3 Tips To Shut Down Debt Collectors For Good
We wrote recently that many here in North Carolina are struggling financially and dealing with past-due debt. Nearly 40% of NC consumers are dealing with debt collections and this can make life rough. Debt collectors can be ruthless when it comes to trying to get money out of you. But here's what you should know – the reason they're so aggressive is not because they're collecting on behalf of the creditor you owe.
Debt Collectors Make Big Money When They Get You to Pay Up
They're collecting for profit. Most debt collectors buy the debt from whoever you originally owed for as little as 2¢ on the dollar. So if you had a $1,000 credit card bill you didn't pay, the debt collector could have bought the debt for just $20. Anything above the twenty they get out of you is pure profit and your original creditor won't see a penny of that. Their business is not just collecting debt, but profiting from debt and they will use extreme tactics to get what they want.
#1 Know the Age of Your Debt
Debt past the statute of limitations has no legal teeth no matter what a debt collector says (other than it being on your credit report). And debt past seven years won't harm your credit report. Sometimes debt collection companies will buy really old debt that was taken out 10-15 years ago that is well past the statute of limitations and has even fallen off your credit report. It's not illegal for them to try and collect on it, but they can't force you to pay.
How to handle collections on old debt: Hanging up on, being rude to or avoiding debt collectors may not work. They bought your debt and have a vested interest in getting money out of you. The best solution is to write them (with return receipt via USPS) and state that you refuse to pay and request they cease communicating about the debt. If they persist, contact the law offices of John T Orcutt for assistance.
#2 Know Who Owns Your Debt
Another problem with shady debt collectors is that they may be illegally attempting to collect on your debt that they have no right to. If you pay them, it won't help you. You can actually pay one debt collector but because they stole your file or it was sold to multiple collection firms, you can legally still owe the debt to another collector. The New York Times recently wrote about how this happens.
How to make sure the debt is legitimate: You don't want to work out a settlement or payment arrangement with a firm that doesn't legally own your debt. Ask for their company information so you can verify they are legitimate, then ask them to verify the debt. Tell them you are going to contact the creditor and verify they sold the debt to them - this may get them to go away for good.
#3 Know How to Fight Back in Court
If the debt is still within the statute of limitations, the collector may file a lawsuit against you. If you can't afford to pay, your instincts may be to toss out the notice of the court case. This is exactly what a debt collector wants. If you don't show, they get a default judgment and can seize assets. Thing is, they may or may not have legally and officially bought the debt, but you won't know unless you fight back.
How to deal with a lawsuit filed against you: You absolutely must show up in court even if you don't have the money to pay. Here's why. Even though debt is bought and sold all the time, the debt collector may not legally own your debt. There's a chance the judge may toss it out if they don't have the back up records. Also, if you can show you're too broke to pay, the judge may deem you uncollectible. But if you don't show up, a default judgment is a done deal.
Debt collectors will often go to extreme lengths to convince you to pay a debt. We hear from our clients that they've been threatened with jail for debt fraud – this is a lie and will never happen – and other outrageous consequence that are illegal. It's important that, as scary as it may be, you enforce your legal rights guaranteed by the North Carolina Department of Justice and the Federal Trade Commission.
If you're deep in debt and have debt collectors harassing you at work and home, your best option may be to seek a permanent solution. Filing Chapter 7 will put an end to most unsecured debts including medical bills, credit card debts, personal loans, old cell or utility bills, etc. As soon as you file, all debt collection must legally stop and any collectors that persist can end up in big trouble and find themselves in court. Contact the law offices of John T Orcutt for a free consultation today.