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 a credit card balance. Why do they have my information? Why am I not being called directly by the credit card company?
Typically if you have not made a payment on an account for a number of months, the account will be turned over to either an in-house collections department, or sold or assigned to a collection company. Once this happens, the collection company will contact you via phone or mail to attempt to collect on the account. As a consumer, you have a legal right to request a copy of documentation that validates that you are actually the responsible party for the debt.
I was just contacted by a collector for an past-due account that I had more than 6 years ago. Do I still owe on this account?
Yes. However, if the account is truly past the statute of limitations, the creditor may no longer be able to pursue legal recourse against you for the collection of the balance. The statute of limitations varies from state to state, and is typically measured from the date of last activity on the account. This would be the last payment made, last time account was used, etc. In some states, you can reset the statute of limitations by simply acknowledging that the account is yours.
I received a collection letter in the mail on law firm letterhead. Does this mean I am being sued?
No. Often law firms act as collection companies. This does not mean you are being sued, just that the account is in collections. Even though a law firm is acting as the collector, they still must abide by the same laws as any other collection company under the Fair Debt Collection Practices Act (FDCPA).
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.
This information will provide you a better foundation of knowledge for dealing with debt collectors. - 15224
I got a letter in the mail from a collection company regarding a credit card balance. Why do they have my information? Why am I not being called directly by the credit card company?
Typically if you have not made a payment on an account for a number of months, the account will be turned over to either an in-house collections department, or sold or assigned to a collection company. Once this happens, the collection company will contact you via phone or mail to attempt to collect on the account. As a consumer, you have a legal right to request a copy of documentation that validates that you are actually the responsible party for the debt.
I was just contacted by a collector for an past-due account that I had more than 6 years ago. Do I still owe on this account?
Yes. However, if the account is truly past the statute of limitations, the creditor may no longer be able to pursue legal recourse against you for the collection of the balance. The statute of limitations varies from state to state, and is typically measured from the date of last activity on the account. This would be the last payment made, last time account was used, etc. In some states, you can reset the statute of limitations by simply acknowledging that the account is yours.
I received a collection letter in the mail on law firm letterhead. Does this mean I am being sued?
No. Often law firms act as collection companies. This does not mean you are being sued, just that the account is in collections. Even though a law firm is acting as the collector, they still must abide by the same laws as any other collection company under the Fair Debt Collection Practices Act (FDCPA).
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.
This information will provide you a better foundation of knowledge for dealing with debt collectors. - 15224
About the Author:
This article was written by Jon Ochs, President/CEO of NCA Credit Repair, Inc, and a well respected authority on Credit Repair, and Debt Relief.
