If you don't take action, judgment may be entered against you. If that happens, the creditor may be able to enforce the judgment by repossessing your goods to sell and get their money back.
Although no one enjoys debt collection phone calls, ignoring them is rarely the right response. Even if you don't owe the debt in question, it is better to address the situation than to ignore it and hope it just goes away.
Use this 11-word phrase to stop debt collectors: “Please cease and desist all calls and contact with me immediately.” You can use this phrase over the phone, in an email or letter, or both.
If the debt is not collected, then the debt collector does not make money. In many cases, although you would think that debt collectors would eventually give up, they are known to be relentless. Debt collectors will push you until they get paid, and use sneaky tactics as well.
A debt collector has a certain period of time (typically three to six years) to file a lawsuit against you to collect the money you owe. This period normally begins at the point you missed the first payment on a credit account, such as a credit card or personal loan.
Ignoring the debt does not make it go away. This is why it is important to take action if you are contacted by a debt collector or served with a debt collections lawsuit.
Don't ignore the notice. If you don't take action, judgment may be entered against you. If that happens, the creditor may be able to enforce the judgment by repossessing your goods to sell and get their money back.
On the other hand, here's what you shouldn't do. Don't give a collector any personal financial information, make a "good faith" payment, make promises to pay, or admit the debt is valid.
If you don't pay a debt collector or collection agency, you'll likely face increasing efforts to collect the debt via phone calls, letters, or even social media contact. Not paying a debt in collections will also hurt your credit score. If you don't pay, the collection agency can sue you to try to collect the debt.
You cannot remove collections from your credit report without paying if the information is accurate, but a collection account will fall off your credit report after 7 years whether you pay the balance or not.
Send a 'drop dead' letter
You have the right to ask them to stop contacting you. To do so, you can send what's sometimes referred to as a “drop dead letter” — a written notice to the debt collector informing them you want no further contact. By law, debt collectors are required to follow this request.
A debt trap means a trap that occurs when a borrower is compelled to take out more loans in order to pay off previous ones. In essence, a debt trap happens when financial responsibilities outweigh a person's ability to repay loans.
A debt trap means the inability to repay credit amount. It is a situation where the debtor could not be able to repay the credit amount.
As a precaution against scams, don't give a debt collector any personal information besides your name. Ask for the debt collector's contact information and the details about the debt. Call the debt collector back after you've verified both the debt and the debt collector, and once you have an action plan ready.
Ignoring or avoiding the debt collector may cause the debt collector to use other methods to try to collect the debt, including a lawsuit against you. If you are unable to come to an agreement with a debt collector, you may want to contact an attorney who can provide you with legal advice about your situation.
It may be tempting to simply ignore debt collectors but that is generally a poor long-term solution. Several potential consequences of not paying a collection agency include further negative impacts to your credit score, continuing interest charges and even lawsuits.
Unpaid debt doesn't go away. Until the debt is either paid or forgiven, you still owe the money. This is true even if it's a credit card debt that is sold to a collection agency and even if you think it's unfair.
When it comes to debt collection calls, it is never clever to ignore them. In fact, it may make things a lot worse for you. The debt collector may file a collections lawsuit in court, which could lead to the garnishing of wages, seizure of personal property, or money taken from your bank accounts.
Debt collectors have a reputation—in some cases a well-deserved one—for being obnoxious, rude, and even scary while trying to get borrowers to pay up. The federal Fair Debt Collection Practices Act (FDCPA) was enacted to curb these annoying and abusive behaviors. Even so, some debt collectors flout the law.
Six Year Limitation Period
For most debts, a creditor must begin court action to recover the debt within six years of the date you: Last made a payment. Admitted in writing that you owe the money.
Debt collection is legal. The people you owe money to (your creditors) have a right to get it back. But it's not okay to harass or bully you. If you receive a notice about being taken to court, get free legal advice straight away.
However, can you actually go to jail for debt? The answer is no – even if the debt is linked to a crime like tax avoidance or ducking a debtor's examination, you can only be charged for the crime and not the debt itself.