If you are being threatened with a debt collection lawsuit, or if you are being harassed or sued over a debt by either a debt collector or an original creditor, you should know that there are some laws in place that could help you. This article will briefly discuss a few of the sources of legal rights you may have.
The difference between "Debt Collectors" and "Original Creditors"
First, a distinction that is very important in the law: the difference between debt collectors and original creditors. An "original creditor" is an entity (the law calls it a "person," but it could be a human or a business) that extended credit to you in some way. For present purposes, it could also mean someone you owe money to in a non-credit transaction, and also means "servicers" of loans. Debt collectors are "persons" a significant part of whose business is the collection of debts due to other people.
Laws pertaining to Original Creditors
Because original creditors have some connection with the public other than debt collection and are therefore at least somewhat vulnerable to negative public opinion, the law gives them much more latitude in dealing with people who owe them money. They are not, however, permitted to assault you, obviously, or engage in other extreme and "outrageous" behavior. Where that line is drawn, however, differs from place to place. Some jurisdictions have allowed original creditors to post your name on a "hall of shame" board, for example, but I've never heard of anyone being allowed to chase you down the street calling you names. It's vague, I know.
Laws do prevent anybody from defaming you (publication of false, seriously derogatory information), and this would include the publication of false information to your credit report. By and large the rule is, that all the basic rules apply to creditors, but very few special ones do. There might be particular laws in your jurisdiction, though, so you must take that with a grain of salt.
Laws pertaining to Debt Collectors
Debt collectors don't have the "civilizing" connection to the community that most businesses do, and so the law is much more stringent regarding them. The rule there is that the Fair Debt Collection Practices Act makes "unfair" or deceptive debt collection techniques illegal. Again, the law is rather vague, but this time its vagueness is in favor of debtors. Debt collectors try many sneaky and underhanded tricks, and many shockingly abusive and outrageous tricks too, and the law is designed to try to cover them all. For further discussion, please visit my website.
Other sources of legal protections include state merchandising practices acts, which mostly apply to marketing techniques, the Truth in Lending Act, the Uniform Commercial Code, and the Federal Trade Commission. Other resources could also include the Better Business Bureau and State Attorneys General. Debt Consolidation Loans: The Basics
It might be out of your control but you are behind on bills. You have done everything in your power to keep up with them, but they seem to keep piling up. Maybe you are unemployed because of the economic environment we are in or it's medical bills that seem to come out of nowhere. Your situation could have been completely out of your control, but either way, your debt seems to keep piling up. So how do you fix this problemall For many people, a bill consolidation loan could be what you need to help with your debt.
What Exactly Are Debt Consolidation Loans?
A debt consolidation loan is fairly simple. It is a new loan that will pay off your other bills. This loan can really simplify things for you by allowing you to only make one payment instead of multiple payments to your bill companies every month. Typically this is the easiest way to handle your bills every month. When you group your bills together into one simple loan you can sometimes get a lower interest rate or even lower your payment. Here is simple example: Joe has five different bills each with their own interest rate, ranging from 12% to 26%. Joe uses a debt consolidation loan and his new interest rate on the loan is 14%. Joe now has one simple payment and is saving money on the interest.
Does A Debt Consolidation Hurt Your Credit?
Typically, debt or bill consolidation does not impact your credit score negatively. However, what does impact your credit negatively is the application that will run your credit to see if you qualify for the loan (also known as a hard inquiry). This will lower your credit score by just a few points. At the end of the day, paying off your bills/debt and more importantly paying them on time, will help increase your score.
If your current situation directs you to get a debt consolidation loan to lower high interest rates, avoid late payments and fees, a credit check that causes your score to drop a few points is not your biggest worry. It is still important to be aware of where your score is at and how losing a few points will affect you. When you pay your bills on time, your credit score will improve with credit card consolidation.
How Do You Know If A Debt Consolidation Loan Is Right For Your Unique Situation?
The purpose of debt consolidation loans is not always immediately evident. You may already be wary of taking on more debt, but in fact there are many great reasons to use them. Reducing your total debt is single handedly the most import thing. So only use a debt consolidation loan if it truly can help you accomplish that goal. It shouldn't be a method to make even more a credit available to you, because if you keep taking on more debt, your situation becomes even more dangerous. It should be used to make the process of managing your current debt easier.
Debt consolidation loans have the potential to get your bills under control and give you some breathing room. A loan that can lower your monthly payments or even lower your interest rate may be the fix that you have been looking for. Before you make a final decision, make sure to do your research so that you can make the wisest decision for your unique financial situation.
The difference between "Debt Collectors" and "Original Creditors"
First, a distinction that is very important in the law: the difference between debt collectors and original creditors. An "original creditor" is an entity (the law calls it a "person," but it could be a human or a business) that extended credit to you in some way. For present purposes, it could also mean someone you owe money to in a non-credit transaction, and also means "servicers" of loans. Debt collectors are "persons" a significant part of whose business is the collection of debts due to other people.
Laws pertaining to Original Creditors
Because original creditors have some connection with the public other than debt collection and are therefore at least somewhat vulnerable to negative public opinion, the law gives them much more latitude in dealing with people who owe them money. They are not, however, permitted to assault you, obviously, or engage in other extreme and "outrageous" behavior. Where that line is drawn, however, differs from place to place. Some jurisdictions have allowed original creditors to post your name on a "hall of shame" board, for example, but I've never heard of anyone being allowed to chase you down the street calling you names. It's vague, I know.
Laws do prevent anybody from defaming you (publication of false, seriously derogatory information), and this would include the publication of false information to your credit report. By and large the rule is, that all the basic rules apply to creditors, but very few special ones do. There might be particular laws in your jurisdiction, though, so you must take that with a grain of salt.
Laws pertaining to Debt Collectors
Debt collectors don't have the "civilizing" connection to the community that most businesses do, and so the law is much more stringent regarding them. The rule there is that the Fair Debt Collection Practices Act makes "unfair" or deceptive debt collection techniques illegal. Again, the law is rather vague, but this time its vagueness is in favor of debtors. Debt collectors try many sneaky and underhanded tricks, and many shockingly abusive and outrageous tricks too, and the law is designed to try to cover them all. For further discussion, please visit my website.
Other sources of legal protections include state merchandising practices acts, which mostly apply to marketing techniques, the Truth in Lending Act, the Uniform Commercial Code, and the Federal Trade Commission. Other resources could also include the Better Business Bureau and State Attorneys General. Debt Consolidation Loans: The Basics
It might be out of your control but you are behind on bills. You have done everything in your power to keep up with them, but they seem to keep piling up. Maybe you are unemployed because of the economic environment we are in or it's medical bills that seem to come out of nowhere. Your situation could have been completely out of your control, but either way, your debt seems to keep piling up. So how do you fix this problemall For many people, a bill consolidation loan could be what you need to help with your debt.
What Exactly Are Debt Consolidation Loans?
A debt consolidation loan is fairly simple. It is a new loan that will pay off your other bills. This loan can really simplify things for you by allowing you to only make one payment instead of multiple payments to your bill companies every month. Typically this is the easiest way to handle your bills every month. When you group your bills together into one simple loan you can sometimes get a lower interest rate or even lower your payment. Here is simple example: Joe has five different bills each with their own interest rate, ranging from 12% to 26%. Joe uses a debt consolidation loan and his new interest rate on the loan is 14%. Joe now has one simple payment and is saving money on the interest.
Does A Debt Consolidation Hurt Your Credit?
Typically, debt or bill consolidation does not impact your credit score negatively. However, what does impact your credit negatively is the application that will run your credit to see if you qualify for the loan (also known as a hard inquiry). This will lower your credit score by just a few points. At the end of the day, paying off your bills/debt and more importantly paying them on time, will help increase your score.
If your current situation directs you to get a debt consolidation loan to lower high interest rates, avoid late payments and fees, a credit check that causes your score to drop a few points is not your biggest worry. It is still important to be aware of where your score is at and how losing a few points will affect you. When you pay your bills on time, your credit score will improve with credit card consolidation.
How Do You Know If A Debt Consolidation Loan Is Right For Your Unique Situation?
The purpose of debt consolidation loans is not always immediately evident. You may already be wary of taking on more debt, but in fact there are many great reasons to use them. Reducing your total debt is single handedly the most import thing. So only use a debt consolidation loan if it truly can help you accomplish that goal. It shouldn't be a method to make even more a credit available to you, because if you keep taking on more debt, your situation becomes even more dangerous. It should be used to make the process of managing your current debt easier.
Debt consolidation loans have the potential to get your bills under control and give you some breathing room. A loan that can lower your monthly payments or even lower your interest rate may be the fix that you have been looking for. Before you make a final decision, make sure to do your research so that you can make the wisest decision for your unique financial situation.
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