Debt Refinancing Guide

Bad debts are a huge problem. Bad debt collection is an even bigger problem. When a debtor has stopped making payment months or years ago, the debt is considered a refinancing-guide/bad-debt">bad debt. This debt can be written off and declared as a loss. The problem is that banks, lending companies, and smaller creditors need to survive. If they keep on declaring bad debts as losses, they will keep losing money. For smaller businesses, it means valuable money that could have been used for operational expenses. More importantly, if bad debt collection doesn?t happen, debtors will assume that their creditors will just let them off the hook.

So, how can a company achieve successful bad debt collection? The key is in the correspondence with the debtor. First of all, make sure that your debt collectors follow the provisions of the Fair Debt Collection Practices Act. Although you?re desperate to get your money back, you?re not allowed to use threats and insults to intimidate the debtor. You want to get paid, not get sued.

Secondly, use all possible venues for communication. You can call, email, fax, or make a personal visit. Make sure that you find a way to communicate with the debtor. Let the debtor know that you are serious about collecting that bad debt. Bad debt collection is about informing debtors that they are responsible for their debts. The best thing you can do to communicate with your debtors is to send collection letters. In these letters, you should indicate the details of the debt ? the amount, the transaction information and the original creditor. Provide all the necessary information and attach any other document that the debtor needs to verify the nature of the debt.

Why letters? The debtor may just dodge your calls, but he cannot escape the collection letter. At the same time, the debtor may be aggressive and defensive when you call. He will keep interrupting you, and you will not be able to give the information he needs to know. In addition, collection letters are valuable documents that can be used as evidence in the event that the matter goes to court.

Thirdly, give a deadline. Be strict and confident. Bad debt collection is about letting the debtor know that you want the debt settled as soon as possible. Don?t ask when it is convenient for him. Say that you want the debt settled by tomorrow. If he says he can?t pay by tomorrow, then you can negotiate. In the end, don?t fall for his excuses. You should try to set a definite deadline.

Also, you need to be respectful. If the debtor finds that you are nasty, you?re just giving him more reasons to ignore you. If you want him to pay, you have to establish a formal but cooperative relationship.

Lastly, if you have tried all of the above and you still cannot succeed in bad debt collection, contact a collection agency to help you.

Debt collection software is a program that helps companies track debts. This software is designed to keep track of payments, fines, penalties and other matters concerning the accounts of debtors.

Benefits of debt collection software

First of all, debt collection software will help you get organized. Instead of having piles and piles of paperwork in the office, debt collection software can consolidate all the information in one place. At the same time, debt collection software can be easily updated. Once the debtor pays a certain amount, it can be easily recorded by the software. This way, you can keep better track of the activities in each account. You will have all the necessary information, including the date and time that the payment was made and the amount that was paid.

Secondly, debt collection software is a great way to keep track of your correspondence with your debtor. Debt collection software has features that allow you to record the exact day and time the collection letters were sent. In some cases, debt collection software can record portions of phone calls. If ever the case goes to court, you can use the debt collection software to show evidence that you tried to maintain correspondence with the debtor.

Lastly, using debt collection software is much cheaper than hiring people or agencies to track accounts for you. For smaller businesses, hiring an external agency or person to do organization and collection of debts will be too costly. Debt collection is a much cheaper alternative.

Features of debt collection software

When purchasing debt collection software, there are a few features that you should look for:

An accounting feature ? When debt collection software has an accounting feature, it will be able to account for all payment activities that are made for each account. This way, even if the debtor insists on smaller but more frequent payments, you can still keep track of each payment.

Auto dialing ? You should get debt collection software that can be hooked up to the telephone for auto-dialing. With just a single click, the computer can instantly dial the debtor?s home phone number or cellular phone. You will no longer waste time to locate contact details of the debtors.

Letter Templates ? Choose debt collection software that has templates for debt collection letters. This way, you don?t have to spend too much time drafting letters. By simply plugging in the information of the client onto the template, you will be able to print the letter in minutes.

However, remember that the software should also serve your company?s needs. The software you use should help make debt collection easier. It should help you monitor the accounts. In the event that the debtor disputes the debt, you can easily use the debt collection software to verify the nature of the debt.

With millions of Americans in debt, debt collection has become a booming industry. In 2004 alone, the debt collection industry made over $16.5 billion in profit. With so much money on the line, debt collection agencies are under a lot of pressure. In some cases, this pressure has resulted in abusive and aggressive behavior that many debtors find intimidating.

So, in order to protect debtors, the United States had to formulate debt collection laws that will help keep debt collectors in check. The primary debt collection law is the Fair Debt Collection Practices Act (FDCPA) of 1977. In a nutshell, the FDCPA specifies ways in which debt collectors must conduct themselves.

As the most prominent of all the debt collection laws, the FDCPA has measures that prohibit debt collectors from engaging in certain activities. Some of these include the following:

Violations of your privacy ? Debt collectors can only talk to other people for the purpose of finding your current location. They are not allowed to disclose any information regarding the terms of the debt collection process. In the first place, they are not allowed to tell anyone that you have an outstanding debt.

Unfair calls or visits ? According to debt collection laws, especially the FDCPA, debt collectors are not allowed to appear at your doorstep whenever they want to. They are only allowed to call or visit between the hours of 8:00 am and 9:00 pm. Debt collectors are also prohibited from appearing at your workplace, especially if you have previously informed them that you are against such visits.

False Representation ? The debt collector cannot intimidate you with false authority. He cannot say that he is a lawyer if he isn?t. He cannot inform you that he has the power to personally repossess your things. He also cannot present documents that make it seem like his actions are directed by the government.

However, the FDCPA is not the only law that is related to debt collection. Individual states usually have their own debt collection laws that are imposed to provide protection for their own citizens. In California, for example, the debt collection laws require the debtor to keep written records of communications and transactions with the debt collector. On the other hand, Pennsylvania has a Fair refinancing-guide/credit">Credit Extension Uniformity Act that helps protect debtors from the deceptive behaviors of debt collectors. This act supports the FDCPA and it states that debt collectors CANNOT falsely imply that your inability to pay your debt is a crime. The debt collection laws of Pennsylvania also detail that debt collectors are not allowed to issue false threats of legal action.

Other states also have their own debt collection laws. These debt collection laws have one thing in common – they help protect debtors from being abused by eager debt collectors. The debt collection laws make sure that the growth of the debt collection agency is coupled with the values of good service and integrity.

Debt collection is covered by the statute of limitations. The statute of limitations refers to the law that sets a deadline for law suits. For every type of case, the law sets a certain timeframe for people to sue. Normally, the debt collection statute of limitations set the timeframe according to the date of the event?s occurrence. In reference to debt collection, it means that after the designated statute of limitation expires, a collector can no longer sue you. So, if the collector wants to go with legal action, he should start the process before the debt collection statute of limitations expires.

The debt collection statute of limitations is computed according to the last time you made a payment to your debt. For example, you made a payment on May 15, 2008. Six months will be added to that date. It will now be November 15, 2008. Next, add the number of years of the statute of limitations. This will depend on two things ? the state where you incurred the debt and the type of agreement you signed for the debt. For the purpose of this computation, let?s assume the debt was an open-ended account in New York. This means that six years will be added to November 15, 2008. This will make November 15, 2014 the date that the debt collection statute of limitations expires. All debt collection activities may stop now since the debt collector can no longer use legal action to force the debtor to pay.

Knowing the debt collection statute of limitations is important. With this information, you can know your account?s situation and how it affects the chances of you being sued. Remember that even if your account is only a month or a day from the expiration of the statute of limitations, you can reset the expiration date if you pay just a single dollar. You?ll be back to square one, and you?d have to wait six months and six years before you can be free from any possible law suits.

To determine the statute of limitations on your debt, it is important to know what kind of debt you have.

Open-Ended Accounts – According to the Truth in Lending Act, an open ended account is a type of refinancing-guide/credit">credit plan that has repeated transactions and interests and balances that vary from time to time. Credit cards belong to this classification.

Oral Contract ? This is a contract where you verbally guarantee someone that you will pay the debt you owe him.

Written Contract ? A debt where the creditor and debtor sign an agreement that details the terms of payment as well as fines and penalties.

Promissory Note ? This involves a written document where the debtor agrees to pay the debt according to a specific schedule of payments. The debtor also agrees on the applicable interest rates.

Being in debt doesn?t mean that you are at the mercy of your creditors. In fact, in 1977, the United States Congress passed the Fair Debt Collection Practices Act. Commonly referred to as FDCPA, the Fair Debt Collection Practices Act was drafted in order to prevent debt collection agencies from abusing or harassing debtors. This act outlines the limits to which collection agencies can pursue debts. The act also specifies the legitimate steps that collection agencies can take in order to collect payments for debts. Meanwhile, the act also provides options as to how debtors can respond to debt collection agencies.

To begin with, what debts does the Fair Debt Collection Practices Act cover? Generally, the act is applicable to personal debts as well as family debts. It also includes household debts. More specifically, it applies to refinancing-guide/credit">credit card debt, car payments, and even house mortgage. It also covers retail financing as well as costs incurred for medical care.

Before we delve further into the specifics of the law, it is important to remember that the Fair Debt Collection Practices Act only covers debt collectors who collect debt on behalf of others. This includes lawyers who pursue debts for their clients as well as collection agencies which conduct debt collection services for other companies. This means that this act does not apply to in-house collectors. In-house collectors are those who work for the collection department of the very business which you owe money to. For instance, a store has its own credit collection department. If the store?s collection department contacts you regarding a certain debt, it does not have to act according to the Fair Debt Collection Practices Act.

For your safety, it is important to know what practices are prohibited by the Fair Debt Collection Practices Act. Here are some of the activities that debt collectors may NOT do:

1) Your debt collector is not allowed to reach out to other members of your family or anyone else in your workplace.

2) The debt collector cannot harass you with repeated phone calls or unreasonable visits. This means that when he is contacting you regarding your debt, he can only call or visit within the hours of 8:00 am and 9:00 pm.

3) The debt collection agency cannot insult your person. He cannot use racial slurs. He is also not allowed to speak to you using profane or obscene language.

4) Unless he is backed by legal documents, the debt collector cannot threaten you with lawsuits or repossession.

5) The debt collector cannot falsely represent himself. He cannot use materials that will make the debtor think that he is a lawyer or he is affiliated with the government.

6) The debt collector cannot charge you extra fees, collection fees and other amounts that are not included in your original debt.

The Fair Debt Collection Practices Act was passed to make sure that debt collectors act honestly and fairly. It doesn?t favor debtors; it simply safeguards both parties from harmful activities.

When you miss payments on your debts, you?re not the only one who gets into trouble. Your creditors, the businesses that you owe money to, also feel the crunch. For every month that you don?t pay, they will lose more and more money. For smaller businesses, this can be devastating.

This is where debt collection agencies come in. When companies find that pursuing you for payments is taking too much time and resources, they turn over your debt to collection agencies. The debt collection agencies usually focus on recovering money from overdue accounts. These agencies collect debts for a certain fee. Sometimes, they offer services in return for a percentage of the debt that they are collecting.

There are two types of debt collection agencies. They are normally classified according to their level of affiliation with the original creditor or lender.

The first type is the first-party agency. Such an agency usually belongs to a subsidiary or a department of the original creditor. For example, if you owe debt to a refinancing-guide/credit">credit card company, the company may send its own collection agents to collect the amount you owe. Normally, first party agencies act fast. They do not wait for you to have months and months of overdue payments. Since you are a customer, they want to keep a positive relationship with you. Hence, they will contact you earlier to sort out the debt problem in the most efficient way possible. However, since these are in-house collection agencies, the Fair Debt Collection Practices Act does not apply to them.

If the first party agency is unsuccessful in collecting the debt, the company will resort to a third party agency. The first party agency normally lets another agency handle the debt if it experiences more than six months of unsuccessful attempts at contacting the debtor. Third party agencies are basically agencies that are NOT in any way involved in the transaction made for the original debt. These debt collection agencies make an agreement or a contract with the original creditor. The agreement covers the payment methods that the creditor will use to pay for the services of the agency. Since these agencies act as representatives of the original creditor, their actions are regulated by the Federal Trade Commission using the Fair Debt Collection Practices of 1977.

Debt collection agencies act in a very straightforward manner. They begin the debt collection process by contacting the debtor and sending a written document that outlines all the details related to a certain debt. After the initial contact, the debt collection agencies allow a period of 30 days for the debtor to raise concerns regarding the debt that is being collected. In this instance, the debtor is allowed to argue that the amount of the debt is wrong or that he has made the necessary payments. Debt collection agencies will investigate the claim and the debt collection process will stop while the investigation is being done. When the debt collection agencies have settled the debtors? claim, they may drop the case or continue collecting the debt.

If you have debts to pay for your refinancing-guide/credit">credit cards, student loans, mortgages or car payments, you should be diligent about making the required payments. If you repeatedly miss payments, your account may be turned over to an agency for the collection of debt.

Once your creditor has grown tired of pursuing you for payments, the collection agency will assume all the responsibilities related to the collection of debt. The collection agency will contact you to inform you that it will handle your account. Within five days from the time of contact, the collection agency will send you details regarding the collection of debt. The agency will mail or fax a written document with information about the amount of money you owe, the company you owe it to and the actions it will take if you do not make payment.

The process of collection of debt may start with a phone call, an email, a fax message or regular mail. Sometimes, the collection agency may even visit you at your home. However, keep in mind that collection agencies are not allowed to contact you before 8:00 am or after 9:00 pm. This ensures that communication happens at a time that is convenient for the debtor. Also, the collection agency is not allowed to call you incessantly or flood your mailbox with numerous emails. Such a behavior may be considered harassment.

In the course of the collection of debt, there are practices that should be avoided by the representatives of the collection agency. These include:

1) Use of threat of force, violence or harm.
2) Use of obscene and profane language.
3) Use of racial slurs, and other insults
4) False representation ? the collector cannot lead the debtor to think that he has legal powers or that his actions are mandated by the government
5) Solicitation of extra fees and charges

Moreover, the collection of debt is a process that should work for both the collector and the debtor. While the debt collector has the right to pursue you for payment, you also have the right to dispute his claim. If you have reason to believe that the debt is not yours or that the amount indicated is incorrect, you may write a letter to the collection agency. This letter should be filed within 30 days of the time of contact between you and the collection agency. Also, if you want the collector to stop calling you, you can send a letter requesting that all communication be done via regular mail.

In the process of the collection of debt, you are allowed to contact the debt collector and request for changes in your payment plan. You may ask him to reduce the amount or to allow you to make more installments over a longer period of time. This gives the collector the guarantee that you will pay since the newly-negotiated rates are more affordable to you.

You may think that the debt collection letter that?s sitting in your mailbox is nothing but pain mailed directly to you. However, you have to keep in mind that for every debt collection letter that is sent, the pain goes both ways ? the creditor is desperate for payment for an overdue account and the debtor is scrambling for money to meet the due date of the payment. So, just as much as the debtor feels pressure, so does the creditor. After all, every delinquent account means that the company will not be getting back some money.

So, what exactly does a debt collection letter contain? The debt collection letter is sometimes referred to as a letter of demand. This letter notifies the debtor of the outstanding balances or unpaid amounts on his account. In certain cases, the letter may also inform the debtor that unless he is able to make the payments on time, court action may be used against him.

In order to help the creditor grasp the full details of the debt, the debt collection letter must come with all the documents that are related to the account. These include copies of the contracts, invoices of past payments, and other letters of agreements made between the debtor and creditor. This way, the debtor will have the documentation that proves that he is responsible for the debt.

The debt collection letter lets the debtor know that the creditor is serious about getting his money back. And in the event that the matter goes to court, the creditor can use the letter as proof that the company did attempt to contact the debtor in an effort to settle the account.

Now that the debt collection letter has reached your mailbox, what do you do next? The first step is always to respond to the letter. You have to let the creditor know that you are not running away from your responsibilities. If you ignore the letter, you may put yourself in more trouble.

Before you respond, study the letter and the attached documents. If you need to dispute the debt, contact a lawyer who can help you. Once you and your lawyer have drafted a letter of dispute, mail it to the creditor immediately. If you agree that you do owe the debt, you should contact the creditor as well.

Once you have contacted your creditor and your responsibility for the debt has been duly established, you may begin to negotiate with the creditor. You can offer to pay several installments or you may offer to pay immediately but with a lesser amount. Since the creditor most likely wants to save on the costs of pursuing you for payment, he is bound to agree.

After you respond, the debt collection letter has done its job. It has opened a way for the creditor to reach you and inform you of your delinquencies. At the same time, the letter has made some options available to you, and you can select a payment scheme that is affordable to you.

It may be true that you do owe money to the debt collector who is standing at your door. However, that doesn?t change the fact that you are still a client and you deserve to be treated fairly. You have the Fair Debt Collection Practices Act to protect you. This act will help you fight back when your debt collector displays actions that can be considered refinancing-guide/bad-debt">bad debt collection practices.

By understand the Debt Collection Practices, you will know what your debt collector can and cannot do.

Dos of Debt Collection

The debt collector must employ Debt Collection Practices that respect the rights of the debtor. This means that he should willingly provide the debtor with documents that will verify the nature of his debt. The debt collector must also initiate communication with the debtor. While communicating with the debtor, the collector must be courteous and cooperative.

Here are some of the other Debt Collection Practices that the collector should do:

1) Within five days of the initial contact, the debt collector should send a written document that lists all the details regarding the debt. These include information about the original creditor, the date the debt was incurred, the total amount owed, and the deadline for payment. Also, all the documents should be attached for the debtor?s reference.

2) The debt collector should let you know the steps you need to follow if you want to dispute the debt.

3) The debt collector should honor your requests. If you submit a letter to inform the collector that you no longer want him to call you, he should comply.

4) The debt collector should keep your debt as a private matter.

The Don?ts of Debt Collection

There are some Debt Collection Practices that are designed to intimidate the debtor. These Debt Collection Practices should be avoided. Debt collectors should remain respectful to the debtor. Acts of harassment and abuse are punishable by law.

Here are some of the Debt Collection Practices that are sanctioned by law:

1) Debt collectors are not allowed to contact you at inconvenient places or hours. This means no calls or visits before 8:00 am and after 9:00 pm. This also means that if it is inconvenient for you to talk to the collector when you?re at work, he should stop making calls and visits to your workplace.

2) Debt collectors are not allowed to issue false threats. Unless he fully intends to carry out legal action, the collector cannot say he will sue you. If he says he will sue you, ask for a document from the agency that shows its intention of pursuing legal action. Also, the debt collector cannot scare you with threats of jail or repossession.

3) Any debt collection practice that involves insulting or discriminating the debtor is completely unacceptable.

4) The debt collector cannot physically hurt you if you refuse to pay.

The words ?debt collection? bring a lot of panic and anxiety to individuals who are in debt. It may be your student loans, your mortgage on your house or your car payments. No matter what the debt may be, debt collection is something that every debtor has to face. After all, your creditors and lenders need to get their money back.

So when you answer your door bell and you come face to face with the representative of a debt collection agency, don?t panic. Remember that debt collection is an activity that is regulated by the law. The law ensures that debt collection is just an act to pursue you to make payments; it will not impede on your rights. The Fair Debt Collection Practices Act of 1977 details the rights that you have when it comes to debt collection.

First of all, you may be wondering why a representative of a debt collection agency is at your door. If you owe a certain amount of debt to a company, you usually pay the debt according to the contract that you signed. However, if you miss payments or you refuse to stick to the payment plan, the company may turn the debt over to a collection agency. This can also happen if you continually ignore notices from your lender. To put it simply, debt collection happens when your creditor or lender feels that pursuing you for payments is already taking up too much of their resources.

Of course, the debt collector cannot simply pop up on your doorstep, demanding that you pay your debt. Typically, debt collection starts when a collector contacts you and notifies you of the status of your debt. The initial contact can happen through a lot of ways. It can be done through a letter, a fax, an email, or a typical phone call. In some cases, the debt collection process can start with a home visit from the collector. However, do not panic. The first visit is usually for the purpose of gathering information only. The debt collector simply wants you to know that he will be handling your payments.

Debt collection is a very transparent process. You will be given all the information you need. For instance, within five days of initial contact, the collector will send you a written document that will provide the necessary details regarding your debt. It will include the name of the creditor or the business from which you borrowed the money. Also included is the specific amount that you have yet to pay.

However, it is important to note that debt collection activities are not always 100% accurate. Sometimes, businesses fail to update your payment records and they may assume that you have missed some payments. If you believe that you have sufficiently settled your debt, you can just write a letter to the collector to explain yourself. You must show proof that you have settled the account, and until the collector can dispute your claim, all debt collection activities will stop.