The majority of moves a debtor makes to repair their credit are logical and straightforward. Taking action to settle a debt, negotiate a better interest rate, or stop harassing phone calls is something the individual can do. However, there are some little known facts about third party collections and borrower’s rights which could be considered credit repair secrets.
The Usual
When people need to take control of their debts, a step by step process is in order. Assuming a reasonable amount of monthly earned income, write out a chart including all debts, prioritize them, and make a schedule to pay them. More specifically, detail the amounts owed, the payment due dates, and highlight any accounts currently in collections.
To eliminate debt quickly, delegate a maximum amount to one credit card or outstanding loan, and pay the minimum on all others. Communicate with creditors and inform them of the intent to pay on time if any payments are overdue and headed for the collector’s box. As each account is paid to zero, shift the large payment to the next account. Continue until all debts are zeroed out.
In the midst of making this schedule, account holders can consolidate several balances to a single card with a lower interest rate, ask the creditor for a reduced rate, and write letters demanding there are no more phone calls. Some will cooperate and others will resist, but the borrower takes what they can and begins to pay back the debt.
Zombie Debts
Few people are aware of the statute of limitations for collecting on accounts, and fewer still are aware of the facts surrounding the collector’s rights to demand payment. The individual can ask for proof of the initial collection date, and if the statute of limitations has expired, inform the company they are attempting to receive money for a ‘zombie debt.’ According to the law in several states, they must cease their actions, and the debtor can then request the negative report be removed from their credit history.
This is how it is supposed to work, but zombie accounts are not always easy to eradicate. Many companies buy these debts for pennies on the dollar and can make a large profit by collecting even a small percentage of the original amount. If the problem persists even after contacting the agency, consider hiring an attorney to sue them.
Rights
The ‘Fair Debt Collection Practices Act’ entitles people to certain rights with regard to attempts to collect money from them. They have a right not to be contacted at odd hours or at their place of employment, and agencies can not make threats or falsify information in order to get paid. The first question a debtor should ask when contacted by a collector is to validate the debt. This is done by presenting an original copy of the signed contract from when the credit line was opened, or by showing proof of the right to collect on behalf of the original creditor.
Knowing personal rights and the law surrounding collection agencies will eradicate debts faster. Contact each major credit reporting agency when an account is cleared to remove it from the report, which will quickly raise the FICO score.
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