Debt Relief
Introduction
In today's world, debt is almost unavoidable. We have been brainwashed to think that more is better, regardless of what more is. Our society is largely commercialized. We are bombarded with subliminal messages, urging us to buy, buy, and buy; and many of us do just that. We buy without knowing how we are going to pay. We live above our means trying to keep up with the neighbors. The cost of living increases but our income seems to stay the same. It is virtually impossible to avoid going into debt. In our diverse society, we have one basic commonality: debt. Debt can be controlled, but we all need to understand it and learn to avoid too much of it.
The following information is designed to answer questions about debt and offer solutions to control it. Contents range from financial planning to debt consolidation, credit reports to bankruptcy, and more.
Debt Management
Debt Management is the process by which debts are consolidated into one lower monthly payment. This one payment will be an amount which the client can afford, and will be apportioned amongst their creditors. Payments to creditors will be made on the client's behalf. An Interview was done with a local agency on debt management.
Managing Your Credit
Specific criteria has to be met in order to obtain credit. Creditors solicit your credit history from credit reporting agencies such as Experian, Trans Union, and Equifax. Whether your credit is good or bad is determined by your Beacon or credit score. If your score is low, you are considered "high risk" and chances are your request for credit will be denied. The higher your credit score, the more likely you will receive approval. Each time you apply for credit, your score drops. If your credit score is low, there are steps you can take to help manage your credit and increase your score.
- Apply for a secured card or deposit money in your checking account.
- Apply for a department store or gasoline credit card and build small balances, but pay them off in full each month.
- Do not use your credit cards to purchase food. You will pay 10 times more in interest than what one meal would have cost if you had paid cash.
- If possible, consider transferring the balance of your credit card to a lower interest rate card. If you do this, immediately destroy the card with the high rate and close the account.
Over time, your credit score will improve, and you will qualify for unsecured credit cards on your own.
Credit Harrassment
Creditor Harassment Know Your Rights With Creditors Are you being harassed by collection agencies? A creditor has the right to contact you when you fall past due on a debt owed to them. However, you have rights if you feel you are being treated unfairly by a debt collector. Your rights are protected under the Fair Debt Collection Act.
How can I protect myself from harassment? Asking a collector to stop calling should be effective in most cases. However, a Cease and Desist letter can be sent to third party collection agencies. The Cease and Desist letter will prevent a collection agency from calling you. Once the letter has been received, they may not contact you again except to say there will be no further contact or notify you that a specific action will be taken.
Can I send a Cease and Desist letter to my creditor? You may not send a cease and desist if the debt is still owned by the original creditor, such as a bank or credit card. Cease and desist letters may only be sent to a third party, such as a collection agency or attorney.
Fair Debt Collection Practices Act The Fair Debt Collection Practices Act protects debtors from unfair debt collection processes. The Act ensures you are treated fairly and prohibits certain methods of debt collection. The Collectors (both original and third party agencies) are unable to:
- Harass, oppress, abuse, or publish lists of consumer who refuse payment
- Use profane language
- Repeatedly use the telephone to badger someone
- Give false information
- Imply they are attorneys, government representatives, or work for a credit bureau
- Insinuate you have committed a crime
- Falsely suggest they work for a credit bureau
- Misinterpret the debt amount
- Submit false information about you to anyone (including credit bureaus)
- Indicate sent forms are from the court or government agency when they are not
- Participate in unfair practices when Obtain amounts greater or less than debt amount (unless state laws permit change)collecting debt
- Deposit a post-dated check prematurely
- Use deception to make a debtor accept collect call
- Threaten to take property (unless done legally)
- Contact via postcard Tips for success
- Address the letter to the collection agency, not the original creditor
- Use the physical address for the agency, not a PO Box
- Send the letter Certified Mail - Return Receipt to ensure they receive it
- Keep a copy of the letter and receipt for your records
What can I do if the law has been violated? A debtor has the right to sue a collector in a state or federal court within one year from the date of the violation. If a suit is favored by the debtor you may recover money for damages, court and attorney costs, plus an additional amount up to $1,000. A group of debtors can sue and recover funds for damages up to $500,000, or 1% of the collector’s net worth, whichever is less. Any problems or concerns can be reported to your state’s Attorney General’s office, the Federal Trade Commission, and/or the American Collectors Association or local State Bar Association.
Please be advised, that while a creditor may not call and harass you anymore, they still have the right to pursue the debt. However unlikely, they may still file suit in an attempt to collect the debt. Although Cease and Desist is a valuable tool, it should only be used when absolutely necessary.