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February 18,2008

  • Hassled by Collection Agencies?, Pt.1
      Taking on the agencies.

    In these trying days, more and more credit card consumers are experiencing the duress caused by collection agencies. With credit card accounts falling into default at an unprecedented rate, collection agencies are having a heyday. Few of us know what to do about this and even fewer enjoy it. It helps to gain some confidence by knowing our rights and when a persistent agent may be overstepping legal bounds. Typically, a credit card lender will turn ‘phase 3' accounts (over 90 days late) over to these agencies to collect what they can. The agencies are given a cut of whatever they can collect. So they use all the tools (and tricks) at their disposal to collect what they can and, in any way they can (presumably legally). Some agents are professional in their behavior but, others are not.

    Here are some tips in understanding what to expect and what not to accept:

    Ramifications: Expect something to happen even if you never hear from these people. Simply ignoring collection agencies won't make the problem vanish. It's almost sure, if you don't work with them, that they will hurt your credit card (FICO) score. In extreme cases, wage and asset garnishment are options but, these are very rare and you are required to be notified in time to stop proceedings. Except for government agencies, private business, like the credit card industry, must win a court injunction with provision for you to defend yourself. You must notified in writing well in advance.

    Fair Debt Collection Practices Act (FDCPA): Americans are protected from certain excesses that constitute abuse. The FTC has instituted these guidelines for that purpose. Credit card debt collectors are obliged to follow them, though the rules are commonly broken. Just in 2007 alone, 71,000 complaints of debt collection violations were reported to the FTC.

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