Tips On Dealing With Old Credit Card Debts And Collections
While the wisest thing to do
While the wisest thing to do
when
dealing with credit card debt, or any other debts, is to pay
on time and never overextend it, some people really do not have the option or
the luxury to do so. When money is tight and creditors are calling you from
every corner, some debts are bound to be left unpaid. The usual policy of the
creditors when a debtor has not been paid from 180 days to 240 days is to
charge off the debt. No, this does not mean that the debt has been cancelled or
that the debtor no longer has to repay it. It simply means that the creditor
has moved that debt account to a bad debt account. The creditor still has
the right to collect the debt from you while some other creditors might sell
that account to a collection agency at a discount rate.
If in any case your creditor or
the collection agency calls you up for collection, the first thing you need to
know is your rights. In the United
States, the creditors or debt collectors are
bound by the states Statute of Limitations. This law sets forth a maximum time
after which a creditor or debt collector can no longer recover the debt from
you, the debtor. The laws of the statute vary in each state so you may like to
find out the limitations for your state. If a creditor demands payment or files
a lawsuit after the allowed time, you can raise the issue of expired statute
limitations. However, be reminded that you are usually required to raise the
issue in written response to the collection demand or lawsuit. The court will
then likely dismiss the case and disallow the creditor to file suit again. This
also means that you are, legally, not bound to the old debt anymore.
Aside from the statute, a
creditor or debt collector is also bound by the contract between you and your
original creditor. So if the initial contract did not stipulate interest
charges but the current collector demands full payment plus interest, you have
no obligations to agree to it. With the average person having at least two
credit cards nowadays, it is difficult to remember the terms of your old
credit card debts, or your old debts outstanding
if any. This is why you are advised to ask for debt validation when the
collector demands payment. In the time between the notifications for a debt
validation till the time it is presented to you, the collector has to cease
collection from you. If the collector fails to present the debt validation,
then the account becomes non-collectable and he has no right to collect from
you anymore. Be sure that you are presented with proper validation, that is the
account statements from the original creditor which includes payment history
from the very beginning as well as the copy of the loan or credit card
application.
These are some means to protect
yourself against old debts when they come knocking on your door. But what if
they are current debts and you are unable to pay them off? The solution can
come in form of
credit card debt consolidation. This means merging your
various credit debts into one new repayment plan; your various monthly payments
will be lumped into new payment plan. This is often an advisable alternative
for paying credit card debts. It will usually result in easier repayment and
lower interest rate too. Sometimes a consolidation involves a secured loan
against an asset, like your house, as collateral. But it isnt always necessary
to mortgage you home though personal loan or unsecured loan is sufficient for
consolidation, although it may come with a higher interest rate as compared to
a secured loan.
by: Ask Bill
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