Latest news with #FDCPA
Yahoo
31-05-2025
- Business
- Yahoo
How to pay off a debt in collections
Before paying a debt in collections, verify it's legitimate and collectible to avoid scams or zombie debt. You have rights under the Fair Debt Collection Practices Act (FDCPA) that protect you from harassment and abuse. Negotiating a payment or settlement plan, especially in writing, can help you resolve debt while minimizing credit damage. Always document all communication and payments to avoid future disputes. No one wants to receive a call from a debt collector. But if you've fallen behind on paying your credit cards, loans or bills, your account may be sent to collections. Dealing with these debt collection companies can be stressful and embarrassing, but it's more common than you think. In the first quarter of 2025, the U.S. hit $18.20 trillion in household debt, and the average delinquency rate went up 0.7 percentage point from the previous quarter to 4.3 percent. Paying off your outstanding debts is important, but you want to do it the right way. A misstep here and there can result in you paying more debt than you owe, reopening zombie debt or exposing yourself to a scam. Bankrate insight As you move through this process, document everything. Keep copies of letters, emails, payment receipts and any agreements you make with the collector. Also note the dates of phone calls and what was said in the call. If you live in a one-party state, you could consider recording your phone conversations. Before taking any action to pay off a debt in collections, verify the debt belongs to you. Gather all relevant information about the debt, including the amount owed, the original creditor and any other account facts. If, after reviewing this information, you find that the debt is not yours, take steps to protect your credit and finances in case your identity has been stolen. You can dispute errors directly with the credit bureaus. If the debt doesn't appear on your credit reports, you might have been targeted by a debt collection scam. Under the Fair Debt Collection Practices Act (FDCPA), collectors must follow strict rules: No calls between 9 p.m. and 8 a.m. No calls at work if you've requested they stop No excessive calls — no more than seven in a week or within seven days of last speaking to you about the debt No contacting you via email, text or social media if you've opted out No disclosure of your debt to others Debt collectors are also strictly prohibited from harassing, threatening or verbally abusing you. If a debt collector breaches these regulations, you can contact your state's attorney general's office to find out your rights under state law. They can help you identify if you are protected under state-level collection regulations and laws like the California Consumer Financial Protection Law (CCFPL) and the Debt Collection Licensing Act (DCLA). Each state has a statute of limitations determining the legal time limit within which creditors or debt collectors can sue you for an unpaid debt. Statutes for different types of debt range from as little as two years up to 10 years or more. Once the statute is up, you can't be sued for the unpaid debt. However, it's important to know that you can reset the statute clock on old debt if you: Agree to pay Get a bankruptcy discharge revoked Make a new charge on the account Make a payment Understanding how these statutes work is essential as it impacts your legal obligations and rights regarding the debt. Research the statute of limitations in your state to know your rights. Not all debts are collectible. For instance: Medical debt under $500 or less than a year old can't appear on credit reports. Soon, medical debt will be completely barred from appearing on credit reports. Zombie debt — or very old debt — may no longer be legally enforceable. This debt is often past the statutes of limitations and may be too old to legally appear on your credit reports. You need to be especially careful to avoid resetting the clock on zombie debts. In addition to verifying the debt is collectible, you should contact the collection company and request a debt validation letter to ensure it has a legal right to collect on your debt. You may have more debt than you can pay off in a reasonable timeframe. In that case, you may be able to negotiate with your creditors about how much and when you pay. But first, you have to calculate how much money you can afford to commit to paying down your debts. Start by reviewing your budget and seeing how much cash you can free up. Determine how much money you could contribute to a lump sum payment or monthly installment. Be realistic and don't put yourself in a position where you need to take on more debt to pay off your existing debt. Once you're informed and have an idea of how much you can realistically pay, it's time to contact the collector. Be prepared to discuss your financial situation honestly and weigh different repayment plans. Effective negotiation can often lead to a reduced amount or favorable payment terms, especially if you pay a lump sum up front. Bankrate tip: For medical debt, contact the provider's billing office directly. They may offer hardship assistance or flexible plans. As a part of negotiating a payment plan, during your repayment period or after the collection has been settled, you may be able to request pay-for-delete agreement. This means the collection agency will remove the collection account from your credit report once repayment is complete. Get any pay-for-delete agreements in writing, and follow up with the creditor or collector to ensure the deletion request is processed. Be aware that changes to your credit reports can take 30 days or more to appear. Very few creditors will not offer a pay-for-delete agreement, but you can still ask. Once you've agreed on repayment terms, formalize the agreement in writing. Include: Payment amount Payment schedule Any additional terms or conditions. A clear plan reduces misunderstandings and ensures both parties follow the agreement accurately. Stick to the schedule and send payments promptly. This demonstrates good faith and prevents further collection efforts. For added security, consider: Mailing a check via USPS with a return receipt ($4.10) or using email confirmation ($2.62) Requesting a 'Certificate of Mailing' for proof of payment date To pay online, first confirm the debt and request instructions from the collection agency. Most have secure portals where you can log in to make payments. Always: Verify the site's legitimacy before entering payment info Save digital receipts and confirmation numbers Monitor your credit to ensure updates are reflected Debt in collections can take a toll on your finances and peace of mind — but you're not powerless. By verifying the debt, knowing your rights and negotiating smartly, you can pay off collections while protecting your credit and avoiding scams. How does debt in collections affect your credit score? Debt in collections has a huge impact on your credit score, especially if the debt also had late payments or a charge-off associated with it. It can take up to seven years for your credit to fully recover from one collection account. As time goes on, however, if you use good credit-building habits, negative marks will have less impact over time as newer things on your credit score have the most influence. If you need help fighting a collection account error or fraud, you can contact a reputable credit repair company. What's the safest way to pay a debt collector? Use payment methods that offer proof of payment — such as mailing a check with return receipt or using a secure online portal provided by the agency. Do collections go away once paid? No. Typically, paid collections will remain on your credit reports for up to seven years from the date of the original delinquency. However, lenders view paid collections more favorably than unpaid ones. What happens if you never pay collections? If you ignore or refuse to pay collections, the debt collector may escalate efforts to recover the debt. These could include: Take legal action Garnish wages (portion of paycheck withheld to pay off debt) Continue reporting the debt Unpaid collections that pass the statute of limitations can still severely impact your credit score and make it harder to secure loans or credit in the future. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
26-05-2025
- Business
- Yahoo
‘Beyond the pale': Atlanta ‘phantom debt collector' pressured people into paying him for debts they didn't owe
Having debt is never fun. And when a representative from a lender calls you asking for the amount you owe, your nerves may get the best of you. But what if you're being harassed? Worse yet, for a debt you don't really owe? Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Kenneth Redon III, a former debt collector who owned Global Circulation, Inc. (GCI), has been barred for life from the debt collection business after harassing a number of individuals to pay debts that didn't exist, according to a Federal Trade Commission (FTC) release. But this isn't a new scam. Back in 2023, Sherrel Dunn was a victim of the same scheme. 'You just feel violated,' she told WSB-TV. 'You feel helpless.' According to the FTC release, Redon 'threatened consumers with jail time, lawsuits, and wage garnishments to pressure them into paying debt they didn't actually owe.' WSB-TV spoke to FTC Senior Attorney Gregory Ashe about the tactics Redon used. In addition to assuming a number of false names, he also called his victims multiple times a week, sometimes calling several times a day. Ashe also said 'in many instances [Redon] had some forms of the consumer's personal information. And so they would say, 'is this not the last four digits of your Social Security number?'' Redon's company allegedly claimed the business was affiliated with certain lenders to further trick borrowers into paying their phantom debts. The FTC's release also states it filed a temporary restraining order against GCI and said Redon violated parts of the Fair Debt Collection Practices Act (FDCPA) and the Gramm-Leach-Bliley Act. Under the FTC's proposed order, GCI and Redon also have a monetary judgment of $9,684,338 imposed, but this will be suspended once any remaining assets are turned over. However, if Redon and his company are found to have misled or lied about their business finances, then the judgment remains in effect. 'Using a playbook of intimidation and threats of jail time to coerce consumers into paying debts that they don't owe is beyond the pale,' said Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection in the same press release. 'The FTC will not hesitate to act against phantom debt collectors to shut down their operations.' Read more: This is how American car dealers use the '4-square method' to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs The Consumer Financial Protection Bureau says the Fair Debt Collection Practices Act prevents debt collection companies from contacting you during certain hours. They are forbidden from abusing, harassing or making misleading statements to individuals who owe debts. As an example, a debt collector is not allowed to call or contact you repeatedly, especially with the intention of threatening or annoying you. Debt collectors are required to identify themselves and can't call before 8 a.m. or after 9 p.m. If you're on the phone with a debt collector or have received a letter, you have a right to know how much you supposedly owe and what the debt is for. You can also dispute the debt or verify whether the debt is actually yours. Even if the debt is legitimate, you still have a right to take some space and ask the debt collector to stop contacting you. That doesn't mean you don't owe the debt, though, they'll just take another legal approach. A major red flag is if a debt collector refuses to tell you the name of the lender you allegedly owe, or if the collector is vague about their own identity or the amount owed. Get as much information as you can in writing to ensure the claim is real. If someone calls you and refuses to provide written documentation, then they're most likely a scammer. Remember, you have the right to ask the debt collector for information about the original lender, assuming the debt was transferred to another company. If a person calls you saying that they are a collector and tries to threaten you or to confirm sensitive information (like your Social Security number), hang up and contact the alleged debt collection company yourself to see if it's legitimate. Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
CBS News
24-03-2025
- Business
- CBS News
How long does a credit card debt collector have to resolve a dispute?
If you've received a call or a letter from a debt collector claiming you owe money, but you believe there's been a mistake, you have rights under the law to challenge it. But while disputing a debt with a credit card debt collector is an important part of dealing with old debt that just won't go away, it's also a process filled with rules and deadlines — one that typically requires a fair amount of patience. When you dispute a debt , the debt collector cannot just ignore your concerns and continue collection efforts as if nothing happened. The Fair Debt Collection Practices Act (FDCPA) outlines specific procedures for disputing debts and sets clear timelines for both consumers and debt collectors. As a result, debt collectors are required to follow a structured process, which includes verifying the debt and responding to your dispute in a timely manner. But exactly how long does a credit card debt collector have to resolve a dispute? That's crucial information to know, as understanding these timelines is important for protecting your rights in these situations. Learn how to get rid of your high-rate credit card debt now . The FDCPA establishes clear timelines that must be followed when you dispute a debt with a debt collector. According to federal law, once you submit a written dispute within 30 days of receiving the initial debt validation notice, the debt collector must cease collection activities until they provide verification of the debt. The debt collector is required to obtain verification and mail it to you, but interestingly, the FDCPA doesn't specify an exact timeframe for when this verification must be provided. This creates what many consider a significant gray area in the law. However, many legal experts interpret "reasonable time" to mean within 30 days of receiving your dispute . If your dispute occurs outside that initial 30-day window after first contact, the rules change slightly. While debt collectors must still investigate your dispute, they aren't legally required to stop collection activities while doing so. That said, the Consumer Financial Protection Bureau (CFPB) guidance suggests debt collectors provide verification within a reasonable period, regardless of when the dispute is filed. For disputes involving information reported to credit bureaus, the Fair Credit Reporting Act (FCRA ) comes into play. Under this law, credit reporting agencies must investigate disputes within 30 days (or 45 days if you've submitted additional relevant information during the investigation period). The debt collector, as the information furnisher, typically has about 25 days to respond to the credit bureau's inquiry so the bureau can meet its 30-day deadline. Explore your debt relief options and take action today . If a debt collector fails to provide debt verification within a reasonable timeframe after your dispute, there are several potential consequences and actions you can take. To start, if the debt collector continues collection activities without providing verification during the 30-day dispute period, they're violating the FDCPA . These violations can form the basis of a complaint to the CFPB or even a lawsuit, which might entitle you to damages of up to $1,000 plus actual damages and attorney fees. If the debt remains unverified but continues to appear on your credit reports , you also have the right to dispute directly with the credit bureaus. Under the FCRA, information that cannot be verified must be removed from your credit reports. If the debt collector fails to respond to the credit bureau's investigation within the allotted timeframe, the bureau must remove the disputed information. Some states have also enacted stronger consumer protection laws than federal regulations. These state-specific debt collection regulations provide additional protections and specific requirements for debt verification that may give you additional recourse if debt collectors fail to meet verification deadlines. If you dispute a credit card debt, the debt collector must stop collection activities until they verify the debt. While there's no firm deadline for their response, they cannot legally pursue you until they provide the necessary proof. If they ignore your dispute or continue collection efforts without verifying the debt, you have the right to take legal action and protect your financial standing. That's part of why understanding your rights is the key to navigating a debt dispute successfully. Whether it's knowing when to send a dispute letter, recognizing illegal collection practices or taking action against an uncooperative collector, being informed can make all the difference. So, if you find yourself in this situation, stay proactive, keep records of all communications and don't be afraid to stand up for your rights.
CBS News
19-03-2025
- Business
- CBS News
6 steps to take if a debt collector is garnishing your paycheck
If you are facing lawsuits from creditors or debt collectors and have recently noticed that your paycheck is smaller than usual, you might be facing an issue with wage garnishment . This process occurs after a creditor or debt collector gets legal permission to take a portion of your earnings to repay an outstanding debt — and, unfortunately, millions of Americans have faced this type of issue. Having a portion of your paycheck taken before it hits your bank account can be a major problem for your budget, though, especially if you're already struggling to make ends meet. Luckily, wage garnishment typically doesn't happen overnight. In most cases, creditors must first sue you , win a judgment and then obtain a court order to garnish your wages. However, certain debts — like unpaid taxes, child support and student loans — can result in garnishment without a court order . Regardless of how it started, though, having a portion of your paycheck puts most people in a difficult financial position. Fortunately, there are legal steps you can take to reduce the impact or even stop the garnishment completely . That said, if a debt collector is garnishing your paycheck, you need to act quickly. The longer you wait, the more money will be taken from your earnings, so make sure to take some or all of the steps outlined below if you're dealing with this type of issue. Learn more about your debt relief options today . If your wages are being garnished by a debt collector, here are the steps you should take to address the situation and potentially find relief from the issue: Before doing anything else, confirm the garnishment is legitimate. Federal law requires that you receive a garnishment notice before your wages are withheld, so review this document carefully to verify the debt is yours and that the creditor followed proper legal procedures. After all, different types of debt have different garnishment limits and requirements — so it's important to ensure that the legal requirements are being followed. Start tackling your collection debt now . Some debt collectors engage in illegal practices during the garnishment process. If a debt collector failed to properly notify you, has garnished more than legally allowed, or used harassment or threats, they may have violated the Fair Debt Collection Practices Act (FDCPA) . So, be sure you understand your protections under the FDCPA and document any potential violations, as you might be entitled to damages and legal fees. Federal law limits how much of your paycheck can be garnished. In most cases, creditors can take only 25% of your disposable income or the amount by which your weekly income exceeds 30 times the federal minimum wage, whichever is less. Some states offer even stronger protections. Certain types of income — like Social Security , disability benefits, veterans' benefits and child support you receive — are typically exempt from garnishment. You have the right to object to a garnishment by filing what's often called a "claim of exemption" with the court that issued the garnishment order. This is particularly important if the garnishment causes severe financial hardship or if you believe your income qualifies for an exemption based on the legal protections outlined above. Courts can modify or terminate garnishments if they would prevent you from supporting yourself or your dependents, so filing an objection or exemption claim can pay off if you feel there's a valid reason to do so. You can still negotiate with the creditor even after the wage garnishment has begun, and in many cases, it can be worth it to contact them directly to discuss a lump-sum settlement for less than what's owed or a payment plan that might work better for your situation. Many creditors prefer a reliable payment arrangement over the administrative hassle of garnishment, so that can work in your favor. Just be prepared to provide details about your financial situation and make a reasonable offer that you can sustain. If you need to wipe out the debt completely and can't afford any other approaches, filing for bankruptcy immediately stops wage garnishment through what's called an "automatic stay." Chapter 7 bankruptcy might eliminate the debt while Chapter 13 creates a structured repayment plan. Bankruptcy has serious long-term consequences for your credit and financial options, though, so it's important to consult with a bankruptcy attorney to understand if this drastic step makes sense for your situation. Wage garnishment is a serious but often manageable financial challenge. By understanding your rights, taking proactive steps to address the situation and making smart financial decisions moving forward, you can minimize the impact on your life and use this difficult experience as a stepping stone toward greater financial stability. And, as you face this challenge, just remember that you're not alone. Millions of other Americans have faced garnishment and successfully navigated their way through it. So, try to focus on the aspects of the situation you can control and keep in mind that this is a temporary challenge — one that will eventually pass with the right approach and a bit of persistence.
CBS News
06-03-2025
- Business
- CBS News
How to verify debt collection accounts
Dealing with debt collectors can be a frustrating process, especially when you're not sure if the debt they're reaching out about is even yours. Mistakes happen, after all, and sometimes old debts resurface in ways that are confusing or misleading. That's why verifying a debt collection account is crucial before making any payments or agreeing to a repayment plan. Without proper verification, you could end up paying for something you don't owe. Verifying a debt collection account isn't just about ensuring the debt is real, though. It's also about understanding its accuracy. Old debt tends to change hands multiple times as it's bought and sold, and in the process, details can get lost or distorted. So, before you pay it, you need to know exactly where the debt came from, how much you owe and whether the debt collector even has the right to collect it. Fortunately, there are steps you can take to confirm the legitimacy of the debt and protect yourself from being responsible for fraudulent activity or errors made by debt collectors. Below, we'll examine how, precisely, you can verify a debt collection account before taking any further action. Speak to a credit card debt relief expert about your options today. How to verify debt collection accounts When a debt collector contacts you, follow these steps to verify the debt: First, don't acknowledge the debt or provide any personal information during the initial contact. Instead, request the debt collector's name, company, address and phone number. Legitimate debt collectors must provide this information. Within five days of first contacting you, debt collectors are required by law to send a written validation notice. This document should detail the amount owed, the name of the original creditor and a statement of your rights. If you don't receive this notice, that's a red flag to take note of. Once you have the debt collector's information, send a debt verification letter via certified mail with return receipt requested. The Consumer Financial Protection Bureau (CFPB) offers templates for these letters on their website. Request specific documentation, including: Proof that the collection agency owns the debt or is authorized to collect it The original creditor's name and address The account number with the original creditor The amount owed, including a breakdown of principal, interest and fees The date of the last payment Documentation showing you're legally responsible for the debt The Fair Debt Collection Practices Act (FDCPA) gives you 30 days from the initial contact to request verification. Once you send this letter, the collector must stop collection activities until they provide the verification you requested. When reviewing the verification documents, be sure to check for discrepancies in names, dates or amounts. Look for signs the debt may be time-barred by your state's statute of limitations. In many states, debts older than three to six years cannot legally be enforced through courts, though debt collectors may still attempt to collect. If the debt doesn't belong to you or contains errors, dispute it in writing immediately. If it's legitimate but contains inaccuracies, you can dispute those specific elements while acknowledging the valid portions of the debt. Get help with your credit card debt now. Why verifying debt collection accounts can pay off Taking the time to verify debt can yield significant financial benefits. For starters, it prevents you from paying debts you don't owe. And, verification can also uncover calculation errors, which can save you money on debts that you legitimately owe. Interest, late fees and collection charges can sometimes be improperly applied, artificially inflating the amount of your balance. By requesting a detailed breakdown, you might identify overcharges that could save you hundreds or even thousands of dollars. Or, the verification process might reveal that the debt is too old to be legally enforceable. While debt collectors can still ask you to pay time-barred debts, they cannot successfully sue you for them. Making even a small payment on such debts can "reset the clock" in some states, though, giving debt collectors renewed legal ability to pursue the full amount, so verification is important in a variety of ways in that aspect. Perhaps most importantly, though, verification can put you in a stronger negotiation position. When debt collectors know you understand your rights and are carefully scrutinizing their claims, they may be more willing to negotiate favorable settlement terms, including reduced payoff amounts or more manageable payment plans. The bottom line Verifying debt collection accounts is not just a defensive measure — it's an assertion of your legal rights as a consumer. While the process requires some effort and patience, the potential benefits far outweigh the time invested, as doing so could result in saving significantly on debt that you legitimately owe, and if you've been incorrectly tied to the debt, it could get you out of paying for it completely. Being informed and methodical about debt verification doesn't mean you're trying to avoid legitimate obligations. Rather, it ensures that you pay only what you truly owe, to the proper party, under fair terms. This kind of diligence isn't just advisable — it's essential for protecting your financial health.
