Insurance and Credit

One of the most common questions that I receive from people struggling with their household finances is, How do I stop collection agencies from harassing me? Many of the people asking me about the harassment they are enduring from debt collectors come from divorced individuals. I recently got an email from a divorced lady whose ex-husband had quit paying the bills he agreed to pay in their divorce decree. Her situation is not unique.

The story often goes like this: Girl marries boy. Girl and boy divorce. Boy hates girl. Boy vows to make girl’s life miserable. Boy fraudulently obtains multiple joint accounts with Girl’s information. Boy wracks up an ungodly debt and drops off the face of the earth. Girl is stuck holding the bag.

Don’t assume that a divorce settlement resolves who gets what debt. If a partner fails to pay on that debt, and it is a joint account, you are on the hook. Debtors do not care what the divorce court says, their collection efforts are not governed or limited by a divorce settlement. This is unfortunate, but it is legal. You were the co-signer.

The lady I received an Email from was experiencing this very thing. Six years ago, she had wrangled with debt collectors, and refused to cooperate in paying for a single dime her ex-husband had squandered and left unpaid. As time passed, the collection calls tapered off. Now, over half a decade later, she is getting those same calls again. The debt collectors are now trying to collect almost $9,000 along with interest and fees for the past-due amount.

My sympathies were certainly with her. After having remarried and left the past behind her, it was rearing its ugly head again. She wanted to know, How can these collection agencies legally harass me for my ex-husband’s actions? We’re not even married any more! She also asked the more practical question of, How do I stop the collection agencies from chasing me for these bills?

If you allegedly owe money to a creditor, they may pursue you until they tire of the chase. When this happens, they often sell the rights to collect that debt to a collection agency. While there are state statutes on how long you may be pursued, the start date is based upon when the collection agency purchased your account. To avoid the account exceeding state statutes, collection agencies routinely buy and sell accounts amongst themselves. This process is known as re-aging debt, and can continue indefinitely.

Onto the first question of what to do. I had no easy answer. Repairing credit and disputing collections takes work. In the case of collections, it will probably mean repeating your efforts, at some point in the future. So, what can you do?

Don’t spend all of your time placing dispute comments on your credit reports. Nobody reads them. If you spend the time to even argue the collection, by placing a comment, you may actually be hurting yourself. It also makes this bad debt stand out on your credit report. Exactly what you don’t want to have happen. How much can you say in your defense when the credit bureaus only give you 100 words to dispute a claim. It just isn’t worth it.

Don’t be afraid to dispute a collection account, but be smart about it. Demand documented proof that the account belongs to you, and any supporting evidence that the collector can legally make attempts to recover the debt. Legally, if they cannot prove the debt is yours, they may not report it to the credit bureaus or continue their attempts to collect. If you know the steps in this process, you can be surprisingly effective in shutting down their efforts. Most collection accounts have been repeatedly bought or sold, and the paperwork can often be sketchy.

Check your state laws. Collection agencies are often contemptuous of the statute of limitations on debt collection, unless you are knowledgeable enough to threaten them with your knowledge of their violation.

One of the most effective methods of halting those annoying calls and letters is a cease and desist letter. Both the state and Federal government have laws that regulate debt collection to protect you, the consumer. Once you issue a cease and desist, federal law prohibits the collection agency from pursuing you by phone or mail for that account, other than to acknowledge that they are stopping their efforts.

As a last ditch effort, you can offer to settle the debt. You may tire from the efforts of the debt collections, and just want the whole problem to end. If so, offer to pay ten cents on the dollar. In return, the collection agency must provide you with a letter stating that your account is settled, and will be removed permanently from your credit report. Never, never settle for a verbal agreement. A collection agency will tell you just about anything you want to hear, as long as they think that they can get at least some money from you. Since they normally pay pennies on the dollar for your debt, they are still making money on you. Insult to injury, they will sell the remaining debt, and the process repeats itself.

If you are facing collection efforts, don’t be afraid to fight back. If they’ve damaged your credit, you can do something to repair it. Your efforts will probably result in a higher credit score, and will certainly reduce the efforts of collection agencies. If you are struggling with collectors, and the process just seems too frustrating, you may want to consider using a reputable credit repair agency. One of the companies with a reputation for effectively dealing with collection agencies is Over720.com. They are the only credit repair company that I’ve found that will repeatedly confront collectors. Most of the credit repair companies will remove your bad account from your credit report, and it will reappear six months down the road. The account was sold, and a new collection agency is working the file. Over720.com is the only company that will resolve any recurrances, free of charge. I have to admit, they are tenacious and serious about getting results. That’s not very common in the credit repair industry.

Decide how you are going to resolve your collection issues, and then act. In today’s economy, your credit score is too important to be damaged by a collection agency. Be tough, and you can resolve those issues.