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Continued: Hounded by debt collectors? Knowing one's rights key to dealing with collection agency tactics

  • Article by: ALEX VEIGA , AP Business Writer
  • Last update: July 19, 2013 - 4:15 PM


Many borrowers often make matters worse by ignoring overdue payment notices or collection agency letters.

There is a window of time after the initial collection notice during which borrowers can exercise certain rights, such as asking for the name and address of the original creditor, as well as proof that they owe money.

To do so, borrowers must make the request in writing within 30 days of receiving the collection notice.

A bigger danger is missing a notice that the collection firm has sued you to recover the debt, says Udis. That opens the door for a court to issue a default judgment against you, which could lead to your wages being garnished and other penalties.

"You'll see attorneys in court with maybe 100 or more lawsuits at a time and no consumers showing up to defend," she says, "so they'll get default judgment after default judgment."


Unpaid loans may end up being bought and sold several times over the years by debt collectors. That can lead to collection attempts on accounts that have gone unpaid for many years.

When the statute of limitation expires on debts, collection agencies are no longer able to sue the borrower for payment. That doesn't stop collectors from trying to convince a borrower to pay up.

Setting aside the moral issue of meeting one's financial obligations, if the statute of limitations has expired on a debt, the borrower is, legally speaking, free to ignore the collection agency. But the claim can remain on your credit report after the statute of limitations for collecting the debt has expired. Such statutes vary from three to 15 years, depending on the state. Negative items remain on a credit report seven years; 10 years, if it's a bankruptcy.

A borrower should look up the statute of the state where they reside, as that's the one that would apply.

You can find a list here: .

Statutes of limitations don't apply to child support payments, federal and state taxes, and federally guaranteed student loans.


Experts advise against entering a debt-settlement program.

They are often run by for-profit companies that offer to negotiate a one-time payment that creditors can accept as a payoff in lieu of the total amount owed.

But some of those companies may suggest that borrowers stop paying creditors until they have accumulated enough money to make a settlement offer. That can lead to more interest and fees being tacked onto the bill — more money the borrower will have to pay should the creditor decline to a settlement.

And the debt-settlement firms often require that borrowers deposit money in an account for 36 months or more before all debts are settled, according to the FTC.

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