When you owe money on a debt, the lender usually works directly with you for payments and servicing unless you fall significantly behind. Sometime between 3-6 months past due, the lender will contract with a debt collection firm to collect the money for them. At some point the original lender will write off the amount of the loan as uncollectible, indicating that they’ve given up on collecting and will sell it off to a different debt collector for whatever they can get, often as low as 5-10 cents for every dollar owed. In this case, the debt is still technically owed but the ownership of the debt has changed hands and transferred the legal obligation to a different party than the original lender.
Regardless of who owns the debt, it remains in force and accumulating interest until the statute of limitations in your state runs out which can be from 3-15 years from the time the account first went delinquent. During that period of time, it can be sold to one debt collector after another and each will attempt to collect the money. Debt collectors are nothing if not persistent, so this can add up to a lot of calls over time. How can you handle it? Start by knowing your rights under the Fair Debt Collection Practices Act (FDCPA).
What are your rights under the FDCPA?
Certain collection activities are specifically prohibited under FDCPA:
Points to consider:
You can get out of debt on your own, but you're more likely to succeed with some help.
One popular strategy for earning higher-than-savings-account interest is a certificate of deposit (CD) ladder. A CD ladder (or laddered CDs) is a way of purchasing multiple smaller CDs rather than one larger CD, staggering the maturation dates. There are two main benefits to laddering your CDs: flexibility and higher interest rates. While you can [...]