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When the Bill Collector Calls

February 21, 2013
Plain English Version

If you fall behind on your credit card payments, expect a bill collector to call you.

Estimates are that 30 million Americans have debts that are in collection. The largest group is people between 35 and 44 years old. The average debt is about $1,500.

Banks write off a debt as “uncollectable” after six months of non-payment. They then sell the closed account to debt collection agencies. Reports say these agencies buy the debt for about four cents on the dollar.

This is a big business. About $143 billion is in the hands of debt collectors.

Dealing with debt companies may be a part of your life. Here is what to do.

Before the debt collector calls, talk to the lender (the credit card company). Do not ignore them. See if you can work out a smaller payment so you do not fall behind. Or try to get a delay in your payment until you can afford to pay.

Talk to a credit-counseling agency. They are part of the credit card world. They may be able to get lower interest payments or lower fees. Check out the agency to make sure it is non-profit and reputable.

Keep track of how much you owe and when you made payments. Make notes anytime you speak to the lender or a collector.

If you are not sure it is your debt, dispute it and ask for proof right away. The collector has to verify the debt. A lot of paper work gets lost as debt is transferred. Some experts say there is a 50-50 chance the collector will not be able to come up with legal proof.

Debt collectors will usually accept 50 to 65 cents on each dollar owed. Do not pay them anything until they send you the payment agreement in writing.

If they take you to court to collect find a lawyer and show up. A judgment against you may be on your credit record years In most states, collectors have three to six years to take you to court.

After that, beware of “zombie” debt (collectors hounding you after the legal time limits have expired.

The Wall Street Journal

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