Bankruptcy can occur due to a divorce, catastrophic event, foreclosure on personal or business property, failure to pay bills on time, loss of income, health problems, poor business decisions, bad timing, bad advice, or a poor economy. When you are bankrupt and can no longer pay bills, bill collectors will begin their debt collection efforts.
What can a creditor do to me if I owe them money?
They can stop doing business with you, report any default or late payments to a reporting agency, turn you over to their collections department, bring a lawsuit against you to obtain a judgment, or if they own a secured note, take back the collateral either by foreclosure or seizure.
How long does it take a creditor to send a debt to an outside collection agency?
Depending on whether a company has its own collection department, a creditor would first send you a certain number of mailed communications as reminders of the debt you owe and then turn the debt over to either their collection department or an outside agency for collections. There is no clear time frame for the process but it generally occurs within a year.
Can a creditor legally sell my debt to an outside collection agency?
Unfortunately, the answer is yes. It is possible. Many creditors put clauses in their contracts to allow them to sell the rights to collection. What can you to stop your debt from being sold? You may ask the new owners of the debt to verify the contractual paperwork and legality of the exchange.
What recourse does a collection agency have in collecting debts?
Collection agencies are bound by the Fair Debt and Collection Practices Act (FDCPA). The Act is a comprehensive statute that details what collection agencies can and cannot do to collect debts and what rights you have as a consumer when dealing with them.
Can a collection agency report the debt to a credit agency?
Yes, but they have to report the debt fairly, accurately, and within the confines of the FDCPA.?
Can a collection agency sue you?
Yes. The primary threat a collection agency has in collecting debt is to obtain a judgment through a lawsuit. Depending on the state in which you live, a judgment can be used by a collection agency to attach liens and garnish wages. Eventually, attached liens can lead to seizures of assets.
Can a collection agency harass me?
Unequivocally, the answer is no. If you send a collection agency a Cease and Desist order, they can no longer contact you, but they still can re-sell your debt to another debt collection agency that can contact you until you ask them to cease and desist. In either case, they must follow the statutes of the FDCPA or suffer heavy fines.
Can you go to jail for not talking to a debt collector or paying you debts?
No! There are no debtor prisons in the United States because you have not committed a crime by owing money.
What can I do If I am overwhelmed by debt collection activities and debt?
You can do what most other Americans do when they find out they have more debt they can pay-off in five years and still pay all their living expenses. You file for bankruptcy protection.
The moment you file a bankruptcy, a judge will order all collection actions to cease. This is called an automatic stay. The automatic stay, applicable to all types of bankruptcy filings, stops certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment. Creditors will have to go through a U.S. Bankruptcy Court trustee to deal with their debtors.
Debt collection basics may simple, but bankruptcy laws can be very complicated. If you are considering bankruptcy, contact a bankruptcy lawyer. If you need relief from the stress of debt and you live in or around the metropolitan area of Gary, Indiana, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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