12 Jun 2017 Budget Buzz
12 Jun 2017 Budget Buzz
If you’re reading this article, chances are that at one point or another you’ve been on the receiving end of incessant collections calls, harassing mail correspondence, threats of repossession or even wage garnishments and levies. It’s a terrible feeling to know that you’re in trouble with a lender or debt collector. Consumers just like you often feel as though there is nothing they can do to stop the calls and collection attempts and as a result simply live with the stress, anxiety, and embarrassment that comes with it.
The truth is there is something you can do. The process begins with seeking education and information about options and alternatives. If you’re struggling to keep up with payments, your first course of action should be to contact your lender or financial institution. Lenders commonly offer flexible payment options to individuals with good payment history who are experiencing unusual financial hardship. If your accounts have already been sold or handed over to debt collectors, know and exercise your rights!
Debt collectors may contact you by mail, phone, fax, or in person. They are, however, required to contact you during reasonable business hours, 8am to 9pm, unless you otherwise agree. You are protected by law from any harassing behavior such as repeated frequent calling and you can stop the continuous contacts by submitting a letter directly to the agency. Your letter will stop all action except notification of intent to bring legal action against you.
If you are behind on payments, in default, on a private loan your lender will likely pursue you for payment. Collection tactics for private lenders are quite different from those available to government programs such as Federal student loan lenders. Borrowers should know which tools private lenders can and cannot use.
You Must Be In Default
In order to begin collection activity on a loan you must first be in default with the lender.”Default” is defined by federal laws. Most often, “default” is defined in the terms of your loan and can be found on your contract. Your contract is the paperwork you would have signed when you received the loan. This contract will outline all of your responsibilities to the lender as it pertains to your loan. Your contract will also include all of the terms between you and your lender. Every loan contract is different, however, the following are common triggers for default:
▪ Not making a payment on time
▪ Filing for bankruptcy
▪ You are insolvent
▪ A Court Judgment
Prior to using collection tools like wage garnishments and levies, a lender must go to court and get a money judgment against you. Most lenders will attempt out-of-court collections before seeking a judgment. Some lenders will even hire a third party debt collector to attempt to collect the debt from you on their behalf. Lenders and third party collection agencies typically attempt to collect a debt by:
▪ Sending collection letters
▪ Calling you on the phone
▪ Calling your friends, family, or associates in an attempt to reach you.
▪ Limits On Debt Collection Tactics
While the attempts can be intimidating, there are limits on how far debt collectors can go to pressure you to pay. The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from employing deception, abuse, or harassment as a means to collect a debt. The FDCPA has imposed limits on collector communications to include the prohibition of false representations, such as claiming that the lender has legal rights that it does not have.
Nothing Lasts Forever
While it may seem like your debt is piled so high that you will never be able to dig yourself out, it can be done. Many loans are subject to a statute of limitations on collection and repayment. If your debt is old, consult an attorney to determine whether the statute of limitations has or will soon run out. If not, you don’t have to brave this journey alone. We are here to help you free yourself from the bondage of debt.