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 got a letter in the mail from a collection company regarding a credit card balance. Why do they have my information? Why am I not being called directly by the credit card company?
Typically if you have not made a payment on an account for a number of months, the account will be turned over to either an in-house collections department, or sold or assigned to a collection company. Once this happens, the collection company will contact you via phone or mail to attempt to collect on the account. As a consumer, you have a legal right to request a copy of documentation that validates that you are actually the responsible party for the debt.

I was just contacted by a collector for an past-due account that I had more than 6 years ago. Do I still owe on this account?
Yes. However, if the account is truly past the statute of limitations, the creditor may no longer be able to pursue legal recourse against you for the collection of the balance. The statute of limitations varies from state to state, and is typically measured from the date of last activity on the account. This would be the last payment made, last time account was used, etc. In some states, you can reset the statute of limitations by simply acknowledging that the account is yours.

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.

One of my creditors called me and said that my account will be “Charged Off”. What does that mean exactly, and will I still owe the debt after it has been “Charged Off”?
Charge-off is a term that is used to classify delinquent accounts for tax purposes. The word “charge-off” is used to report the delinquent account as a loss for the creditor. A debt is usually charged-off after there has been no payment made for more than 180 days. Although an account has been charged-off, you do still owe the debt. A creditor will typically either assign, or sell the debt to a collector after charge-off. Another important thing to be aware of with a charge-off is that if the account is sold to a third party collector, that collector may also report the delinquent account on your credit. This may result in an additional negative trade line on your credit reports.

This information will serve you well in all your dealings with collectors.