May 5, 2009

Paying the Debts of the Deceased – What You Don’t Know Could Cost You

Some debt collection agencies are taking their collection practices to new extremes when it comes to making a profit – collecting from the relatives of the deceased. In most states, the estate of the deceased is responsible for payment of any debts that are presented during the probate period. However, these debt collectors circumvent this process by going directly to the surviving spouse, children, parents or siblings, in an attempt to directly collect. Oftentimes, these individuals are not legally responsible for these debts, and the debt collectors typically do not disclose this fact. By assuming the debt of a relative who has died, these individuals potentially place themselves in a position of unnecessary financial risk.

How can you protect yourself from these predatory practices? There are a few simple guidelines to follow when dealing with creditors who are attempting to collect a debt from a deceased individual. Use these tips to deal with creditors, and if necessary, get legal advice for your particular situation.

Don’t discuss the debts of the deceased. This is likely the simplest solution, overall. Inform creditors who call that the individual they are calling for is deceased. Do not offer additional information, and do not allow the creditor to pressure you into making a payment. If you were not a joint account holder or otherwise responsible for the debt, there is no reason to communicate with the debt collector in most instances.

Don’t provide your personal information. This tip is also important, because if you provide your personal information to the debt collector, they may try to get you to assume the debt, thereby placing it on your credit report. This can have a negative impact on your overall credit, and it also makes it more difficult for you if you later decide that you do not want to handle your loved one’s old debts.

Don’t give in to pressure. If you know that you aren’t responsible for the debt, don’t succumb to creditor pressure to assume the payments. Unless the debt involves secured property that is of value to you or your family, there is no reason to negotiate over payments on a debt that you do not owe.

Do handle any debts on which you are a co-signer or are otherwise responsible. Find out the laws about credit card liability in your state – in many instances, the spouse is not responsible for credit card debt that is not part of a joint credit account. However, if you are jointly responsible for the debts in question, making arrangements sooner, rather than later, can help preserve your good credit.

If creditors are persistent in contacting you, you may want to get legal advice from a local attorney about how best to proceed. In most instances, if creditors do not make their claim during the probate process, they are out of luck – trying to collect from relatives not associated with the original account is a shady practice at best. Losing a loved one is difficult. Don’t let opportunistic creditors make an already difficult time that much worse – know your rights, and don’t offer to pay for any debts to which you are not contractually obligated.

Posted in collection agencies, debt collection, debt collectors | No Comments »



May 7, 2008

Stop Debt Collector Harassment Dead in Its Tracks!

If you are being harassed by lowly debt collectors, there are ways to stop them cold! You have legal rights and you do not have to endure any type of degrading treatment from these leeches of society. It’s not bad enough to them that you are obviously experiencing some financial difficulties; they need to accentuate the problem – it’s just in their bloodlines. Check out the following tips to stop debt collector harassment quickly.

Let Lexington Law Repair Your Credit!Under the Fair Debt Collection Practices Act (FDCPA), debt collectors have their boundaries explained to them. You can use these guidelines to understand what they are allowed to do and what they are not. You should also download a free copy of your credit rights from the Federal Trade Commission’s website. Alternatively, you can call 617-542-9595 (National Consumer Law Center) and request a copy of “What You Should Know about Debt Collection”.

After you educate yourself about the debt collection realm, you can start ridding your life of any debt collector that has been bothering you. The first thing to do is to record your conversations. Tell the collector that you need a minute to get your recorder turned on. Flick the switch into the microphone of your telephone so that they can hear it. This alone will put you on a whole new level of conversation. Suddenly, they won’t feel so brave with their disrespect and lacking professionalism. A tape recorder will definitely put any debt collector in check.

Keep excellent records of your phone conversations with debt collectors. Ask for their names. Write down the times of the calls. Write down the dates. If you are not recording the conversation, take accurate notes of what is said.

If you enter into any payment agreement with a debt collector, tell him that you will be happy to stick to it as soon as you receive it in writing – no other way. If you fail to get your deal in writing, you really have no deal at all. Avoid talking to them on the phone.

Send a letter to the collection agency outlining your understanding of the deal that has been made with the debt collector. Send it to them certified with a reception receipt requested. Show them that you are paying attention and demand professional courtesy and respect. Make sure to keep the copies and receipts in your records.

Add the following if you pay by check: “Cashing this check constitutes payment in full.” Write this right on the check itself.

Request that the negative item be removed from your credit report. At a minimum, ensure that the item will be marked as “Paid in full” and not left as unpaid. Again, get everything in writing.

Never let yourself be bullied or rushed. Debt collectors will pressure you greatly to act immediately to remit payment. Tell them no – not until you have everything that has been agreed to in writing. Again, avoid talking to them on the phone altogether. The best way to communicate with them is in writing.

You can stop debt collectors from harassing you and make them show proper respect and professionalism!

Posted in FDCPA, Fair Debt Collection Practices Act, bill collectors, credit, debt collectors, debt settlement | No Comments »



Apr 18, 2008

How to Stop Collection Agencies

You can stop collection agencies from contacting you in a number of ways. There is a federal law called the Fair Debt Collection Practices Act (FDCPA) and you can use what it states to cease any efforts of collection agencies to collect any monies from you. It’s true! Remember, this applies only to collection agencies – not creditors who may employ them. If you feel that you are being harassed, then you should definitely utilize any or all of the following methods:

Method 1: The prevention of delinquency.

Creditors will either turn over delinquent accounts to a collection agency or they will have an in-house collection department. Either way, they will not simply forget about the debt. The best way to avoid collection attempts is to not become delinquent in your payment responsibilities. A lot of misplaced anger results from people who would have no problems were they just to pay on time and protect their credit to begin with.

Method 2: Write a cease letter.

Federal law requires collection agencies to stop their attempts to collect a given debt if they receive a written cease letter. There are many online to use as samples. Basically, they simply state that you wish for their organization to stop any type of attempts to collect from you. You further state that you will deal only with the creditor that you owe the debt to.

Method 3: Attorney cease letters.

If your personally written cease letter fails to be effective in stopping a collection agency’s attempts to settle debts with you, a letter written from an attorney will normally do the trick. Federal law requires collection agencies to cease contact with any consumer when that consumer is known to be represented by an attorney.

Method 4: You can work out an agreement to pay with the collection agency.

You can certainly stop a collection agency from calling you by agreeing to pay. That’s what they’re really after anyway. Aggressive debt collectors are paid based on what they collect in a given time period. They become more zealous about their endeavors to collect when they believe that you are simply ignoring them. If you talk with them in a professional manner and come to terms for repayment, they will be much more polite. Remember, if you strike a deal with a debt collector; tell them you will not pay anything until you receive the deal in writing.

Method 5: Bankruptcy.

There is an automatic stay on collection attempts that goes into effect when you file for personal bankruptcy. In order for any debt collector to further attempt debt collection, he or she must obtain specific permission from a bankruptcy court. This is a rare occurrence. Also, bankruptcy courts will never grant this permission to anyone attempting to collect unsecured debts from you. As you know, bankruptcy is a most serious act. It should be reserved for use only in cases of severe financial turmoil.

You do not have to suffer the harassment of collection agencies anymore. You can stop collection agencies from contacting you and disturbing your quietude. Utilize the above methods to stop collection agencies today!

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Oct 21, 2007

Settling Old Debt Can Hurt Your Credit Scores

Did you know that settling some old debts can actually harm your credit score? Consumers shouldn’t always assume that paying off old debts will improve their financial situation or make them a better risk in lenders’ eyes. Borrowers who try to pay off old delinquencies, charge-offs and collection accounts often find that sometimes, doing the right thing does the wrong thing to your credit.

How can this be possible? The Fair Isaac Corporation, the company that determines your FICO scores, has fairly determined that the most recent accounts on your credit count towards your scores the most. The older the account is on your credit report the less it factors in to your scores and a lot of times when you pay off a debt you make the account current. The only problem is that the credit bureaus still report the account as negative, but now instead of being old, it’s brand new like it just happened. It will stay on your credit report for 7 more years. This can damage your credit scores drastically.

Before you consider paying off an old debt on your credit report, you may want to contact the creditor in writing. Tell them of your good intentions and ask them if they will agree to delete the account from your credit reports if you settle your debt (lots of times for much less than you owe). Get their agreement in writing!

You must be careful when contacting creditors though. Arranging a payment plan or even inquiring about an old debt can restart the statute of limitations in some states, allowing creditors to sue you. Simply contacting a creditor about a past-due account can renew its interest in trying to collect, leading to harassment and hardball tactics.

Some debt collectors will actually refuse to delete the account from your credit reports, even if you pay. Others will pretend they are “not allowed” to. That is obviously not true.

Even worse, some unethical collection agencies may promise to upgrade how your debt appears on your credit report in exchange for payment, then not follow through or make matters worse by making the debt seem more recent than it is.

So, what should you do if they won’t agree to delete it? Simple – don’t pay it. Wait until the end of 7 years for it to come off of your report. It’s really not hurting your scores that much anyway and the older it gets, the less it factors in.

Instead of paying them off, work to get new positive accounts reporting on your credit report. As the old negative accounts become less relevant, the new positive accounts become more relevant and increase your credit scores.

Remember to always monitor your credit reports to make sure that unethical collection agencies don’t purposely re-age your accounts. It’s illegal, but it still happens quite often. Check your state’s collection laws to see how long a collector can collect on your debt. Once the debt is past the statute of limitations, they can no longer legally collect on that debt.

Posted in FICO, Fair Isaac, credit, credit scores, credit scoring, debt collectors, debt settlement, settle debts | No Comments »



May 20, 2007

What is Debt Validation?

Debt validation is the process of forcing debt collectors to verify the validity of the debt in question, as well as their attempts to collect. The right to dispute the debt and receive validation are part of the consumer’s rights under the United States Federal Fair Debt Collection Practices Act (FDCPA) and are set out in §809[1] of that act. Under the FDCPA, the collector bears the burden of proof.

For legal purposes, any entities that are not original creditors – including lawyers – are considered collectors. Lucky for you, collectors must adhere to the guidelines of the Fair Debt Collection Practices Act (FDCPA), which will be the basis of your debt validation proceedings. It applies even to those collectors who legally have bought your debt (i.e. they still do not become your “creditor”.)

Generally, debt collectors must be able to prove that:

1. They own the debt legally and have been authorized to collect it from you.

2. The full amount of the debt that they are pursuing is accounted for and documented by your original creditor.

3. They can provide a copy of the original legal contract that you signed with your creditor.

The following is a step-by-step guide of actions to take to demand your right to debt validation:

• Send the collections agency (or lawyer, etc.) a certified debt validation letter asking them to validate your debt. Allow them 30 days to respond to your request. If they fail to do so, they are in violation of the law.

• Meanwhile, if you do not believe they have the right to collect from you, send the credit bureaus (Experian, Equifax, and TransUnion) a certified letter disputing collections actions on your report.

• If the collection agency responds in writing with proof of the three FDCPA requirements listed above and you wish to pursue your dispute further, you may find out whether or not they are authorized to collect in your state. If they are not, write another letter stating the violation and threaten to sue if they do not both cease collections efforts and alert the credit bureaus.

• If the collection agency responds in writing and does not provide sufficient proof, write them another letter specifying their violation of FDCPA. Tell them either to cease collections efforts and alert the credit bureaus or you will file a lawsuit. Allow at least two weeks for a response, and then follow through with your threat in small claims court.

Most collectors will give in before you will have to get the law involved, and some cases may be much easier than others. If a collector has bought or has been assigned your debt, they inherently do not “own” your debt and therefore cannot prove your obligation to pay (unless there is a clause in your original contract). Similarly, unqualified and deceitful collections agencies probably will want to rid themselves of your situation as quickly as possible.

It should be noted that creditors may take legal action against you, so it almost certainly is not in your best interest to just ignore a debt that you think cannot be proven. If you fail to take action and demand proof (or lack thereof) from a collections agency, it really does not matter what you believe to be just and accurate. You still may find yourself with a judgment against you.

Attempting debt validation might sound a bit daunting, but the financial benefits that you may gain from enforcing your rights certainly make it worthwhile for many people. FDCPA and contract laws are usually on your side. And if a collection agency lacks proof of your obligation to pay, well then…you might as well not.

Posted in FCRA, FDCPA, Fair Debt Collection Practices Act, collection agency, credit, debt collectors, debt validation, validation letters | No Comments »



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