Credit card debt collection is an issue that unfortunately, many credit card holders have to deal with. When a person is unable to pay the minimum monthly payments on his credit card, the credit card company is required to charge off the account.
Often, these delinquent accounts are outsourced to collection agencies who under Federal laws have limited actions they can perform to encourage a person to pay up their credit card debts. These actions include:
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1. Writing Debt Notification Letters
These letters are sent by mail and are written to the credit card defaulter, informing them of the debt they owe the credit card company. They include the name of the defaulter, his address, the credit card company owed, the amount of money owed, its repayment deadline and the name of the collection company making the follow-up. The first letter must inform the defaulter of his right to appeal the debt in writing within a thirty day period.
2. Making Follow-up Phone calls
A person who owes a credit card debt may receive calls on his home or cellular telephone between 8AM and 9PM. The debt collector may also call his place of work, except in cases where they are requested not to do so by an employer. However, the debt collector is not in a position to reveal the nature of business they have with the defaulter, unless it is with his spouse or their attorney.
3. Seeking Judgement after Filing a Lawsuit
In cases where the collector is unable to come to an amicable settlement with the defaulter, they can take him to court in order to get back the unpaid debt. This is often a last option reserved for very large debts, due to the costs involved in hiring lawyers and the time it takes to recover the money.
If ruled in favor of the debt collector, the ruling enables the debtor to take more extensive measures to collect the debt, which includes attaching liens to property or attaching wages until the debt is cleared.
Limits to What Collection Agencies Can Do
- Under Federal law, a debt collector is prohibited from taking the following actions to pressurize a defaulter to pay their debt:
- Accusing the defaulter falsely in order to get them incarcerated.
- Verbally harassing the individual, using foul language or threats of violence.
- Publishing the defaulter’s name in a list of defaulters or increasing interest fees unless stipulated in the credit card contract.
- Misrepresent themselves to the defaulter either through impersonating a state official or sending false legal documents in order to get his attention. They are not allowed to threaten legal action against the defaulter, unless they are actually intending to do so.
- Sending post-dated checks and mailing postcards.
Can credit card companies garnish your wages?
Another issue is the garnishment issue that people worry about when they are unable to pay their credit card debt. The fact is that credit card companies can not garnish your wages without your written agreement. In order to garnish your wages, a credit card company has to get a judgment against you by suing you in court.
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Basically, if you are unable to pay your credit card payment, the credit provider can’t just start a wage attachment, unless of course you agree to the garnishment in writing.
How long can a credit card company collect a deb?
If you don’t pay your credit card bill, the credit card company can actually pursue the debt indefinitely, until you either settle the debt or get rid of it through a bankruptcy.
As far as reporting the information in your credit report goes, the credit card provider can list the past due balance only for 7 years.
Is there a statute of limitations on credit card debt?
Yes, there is actually a statute of limitations on credit card debt. However, the limit is actually set by a state’s statute of limitations. That said, in most states the period for the statute of limitations is somewhere between 3 and 10 years.
Now, it is important to mention that although the statute of limitations on debt doesn’t allow card companies to take you to court for old credit cards debt you owe, they can still come demand payment from you.
Please be sure to check your states rules and regulations regarding debt collection by credit card providers. And let’s not forget that each case is unique, and each company operates by its own set of standards and rules. So, there are many different things that can factor in what a credit card company can and can not do to collect debt.