July 31, 2012
Settling Your Debts
Some people have expressed skepticism that you can actually do debt settlement on their own using our strategy or other creative methods of settling debts. Read letters from readers who were highly successful. You can also watch our video on how to settle your debts.
Note: This page addresses debt which is with a collection agency (CA). For debts still with original creditors (still with the credit card company and NOT with a collection agency), go here. How do you know if your debt is still with the original creditor (OC) and not with a collection agency? Simple: call the credit card company.
If a debt is with a collection agency, the original creditor is not going to deal with you. The OC has collected its tax benefits under US tax law for bad debts. They have "cut the ties" with the debt.
Now that we've explained the difference between a past due debt which resides with a CA vs. an OC (collection agency vs. original creditor) - are you in the right place? You're sure your debt is with a collection agency? If the answer is yes, then you are now reading the right article.
Understanding the True Risks and Realities of Overdue Debts
Most consumers hit the panic button over notifications from collection agencies:
Many consumers are unaware of their risks with unpaid debts. Yes, it's true that a creditor could sue you in court and win a judgment, allowing the creditor to garnish your wages or hire a sheriff to come get your property. However, the chances of this are not as big as you think.
It's true that collection agencies are turning to lawsuits more and more these days, but I would still tell you not to worry. Once you make the creditor aware that you know the law, they are more likely to leave you alone. With savvy consumers, many debt collectors think it is simply too much time and expense for them to take legal action against a debt.
We don't want to lie to you, the possibility of a lawsuit does exist. You might want to take comfort in this: if they do take you to court, often they have no case. There are a lot of new players out there, like the Junk Debt Buyers. These guys buy and sell debts and place them into million dollar packages which sell on Wall Street, much like the secondary mortgage market derivative packages.
If push comes to shove and the collection agency won't settle your debt and decides to sue you, we have all the information you need to fight the lawsuit and win.
Too many consumers feel their debts are overwhelming and there is nothing they can do other than file a bankruptcy. Consumers believe those awful tales spun by collection agencies of impending doom, especially about garnishment and seizure of property. Collection agents fail to mention (surprise!) that in order for these actions to take place, the creditor must first go to court.
Due to lack of information, many consumers get panicky and turn to bankruptcy in these situations. Please don't do this! Bankruptcy should not be used until after all options are exhausted, including the settlement procedures we are going to talk about here. In addition to getting out of your debts by settling, see our other alternatives to filing a bankruptcy. In some cases, having your debt go into collections can be a blessing!
Have You Tried Debt Validation?
The best way to deal with a collection agency is the debt validation method. This should be your first step in the settlement process.
Check the Statute of Limitations on the Debt
Before you attempt to settle a debt, check the statute of limitations. Collectors only have a certain amount of time to sue you for payments! If your debt is too old, the collector can't take you to court. You can determine if the statute of limitations for collecting a debt in your state have past.
If you find the debt is older than the statute of limitations, tell any bill collector calling you they are wasting their time by harassing you for an uncollectable debt, as neither they nor the original creditor nor the assigned collection agency can take you to court to get a judgment.
The above statements do not represent those of Weston Legal or Michael Weston and they have not been reviewed for accuracy. The statements have been published by a third party and are being linked to by our website only because they contain information relating to debt. Nothing in this article should be construed as legal advice given by Weston Legal or Michael Weston. To view the source of the article, please following the link to the website that published the article. Articles written by Michael W. Weston can be viewed here: To report any problem with this article please email firstname.lastname@example.org