How Far Can Creditors Go With Collection Practices

If you miss payments on a car or mortgage loan

, student loan, credit card debt or other bills, your creditor will try to collect the past-due amount. If theyre unable to contact you, or you cant reach an acceptable resolution, the creditor may hire a debt collection agency. State and federal laws limit collection practices and mandate the steps creditors and debt collectors may take.

Collection agencies may call you between 8 a.m. and 9 p.m. but must identify themselves. They may call you at work, unless you inform them that your employer doesnt allow you to accept calls there.

Harassing behavior is prohibited. Creditors and debt collectors may not threat you or your reputation, use profane language or call people you know to talk to them about your debt.

The creditor or debt collector must be honest about the steps they can take to collect. They may not say or do anything that leads you to think your overdue account constitutes criminal behavior.

If your past-due bills are for secured debt, the creditor can repossess the property. Secured debt is that for which you offered collateral in return for the loan. Auto loans, business loans for equipment and home loans are examples of secured debt.

A creditor who sues you for repayment and receives a judgment can file a lien against your property. The lien forces repayment of the debt when the property is sold. In some cases, the lien sale is forced.

For unsecured debt, the creditor can sue you for the balance due on your account. The difficulty in collecting on a judgment in such a suit leads many creditors to write off your debt. The creditor reports this action to the credit bureaus, where it becomes a derogatory item in your credit report.

In some cases, a judgment against you for nonpayment of a debt can result in your wages being garnished. If that happens, a certain percentage of your salary can be withheld automatically and applied to your judgment.

The best way to avoid the more serious consequences of collection is to contact your creditor as soon as you know youre going to miss a payment. If your account is already in collection, work with the collection agency to set up a repayment plan. You may need to contact an attorney if repayment isnt possible.

For more information, go to Collection Practices at http://www.creditnowusa.com/Collection-Practices

by: Money Lender

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