Ultimate Guide To Bankruptcy Recovery

If this current economic slow-down has found you in a position of financial difficulty, you may find yourself dealing with debt collection calls and letters. Here are some of the most common questions people have in dealing with debt collectors.

I received a letter from a collection agency regarding a credit card bill. How did they receive my information? Why isn’t the credit card company contacting me directly?
The company or organization that you initially signed a contract with is referred to as the original creditor. For example, let’s say you obtained a credit card account with MBNA. If your account becomes past due, MBNA, your original creditor, will send reminders and call you in an attempt to get you to pay the amount due. When your account becomes more delinquent, approximately 180 days, MBNA may have an outside collection agency, ABC Acquisitions, attempt to collect payment. This company is a third-party collector. Keep in mind that your accounts may be assigned to or bought and sold by several collection agencies during the course of the collection process. You may find it helpful to keep paperwork organized and to track the process as each account changes hands.

I was just contacted by a collector for an past-due account that I had more than 6 years ago. Do I still owe on this account?
Yes. However, if the account is truly past the statute of limitations, the creditor may no longer be able to pursue legal recourse against you for the collection of the balance. The statute of limitations varies from state to state, and is typically measured from the date of last activity on the account. This would be the last payment made, last time account was used, etc. In some states, you can reset the statute of limitations by simply acknowledging that the account is yours.

I received a collection letter from a law firm concerning a debt. Does this mean that I am being sued?
No. In recent years it has been shown that often a law firm or attorney can be more effective at collecting a debt than just a regular debt collection company. This is basically due to the fact that people are generally intimidated by attorneys and law firms. Keep in mind that in this case, the law firm or attorney is simply acting as a debt collector, and is subject to all the same rules as any debt collector as outlined in the Fair Debt Collection Practices Act (FDCPA). If you are in fact being sued, you will, in most cases, be served with a summons to appear in court.

A creditor told me on the phone that my account is going to “Charged Off”. What does this mean, and once it is charged off, do I still have to pay it?
Charge off is simply a tax and accounting term used to describe when an account has reached a delinquent status and has been written off as a loss and sold or assigned to another department or company for collections. You are still responsible for the debt, and will in most cases see more collection efforts after charge off. At this point, you will also see the account indicated as “charged-off” on your credit reports, and may even see an additional trade line for the collection company that now has the account.

This information will serve you well in all your dealings with collectors.