Definition
Debt collection is the process by which creditors or specialized collection agencies attempt to recover overdue debts from borrowers (debtors). This process typically begins after a debt has become delinquent, meaning payments have been missed for a certain period. Original creditors may handle initial collection efforts themselves or hire a third-party collection agency. If the debt remains unpaid, it might be sold to a debt buyer. Debt collection activities can include sending letters, making phone calls, and, in some cases, taking legal action such as filing a lawsuit to obtain a judgment against the debtor. The Fair Debt Collection Practices Act (FDCPA) regulates the conduct of third-party debt collectors in the U.S.
Frequently Asked Questions
What are my rights when dealing with debt collectors?
Under the FDCPA, you have rights including the right to request debt validation, to stop certain communications, to be free from harassment or abuse, and to sue for violations. State laws may provide additional protections.
How long can a debt collector try to collect a debt?
While a debt collector can attempt to collect a debt as long as it's owed, there's a statute of limitations that limits the time they can sue you for it. This varies by state and debt type. Even after the statute of limitations expires, they may still contact you, but cannot successfully sue.
What should I do if a debt collector contacts me?
Don't ignore them. Communicate in writing. Request debt validation within 30 days of their first contact to ensure the debt is legitimate and they have the right to collect. Understand your rights under the FDCPA.
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