Right now, our country is facing a great deal of economic trouble. This economic slowdown is affecting every family in the country and many are finding themselves in personal financial difficulty. If you are in a situation where you can no longer pay your minimum payments, you will find this information helpful for dealing with your creditors and debt collectors.



I received a letter from a collection agency regarding a credit card bill. How did they receive my information? Why isn't the credit card company contacting me directly?

The company or organization that you initially signed a contract with is referred to as the original creditor. For example, let's say you obtained a credit card account with MBNA. If your account becomes past due, MBNA, your original creditor, will send reminders and call you in an attempt to get you to pay the amount due. When your account becomes more delinquent, approximately 180 days, MBNA may have an outside collection agency, ABC Acquisitions, attempt to collect payment. This company is a third-party collector. Keep in mind that your accounts may be assigned to or bought and sold by several collection agencies during the course of the collection process. You may find it helpful to keep paperwork organized and to track the process as each account changes hands.

I was just contacted by a collector for an unpaid account that I had more than 6 years ago. Do I still owe on this account?

The short answer is... it depends. In each state there is a statute of limitations for debt. The statute of limitations time-period begins from the date of last activity on the account. This could be the last payment you made, or in some cases, the last communication you had with the creditor. If it is beyond the statute of limitations, the creditor can no longer sue you for the past due balance on the account. They may still continue to attempt collections, however, there is little they can do beyond phone calls and letters.

I received a collection letter in the mail on law firm letterhead. Does this mean I am being sued?

No. Although the collection agency may be a law firm or attorney, this does not mean you are being sued. It also does not mean that they can do anything to collect the debt that cannot be done by any non-attorney collection agency. Any company or law firm acting as a debt collector has to abide by the Fair Debt Collection Practices Act (FDCPA). These laws protect you, the consumer, from unfair practices and harassment by debt collectors.

A creditor told me on the phone that my account is going to "Charged Off". What does this mean, and once it is charged off, do I still have to pay it?

A charge-off is when the original account holder writes the debt off their books, and sells or assigns the account to collections. Charge off will typically occur after 180 days of delinquency, and it does not mean you no longer owe the debt. In fact, this is when the collection efforts will often become more aggressive and you will receive more phone calls and letters from professional debt collectors.

Use this knowledge to better prepare yourself in dealing with debt collectors.