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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.