Latest news with #debtcollectors
CBS News
5 days ago
- Business
- CBS News
Settling debt while unemployed: What are your real options?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. If you're unemployed and struggling under the weight of your debt, settlement could still be an option. Getty Images Losing a job is hard enough on its own. But when you're unemployed and staring down a stack of unpaid bills, the financial pressure can feel overwhelming. After all, when your income has been impacted, the bills can add up quickly between your credit cards, utilities, rent or mortgage payments and any other financial obligations you may have. So, while figuring out how to keep up (or catch up) on those payments is important, it can also feel close to impossible. Unfortunately, lenders and debt collectors don't always care that you're between jobs, either. They still expect to get paid each month, even if your budget is completely stretched. As a result, many people find themselves wondering what their actual debt relief options are when they're unemployed — and whether debt settlement, which allows you to negotiate with your creditors to pay less than what's owed to resolve the account, is one of them. Fortunately, you do have options for reducing what you owe and negotiating a more manageable outcome, even without a steady paycheck. So what are those options? We'll outline a few real strategies that can help below. Learn what debt relief options are available to you now. Settling debt while unemployed: What are your real options? Several tools — some temporary, others long-term — can help you manage or even reduce your debt load while you get back on your feet. Here's what to consider if you're out of work and struggling with debt: Negotiating a settlement with creditors directly If you're unemployed and can't pay your debts, your creditor may be open to settling for less than what you owe, especially if your account is already past due. While debt settlement is not guaranteed, as creditors aren't obligated to accept less than what's owed on the account, being out of work may actually improve your chances of success. Creditors want to recoup as much as they can, but if they believe you're truly unable to pay in full, they may be willing to accept a reduced lump sum. For example, if you owe $6,000, the creditor might agree to settle the debt for $3,000 if you can pay it all at once. Of course, that's a big "if" when you're unemployed, but if you have savings, a severance package or help from family, it could be enough to negotiate. Find out how the right debt relief strategies could help you today. Working with a debt relief company to settle If you don't feel comfortable negotiating on your own or if you're juggling multiple debts, you might consider working with a debt relief company instead. These companies act as intermediaries, negotiating with creditors on your behalf to try to lower your total debt amount. Here's the catch, though: Debt relief companies typically require you to make monthly payments into a special account for months (or even years) before they settle your debts. If you're unemployed and don't have any extra money to contribute to that account, it may not be a viable option, at least not right away. That said, if you've landed part-time work or have some form of income, it could be worth exploring. Just make sure to vet any company you work with and read the fine print. Not all debt relief companies are created equal, and some charge steep fees or make promises they can't keep. Exploring lender hardship programs Many credit card companies and lenders offer temporary hardship programs for customers going through financial rough patches, unemployment included. These programs might include: Lowered or frozen interest rates Deferred or reduced payments Waived fees or penalties While this won't reduce the total amount you owe, it can buy you time until you're working again. Most lenders won't advertise these options upfront, however, so you'll need to call and ask if a hardship plan is available. Before you call, though, make sure you're prepared to explain your situation and provide proof of income loss. Lenders may ask for documentation, such as a termination letter or unemployment benefits statement, to qualify you for enrollment. Looking into what credit counseling offers If you're feeling overwhelmed and unsure of your next steps, a credit counseling agency can be a great resource. These agencies offer free or low-cost advice to help you create a budget, prioritize bills and explore your options for managing debt, including debt management plans. With a debt management plan, you make a single monthly payment to the agency, which then pays your creditors. The agency may also negotiate lower interest rates on your behalf. While these plans typically don't reduce your balance like a settlement does, they can make repayment more manageable, especially if you've picked up a side gig. Credit counseling can be especially useful when you're unemployed because there's no obligation. You can talk through your situation, get tailored advice and decide if you're ready to act or if you just need to wait until your income stabilizes. The bottom line Being unemployed doesn't mean you're out of options when it comes to dealing with debt. Whether you pursue a direct settlement, hardship plan or credit counseling, be proactive and honest about your situation. Not every solution will work immediately, especially if you have zero income, but laying the groundwork now can save you money, stress and time in the long run. And remember, unemployment isn't forever. The goal is to stay afloat during this transition and position yourself for a stronger financial comeback when you're back to earning again.
CBS News
5 days ago
- Business
- CBS News
How to qualify for medical debt forgiveness
If you're struggling to pay off your medical bills, debt forgiveness could be an option to pursue. SengMedical debt has become one of the most common and overwhelming forms of debt in the U.S., and for good reason. The rising cost of healthcare has made even the most routine care unaffordable for the average person, and all it takes is a short hospital stay or emergency room visit to end up with medical bills in the thousands or tens of thousands. And, things like high deductibles, surprise billing and out-of-network charges can add up fast, even if you have insurance. But if you don't have insurance at all, the bills can be staggering. What makes medical debt particularly frustrating is that it often feels unavoidable. Unlike a credit card balance or a personal loan, which you might voluntarily take on or use to bridge the gaps in your salary and expenses, medical debt is typically the result of an unexpected illness, accident or necessary treatment. And when you're dealing with a health crisis, figuring out how to pay the bill is usually the last thing on your mind, at least until the debt collectors start calling about your overdue medical bills and it becomes impossible to ignore. That's where medical debt forgiveness can come into play. While full forgiveness isn't guaranteed or always easy to get, there are legitimate ways to reduce or eliminate what you owe. So, if you're hoping to erase some or all of your medical debt, you'll want to know about qualifying for forgiveness — and what to do if that's not an option. Find out how to start the debt relief process today. How to qualify for medical debt forgiveness The first thing to understand is that medical debt forgiveness can take a few different forms. Unlike student loans or tax bills, there's no single federal program that wipes out healthcare-related debt. But there are hospital- and provider-based programs, nonprofit resources and settlement strategies that can lead to partial or full forgiveness. Here's how to approach these options: Start with hospital financial assistance programs. Many nonprofit hospitals are required to offer charity care or income-based relief under the law. So, if your medical debt is tied to a nonprofit hospital and your income falls under a certain threshold you might qualify for full or partial forgiveness. The catch? You usually have to ask. Hospitals don't always publicize these programs, and some require you to apply within a certain timeframe after receiving care. Look into debt settlement as an option. If you don't qualify for assistance through a hospital or charity, negotiating with the billing department or a third-party debt collector can sometimes lead to partial forgiveness. With medical debt, creditors are often more willing to settle for less than the full balance, especially if the debt is old or has been sold to a collection agency. You can negotiate this on your own, or work with a debt relief company that specializes in unsecured debt. Just keep in mind that there may be fees involved, and any settled debt could be taxed as income if the forgiven amount is over $600. Watch your insurance and billing statements carefully. Sometimes what looks like medical debt may actually be the result of incorrect billing or insurance denials. If you see errors, appeal them. Getting a charge corrected or resubmitted to your insurer could make the balance go away entirely and save you the trouble of needing forgiveness in the first place. Chat with a debt relief expert about the options available to you now. What to do if you don't qualify for medical debt forgiveness If you've explored the forgiveness options above and still come up empty, you may still have some options. Taking the steps below, for example, may help you manage your medical debt burden: Set up a payment plan. Most hospitals and clinics will let you pay off your balance in small monthly installments without tacking on much (or any) interest. This isn't medical debt forgiveness, but it can make the debt much easier to handle and prevent it from going to collections. Explore debt settlement more seriously. Settling your debt for less than you owe comes with some downsides, but it can be a realistic way to cut down the balance. So, if you were hesitant to pursue this route due to the tax and fee implications but are out of options, you may want to revisit the possibility of settling your debt. Prioritize the debt correctly. Unlike credit card debt, medical debt generally doesn't accrue interest or late fees in the same way, and newer changes to credit reporting rules mean that paid medical debts no longer appear on your credit report. Use that to your advantage and focus on higher-interest debts first, while staying in communication with the provider to avoid collections. The bottom line Medical debt forgiveness isn't always easy to come by, but it's more accessible than many people realize. From hospital assistance programs to debt settlement, there are real ways to reduce or erase what you owe, especially if you're proactive about asking for help. And even if forgiveness isn't an option, affordable payment plans and strategic debt management can make the load lighter. The most important step is to take action quickly, though, as there's real power in negotiating, asking questions and exploring every available path to relief.
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
CBS News
27-05-2025
- Business
- CBS News
Should you settle your delinquent credit card debt or go to court?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. If you're facing a lawsuit over unpaid credit card debt, settling is an option to consider — but so is defending yourself in court. Getty Images More Americans are struggling to make ends meet in today's tough economic environment, and, as a result, credit card debt problems are growing. Not only has the number of maxed-out credit card accounts been increasing, but the average amount of credit card debt has, too. Right now, the average cardholder owes about $8,000 on their credit cards — and they owe that much at a time when the average credit card rate is north of 21%. As a result, more people are falling behind and becoming seriously delinquent on their card payments. When the credit card payments stop, though, the debt collector calls, notices and legal threats tend to follow. And if you're sued over your unpaid credit card debt, you may wonder whether you should try to settle or face your creditor in court. Settling might save you money and avoid a judgment, after all, but it requires cash and negotiation. Going to court could work in your favor, or it could end with a wage garnishment and a long-lasting hit to your credit. So, it's a high-stakes decision with real financial consequences. Understanding when one option makes more sense than the other, though, can help you navigate the situation. Get expert help and start the debt settlement process today. Should you settle your delinquent credit card debt or go to court? The right approach depends on several factors, including your financial situation, the strength of the creditor's case and your willingness to negotiate. Here's a breakdown to help you choose the best path forward: When you should settle your delinquent credit card debt There are a few situations in which it makes more sense to settle your delinquent credit card debt, including: When you haven't been sued yet If your creditor hasn't taken legal action yet, you're still in a strong position to negotiate a settlement. Creditors often prefer to recoup some money quickly rather than risk the time, cost and uncertainty of a court battle, so reaching out early to offer a reduced lump sum settlement can stop the situation from escalating. The longer you wait, though, the more likely the debt will be pursued through the courts, and your negotiating power may shrink as that happens. Learn more about how to handle your delinquent credit card debt now. When you have access to some cash Having some money on hand, even if it's not enough to cover the full balance, gives you leverage. Creditors are typically more inclined to accept a reduced amount if it can be paid quickly, and a lump sum can be especially attractive to them because it guarantees immediate recovery without further effort or risk. When you want to avoid a judgment on your credit report A court judgment can damage your credit for years. It also opens the door to legal tools like wage garnishment, property liens and bank account levies, depending on your state laws. These consequences can linger for years, but by settling before legal action begins, you can resolve the debt on your terms and potentially limit how long the negative impact sticks to your credit report. When the debt is valid and you know you owe it If you know the debt is yours and the creditor has the documentation to prove it, settlement is often the most realistic way out. Fighting a valid debt in court rarely eliminates the obligation, and even if you delay the process, a judgment is likely in the end. Settling also helps you avoid the legal costs of a drawn-out case where you're unlikely to prevail. When going to court makes more sense And here's when it could make more sense to defend yourself in court: When you've already been sued Once you receive a formal court summons, your options narrow. At this point, you're legally required to respond. If you don't, the court will likely issue a default judgment in favor of the creditor, granting them legal rights to pursue repayment through more aggressive means. But by showing up and participating in the process, you may be able to negotiate a better outcome, request more documentation or even get the case dismissed in certain situations. You're judgment-proof or truly unable to pay Some people, by legal definition, are considered "judgment-proof," meaning they have no wages to garnish, no valuable assets to seize and their income sources, like Social Security, are protected from creditors. If this describes your situation, you may not need to settle at all. A creditor can win a lawsuit, but if they can't collect, the judgment might have limited real-world consequences. When the debt is too old to legally enforce Each state has a statute of limitations that defines how long a creditor has to sue you. If the debt is beyond that limit, it may be time-barred, meaning you have a legal defense to get the case dismissed. Creditors sometimes file lawsuits hoping you won't realize this, or that you'll respond in a way that resets the clock. If you're unsure about the debt's age, reviewing your payment history is important before taking any action. When you suspect the creditor can't prove the debt When debts are sold to third-party collectors, critical paperwork, like original account agreements or payment records, often goes missing. If a debt collector sues you but can't produce sufficient evidence to prove the debt is valid, it may be possible to have the case dismissed because the debt collector didn't have the documentation needed to support their claim. This strategy isn't guaranteed, but it can be effective when there are clear gaps in the case against you. The bottom line If the debt is valid and you can afford to settle, doing so before a lawsuit hits your mailbox is usually the best route. But if you've been sued, or if the debt is questionable or uncollectible, going to court may give you a better shot, especially if you're judgment-proof or the creditor can't back up their claim. Whatever path you take, though, it's important to know your rights, understand the risks and get help if you need it. A well-informed decision now could save you a lot of money — and a lot of future stress.
The Herald
21-05-2025
- Business
- The Herald
Sars allocated R4bn to boost its capacity to collect tax revenue
In his latest budget proposals, dubbed budget 3.0, he announced that he was allocating R4bn to the taxman in the current financial year, with Sars receiving an additional R7.5bn in the Medium-Term Expenditure Framework (MTEF) or the next three years. Godongwana's latest budget documents also showed that Sars had collected R95bn in debt during the previous financial year of 22024/2025. 'Over the MTEF period, the agency will receive an additional R7.5bn relative to the baseline. 'Part of this allocation is expected to increase debt collection by R20bn to R50bn per year. 'This potential revenue is not included in the revenue estimates. However, the performance of SARS will be monitored by assessing the change in the amount of cash collected, which will be published monthly.' Godongwana had previously allocated R3.5 billion to SARS during the medium budget policy statement in November last year. The allocations will also see SARS investing in new technology, data science and artificial intelligence to beef up its capacity to collect more money. SARS commissioner Edward Kieswetter has previously called on the national treasury to allocate it more resources for it to also go after tax dodgers. At a pre-budget briefing, Kieswetter said he would be hiring up to 1,700 debt collectors chase billions of rands owed to Sars. 'In the month of April, we already hired 500, we've used the month of April to train them and upskill them, from the first of June we'll bring a further 250 and that takes us to about 750,' Kieswetter explained. Sars was aiming to collect at least R120bn in total tax debt in the MTEF period. At the same time, Godongwana has reduced allocations to the government's early retirement programme. The early retirement plan is aimed at reducing the number of public servants by encouraging government employees aged 55 and above to retire early without incurring early withdrawal penalties. The early retirement package has now been cut from R11bn to R5.5bn from this year, up to 2027. 'Discussions with organised labour on the process are underway in the Public Service Co-ordinating Bargaining Council (PSCBC). The allocation will be revisited on the conclusion of these consultations as part of the next budget process, although functions that are not parties to the PSCBC process-such as the department of defence-can proceed with implementation.' Duncan Pieterse, the director-general of the national Treasury, said they were not aiming to entice at least 15,000 civil servants of advanced age to take early retirement, reduced the 30,000 that had been announced last year. Allocations to the department of defence have also been cut by R2bn, due to the 'expedited schedule for withdrawal' of SANDF troops from the Democratic Republic of Congo. TimesLIVE
