Archive for Debt Collection Problems

Social Media Could Be Detrimental To Debtors

February 13, 2012 Credit Manager Debt Collection Problems, Misc. Credit Repair Articles

How many times do you see people bragging on their Facebook or Twitter profiles about a new car, new job or linking out to all their relatives? It’s social so of course, people are social — but those who owe debt collectors may be giving personal details that enable collectors to find them & their money.

While it’s illegal for debt collectors to expose debts of a consumer to third parties, it isn’ illegal for them to be prowling the web looking for your information. With the invent of the web and algorithms like Google’s, there could be a lot of information on you all over the web. From Linkdin to Pinterest, people love to post social interactions and it makes a debt collector’s job much easier to track you down using these social profiles.

If you have social profiles you may want to be very careful of the privacy settings so that your information is only seen by friends and family. Likewise, if you get odd friend requests from people you dont know, think twice before you add them.

A public social profile can be a wealth of information for debt collectors. Imagine if you are a bill collector and are looking at 5 year old application with all inaccurate information like home phone numbers and mailing addresses. Imagine your delight if you Google that debtor and suddenly find all his information including where he works sitting right there on a facebook profile!

Facebook allows users to set their privacy options so that only some of the information is shared. It’s not set by default so if you’ve never customized your settings, you may want to do so now.

If you have multiple social profiles across multiple websites, its a good idea to check them all and adjust the privacy settings so that your information in not indexed in the search engines. Once it’s there, it’s difficult to remove.

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Time Barred Debts – What You Need To Know

January 30, 2012 Credit Manager Debt Collection Problems, FTC Updates

Making a partial payment on a debt, even making a written promise to pay may extend the clock to legally enforce the debt.

Did you read that?

We sure hope so because a large majority of people in the United States have no idea that debts expire. DEBTS DO EXPIRE.

A bill collector may contact you out of the blue claiming you owe money. Some people, too many – unfortunately, dont question the debt and either pay it or put up with being harassed over it, when in truth, it was totally noncollectable.

Have you ever heard of Asset Acceptance? If you have its probably because they’ve contacted you about an unpaid debt. Asset Acceptance is a third party debt collector (debt buyer) who purchases debts from creditors like credit cards, medical bills and utility debts. The FTC took action against AA for misleading consumers and has agreed to accept 2.5 million from the collection agency for misleading consumers.

Specifically the FTC states 9 counts against Asset Acceptance including not notifying consumers of expired debts. The FTC states that the complaint consisted of violations of the FTC Act, FDCPA, and the FCRA.

The FTC’s nine-count complaint charged Asset Acceptance with:

  • misrepresenting that consumers owed a debt when it could not substantiate its representations;
  • failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable;
  • providing information to credit reporting agencies, while knowing or having reasonable cause to believe that the information was inaccurate;
  • failing to notify consumers in writing that it provided negative information to a credit reporting agency;
  • failing to conduct a reasonable investigation when it received a notice of dispute from a credit reporting agency;
  • repeatedly calling third parties who do not owe a debt;
  • informing third parties about a debt;
  • using illegal debt-collection practices, including misrepresenting the character, amount, or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt; and
  • failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer.

Time barred debts often referred to as expired debts or SOL debts (statute of limitations to collect) are a big problem in the credit industry when it comes to consumer’s rights. With the number of collection agencies buying old debts and junk debt buyers recirculating old debts, people are often completely unaware that under state law, they cant be sued for the debt. Without knowing this information, people make a payment on the old debt and unwittingly renew its statute of limitations. Basically resetting the clock and making the debt legally collectible.

This latest action from the FTC is making clear one thing. Debt collectors need to start following the rules or pay the consequences. In this case, the consequences add up to 2.5 million dollars.

While the Fair Debt Collections Practices Act (FDCPA) makes a lot of activities by debt collectors illegal, one thing that needs to become standard operation is a notification to a debtor that a debt is legally expired. Just as a collection agency must advice a consumer of their right to dispute the validity of the debt, collection notices should also contain a disclaimer when a debt is legally expired. Hopefully this latest action will begin to broaden the scope of what’s “collectible” giving consumers a clearer picture.

Read more on time barred debts: FTC on time barred debts & what you need to know.

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What Happens to a Deficiency Balance in a Chapter 7 Bankruptcy

January 17, 2012 Credit Manager Debt Collection Problems

A Chapter 7 bankruptcy is often referred to as a straight BK because you normally have no assets to speak of or do not qualify for a payback plan like you see under a chapter 13.

People who file for chapter 7 bankruptcy usually claim all debts in the proceeding and walk away clean. A chapter 7 can mean “no assets” and usually consists of credit card debt and medical bills. Many people are forced into a bankruptcy from medical bills piling up and no health insurance. It’s tragic that it has to be this way in the United States.

If you do own assets but have no way of repaying your creditors, even a portion, the court will usually evaluate how many assets you have and if they can cover any of your debts. Credit card bills obviously have no collateral attached to them so they are often the cause of a BK 7 as well.

If you own a car dont feel like the court is going to force you to sell it to pay your creditors back. A person has to have a way to get to work. If however you have cash, assets, multiple vehicles or property, that will be taken into consideration for the type of bankruptcy you qualify for.

Often times a bankruptcy filing is a last resort but if creditors start hounding you non-stop or you’re being sued then bankruptcy can protect you and put a stop to collections. During a bankruptcy petition, there is an automatic stay that forbids creditors from coming after you.

What Happens to a Deficiency Balance in a Chapter 7 Bankruptcy

If your bankruptcy is successfully filed and discharged (not dismissed), you will not owe any deficiency balance in a chapter 7. The debts are wiped away.

Of course, each case is a separate situation so discussing your options with a bankruptcy attorney is suggested. He can explain to you about the Bankruptcy Means Test & Debtor Education that is required.

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Used Car Dealers “Car Repossession” Tactics About To Change?

January 12, 2012 Credit Manager Debt Collection Problems

Used Car Dealers Car Repossession Tactics Could Stop with New Bill

New Bill would regulate used car lots that charge sky-high interest, inflate car prices and repossess the same car over and over for profit. According to the LA Times;

Focusing on customers with bad credit, dealers often charge triple the book value for older used cars and charge interest rates that can top 30%. Some employ a business model that ratchets up profits by repossessing the same car multiple times, reselling it to new customers each time.

In addition, the bill would prohibit dealers from repossessing cars themselves when a customer defaults. Instead, they would be required to hire a state-licensed repo company; they also would be obliged to offer consumers a grace period after repossession in which to pay off outstanding delinquency fees.

With the current state of the economy on a nationwide level, a law that would force these types of fees and car repossessions is much welcomed. As if we dont have enough trouble already as consumers when it comes to making our car payments or keeping up with credit card debt. Companies that target “bad credit” customers tend to be of a certain type, offering very little and taking advantage of people in already financial precarious states. Pay day loans, bad credit car loans, revolving lines of credit that target those with bad credit histories need much more scrutiney to ensure fairness across the board.

You can read more about this new bill at the link above at the Los Angeles Times.

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