DEBT COLLECTORS -
Dealing with debt collectors | Restrictive offers and protection
Debt Collectors are salesmen
pure and simple. They are paid to make you pay old
debts or charged off debts. They act as a third party to the
original lender - thus, putting them responsible for certain action
under the Fair Debt Collection Practices Act. A collector does not
want a smart debtor. You make their job tougher when you know the
rules. According to and under the provisions of public laws 95-109
and 99-361, also known as the Fair
Debt Collection Practices Act, you have rights. Read those rights
in full, it will tell you what they can and cannot do. Before you
make promises to a debt collector review your options.
Is the debt legally
expired and are you risking renewing it by putting a promise in
writing or making a payment?
Yes, that's right. Putting
a written promise to repay an expired debt can renew the statute
of limitations making the debt re-collectable. If you do this,
you lose all rights to the expired statute plea. Once a debt collector
has a new written promise to pay from you, it changes everything.
Note, however we are talking about expired debts. If the debt is
not expired and is not nearing the expired statute then this would
not apply.
Is the debt legitimate.
Do the figures match what the OC or CA stated you owed?
For CA- collection agencies:
How many times have you seen your old debt for $500 turn into a
new debt for $1000? When collection agencies purchase old debts
they re-age it with all the new fees and interest from the date
it was written off. Who is going to question every dollar if you
do not? No one! It is up to you to use your rights under the law
to ask for validation of
a debt. If you have ever received a collection notice, it is
stated right there: "If you dispute the validity of this debt
you must notify us within 30 days or we can assume the debt is valid".
Be sure to confirm the debt by way of VOD.
For OC- original creditor:
One of our strongest consumer rights is the Fair
Credit Billing Act and TILA- Truth in Lending. These law allows
you to question a balance and have the debt proven to you. Not only
do you need to verify the dollar amount but you need to check to
dates of opening, last activity and last payment. One of the most
common errors in credit reports are debts reported inaccurately
by OC and CA. Make sure they
prove to you the debt is due down to the last penny. Pay attention
to the fees and penalties they assess. Most states have a usury
law which means the debt can only be charges fees and interest according
to that state's law. Find your state
laws here.
Have you tried to
restrictively negotiate the debt?
Why would anyone want
to pay an old debt once it has been charged off? Well, several reasons
but not without using leverage to obtain the best results. Once
a debt is charged off to profit and loss it will never go back to
current, so paying it will do nothing but turn it into a paid charge
off. Does that benefit you? No. What does benefit you is restrictively
negotiating that old debt. If the debt is not expired then there
are several things you should attempt. First, attempt to get the
agreement in writing that the bad marks will be deleted from your
credit report upon payment. If they agree, great! GET IT IN WRITING!
(We have sample letters to
help you). Before you attempt to settle any debt be sure to
verify it to the CRA first then use a VOD
to make sure it is accurate. If so, use a restrictive
endorsement to pay it.
Never EVER take a collectors
word. They will be laughing all the way to the bank. Second, attempt
to reduce the debt to 30-40 cents on the dollar and work your way
up to 50-60 percent if need be. Start out very low. Again, get it
in writing if they agree before you pay it. Thirdly, write up an
agreement that includes all the above and put a confidentiality
clause in there. It protects you further from the debt being reported
because now the terms are confidential and if they reveal the payoff
to the credit bureaus, they have violated the confidentiality clause.
Is there fraud involved
or billing errors.
Be sure to check all
old statements and review the account for fraud. If there is fraud
involved, you are not liable for the charges. Use all of these thoughts
as tools to give you more ideas to make a case and argue for a good
settlement. These are all areas you need to consider before you
communicate. Especially be careful of putting promises in writing
and signing those letters. That will be new evidence that you intended
to pay. Have you tried to work out a repayment with the original
creditor? if not, all is not lost. Believe it or not, debt collectors
are easier to deal with than the original lender. They are motivated
by money. They only put the debt on your credit to get you to contact
them. If you work out a negotiation,
they will usually agree to delete it in exchange for payment. They
are unlike creditors who place trade lines on your credit to show
a history to either benefit or disable you. Their use of it is purely
for skip tracing and getting you to call.
What about Restrictive
Endorsements, do they work?
Restrictive endorsements
can work and can hold up in court if done right. If you put on the
front and back of the check: The cashing of this item constitutes
full and final payment and you accompany that check with a cover
letter explaining that this is full payment then the creditor may
have to abide by that. Why? Because it is a form of contract. If
the company depositing the check does so even though you have placed
restrictions on it then they will have trouble proving their claim
in a court of law because and Accord
and Satisfaction has been created through the offer and acceptance.
Now if they cross out the language and still deposit it then the
laws in your state would have
to determine who is right. See more
about which states apply. California has an exception to this
rule. See link above.
We also recommend that
you use the "right to object." By notifying the creditor
before you send payment you have given them ample time to object.
By following up with the restricted
payment and a letter stating you notified them over 30 days
ago and have yet to receive an objection, that constitutes their
agreement. Keeping these records will prove that you notified them
of your intent and additionally reminded them when you sent the
check and they still cashed it. It is not recommended that you try
this with your regular debts just to avoid full payment, this should
be done on collection debts, disputed balances and the like.
Just remember, credit
is a luxury. Not everyone has it and some do not deserve it. If
you have good credit keep it that way and you will be rewarded.
If your credit is less than desirable put actions into motion by
challenging, settling and negotiating your negative items. Once
you rebuild your credit don't do anything to jeopardize it again.
Next time you may have NO success in rebuilding it. Finally, review
state collection laws.
The complete list of laws, bonding, license information, interest
that can be charged and judgment/statute info can be found here.