each other’s house.
  4. Free tours. Breweries, the Candy Factory, Celestial Seasonings Tea Factory and more. Colorado has many fun free tours to take.
  5. Attend Free Venue Days. These events require more planning, but give you a chance to score free entry to some of the best local museums, zoos and botanic gardens around.
  6. Catch a flick at a dollar theatre. If your town doesn’t have a dollar theatre, you can also rent movies from RedBox.
  7. Get Crafty. There are thousands of cool d0-it-yourself ideas online that are really fun to do with friends such as pumpkin carving, quilting, origami, woodworking and more.

It is also nice to have the emotional support for when things get tough. A financial buddy can be an important asset when you face life’s inevitable misfortunes. During these hard times, a financial buddy can act as both your cheerleader and coach, offering support and encouragement.

When faced with difficult choices, people tend to act- well human. That means we often don’t make the best decisions, which usually leads to further troubles down the road. A good financial buddy can help you remind you of your financial goals, and help you make smart choices.

For example, a good financial buddy could go with you to credit counseling. Credit counseling is a great place to start, and is often free. Using experts will help you get qualified, and personalized financial advice. A credit counselor can help you make a budget, develop a savings strategy, and even compare home or auto loans.

The point is, there is no easy route to financial freedom, and no road-trip is ever fun if you’re doing it alone.

[i][ii] http://www.nefe.org/press-room/news/make-resolutions-stick-with-a-financial-buddy.aspx

Finally, an App for that. My review of Mint.com

By: Sierra Moller

Today, there seems to be an app for everything. And nearly every app is designed to get you to spend money. But are there apps that will truly help me save money?

Mint.com is a simple app that allows you to link all of your accounts to one easy-to-use platform. Its free to signup and only takes a few minutes to link your accounts.

Please note, you must already have online banking set up with your bank in order to use the app. Therefore, if you don’t have online banking already set-up, you will need to go to your bank to set up an online account with your bank. Mint.com works by adding your bank accounts onto their platform to present your financial information in a slick web-interface, complete with graphs and charts.

The app itself is fun, intuitive, and easy to understand. The service is particularly useful for budgeting, creating goals, and looking at all your financial accounts in one place.

As previously mentioned, it requires linking your bank accounts to the app. I loaded up all my debt accounts first so I could capture how much I actually owe all in one place. It recognized my credit card and student loan accounts instantly. However, it didn’t recognize all of my accounts immediately. For instance, it took 24 hours to recognize one of my accounts from a local bank. In fact, depending on your bank, you may not be able to link all of your accounts. That said, mint.com recognized most of my major accounts so when I was finished, I did feel like it accurately reflected my net worth.

After linking my accounts, I was able to look over all my recent transactions and categorize my spending habits. Mint.com initially auto-categorizes your transactions. Most of them are correct, but there were also a lot of transaction that were mislabeled that I had to re-categorize. It was a little inconvenient at first, but once I adjusted a transaction to a different category, mint.com saved it and automatically remembered it for all future transactions. For example, it labeled my parking meter charges as “other” at first, but then remembered to categorize it as “transportation expense” later.

After three weeks of using the app, I quickly realized that I was spending money at restaurants way more each month than I realized. So I tried out mint.com weekly summaries via email. I normally hate emails from apps, but I thought a weekly email would reveal more about what I was buying each week closer to when I purchased it, so I would be more likely to remember.

Truthfully, it was about as useful as most email alerts. I only really checked it when I had the time, and if I was busy, I just deleted the email before reading it. I think if I checked my mint.com account before I bought every meal I would have resisted spending more. But who has the time? I’m usually grabbing lunch because I’m in a hurry and on the go. Therefore the email feature didn’t stop me from making purchases, but it did help me see what I was buying and how much. After a few weeks of using the email feature, I did notice that I started packing my lunch more, and I was more deliberate about the price of my lunch when I was purchasing my lunch on the go.

Another useful feature is the alert function. You can set it up either with your phone or via email for every late fee, bill reminder, rate change, or when you go over budget on a category. I used this function to alert me when I would go over budget on eating out, and I found this function much more useful to control my spending then the weekly email. The reminders for bill due dates was also a nice feature that I highly recommend.

Lastly, mint.com has a credit monitoring function that I found useful. Mint.com allows you to view and monitor your credit score, payment history, errors, and account usage. I was hesitant at first to enter my credit information, but after checking their terms of service, I opted to enter my info.

Remember when using mint.com the company makes money by acting as a lead generator for other financial services. Which means that the company makes money by recommending various financial services, which they get a referral fee for every customer that signs up. Therefore be on the lookout of when the site is directing you to a third party service, as those services usually cost money.

All in all, I find mint.com a great budgeting tool and I recommend it to those looking to get their finances back on track.

 

Written Requests To Debt Collectors: What you need to know

By: Andrew Marchant 

Earlier Blogs on this site have discussed some of the basics regarding your rights against debt collectors.  The Fair Debt Collection Practices Act, a law that applies to all 50 states, allows you to make certain requests/demands to the debt collector.  The law also requires the debt collector comply with certain of those requests.  Some requests you can make include: that a debt collector reduce or stop contact with you; that the debt collector limit methods, times and locations of contact with you; and that the debt collector verify the debt.  You also have the right to dispute the debt.  All of these requests have one major thing in common – they must be in writing.

In this blog we take a look into basic mechanics of making written requests to the debt collector.

All letters can be fairly straight forward, and some information should be in almost every request letter you send to the debt collector:   

  • Identify your name and your address.  This can just be in the top left corner of the letter – similar to what you would find in most letters you’ve sent to businesses (or in letters you’ve received from businesses). Be sure you date the letter.  This helps you prove when you sent the letter out, and roughly when the debt collector should have received the letter.
  • Include information about your debt.  Things like the account number (if available) and any information the debt collector gave you about the debt should be included.  This will help the debt collector correctly identify the debt collection matter.  
  • If you can, sign your name at the bottom of the letter, which helps to prove you actually intended to make the request and that it was you who actually made the request.

The Consumer Financial Protection Bureau (CFPB) has a great website with examples of “action letters” that you can download and personalize.  These “action letters” contain form language for things like disputing the amount of the debt, requesting information on the original creditor, and restrictions on the ways the debt collector can contact you.

If you do not choose to use the samples form the CFPB website, always be sure you are direct in what you are requesting of the debt collector.  Also be clear with the request.  For example, if you are requesting that you only be contacted via mail, be sure you give an accurate address.  Or if you are telling the debt collector what times they can call you, be sure you note whether the hours are A.M. or P.M.  Specifically, with letters requesting information about the debt, at a minimum be sure to ask (1) Why the debt collector thinks you owe the debt, and to whom it is owed;  (2)  How much was the original debt, how much is owed now, and why there is any difference in the two amounts;  (3)  Details about the debt collector’s authority to collect the debt.

For all letters you send, make a copy of the letter for your records if possible.  That way, if the debt collector violates your request, you can easily reference the letter if you need to.  Also, that letter could be used as evidence against the debt collector in the event you end up in court with the debt collector over its violation of your request (and by extension its violation of the law).

If you are sure to be direct, clear, and accurate in your letter the debt collector is bound by law to honor certain requests.  If the debt collector does not, he can be liable to you and to the government.

Time Limits on Lawsuits by Debt Collectors

By: Andrew Marchant
It is not uncommon for consumers to be contacted by debt collectors.  Debt collectors can be people or companies that collect debt owed to someone else; sometimes debt collectors actually purchase the past-due debt from the original creditor who made the loan or extended the credit.

One way debt collectors try to get repaid is by bringing a lawsuit against the debtor in court.  If the debt collector is successful in the lawsuit, the debt collector may be given permission to take special steps to collect on the amount owed.  (Such steps might include garnishment of wages, or the freezing and seizure of funds from the debtor’s bank account.)  But when it comes to lawsuits against the debtor, time may be a deciding factor in the outcome.

State laws limit the amount of time a debt collector has to file a lawsuit with the court. When this time limit has passed, the law says the debtor may have the lawsuit thrown out for not meeting the applicable time constraints.  This concept of a legal time limit for the debt collector to sue is called the Statute of Limitations.  In legal terms, when the time limit has passed, it is said that “the statute of limitations has run.”

This blog takes a look at the rights and obligations of a debtor when the time limit to sue has passed. Below are some questions and key points to remember about your debt after the statute of limitations has run.

When the time limit to sue has passed, and a debt collector can no longer sue in court, what does that mean about the underlying debt?

  • The debt still exists, or put another way, the debtor’s promise to repay the debt still lives on. However, the debt collector no longer has the ability to sue or ask the court for permission to take the special steps mentioned above.  (That’s not to say some debt collectors still won’t try to bring a lawsuit.  It is always important to pay attention to notices from a debt collector because one might include a notification of a lawsuit .  If a debt collector sues outside of the time limit, you should not rely on the courts to enforce the statute of limitations on the debt collector.  In fact, many states require the debtor to prove that the time limit has expired.  For more details on these situations and possible legal support check out the this page at the Consumer Financial Protection Bureau)

What can the debt collector do after the time limit to sue has passed?

  • After the time limit has passed, and even though the debt collector cannot sue or take action in court, the debt collector may still contact the debtor. The debt collector may ask the debtor to repay the debt in full or setup a repayment plan or attempt to recover a portion of the debt. It’s important to remember that such contact is still governed by federal and state fair debt collection laws. The debt collector must still follow the rules. For a good summary on these rules visit another article on this website: Dealing with Debt Collection.

Should the debtor worry about the debt if the law won’t make him repay it?

  • Outstanding past-due debt may still have an adverse impact on a consumer’s ability to borrow in the future. Other creditors, banks, and financial institutions may be more reluctant to make loans or extend credit when they know a consumer has a history of unpaid loans.  After the time limit to sue has passed, the debtor may voluntarily decide to repay the debt but the courts cannot make him do so.  If a debtor is going to make payment to a debt collector after the statute of limitations has run, the debtor should seek legal advice.  The Federal Trade Commission has a helpful page explaining why repayment after the statute of limitations can be complicated, here.

So should a debtor just wait until the statute of limitations runs, and ignore any attempts by the debt collector to get the debtor to repay?

  • The debtor should never ignore the status of his outstanding debt. Up until the statute of limitations has run, a debt collector can bring legal action for repayment, and if the debtor has ignored important notices about the legal action, the debtor could miss out on his day in court (to dispute the debt or make other arguments against the debt collector). Therefore, it is always important to pay attention to correspondence received regarding an outstanding debt. While the debtor has the right to tell the debt collector to leave him alone, doing so does not mean the debt collector can’t take legal action before the statute of limitations is out.

So how do you know if the statute of limitations has run? (How do you know when the creditor can no longer take legal action regarding repayment of the debt?)

  • It is not within the scope here to explain how to determine the time limit a creditor has to take legal action. However, a quick search of the internet using queries such as “Statute of limitations and debt collection,” “Time-barred debts” and “Statute of limitations for old debts” all will provide helpful resources on the topic. Generally, the debtor should check his state laws to find out the length of time a debt collector has to pursue legal action. This length of time varies by state and by the type of debt or loan the consumer entered into. Also, different events trigger the clock on the statute of limitations.

Ultimately, if a debt collector has run out of the time allowed to sue a debtor, the debt collector can no longer use the law to force payment.  Nevertheless, a debtors should still be aware of their rights and existing obligations even after the statute of limitations has run.