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Money Management International Improving Lives Through Financial Education
SUCESS NewsletterFinancial Education Newsletter
Debts have a statute of limitations in court but not in the ledger of a debt collector.

The Debt Advisor

Dear Debt Adviser,

I have a collection agency harassing me over a 10-year-old debt that is no longer on my credit report. The collector purchased this very old debt from the original creditor. The original creditor wrote off the debt many years ago and has not contacted me for several years now. I informed the collector that this is a 10-year-old debt from the original creditor and I will NOT pay them one cent. The representative informed me that the harassing robot calls will not stop until I pay them. My question is this: Does the collector have the legal authority to harass me via these robot calls to try to make me pay this very old debt? If not, how do I make them stop harassing me?
-- Eric

Dear Eric,

I'm not going to ask why you have a debt older than my cat. But I will say that in my experience, unfinished financial business and unpaid debts have at least nine lives and keep coming up at the worst times until they are finally taken care of. However, the quick answer to your question is "no." No collector has the right to harass you. They do have the right, however, to try to collect the debt and to do it vigorously. Just because the debt is 10 years old doesn't change the fact that you do owe it. However, you have the right, provided by the Fair Debt Collection Practices Act, or FDCPA, to request the collector to stop contacting you regarding the debt. Once you make that request, it would be illegal for them to continue to contact you.

I asked my friend at the University of Houston Law Center, Richard Alderman, who is also involved with the the People's Lawyer Web site, his take on the legal issues in your question and this is his response: "Your question raises several interesting issues. Even though this is an old debt, you still owe the money. It may be too late to sue and the debt no longer appears on your credit report, but that has not extinguished your obligation to pay."

I suggest that you check your state's statute of limitations to see if the debt is too old to take before a judge. Every state has its own. Some are as short as a few years while others can be as long as 15 years and even longer if the creditor has obtained a judgment previously.

So, while you may not be successfully sued in court, collectors can still pursue writing, calling and other remedies as allowed by the law. Professor Alderman went on to say that, "No debt collector ever has the right to harass you. Debt collector harassment or abuse is unlawful, and you could be entitled to any actual damages plus $1,000 penalty if you had to sue."

Now I don't recommend taking a debt collector to court lightly if you have any other options. There is a saying that if you get down in the mud and wrestle with a pig, you get dirty and the pig has fun. The bottom line is that the debt collector has no legal right to harass you and knows it. If the debt is past the statute of limitations, I suggest you or your attorney send the collector a written notice, demanding it stop all further communication. If the debt is within the statute of limitations, then telling them to stop all communications will accelerate their remaining legal options and you should expect a court summons in your future.

Send any written correspondence by certified mail with a return receipt request. If you continue to receive calls after you receive the receipt proving they received your letter requesting to stop communication, report the collection agency to the Federal Trade Commission, or FTC, and your state attorney general. You can also file a complaint with the FTC online or by calling its Consumer Response Center at (877) FTC-HELP.

You can also learn more about your credit rights by viewing The People's Lawyer's latest video, "Money, Credit and The Law -- Know Your Rights."

Good luck!

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of "Credit Repair Kit for Dummies."

 

 

 


Regifting

Surviving the post-holiday shopping blues

Opening gifts is a ton of fun. Opening the resulting bills is not. Yet every holiday season millions of consumers use their credit cards to buy gifts when they don't have cash.

 

During the next couple of weeks, those bills will start rolling in and a strong case of post-holiday remorse will begin to set in. When faced with the post-holiday blues, debt can seem insurmountable. To help you get a handle on the situation the financial experts at Money Management International (MMI) offers the following advice.

  • Realize that there are only two legal ways out of debt – cutting expenses or increasing your income. Decide which works for you and truly commit to it.
  • Create a damage sheet. List the names of your creditors, amount owed each and current interest rates, then total it all up. Update that sheet monthly and tape it wherever you will see it regularly.
  • Create a budget and a repayment plan. Track your expenses for one month so that you can be sure every expense is included.
  • Periodic expenses can break a budget so allocate an hour each Sunday to address your finances. Staying on top of your expenses will help you stay in budget.
  • Shelve your credit cards. Take them out of your wallet and leave them at home. In fact, store them with your damage sheet to remind you of your balances. If you have to use credit, don’t charge anything you can't pay off within 90 days.
  • Pay off the credit cards with the highest interest rates first.
  • Establish a 2010 holiday savings account so that next holiday season, relying on credit won't be necessary. Factor it in as an expense.
  • Take a good hard look at your spending habits. Credit is not an extension of your income!
  • If you can’t make a dent in your post-holiday debt, consider credit counseling from a reputable source such as Money Management International.
Treat this year's holiday charges as a learning experience and resolve to do better next year; so that in January 2011, you can focus on starting the New Year debt-free.

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Young Adults: Make your money work for you in the New Year

Managing finances is tough. There's no universal solution that applies to all people. It really depends on your personal income, debt, and household budget. Also, sometimes it isn't as easy as the 10-10-80 rule. At least I haven't found it so easy. Within the last few months I have had some drastic changes happen within my budget. And, once those changes were made (I thought for the better), I still found I was wasting money.

One day as I was looking over my bank statement and it just hit me: I was paying way too much in fees and not getting enough return in my investment. This is true for many people. It may not be bank fees, but there are some areas where your money can be more useful. Now is the perfect time to reflect and evaluate your finances to ring in a more prosperous New Year.

Ask yourself the following questions.

  • Am I getting the most out of my money?
  • Is my money working for me?
  • Do I have a savings cushion to rely on?
  • Is my money going to good use?

If you answered no to the above questions, it's time for a new game plan. Here are some steps you can take to have a prosperous 2010.

Determine if money is being wasted and fix the problem. This could include many areas. For me it was in high bank fees. I moved my money to a different financial institution that does not charge a monthly account maintenance fee. Some people are paying too much in auto insurance. Ask yourself this question, Am I paying for services that are typically free elsewhere?; If you answered yes resolve to change those habits and put your money to better use.

Research new products that will help you get where you want to go. I chose to switch financial institutions, but often it is as easy as choosing a different product within the same financial institution. Take a look at your account statements and research similar products to get the best value. Doing this will guarantee your money is working for you. Also, if your situation happens to be with a financial product such as a savings or retirement account changing investment strategies will help your money to grow more productively.

Set a goal and strive to achieve it. I want to travel more. Even if it’s just once a year, it is something I want to do for myself. So I decided on my dream destination, researched how much it would take to get there (and back), and I’m saving up for the trip. What are your financial goals? Maybe it’s beginning graduate school or buying a home. Clearly write out your goals, what all is involved to achieve it, how much money it will take, and a timeframe on achieving the goal. When setting a timeframe, it’s more beneficial to state a specific date.

For many people, the New Year is a time to make resolutions they hope to achieve to better their lives. Whether the past year was prosperous or not there’s always room for improvement and the opportunity to maximize your earning potential.

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If you would like more information about signing up for a Debt Management Plan through Money Management International, visit MoneyManagement.org.


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About Money Management International

Money Management International (MMI) is a nonprofit, full-service credit counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. Services are available in English or Spanish. To learn more, call
800-762-2271 or visit moneymanagement.org.


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