For many folks, the prospect of dealing with debt is simply too daunting. There are multiple debt-related elements to consider, and each of them is extraneous. Debt places a tremendous financial burden on the debtor, and it also comes with a variety of emotional stressors. Once debt starts mounting, it becomes increasingly difficult to pay down the high interest on debt. Credit cards are ranked among the most difficult debts to pay off, owing to the APRs. The annual percentage rate on a credit card ranges from 14% through 25%, with higher APRs associated with greatly increased debt burdens and liabilities.


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Whether it is a personal line of credit, home loan, business line of credit or payday loan, it’s important to know your rights vis-à-vis credit collection agencies. If you happen to fall behind on your payments, your debts may well be passed on to a credit collections agency which ‘buys’ your debt and then expects you to make payment. Once the debts have been bought, the phone calls invariably start coming. According to statistics provided by leading debt management resource DebtConsolidation.com, the facts and figures point to 1 in 3 Americans holding debt in collections. The amount that is owed by the people averages $1,450.

The problems worsen when debt collections agencies start calling. They don’t call at convenient hours, making it all the more troubling when the calls do go through. Instead of panicking and opting for desperate measures, it’s a good idea to understand your rights and obligations with respect to debt collections agencies. Harassment is never okay, despite the fact that these debt collectors are known to apply significant pressure on people. Stats indicate that some 85% of consumers are contacted via telephone, 71% via letter, 57% by voicemail, and 12% by email.

What rights do borrowers have?

If you happen to be retired, and you are owing money, debt collectors cannot take payments from your Social Security income. Further, the threat of being sued for outstanding money is not permissible. All your rights and obligations are clearly spelled out in the FDCPA (Fair Debt Collection Practices Act). The tactics employed by creditors will differ from one to the next. Collections agencies purchase debt from companies so that those companies can get a percentage of the outstanding debt you owe.

The debt collection companies expect you to pay back the full value of the debt, and that’s where they make their money. Sometimes, scam artists will try to infiltrate this arena by posing as legitimate debt collection companies. Be sure to check out their credentials with state and national agencies before you simply hand over payment. A proactive approach is the best way to deal with debt problems. Once you are aware of outstanding debt, you can call the creditor to indicate that you are looking to work out an agreement. It’s always best to behave with decorum when trying to settle debts with companies.

There are several options available to you, including debt consolidation which allows you to take out a loan for things like credit card debt with high APR’s at a lower rate of interest and then pay down the high interest debt and be left with a low interest debt repayment. Other options include setting up a payment plan. If you work with your creditors, they will always try to accommodate you as best they can. Be sure of the amount that you owe – sometimes debt collection agencies will inflate figures in the hopes of getting more money out of you.

Another point which few people are aware of, but which has important implications for your debt is the statute of limitations on credit card debt. Be sure to understand where your state is on the spectrum when it comes to credit card debt statutes of limitations. Typically, this is 3-6 years from the last payment that was made. Depending on where you live, the statute of limitations on credit card debt ranges is 3 years in states like Arizona, Kansas, Oklahoma, Arkansas, Louisiana, Mississippi, and Alabama, while states like Wyoming have a 10-year statute of limitations. It’s always a good idea to get a free copy of your credit report so that you know which debts are outstanding, and how everything is being reported.

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