Stop Bill Collectors!

Author: Robin Williams

When consumers are not paying their bills, creditors may take help of collection agencies to make them repay the debt. However, debtors need not worry. If it is a reputable agency, it will not resort to any unfair mean to collect the debt. If the debtors are facing financial hardship, the collection agency will communicate it to the creditor and the creditor may agree for debt settlements. In this way, they help debtors pay off bills and also save creditors from losing all their money.

Types of collection agencies and how they work

A collection agency helps creditors get back their amount when the debtors are unable to repay them on time. Typically, an agency gets paid a fee or/and a certain percentage of the total amount owed after they successfully collect it. There are various types of collection agencies. These are:

• First party agency: A first party collection agency is a subsidiary of the creditor that owns the debt. As they are a part of the financial institution that extended consumers credit, they try to maintain a good customer relationship and generally do not resort to unfair means for collection of debt. Creditors normally involve first party agencies for collection and if they are unable to collect, then the account is passed to a third party agency.

• Third party agency: A third party collection agency is a separate company that help creditors collect the debts. They take a percentage of the debt amount that they successfully collect. They earn only when they collect money from debtors. Unlike the first party agencies, these agencies are subject to the provisions of the Fair Debt Collection Practices Act (FDCPA) of 1977.

• Debt buyers: There is also another type of agencies known as debt buyers who buy debts from creditors by paying a fraction of the value of the debt and pursue the debtors for collecting the outstanding debt amount in full.

When creditors ask their subsidiary agency to collect the debt or assign collection to a second party agency, they must check the service background of the company. As the agency will represent you while communicating with debtors, they must follow proper work ethics. Though their main aim is to collect the debt amount, but they should not harass or threaten consumers. Assigning debts to a reliable collection agency is very important for creditors to maintain good public relations.

Federal Debtor’s prisons–outlawed in 1833–are making a comeback in these tough times.

Texas is one state that’s cracking down on people caught speeding too many times: hitting them with “surcharges” and throwing them in jail if they don’t pay up. That’s according to this article on debtor’s prisons, which tells the many ways you can be jailed in the United States for the crime of not having enough money.

Not paying your child support? Expect to be jailed if you don’t cough up the cash. You can also be jailed for not filing your federal taxes or not paying those taxes once you’ve filed.

But perhaps the most surprising way that you can find yourself in prison is not paying your credit card debt.  Thanks to over-zealous attorneys and collections companies hit by the financial downturn and resorting to borderline tactics, you might find yourself in the county jail without any fair warning. In many states (like Florida), all a credit card company has to do to notify you of court action is to send you a first class letter. If you don’t receive that letter (say, they send it to your old address), you could find a nasty surprise next time you check your credit report–a judgment against you. That civil action could lead to an arrest warrant if you don’t pay up.

Technically, you can’t be arrested for not paying a debt. But you can be arrested for contempt of court–and the collection agency lawyers want this to happen, because a person sitting in jail will generally pay up a lot faster than someone sitting at home and not answering the phone. A judge may order you to pay several thousand dollars within a day–and he won’t care if you have to skip a mortgage payment to do so.

Check your credit reports regularly, comply with court proceedings, and you may find yourself able to keep out of jail. But if the government–or a collections agency–thinks you have the means to pay (even if you don’t), be alert for that knock on the door: it could be the sheriff’s department coming to take you away.

When you don’t pay your bills on time, don’t respond to the calls from the collection agencies, and live under cover, you could wake up one day to find your bank account temporarily frozen. That will be a bad day if it’s the day your rent or mortgage is due! You may have missed the judgment notices in the mail (or maybe you moved). You may not even know your creditors went in to court and sued you. You have no idea they got a judgment against you and used it to empty your account. When the creditor follows legal procedures, your account may not be garnished immediately. Instead it might be temporarily frozen.
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If you have creditors who file a judgment against you for debts owed to them, your wages could be docked. While the laws on wage garnishment differ from state to state, generally once creditors have a court order against you, they can take 25 per cent from each pay check. Once a creditor has filed a judgment against you, there are very few options (besides bankruptcy) available to you. Therefore, the trick is to stop a garnishment before a creditor obtains a court order.
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Being in debt is not the nicest thing in the world. It can get you down and it can even cause medical problems such as stress, depression and sickness. A lot of people who owe money to creditors worry that they will be thrown in jail but this very rarely happens. This doesn’t mean it won’t happen: Here are a few notable examples of when you can end up in jail for money problems.
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The dictionary defines garnishment as “a court order to an employer to withhold wages or send money to court or to the person who has won a lawsuit against an employee.” You don’t need to hire an expensive lawyer who will charge you hundreds of dollars an hour for his services to fight a garnishment. There are ways in which you can fight for yourself and win.
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Thinking of writing a cease and desist letter to your creditors? (See this article for a sample cease and desist letter). It’s not as simple as writing a letter to your creditor telling them to stop calling you. Here are 5 vital facts you need to know before you send the cease and desist letter to stop creditors from hassling you.
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If you are being harassed by debt collectors, take a leaf out of Craig Cunningham’s book. Cunningham owes $100,000 in debt, and he’s inundated with calls from debt collectors. But he doesn’t mind: he’s earned a whopping $20,000 by answering bill collector calls: every penny of it has come from the debt collectors themselves! Most people who receive calls from debt collectors dread picking up the phone, but not Cunningham. He’s beat debt collectors at their own game by catching debt collectors violating federal law, and suing them in court.
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Debt collection agencies use every technique they can to collect judgment. They’re like The Terminator: they have one goal, and that is to collect. They will use every technique allowable by law (and sometimes, ones that are illegal), top con, trick, coerce, and cajole you to giving up personal information. While you should not ever talk to a bill collector (sure, go ahead and call once, to see if they are being reasonable. Trust me, they’re not going to be). But in order to really deal with debt collectors you’ll need to know how they operate. Here’s the top ten tricks they use to get you to divulge your security number, which they will use to find hidden assets and report you to the credit bureaus.
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If you are reading my blog, you are probably here because you’ve got creditors knocking at your door. Maybe you are looking at losing your home, your car, or even your furniture. While there are solutions to your problems, many are dramatic (like bankruptcy) or expensive (like moving to Florida and purchasing a homestead). To avoid worrying about creditors stealing your hard earned money and selling your assets out from under you, you should stash your cash somewhere safe. And the safest place to stash your cash? Not surprisingly, Switzerland. In these internet days, all you need to set up a Swiss Annuity is an internet connection.
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