What To Know About Debt Collection
What types of debts are covered under the law?
Your credit card debt, auto loans, medical bills, student loans, mortgage, and other household debts are covered under the FDCPA. Business debts are not.
Can debt collectors contact me at any time or place?
No. Debt collectors cant contact you before 8 a.m. or after 9 p.m., unless you agree to it. They also cant contact you at work if you tell them youre not allowed to get calls there.
How can a debt collector contact me?
Debt collectors can call you, or send letters, emails, or text messages to collect a debt.
How can I stop a debt collector from contacting me?
Mail a letter to the collection company and ask it to stop contacting you. Keep a copy for yourself. Consider sending the letter by certified mail and paying for a return receipt. That way, youll have a record the collector got it. Once the collection company gets your letter, it can only contact you to confirm it will stop contacting you in the future or to tell you it plans to take a specific action, like filing a lawsuit. If youre represented by an attorney, tell the collector. The collector must communicate with your attorney, not you, unless the attorney fails to respond to the collectors communications within a reasonable time.
Can a debt collector contact anyone else about my debt?
What does the debt collector have to tell me about the debt?
What if I dont think I owe the debt?
What are debt collectors not allowed to do?
Who A Debt Collector Can Contact
A debt collector can only contact your friends, employer, relatives or neighbours to get your telephone number or address.
This does not apply in the following cases:
- the person being contacted has guaranteed your loan
- your employer is contacted to confirm your employment
- you’ve given your consent to the financial institution that they can contact the person
If you gave consent orally to your financial institution, you must receive written confirmation of your consent either on paper or electronically.
What If You Cant Attend
If you are unable to attend the court hearing for a legitimate reason, you dont have to face the possibility of prison.
You can ask the creditor or the debt collector to have the court date changed themselves. Most respectable companies will do this for you to ensure they get the information they need. If the debt collector is refusing to cooperate and change the court date or time, you are able to make a request directly to the courts to get it changed. To do this, you need to fill out a form on the GOV.UK website called form N244.
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Work Out What You Can Afford To Pay
Use our budget planner to work out what you can afford to pay. Calculate your income and expenses to work out how much, if anything, is left over.
If you can’t afford to pay anything, call the National Debt Helpline on 1800 007 007 for free, confidential advice about what to do. The helpline is open Monday to Friday, 9:30am to 4:30pm.
Respond To Lawsuit Notices
Its important that you dont ignore an attempt to collect a debt. If debt collectors have trouble reaching you and settling the debt, they may legally be able to sue you.
Depending on the laws of your state, if you ignore a summons even if you believe the debt is too old the debt collector may get a judgment to go after your assets or garnish your wages.
If youre worried you wont be able to afford an attorney to fight a suit from a debt collector, the CFPB has resources on state legal aid offices.
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If Freezing Your Money Causes You Hardship
If your money has been frozen, this may cause you hardship because you cant meet day-to-day living expenses. If you’re in this situation, you can make an application to court for a hardship payment order.
Make the application on court form N244. You can download the form from the Ministry of Justice website at: www.justice.gov.uk.
When youve filled it in, take the form to court yourself with written evidence of your hardship. This evidence can include:
- copies of wage slips
- your rent book
- any other documents which show your financial situation.
If other people in your family will be affected because your money is frozen, for example children or an older person living with you, explain on the form how they will be affected. This will help the court to make a fair decision about your situation.
Usually, you have to pay for this application. However, you might not have to pay the fee at all or it could be reduced because your money has been frozen. Ask the court about this when you take the form in.
A judge will deal with your case on the same day you take the application form in. They can make a hardship payment order which orders the bank to release a certain amount of money to you or to someone else, such as your partner. The order will be faxed to the bank and copies will be sent to your creditor.
Making A Payment Could Restart The Clock On Your Debt
In some states, making a partial payment on your debt could restart the statute of limitations. Thats why, before committing to a payment plan, you should make sure youre comfortable with the possibility of eventually having to pay off all your debt. Its also a good idea to get that repayment plan in writing and review it for accuracy.
If your debt is nearing your states statute of limitations, the CFPB says that debt collectors may be more willing to negotiate a settlement with you.
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Can A Creditor Freeze My Bank Account Without Telling Me
No matter who you owe, there will always be some amount of warning before they take an action as extreme as having your accounts frozen. If you owe money to a credit card company, for example, they must first receive a judgment against you in court before they can freeze your bank account.
This means that they have to serve you with papers notifying you that they are suing you. You will also receive notification from the court as to the date of your scheduled court appearance. You can skip it, but if you do the case will most likely be decided against you. If you attend, youll at least have the opportunity to argue your case and maybe reduce the amount you owe or set up a payment plan.
If the creditor receives a judgement against you, they will then have permission to seize your bank account. Depending on the state you live in, your bank may or may not notify you in advance.
They Can Do Internet Searches
An internet search through your favorite search engine can be a powerful tool in a lot of situations. Itâs the same for debt collectors. Debt collection agencies can do a simple internet search and get several hits on you. Churches, professional associations, and other groups you may be a part of have online newsletters, blogs, and articles that can provide debt collectors with information about you.
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How To Protect A Bank Account From Creditors
People who have a judgment against them often want to know how to open a bank account that no creditor can touch. Despite the judgment, the debtors need a bank to secure their savings and future income. However, they do not want to put their money in a bank account only to lose it to garnishment or bank account levy.
There are four ways to open a bank account that is protected from creditors: using an exempt bank account, using state laws that dont allow bank account garnishments, opening an offshore bank account, and maintaining an account with only exempt funds.
First, exempt bank accounts include accounts owed as tenants by entireties . Second, some states have laws that prohibit a judgment creditor from garnishing banks within the state entirely, regardless of the source of the funds in the account. Third, an offshore bank account can make collection by most civil creditors very challenging and expensive. And fourth, an account would be protected that includes only exempt funds, such as social security deposits.
If A Creditor Sues You
A creditor has the option of suing you in the Civil Division of Provincial Court or the Court of Queens Bench.
If you are sued, you will be served with a civil claim. Dont ignore the claim.
If you are served with a civil claim:
- talk to your creditor
- pay the claim
- file a dispute note
If you receive a civil claim in Alberta, you have 20 calendar days from the time you are served to file the dispute note. If the claim is served on you outside Alberta you will have one month to respond.
If you do not file a valid dispute note within the required time or appear in court on the day of the hearing, the court will award the creditor with a judgement against you.
Once a judgement is granted the creditor can take several steps to get the money that you owe:
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Is It Illegal To Move Money Out Of My Bank Account To Avoid Creditors From Taking It
If you move a large amount of money out of your bank account for the sole purpose of avoiding creditors from taking your money, this can be considered as fraudulent. This is referred to as Fraudulent Conveyance which is the intentional transfer or sale of your assets to avoid paying creditors. There are different ways that you can be guilty of fraudulent conveyance.
Here are some examples of situations that could be deemed as fraudulent:
- You transferred all your money or a substantial amount to another person like your spouse, family member, or business colleague to avoid paying a judgement
- You transferred a large sum of money to an offshore account shortly before filing for bankruptcy.
- You sold your assets for less than the reasonably equivalent value, like selling a brand new $30,000 car for only $3,000 to your sibling, then continuing to use that car even after the supposed sale.
You may be surprised to know that the look back period for fraudulent conveyance is usually one year so if youre planning to hide your money intentionally while knowing that there is a potential or current claim from a creditor, you could be committing something illegal.
How Much Money Can A Creditor Take From Your Account
There are consumer protection laws in place to prevent a creditor from taking too much money out of your account. But again, these are state laws that vary depending on where you live.
Typically, the laws that limit a creditors ability to garnish your bank account require you as the debtor to do something. You are responsible for figuring out what the law is in your state and taking action to limit the amount that a creditor garnishes from your account.
A creditor can also garnish your wages, up to 25% of your paycheck. This is garnishment from your paycheck. If the funds are actually deposited into your bank account, the 25% doesnt hold true.
If you are in this situation, you should consult an attorney to see what state laws are in place where you live.
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Can A Debt Collector Garnish My Bank Account Or My Wages
If a debt collector has a court judgment, then it may be able to garnish your bank account or wages. Certain debts owed to the government may also result in garnishment, even without a judgment. However, if certain federal benefits are directly deposited into your bank account, there are automatic protections under federal law for some of the funds in your account.
Collecting judgments. All states have methods for collecting court judgments from debtors. Those methods may include wage garnishments and bank account garnishments. The court’s judgment will state the amount of money you owe. The amount of money you owe could include the original debt as well as other fees or costs as determined by the court. A later court order may also state how much may be taken from your bank account or garnished from your wages.
Protections. State and federal laws have limits or exemptions that apply to bank account and wage garnishments, usually to make sure you have something left to live on. These exemptions vary by state, as do the procedures for claiming the exemptions.
If federal benefits, such as Social Security, SSI, VA, and others, are directly deposited into your bank account, there are additional protections under federal law for some of the funds in your account.
Tip: If possible, consult an attorney if you are sued.
Owing Money To A Bank
If you have an overdue debt owing to a bank, the bank can use its right of set-off to recover the money. The right of set-off allows a bank to withdraw money from your accounts to pay your overdue debt. The bank does not have to give you notice or ask your permission before taking this action. The bank does not have to ask the permission of the court.
Banks may use their right of set-off to collect overdue payments on credit cards, loans, overdrafts or lines of credit. A bank may withdraw money that you have on deposit in any of its branches and apply it to your debt. The bank does not have to leave any money in your account.
What A Levy Means For You
When an overdraft occurs, a poor financial situation may go from bad to worse. Insufficient funds in your account will almost always lead to more fees from both your creditors and fees from your bank. This will leave you with less than you had before if anything at all. And it will be even more difficult to catch up!
Can A Debt Collector Take Your Stimulus Check
The CARES Act specifically prevents state and federal agencies from taking Americans stimulus money for things such as federal student loans and taxes owed to the IRS. However, it doesnt prevent private debt collectors from taking stimulus money. To cover this loophole, some states passed regulations preventing creditors from taking stimulus money. If youre concerned about this possibility, check to see what your state has done to protect consumers.
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They Can Search Your Social Media Profiles
In our hyper-connected world, many people use social media. Your social media profile may list your city, state of residence, current employer, former employer, and other bits of identifiable information. Facebook, LinkedIn, and other prominent social media sites are good resources for debt collectors to use to track you down. Even just knowing your city can be a good start for a debt collector to find your address. If a debt collection agency already has a judgment against you and wants to garnish your wages, they only need to know your current employer to get started on a garnishment.
How Do I Stop Harassing Phone Calls From Debt Collectors
Fortunately, there are legal actions you can take to stop this harassment:
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How A Debt Collector Gets Access To Your Bank Account
A debt collector gains access to your bank account through a legal process called garnishment.
If one of your debts goes unpaid, a creditoror a debt collector that it hiresmay obtain a court order to freeze your bank account and pull out money to cover the debt. The court order itself is known as a garnishment. The court order normally comes after a debt collector sues you and then wins a judgment against you.
Debts that may be affected include credit card bills, auto loan payments, personal loan payments, medical bills and mortgage payments.
In addition to garnishing a bank account, a debt collector may be able to garnish your wages. This happens when a debt collector secures a court order requiring your employer to subtract wages from your paycheck to cover an unpaid debt.
Four statesNorth Carolina, Pennsylvania, South Carolina and Texasdont allow wage garnishment for consumer debt. If you live in one of those states, a debt collector can still essentially garnish your wages by garnishing your bank account, though. Once your wages are deposited into your bank account, they arent considered wages anymore. Therefore, a debt collector may be able to tap into your account and take your moneyincluding money from your paycheck.
S To Take When You Receive A Notice That Your Debt Is Transferred To A Collection Agency
If you receive a notice that your creditor will transfer your debt to a collection agency, contact your creditor as soon as possible.
You may be able to:
- pay a portion of the amount or the full amount owed to avoid having the debt transferred to collections
- make alternate arrangements with your creditor to pay back your debt
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