The DebtClear Roadmap

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Debt Relief Strategies

Credit Debt Relief Strategy: Become High-Hanging Fruit

The business of debt collection is just that—a business. And like most businesses, collection agencies are interested in one thing: the bottom line. Collecting credit card debt is their primary purpose, and fulfilling that purpose is what keeps them operating.

Many people get the image that collection agencies employ skilled professionals—but the reality is, most collectors are low-paid, and ill-versed on the rules of the FDCPA (which could play to your advantage, especially if you know how to navigate the terrain). But you can't know if your rights have been violated if you don't understand them in the first place, which is why educating yourself is so important.

In addition to educating yourself, there are tactics you can employ that'll make it virtually impossible for a debt collection agency to effectively do their job. And if you can't make it impossible for them, you can at least make it extremely difficult. The harder you are to collect from, and the more roadblocks you throw in a collector's path, the more likely they are to do one of two things: give up collection efforts entirely, or make a mistake that can give you the necessary leverage to beat them at their own game.

Being uninformed can leave you as exposed as low-hanging fruit to their greedy grasp. Getting educated can quickly turn you into high-hanging fruit. And what usually happens to high-hanging fruit? It gets ignored.

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Credit Debt Relief Strategy: When You're More Than 120 Days in Default

After 120 days of non-payment, the original creditor will usually write off your debt as a loss. This doesn't mean you're suddenly absolved of your credit card debt or have credit debt relief. It will show up as a "charge-off" on your credit report and the debt will be either assigned to a collector (who will try to collect for the original creditor), or sell your debt to a third party debt collector. Therefore, if you are being contacted about a debt that is more than 120 days old, you are probably talking to a debt collector.

Debt collectors are governed by the Fair Debt Collection Practices Act which contains a number of important consumer protections. Without understanding or enforcing your rights, you may just be giving up important offensive and defensive strategies that could be used to minimize the amount of debt you are required to pay back.

If you find that your rights have been violated by a debt collector, you can get a free evaluation from an attorney specializing in creditor harassment. If you have a case they will take it on contingency (meaning no charge to you!) and do their best to back down the debt collector and hopefully retire your account.

Credit Debt Relief Strategy: Steps to Take After Receiving a Dunning Letter

Within 5 days of first contacting you about a debt, a debt collector is supposed to send you something called a dunning letter. This contains basic information about the alleged debt (amount you owe, account number, original creditor, etc.) and also contains a special disclosure required by the FDCPA—a notice informing you that you have 30 days to dispute the debt or else it will be deemed valid.

If you dispute the debt within the required time-frame, you put the burden of proof back onto the collector and asking them to provide verification that the debt belongs to you, how they arrived at the amount you allegedly owe, and proof that they have the right to collect on the debt, and are licensed to collect debts in your state (see the dispute and debt validation sample letter.

I don't know about you, but I certainly couldn't tell whether my balance was correct by simply looking at it. Nor would I know at a glance what my account number was, or whether XYZ Collection Co. has the right to collect on my account. My point is that there are a number of reasons to dispute a debt and ask for validation, even if you think the account may be yours.

Once your dispute is received, the debt collector is required to cease collection activities and not report any negatives to the credit bureaus. If they continue with collection or reporting activities before providing you with verification, they have just broken federal law and you have grounds to sue. Threatening to sue, or actually suing, for FDCPA violations is a great way to zero-out your collection account. If you think your FDCPA rights have been violated click here for a free consultation with a FDCPA attorney.

Credit Debt Relief Strategy: Collection and the Statute of Limitations

Every state has a specific statute of limitations associated with credit debt, which explicitly spells out the timeframe in which collectors are allowed to sue you to collect. In most states the statue of limitations is between 3-6 years. The "clock" on this statute of limitations begins to tick from the date of your first missed payment, or six months thereafter, depending on your location. Visit your State Attorney General's Office to determine what the debt collection statue of limitations is in your state.

Once a debt is past your state's statute of limitations, it is considered a time-barred debt. The good news for you is that once a debt becomes time-barred it is essentially uncollectable in the eyes of the law. Unless you choose to pay a collector voluntarily, there is nothing they can do.

Just because a debt is time-barred doesn't mean it is gone. Collectors can still try to collect (they just can't sue) and they can still report the collection account on your credit report for up to 7 years. However, if you send a letter notifying a debt collector that your debt is time-barred, in all likelihood they will give up. Without the threat of a lawsuit the only leverage that remains is the negative on your credit report.

A word of caution: If you pay any creditor a dime on any debt it resets the statue of limitations clock! Debt collectors know this so they will try to get you to pay something—even a dollar—to reset the clock. If it has been more than a couple years since your last payment and you haven't been sued, chances are you probably won't be. And once the debt becomes time-barred, you will know that you won't.

If you do happened to receive a lawsuit on a time-barred debt you can easily have it dismissed by letting the court or judge know that the debt is indeed time-barred.

Credit Debt Relief Strategy: To Settle or Not to Settle

Deciding whether or not to settle your credit card debt is a decision that should be given serious thought. Making a settlement will get a collection agency off your back, but it also requires you to part with a substantial amount of money that you may or may not have had to part with. There are perfectly legal methods at your disposal that could result in having your debt zeroed out and your credit report updated, but in order to be successful you need to start preserving your rights now.

The sleep-well factor is probably the biggest benefit in reaching a credit card debt settlement. You no longer have to worry about being sued on the account and you can usually have your credit report updated with more positive information. However, the odds are that if you haven't been sued in the first couple of years after defaulting, you probably won't be. Eventually the statue of limitations on your debt will expire and the entry will removed from your credit report.

To learn more about debt settlement, get a free consultation from a debt settlement company or read our tutorial on DIY debt settlement.

Credit Debt Relief Strategy: Settling Your Account with a "Paid As Agreed" Status

Say you've decided to negotiate a debt settlement with your creditor, but you're not sure how to proceed. Knowing the right questions to ask, and what's considered a reasonable request versus an unreasonable one, is essential in ensuring that when you do settle, you're not settling for less (er, more).

When working out a debt settlement, in which a creditor or debt collector offers you the option to pay a certain portion of the past due amount in order to reach final resolution, you always have the option of negotiating concessions. However, the debt collection agency will not offer it without you asking.

As a condition of your agreement to settle your credit card debt, always ask the collector to remove the collection record from your credit report, or to report to the credit bureaus with the updated status of "Paid As Agreed." If you don't ensure this, your credit score will read "Settled For Less Than Full Amount," a black mark on your credit score. This could adversely affect your ability to qualify for a loan in the future, or greatly impact the level of interest rates you're approved for.

Credit Debt Relief Strategy: Fighting Back and Letting the FDCPA Work For You

The purpose of the Fair Debt Collection Practices Act (FDCPA) is to eliminate abusive collection practices and give you recourse to dispute the accuracy of your credit card debt, or to demand proof it's yours. It also gives you the tools to fight back against collectors who use threatening and abusive tactics to collect money from you. Under the FDCPA, you have rights that are guaranteed by law and enforced by the Federal Trade Commission. If a collector violates the rules of the FDCPA in any way, you can sue them in Federal Court.

Some of conduct prohibited by the FDCPA includes:

  • Calling you outside of specified hours.
  • Calling multiple times a day.
  • Threatening to have you arrested.
  • Reporting false information on your credit report.
  • Speaking to anyone else besides your attorney or spouse about your debt.
  • Calling you after you have requested they stop.

Understanding debt collection laws, your rights under the FDCPA, and how to document and enforce your rights, is a powerful tool in getting debt collectors to back down. Even the threat of a suit could be enough to force the creditor to cease collection efforts and remove the negative from your credit report.

Credit Debt Relief Strategy: Knowing the Plain Truth About Defaulting on Debt

Ultimately, you hold the cards when it comes to your credit debt. Most collectors are eager to infer all sorts of legal ramifications for your refusal to pay a bill, but the fact of the matter is that unless the collection agency or your creditor takes you to court and wins, they're powerless to do much of anything.

In truth, most creditors won't take you to court over default of debt. They're in the business of lending money, not collecting it. The worst that usually happens if you don't pay your bill is that your account will be charged-off, wind up in the hands of a collection agency and your credit score will take a hit.

Most debt collectors won't sue you for unpaid credit debt either. Looking at the overall picture, it's too costly a venture for them to do so. There are filing fees, attorneys to pay, the costs of enforcing the judgment—and all without any guarantee that they will be able to collect a dime. In fact, about 80% of all judgments go uncollected!

Most debt collection agencies will simply continue to try collecting from you, and continue to report negatively to the credit bureaus. And although seemingly constant phone calls and letters demanding payment are not anybody's idea of an enjoyable experience, the fact remains that there is very little a collector can do outside of these practices. In fact, sending a debt collector a Do Not Call letter should make the phone calls stop.

Eventually, the statue of limitations on your debt will be reached at it will no longer be collectable.

Credit Debt Relief Strategy: Getting a Collector to Cease and Desist

One of the provisions of the FDCPA allows you to ask a collector or collection agency to cease contact. Once you've done this, the collector or collection agency is required by law to comply. This won't make your credit card debt go away, but it can lessen the weight of the burden by removing the element of frequent, harassing contact as you work toward your goal of credit debt relief.

Before you take action to ask a collector to stop contacting you, it's in your best interest to communicate with the collector at least once to determine if anything can be done to satisfactorily resolve the issue—whether or not the debt in question is yours, or whether you decide to challenge or dispute the collection agency's claims.

Once you've decided that you want a collector to stop calling you, accomplishing that end is as easy as asking for it—as long as it's done in writing. Simply write a letter asking the collector to cease and desist all contact, and send it via certified mail with return receipt so you'll receive confirmation that your letter was received. After this point, any further contact (except to inform you of pending legal action, or to let you know that they're stopping all contact) will leave the collector open to a lawsuit.

If you know how to properly document these violations you may have the leverage you need to zero-out your account, have the record removed from your credit report and achieve credit debt relief. To learn more, read our section on Debt Relief.