Latest news with #householddebt
Yahoo
5 days ago
- 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
19-05-2025
- Business
- Yahoo
Energy bill defaults hit record high, says ONS
A record proportion of British households were unable to pay their energy bills by direct debit last month because there was not enough money in their bank accounts, according to official government data. More than 2.7% of direct debit payments for gas and electricity defaulted in April due to insufficient funds, the latest figures published by the Office for National Statistics (ONS) have revealed. The default rate is the highest published by the ONS since its records began in early 2019 and is three times higher than the 0.9% rate recorded before the global energy crisis caused a surge in costs. The data also revealed that missed payments on loans, which are often used by struggling families to cover household costs, have also climbed to their highest level since the records began. Just under 3.9% of direct debit loan payments defaulted last month, according to the ONS, well above the lows of about 2.1% that were recorded during the summer of 2020 when Covid-19 restrictions left many households with extra cash. The 'deeply worrying' energy default figures are expected to lead to higher overall energy debt and arrears, which reached a record £3.8bn at the end of September last year, a £2bn increase from the start of 2022, according to consumer campaigners. Gillian Cooper, a director at Citizens Advice, said the consumer group's own research has shown that the number of people living in a household in debt to their energy supplier has reached a new high of nearly 7 million. 'The government must urgently progress plans to provide more targeted energy bill support to those who are struggling most,' Cooper said. 'It must also meet its promise to reduce bills by upgrading 5 million homes with energy efficiency measures this parliament.' The debts have continued to rise, even as costs under the government's energy price cap have fallen from record highs in 2022 and 2023 after Russia invaded Ukraine, leading to a sharp surge in prices across Europe. The UK continues to shoulder some of the highest energy costs in the world, which experts attribute to its strong reliance on gas for both generating electricity and home heating. Simon Francis, a coordinator at the End Fuel Poverty Coalition, said the figures should 'ring alarm bells' in the Treasury because they show that the 'energy bill crisis is not over'. 'This is a deeply worrying trend and will only add to the increasing levels of energy debt suppliers are reporting,' Francis said. 'It is simply unsustainable for consumer energy debt to continue to grow unchecked.' He called for the energy industry regulator, Ofgem, to introduce a proposed debt-relief scheme 'as soon as possible' to help those who have got behind on their energy bills. Ofgem closed the two-month consultation in February but is yet to publish a response. If the plans are supported it aims to open a statutory consultation within the coming months. An Ofgem spokesperson said: 'We know the cost of energy remains a huge challenge for many households and the growing issue of debt is one that requires urgent action from everyone across the sector and government. 'That's why we've introduced tougher rules to make sure energy companies do more to spot the signs when a customer may be struggling and step in quickly to offer support, including offering affordable payment plans or providing emergency credit to reduce the risk of self-disconnection.' A government spokesperson said: 'We will fix the broken energy market and deliver real change for working people. 'That is why we are working with Ofgem on a debt relief scheme, and the energy secretary has called on Ofgem to progress this further. 'We are also proposing expanding the £150 warm home discount, to help around 6 million households next winter.' Sign in to access your portfolio
Associated Press
13-05-2025
- Business
- Associated Press
Fiscaldata.Treasury.gov informs North Carolina voters about the National Debt.
Both major parties have contributed to the unprecedented level of federal debt. 'Top 10 spending by category: 22% Social Security, 14% Net Interest, 13% Health, ...'— RALEIGH, NC, UNITED STATES, May 13, 2025 / / -- North Carolinians know the stress of being stuck in debt, with certain types of household debt running above the national averages, according to the Urban Institute ( ). Despite high levels of household debt, each household's share of the national debt is even more -- according to data from the department of Treasury website: Again, from the Urban Institute: 'Credit can be a lifeline during emergencies and a bridge to education and homeownership. But debt, which can stem from credit or unpaid bills, often burdens families' and communities' financial well-being.' These same words could apply to federal debt, though the amount of federal debt is an order of magnitude greater than the amount of household debt, excluding mortgage debt. The most obvious harm caused by the large federal debt is from the interest payments, which according to are now 14% of federal spending. Only Social Security spending is higher. High interest payments displace spending on social welfare, national defense, and other urgent priorities of government. Another harm of persistent deficit spending is born by future generations who are obligated to pay it back despite much of the benefit going to recipients today. Just as interest payments displace beneficial spending today, the repayment obligations of debt can displace future spending on essential programs. These harms are why people, when given the choice of taking on debt individually, take on far less debt than the government imposes on them. According to the New York Federal Reserve and other sources, the average household debt in the U.S. is about $32,000, excluding mortgages. This number, $32,000, represents the collective wisdom of over 170 million American households as to the amount of non-mortgage debt they are each willing to assume. In his 2004 book 'The Wisdom of Crowds,' author James Surowiecki showed how collective knowledge can be superior to biased or conflicted experts. The case of the federal debt may be a case where the wise crowd gives a better answer. The so-called experts in this case include biased Keynesian economists and conflicted politicians who increase spending while paying with debt rather than increasing taxes. Just how much has the federal debt diverged from the wisdom of the crowd? So much that in 2025 the expected U.S. federal debt per household is $216,000. That is seven times more than the $32,000 household average of non-mortgage debt. Who in North Carolina ran up the debt? All incumbent members of the U.S. Congress have responsibility for incurring federal debt. Special blame goes to the U.S. House Representatives, which is the only part of government that can introduce bills to raise revenue. The two longest serving members of North Carolina's House delegation are representatives Alma Adams (NC 12) and David Rouzer (NC 7). They have both served over 10 years and voted for over $18 trillion in debt between them. That is over $10,000 in debt per year, every year, for each household in North Carolina. During the tenures of both Adams and Rouzer, the national debt has more than doubled. The example of these two representatives shows that both Democrats and Republicans are responsible for causing unprecedented federal debt. One party has historically been about helping the poor and building the middle class. The other has a brand built on fiscal responsibility and low taxes. Yet the climbing federal debt displaces spending for the poor, pressures the middle class, is fiscally irresponsible, and increases future taxes. The Department of the Treasury has laid out the discomforting facts on its fiscal data website: Discomforting, but nowhere on the website does it say, 'debt crisis.' These words are used by many others, including the centrist think tank the Brookings Institution. In a recent article by Wendy Edelberg, Ben Harris, and Louise Sheiner they state: "... Analysts warn, however, that our nation's growing debt will inevitably lead to a crisis.' Rob Yates Libertarian Party of North Carolina ( +1 803-250-1075 [email protected] Visit us on social media: Facebook Legal Disclaimer: EIN Presswire provides this news content 'as is' without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
CBS News
07-05-2025
- Business
- CBS News
Want to have your debts forgiven? Here's what will (and won't) qualify
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Debt forgiveness can offer big relief in the right circumstances, but it won't help with all types of debt. Getty Images Whether it's sky-high credit card balances, expensive medical bills, high-rate personal loans or lingering student loans, carrying costly debt has become a common thread for households across the country. According to the latest Federal Reserve data, total household debt hit a new record high of $18.04 trillion in the fourth quarter of 2024. And, that uptick in total debt coincided with an increase in delinquent credit card and auto loan payments, both of which are indicators of how difficult it is for Americans to keep up with their debts in today's inflationary environment. If you're one of the many who are struggling right now, you may be exploring your options, like debt forgiveness, to find relief. When you pursue debt forgiveness, the goal is to work with your creditors to try and settle the debt for less than what you currently owe. That, in turn, can provide some serious relief, helping you get your finances back on track. But here's the thing: Not all debts are created equal when it comes to forgiveness. While certain types of debt can be reduced and partially forgiven, others are excluded. So, before you sign on the dotted line for a debt forgiveness program, you need to know what debts might actually be eligible for forgiveness and which ones you'll still be stuck with. Below, we'll detail what qualifies — and what doesn't — if you're trying to have your debt forgiven. Get started with the debt forgiveness process today. What types of debts qualify for debt forgiveness? Several types of debts qualify for debt forgiveness, including: Credit card debt: Credit card debt is one of the most commonly forgiven types of debt, so if you're carrying a hefty card balance that you can no longer afford, this debt relief option could be smart to pursue. In many cases, you may even be able to reduce your credit card debt by 30% to 50% by offering a lump-sum settlement to the creditor. However, you typically need to be significantly behind on your payments and be experiencing serious financial hardship before a creditor will consider reducing what you owe. Medical debt: Medical bills can be a major source of financial stress, but fortunately, these types of debts are often eligible for forgiveness. Many hospitals offer financial assistance programs that can reduce or eliminate bills based on income and need. Medical debt is also a common target for debt collectors, so like credit card debt, it can often be settled for less than the full balance by negotiating on your own or with the help of a debt relief company. Private student loans (in certain cases): Some borrowers with private student loans may qualify for partial forgiveness through debt settlement. This usually requires showing that repayment is not feasible due to long-term financial hardship, but as with other types of debt, lenders aren't required to forgive any portion of private student loans, so outcomes vary widely. If you go this route, working with a debt relief professional who understands the private loan landscape can help improve your chances of a successful outcome. Unsecured personal loans: Like credit card debt, unsecured personal loans, which are loans not tied to collateral like a car or house, may be eligible for forgiveness through debt settlement. If the lender believes you're unable to pay the full amount, they may agree to take a reduced balance to recover at least part of the debt. This is more common when the loan is already in collections or severely delinquent. Learn more about your debt relief options now. What types of debt won't qualify for debt forgiveness? And, these are the debts that typically won't qualify for forgiveness: Federal student loans: Federal student loans don't typically qualify for settlement programs, but they generally have their separate channels, like income-driven repayment plans or Public Service Loan Forgiveness. If you're not eligible for those types of forgiveness or reduced repayment options, you'll be expected to repay the full student loan debt. Tax debt (unless you qualify for an IRS program): Tax debt owed to the IRS or your state can be extremely difficult to get rid of through traditional debt forgiveness. That said, the IRS does offer programs like Offer in Compromise (OIC), which allows you to settle for less than you owe if you can prove serious financial hardship. These programs can be complex to navigate, though, and approval isn't guaranteed. Many people will need professional help during the process. Child support and alimony: Debts related to court-ordered child support or alimony payments are not eligible for forgiveness, either. These are legal obligations, and failing to pay them can result in wage garnishment and even jail time in some cases. If you're struggling with these payments, your only option is to go through the legal system to request a modification. Secured debt like mortgages and car loans: If you fall behind on a mortgage or auto loan, the lender has the right to repossess the asset (your home or car). These loans are backed by collateral, so lenders have more security and less incentive to forgive the debt. In some rare situations, such as a short sale or a voluntary surrender of a vehicle, you might be able to negotiate a reduced deficiency balance, but true forgiveness is rare. The bottom line Debt forgiveness can be a powerful tool if you're overwhelmed with unsecured debts like credit card balances or medical bills, but it doesn't apply to everything. Understanding which debts you can realistically reduce or eliminate can help you avoid wasted time and frustration. If you're unsure where to start or which options you qualify for, it may be worth speaking with a debt relief expert. The more informed you are about what will (and won't) qualify for forgiveness, the better your chances of building a clear path out of debt.
