Can I Avoid a Judgment?

The last resort for a creditor to obtain payment from a debtor is to try to obtain a court judgment. You actually agree to this when you take out a loan or apply for a credit card. The fine print in the document states that you agree to be sued if you don’t make your payments each month.

The main goal in a creditor’s lawsuit is to prove that you actually owe the debt. It is smart, if you really do owe the debt, to attempt to resolve any pending legal action quickly. It is often that a creditor may prefer a settlement to continuing with a legal action. To show good faith, it is helpful if you can provide an up-front partial cash payment.

You will want to know if the statute of limitations is still in effect. If not, the debt is no longer legally collectible. However, it is important to understand that the payment of even a small amount will reinstate your obligation to pay.

If the matter is being handled by an attorney for the creditor, consider calling the attorney and making an offer. No matter what you decide to offer, the attorney is bound legally to discuss your offer with the creditor.

You should do what you can to avoid going to court. Also, keep in mind that a settlement is always better than a court judgment. If your creditor is able to obtain a judgment, your credit report will reflect the judgment and the entry can remain on your credit report for up to ten years.

SHOW UP if you are forced to go to court! Many people who cannot reach a settlement with their creditor make the error of not attending the hearing. This, in turn, means that the creditor will be granted the judgment by default!

It is important to note that if you do appear, you should be prepared to present a defense and work toward a resolution of the matter. You will earn the respect of the judge and plaintiff creditor by doing so. This will require that you present a defense on your behalf.

You will receive a notice of judgment if the creditor is successful in his suit. The judgment will allow you 30 days in which to pay the debt in full. After the 30 days has run and if you still have not paid the debt, there are additional legal actions which the creditor may take. For instance, the creditor may be allowed to place a lien against your home or property. If a lien is placed against your home, the lien will have to be paid in full prior to the sale or refinance of your home.

The garnishment of wages is another legal remedy which is allowed in some states. Additionally, sometimes creditors are allowed to seize personal property to collect the debt.

The result of a judgment on your credit score will be far-reaching. Besides a loss of borrowing power, other areas of your life can be adversely affected. For instance, your chances of promotion or a new job opportunity may not materialize! It is wise to avoid a judgment at all costs.

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Attorney Generals Say To Collection Agencies “Enough is Enough!”

Almost everyone who has been in debt has received the dreaded phone call from a collections agency. But sometimes one phone call turns into twenty, and even worse, an agent may be aggressive and threatening on the phone.

While it may be true that collections agents are trying to collect a legitimate debt, more and more negative attention is being focused on unfair and aggressive policies that some companies have been using.

Some of the more threatening policies caught the eyes of James Caldwell, Louisiana attorney general and Washington attorney general Ron McKenna who have both pledged to make accounts receivable management firms and their owners take more accountability for their behavior.

Already, Caldwell has swiftly obtained injunctions on January 8th against two collection agencies that were not following proper procedure with the standards that have been set for obtaining debt.

On that very day McKenna also stated that his office had just come to an agreement with a collection agency that agreed to follow the new restrictions that have been established.

Some of the new boundaries that these collection agencies must comply with include more effective communication. This means that any harassment, intimidation, threats, profanity, or attempts to embarrass the debtor are now out of the question.

With these new settlements, these collection agencies under scrutiny will no longer be able to intimidate debtors through implications such as failing to pay a debt will result in a suspension of the debtor’s driver’s license.

Lastly, although it is lawful for these collection companies to report debts to credit reporting agencies, they are no longer allowed to threaten debtors with impairment of their credit rating.

Although collections agencies are justifiably trying to collect a legitimate debt, there are two issues to consider. People who owe money are just that people, who deserve to be treated with respect and dignity. More importantly, if a debtor is terrified of an aggressive collections agent who calls them constantly they very well might just stop picking up the calls, leaving themselves in debt, and the collection agencies with nothing.

Mallory McGuinness-Hickey works for debt collection agency Rapid Recovery Solution and does free lance writing about the business world.

Tax Liens 101

If you have never come face-to-face with a tax lien, let me explain what a tax lien is. A tax lien is a process whereby real or personal property has a lien placed against it in order to secure the payment of delinquent taxes. Taxes owing on the asset itself or taxes owed by a taxpayer will warrant a tax lien.

The most common form of tax lien is that placed on real property. Tax liens placed on real property differ from personal property tax liens in that real property tax liens attach to the home. So, if you decide to sell your home, that unpaid and delinquent tax remains with the house after the sale. The new owner will then be responsible for the payment of these overdue taxes.

The real property owner and mortgage lender will be served with a notice if taxes become delinquent on the property. A title search is invaluable if you are thinking of purchasing a piece of real estate. The existence of any tax liens will show up on a title search, thereby alerting you to the fact that there are unpaid taxes due.

When a property is sold which has outstanding taxes due, any lien against the property will normally be paid from the proceeds of the sale as a portion of the closing costs. If a tax lien is not detected prior to the sale, the delinquent tax will pass to the new owner.

As stated above, mortgage lenders and home owners will both be served a notice regarding the real property taxes when these taxes become delinquent. When this happens, often mortgage holders will pay the taxes and then turn around and bill the home owner for the amount paid. This is done because a government tax lien takes precedence over mortgage payments so the mortgage lender often feels it needs to protect its interests.

In the event this doesn’t happen, there are several different ways to make overdue tax payments in order to remove the lien from the property. The home owner can decide to pay the tax directly. Alternately, the home owner can decide to use an escrow account.

Normally, the home owner will have a length of time in which to pay the back taxes. If the taxes are not paid within this time period, the property can be seized, subsequently sold, and the proceeds used to pay the delinquent taxes.

Typically, federal procedures will dictate the process since most real property liens are federal in nature, such as liens for the payment of income tax or gift tax. If the tax lien is state mandated, the procedures will be determined by the state in which the real estate is located. To avoid this type of scenario, it is best to pay all taxes when they are due and to request a title search if you are considering a real estate purchase.

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Beating Credit Card Debt Collectors at Their Own Game

Most people would simply rather pay their credit card debts than deal with collection phone calls and collection attorney letters. But, what about those who cannot afford to make monthly minimum payments on their credit card debt? Many fall prey to the debt collection industry. Some, however, become educated consumers and use the law to force debt collectors to spend their time with other, less knowledgeable consumers.

Time is money for a credit card debt collector who is in the business of collecting unsecured consumer debt, most of which happens to be credit card debt. These consumer debt collectors and collection attorneys work on a percentage of what is collected. Most people think there is a debt collector for every debt, when the reality is there is only a debt collector for every easy-to-collect credit card debt.

Consumer debt collection has grown and prospered with the expansion of the credit card industry.

The Federal Reserve and Business Week report $133.7 billion of consumer debt in 1970 increased to $2.5 trillion of consumer debt in November 2007.

Each year debt collectors put more than $40 billion back into the U.S. economy, according to ACA International, a trade group for the debt collection industry.

There were 173 million credit cardholders in the United States in 2006, According to the U.S. Census Bureau.

4.75 percent of bank cards were delinquent in the first quarter of 2009, according to the American Banking Associate.

These statistics indicate debt collectors have millions of delinquent credit card accounts to collect from.

The Federal Reserve requires credit card companies to hold reserves for bad debts. The credit card companies profit from these debts after they are written off by selling them to junk debt buyers for no more than one penny on a dime, or 10 percent of their value. With that discount, junk debt buyers and their collection agencies and collection attorneys can be quite profitable by only collecting on 30 or 40 percent of the purchased accounts.

Debt collectors can make more money by pursuing delinquent credit card account holders who put up no resistance. Proper resistance to debt collection attempts usually causes debt collectors to look for less resistant targets. Effective resistance to credit card debt collectors relies on The Fair Debt Collection Practices Act (FDCPA).

The Fair Debt Collection Practices Act covers the behavior of collection agencies, junk debt buyers, and collection attorneys. The FDCPA treats attorneys as debts collectors, if they are collecting consumer debt. The consumer must be notified in writing by the debt collector of their right to dispute the debt and have it validated, according to the FDCPA. Copies of original documentation that verifies a debt are considered proper validation by the FDCPA. The FDCPA gives the consumer the right to tell the debt collector to stop collection activity until they have validated the debt.

Should the debt collector invest their time with those who properly dispute and request validation or those who put up no resistance?

Matt Highlander has researched credit counseling, debt settlement, debt collectors and collection attorneys. If you are seeking credit card debt relief, read Credit Card Debt Survival Guide