Debt Collections: The Importance of Not Being Sued

by Sachin

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If you run and hide from a debt collections agency, you will eventually be sued. Most debt collections agencies are looking to settle the debt over taking you to court to sue you.

It seems the natural reaction to do when a debt collection agency is chasing you is to want to run and hide. Although hiding might be the most common way to react, obviously it is the worst way to deal with your situation. If we don’t answer their calls, or don’t respond to their letters, they will move towards taking legal action against us. The business of debt collections is booming. In hard times for the rest of the economy, the debt collections business always sees a big upturn. The process where companies sell or transfer debt among each other can actually benefit us as consumers. In the last 15 years, the debt purchasing industry has grown over 10 fold – that is over 1000%.

Account Details and Transfer

When someone has defaulted on cash loans, credit cards, store cards, or other unsecured bank loans, the collection agency normally only receives an electronic file containing the debtors details, account details, personal details and a small amount of other information related to the account. Interestingly enough, other important personal information and details related to the debt is not included. The more times the debt is sold on, the less information that is normally included in that electronic file.

Statute of Limitations

Most people don’t understand the statute of limitations. It is important not to confuse this issue. The statute of limitations is only the amount of time the agency has to contact you about the debt, and not the time that you have to pay it back by. Just because the statute of limitations has expired, and you have not paid back your debt, it does not mean you do not have that debt anymore.

Option to Sue

Many debt collections agencies will not have the information they need to sue you immediately. Taking you to court will take sometime, and most of the time they are more interested in talking with you directly and pressuring you into repaying. Suing you is often the last option of any debt collection agency.

Proving the Debt

While most debt collection agencies behave in the proper manner, there will still be those agencies who do not. It is important you understand your rights. The first real importance of the debt collection agency will be to have you admit to owing the debt. When you are contacted by the debt collection agency, you should never admit to the debt immediately. If you are being harassed by a debt collection agency, you will even have the right to sue them. It does not make sense for them to harass you or behave badly. This can even reflect on their clients.

Default Judgments

Once a matter has gone to court, it is highly likely you will lose the case. If you do not go to court, you will lose the case on default. It is important you go to court, unless you know that you are the one who owes the money. Once you have lost the court case, the debtor can then go about getting the money that is owed by you through such measures as taking money from your bank account, garnishing your wages or other more drastic measures.

Running from a debt collection agency is the worst thing you can do. Most of them will be looking for a settlement long before they attempt to take you to court. Getting help with settlements is imperative. There can be many complicated issues that arise, such as paying high debt collection fees on top of the interest that you now owe. Settlement will take some time, but that is better than losing complete control of the situation by being sued in court.

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