Debt Collection Laws

Debt collection laws are important to understand if you have gotten into debt. Debt collection is simply a normal transaction when lenders try to collect loan repayments from borrowers. When you sign a credit card or loan agreement, you are legally bound to pay the loan back. While there are some ways to legally cancel a debt, such as bankruptcy, it is not a good idea to just ignore mounting debts. There are a lot of things you can do to deal with collections and get back on track.

If you're dealing with collectors, then you know how stressful it can be. They may call you constantly and it can seem like a real invasion of privacy, or even harassment. Some collectors cross the line and use intimidating behaviors like calling your place of employment or your neighbors and family in an attempt to embarrass you. Sometimes they even try to collect past debts that are not even valid anymore.

The good news is that if you are being unfairly treated by a bill collector, you have a law on your side that is intended to allow the collector to obtain repayment, without resorting to any unethical or harassing techniques. Learn about the right ways to protect yourself.

The Debt Collection Process
If you're contacted by a debt collector, you probably have not been making your payments already for several months, as they don't get involved until your bill is late. Bills may be collected either by the creditor/lender, or they may have turned the debt over to a dedicated collection agency. The best thing you can do is return the phone call and attempt to work out a repayment arrangement. By ignoring collectors, you are just delaying the process and allowing your credit rating to be damaged. You can usually work out an acceptable repayment option.

If your debt is given to a collection agency, they will likely have made an arrangement to collect whatever payment they can, even if it is less than what you originally owed. Some payment is better than no payment at all. Debt collection laws do allow these companies to try and collect payment. Collection agencies usually make some fees, so it is in their interest to collect payment. Therefore they are very determined to do so, so don't assume they will stop calling and just go away!

If you are expecting a call from a collection agency, know that you are protected by the FDCPA (Fair Debt Collection Practices Act). You can find more information about debt collection laws and the FDCPA , by searching the internet with your questions.

Don't allow collectors to coerce you into making a payment that you can't afford. However, do try to work with them on a reasonable repayment schedule that you know that you can stick with. You will feel better at settling your debt and paying it off, and you will be able to restore your credit rating over time by settling outstanding debts and making consistent payments.

Dealing with Debt Collectors
You are liable to repay your debts, so the debt collection laws do support the collection process. When a debt collector or a collection agency calls you, be sure to explain your situation so that they understand that you are willing to repay the debt if you can make a suitable arrangement for repayment. Debt collectors are typically willing to be reasonable and will work with you, because it is in their best interest to find some way to collect their money, even if it takes a lot longer than originally agreed to when you got the loan.

If your debt collector doesn't explain or offer you some sort of reasonable solution, request that they make some sort of offer with more acceptable terms. Indicate that you intend to repay--once you agree to the terms. If they are being hard to deal with, just ask to speak to their supervisor or manager. Sometimes an inexperienced loan collector is harder to deal with and you can find a solution faster by talking to someone higher up in the company.

If you can't seem to resolve your outstanding debt and come to a workable arrangement, you still have options. You can contact a professional debt counselor or debt management company and get some guidance and help to get out of your situation.

Statute of Limitations on Debt
Sometimes, bills may be so old that the statute of limitations on collections has expired. Debt collection laws also protect you from old debts. Even if a debt is old, that doesn't always stop a bill collector from calling you though. It is a good idea to find out more about the statute of limitations on your debt. It is possible that they cannot collect from you any longer, and that it wouldn't hold up in court if they insisted on repayment. If you have very old unpaid debts on your record, research the statute of limitations in your state.

It varies, but typically debts must be collected within three to seven years. You can search on line to find out the statute of limitations for debt collection in your own state.

If you feel someone is trying to collect an old debt, then request legal proof of the debt from that collection agency. If they don't provide you with that proof within thirty days, they cannot attempt to collect the debt. You will also want to remember to follow up with credit bureaus in order to have old debts removed from your credit report so your credit rating doesn't reflect them. This applies to debt that is older than seven years old.

Summary

Debt collection laws are important to understand when dealing with debt collectors. You legally are required to pay back your loans, however you do not have to be harassed by bill collectors either. Try to work out an arrangement for repayment and get back on track. If you need to understand your rights, visit the FTC.GOV website and read about the Fair Debt Collection Practice Act.