What Should You Do After Being Contacted by a Debt Collector?

Step 1:  First of all, don't panic.  Debt Collectors make a lot of idle threats that they never intend to follow through with.  Odds are very high that you will NOT ever be sued for any debt you owe that is UNSECURED, like credit card debt.  Debt collectors make all sorts of threats to scare you in to paying today, but 99 percent of it is bluff.  We do not have debtors prisons in North America.  We do not put people in jail for non-payment of credit card debt, auto loans or mortgage loans, so if they tell you that you will be arrested if you don't pay the debt today, they are fibbing and you shouldn't believe them.  (Note:  We do put people in jail for nonpayment of child support and taxes)  

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How Did A Debt Collection Agency Get a Judgment Against Me for an Old Debt??

You might me surprised to find out that all the old, unsecured debts you never paid and thought you got away without paying never really go away. They are always out there, being sold and resold and resold again to companies that operate as scavenger debt collection agencies.  These agencies purchased your really old debt for just pennies.  Literally pennies.  For example, say you owed a big credit card company $2000 ten years ago and you didn't pay the debt and the credit card company wrote it off as uncollectible, and you thought the debt was gone.  Well, it isn't.  A scavenger debt collection agency purchased it for pennies on the dollar -- so they paid about $20 to the original credit card company for the right to collect the $2,000 you owed that company ten years ago.  But the scavenger debt collection agency isn't just going to try and collect the $2,000 you owed the original creditor; they are going to tack on all sorts of interest, fees, late fees and other bogus charges, so that when the debt collector contacts you ten years later, he (or she) claims you owe them $6,000, but if you send them a payment today by Western Union they will gladly accept $3,000 as payment in full.  They will make you feel lucky that you are getting away with only paying $3,000. Getting a $3,000 return on a $20 investment should explain why they are so aggressive in their debt collection tactics.  continued >>


How Do I Get a Debt Collection Notation Off of My Credit Report?

Since a debt collection notation on your credit report will significantly destroy your credit rating, you should try to get it removed if you possibly can.   How?  Well, if the notation is about a legitimate and recent debt that you owe, it is unlikely you can have it removed.  However, if there is anything that is inaccurate about the notation on your credit report -- as in the amount owed is stated incorrectly or the debt is older than seven years, you have a shot at having the notation removed.  Here is what you do.

1.  Get a free copy of your credit reports (all three of them) through annualcreditreport.com.  Federal law requires Equifax, Experian and TransUnion to give you a free copy every year.  Don't let them talk you in to buying credit monitoring or any other services.

2.  If the debt collection notation amount is incorrectly stated on your credit report (and it probably is because they added bogus fees to the amount you originally owed), you can dispute it online at the credit bureaus' websites.  If the debt collection agency doesn't respond to the investigation, the credit bureau must remove the notation.  Unfortunately, even if it is removed for now, it might appear on your credit report some time in the future, particularly if the debt is sold to another agency.

3.  If the debt collection agency is trying to collect a really old debt and has put a notation on your credit report, dispute it with the credit bureau on the ground that it is in violation of the Fair Credit Reporting Act (FCRA) because it is older than seven years.  The FCRA requires credit bureaus to permanently remove any negative information from credit reports older than seven years.
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