| Debt Collectors |
| By Credit Federal |
Published
05/25/2008
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Collection Agencies
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Spending Helps Improve Economy, But Not Bad Credit Scores and Financial Security
The mortgage crisis, escalating fuel costs, sluggish economy, loss of jobs, high cost of health care and rising food prices, it's no wonder more and more Americans are getting further behind on their bills. Add to that equation the fact that it is becoming common for Americans to live beyond their ability by eating up more and more credit and not saving or planning for retirement, multiply that by the millions of other baby boomers in the same position, the outlook looks bleak for both the economy as well as for long term personal finance.
What could be worse than all that? Your creditors sending you Final Notices and then aggressive debt collectors calling your home telephone. According to consumer advocates, there is a surge in highly aggressive debt collectors and; as they compete against other debt collectors to get their clients repayed first, there's also a surge in some questionable practices.
According to the Council of Better Business Bureaus, consumer complaints surged 20% in 2006 and 26% in 2007. The Federal Trade Commission, which receives more complaints about debt collectors than about any other industry, reports it is seeing a steady rise in debt collecor complaints.
Even during strong economies and a solid credit industry, debt collectors can still be extremely aggressive in collecting past due loans. Now that the economy is in the dump, collectors are filing more lawsuits to recoup debt and quicker to start calling past due borrowers.
Federal law bars debt collectors from repeatedly calling borrowers after being asked, in writing, to stop; it also prohibits them from threatening people with fake lawsuits. Some regulators say that as the economy struggles, they're seeing more violations. For example:
In New York, Attorney General Andrew Cuomo has fined two debt collection agencies in the past six months for falsely pretending to be lawyers.
The California attorney general is receiving more complaints against debt collectors and has begun investigating a couple of collection agencies.
In Minnesota, Attorney General Lori Swanson says she plans to file lawsuits against debt collectors for increasingly abusive tactics. Her office is receiving more complaints about collectors trying to collect debt from the wrong person and garnishing Social Security benefits in violation of state law.
Lenders are sending delinquent credit card accounts to collection agencies faster than in the past, as early as only 60 days past due, not after 180 days as was the norm.
Meanwhile, millions of Americans are counting on their 401k and home equity to pay for retirement. But rising consumer prices and falling home values are making that plan less secure. The lesson? Putting all your eggs in one basket. Americans need to stop living beyond their means. Stop charging expenses to a credit card only to have to worry 30 days later as to how the balance will be repaid. Americans have gotten into the habit of charging and abusing credit instead of first earning the funds necessary for purchases. Consumers who are deep in debt need to stop spending themselves into a deeper debt hole. Those that cannot create a household personal budget and stick to it to get their personal finances under control, should seek professional assistance immediately while they still have a chance to recover. Otherwise, if the economy worsens and prices continue to rise, it will be far more difficult; or impossible, to get out of the debt hole. A debt consolidation loan is not necessary. With credit counseling you can make a repayment plan. Many consumers; however, wait until it's too late and end up having to chargeoff credit card bills or negotiate debt settlement.
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