DEBT FAQ
10 questions regarding debt!
1. Can I dispute the debt and make the collector away?
No, this is rare. While you can dispute any debt, the dispute will prevail ONLY when there has been an error of some kind. If the product you purchased was defective or if you did not borrow the funds in question, then you can successfully petition the creditor to remove the debt and the collector will stop calling. However, making a successful dispute is not always quick and easy and much paperwork is usually involved. In addition, for fraud, many collectors and creditors require that a police report be filed before they will consider that kind of a dispute. In all cases, however, it is important for the debtor to realize that he bears the burden of the proof, which can cause problems.
2. Can I get my bad debt removed from my credit report?
No, this is very rare. Only if there has been an error can you have a “negative” permanently removed from your credit report.
Despite much advertising to the contrary, there is virtually no way to permanently remove negative information from your credit report, if it is accurate. The law has required the credit bureaus to establish a dispute process that consumers can pursue to get errors removed. However, while time consuming, once it is determined that the negative data is accurate, the credit bureau will again post that data to your report every time it is issued, for as long as the statutes will allow. The credit bureau will display your charged off accounts for seven years and your bankruptcy for ten years. Divorce does little to change this. Those debts you incurred with your spouse will follow you in your post-divorce period. Your new creditor will most likely view any negatives on your credit report as your obligation, ones you will be required to rectify before getting new credit, regardless of what your divorce settlement decreed regarding who was responsible for these debts going forward.
3. Can a collector sue me if I do not pay my defaulted debt?
Yes. Collectors file many lawsuits each year.
These lawsuits have an extremely high success rate. Usually the collector obtains a judgement against the debtor in more than 98% of all such cases. Those debtors who have financial assets, a car, a home, are especially vulnerable. Collectors often seek a lien on those assets as a means of forcing the consumer to repay his defaulted debt.
4. Can a collector access information on my personal finances and my assets?
Yes. The Fair Credit Reporting Act gives any collector with the right to work the debt, the right to access a credit report as part of the bad debt recovery process. The credit report contains a very comprehensive financial history of the debtor, including knowledge of such assets as real estate, cars, boats and planes.
5. Can a collector find me even if I move and do not list my new phone?
Yes. Your credit report contains many leads that a diligent collector can pursue to find you and contact you. That report contains leads to lenders who are serving you today, as well as an address history and, on occasion, employment data. Any one of these leads can be pursued to find your current address and phone number, both at work and at home. It is a common practice and rarely successfully disputed.
6. Can a collector inform the credit bureau if I don’t pay my defaulted debt?
Yes. The nation's three largest credit bureaus, all accept data contributions from collectors. So, each collector who calls has the opportunity to notify the credit bureau that you are in collections and to update that bureau should you pay or not pay. Their contributions are very quickly integrated into the nation’s credit database, which any of your creditors, past, present or future, can legally access.
7. Can a collector garnish my wages?
Yes, but only in certain states or with regard to certain types of debt.
For example, Georgia law allows wage garnishment. And, select kinds of federally sponsored student loans also enable the collector to garnish wages. Please, consult an attorney for guidance regarding whether or not your specific defaulted debt is subject to wage garnishment in your state.
8. Can the collector tell my friends and my employer about my financial problems?
No, not usually. Your financial problems are confidential and the collector is usually limited to discussing them with you, the party who owes the money. However, collectors are allowed to pursue legal processes that will post your defaulted debts to the public record. Once your defaulted debts become a matter of public record, your friends and employer can find out.
9. Can a collector offer me a discount on the amount I owe?
Yes. Discounting is a common practice, but it is far from automatic.
However, the amount of your discount is highly dependent upon the kind of collector that calls. A collector employed by the creditor or lender is much less likely to offer much of a discount to you, especially if your debt is only delinquent, but not yet charged off. A delinquent debt is one where you have failed to make payments on time. A charged off debt is one where the lender has determined that you are in default of the debt and he can no longer expect repayment. A collector who works for a contingent fee agency is more likely to offer you a discount. However, this collector must abide by the discount policies established by the creditor, which at times can be liberal and at other times can be very conservative. Generally, this kind of collector
will initiate the collection process with a balance-in-full demand, which may also include late fees, unpaid interest and other charges. He can progress from that offer to one with a larger discount, but only in accordance with the creditor's discount policy, which will also relate directly to your financial predicament. The contingent fee collector has received the right to call you based upon the fact that the creditor has contracted with that collector's firm to work the bad debt, which is almost always charged off debt of some kind. There is a third kind of collector that is becoming more prevalent and this kind is known for issuing more discounts. This collector works charged off debt, but as the titleholder to the claim. This collector works for a firm that has purchased the rights to the charged off debt from the creditor. When this occurs, the collector has a great deal more latitude in deciding if a discount is to be offered and how much. This collector is not bound by the creditor's discounting policy. His major aim is to collect enough from each debtor to pay back the money he spent to purchase these distressed assets and earn a profit.
10. Can paying a collector improve my credit rating and help me get new credit at a reasonable rate?
Yes, it certainly can. However, the process is not automatic. We hope in the following to give you the knowledge you will need to insure that should you repay your defaulted debt, you will maximize your chances to successfully apply and receive reasonably priced credit in the future. It is critically important that you negotiate for the proper statuses on your credit report and that you select the right financial services firm in the future. While you need to be sure that you are selecting the firm that will lend to consumers with your level of risk, you must also insure that your rates and terms are appropriate for your level of risk and not a more risky consumer.