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Questions about Collection Agency Laws

What is a collection agency?

A collection agency is a type of business that goes after a person for a debt that they owe, regardless if the debt is owed by a person or a business. In most cases, collection agencies operate as a type of agents for the creditors or lenders for a percentage of the debt that is owed. When it comes to collection agencies, there are many types from first-party agencies that are the actual company the debt is owed to or an agent of the company, or a third-party, which is a separate company that is contracted to collect the debt for a fee. When a person purchases the debt, he/she is called a debt buyer.

If a collection agency for a credit card has a judgment against a person, can they take the person’s tax refund?

When a collection agency attempts to collect the debt owed to a credit card and receives a judgment, then the collection agency cannot take the person’s tax return. The only debt that a tax return can be intercepted for is child support obligations or government type debt.

If a person files for bankruptcy, how long does the person have to tolerate collection agencies calling?

When a person files for bankruptcy, the collection agencies are required to stop calling once the notice of bankruptcy filings are received, or when the person tells the collection agency that the bankruptcy has been filed. If the collection agency continues to call the person, then it is considered to be a violation of the bankruptcy code automatic stay, which stops the collection actions against the person that files for bankruptcy. If the collection agency continues to call the person after the notices have been given, then the person can contact a lawyer to file a suit against the collection agency.

In the state of South Carolina, what is the statute of limitations regarding collection agencies calling for a debt?

When it comes to a collection agency collecting on a debt, the statute of limitations in South Carolina is 3 years. This means that if the person did owe the money, then the collection agency could not collect if the debt is over 3 years old.

If a person owes a collection agency a large amount of money, how would they go about seeing if the agency would settle the case?

If the person has the ability to pay the lump sum that is owed, then the person would have a better chance of the collection agency settling the case as compared to making part payments. In most cases, if the person wanted to do a lump sum settlement, then the agency may do this for 50% of the amount of the debt. If the person could only make payments, then he/she would be looking at paying at least 75% of the debt owed. The best way for the person to find out what the collection agency would settle for is to contact them and discuss the settlement option and amount. If there is no agreement on a settlement amount, the person would need to continue to bargain with the collection agency till the amount that is agreed to by both parties.

Collection agencies are in place to collect debts that people owe. When an issue comes up regarding the practices or laws that bind the collection agency, then the person may need to seek Expert insights to clear up any confusion or questions the person may have.
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Recent Collection Agency Questions

  • I am helping a family member who withdrew from a chapter 13

    I am helping a family member who withdrew from a chapter 13 bankruptcy make payments to her creditors. Is it legal to stamp on the back of checks that the payments we are making are payment in full as agreed and that no further collections will occur? Would something like that hold up in court? We have sent letters to all creditors but some will not return the debt verification. I want to make sure that when we pay them, they will not continue to accrue interest or any other charges. Most of her creditors are payday loan places that appear to be quite disreputable and dishonest.
  • I recently applied for a credit line increase and was rejected.

    I recently applied for a credit line increase and was rejected. I received a letter from the creditor that the reason I did not receive the credit line increase was because the status on my mortgage was not clear. I was told by people that I could not receive a home equity loan as long as my mortgage was not released! For years I tried to get a mortgage modification and they've been rejected! I had 3 properties and I lost my two rental properties in January 2009. I filed a chapter 7 bankruptcy on October 17, 2008 which was converted from a chapter 13. When the mortgage companies received notice that my chapter 13 was changed to chapter 7; they quickly foreclosed on my rental properties! I did the best I could to keep up with the payments in the property that I resided in. On July 2011 Litton Loan Charged off / Written off Mortgage. I spoke to a foreclosure attorney and he told me that I no longer have to pay mortgage. He said that I could not be removed from property because they waived their rights in the charge off. He said I would have to take the hit on my credit history. He advised me to put my property in a land trust to tie up any immediate action that they may take! I've been making property tax payments to Cook County Treasurer since mortgage write off. I was told they still have a lien and that according to the Cook County Recorder of Deeds, it is not released. I contacted the three credit bureaus and had the balance of my mortgage changed to zero. The credit card companies say that my mortgage information is not clear! Even with zero balance!

    Today I spoke to the Cook County Recorder of Deeds after reviewing my records on line. I had three situations that needed help in. First was Federal Tax Lien and Lien from Dept of Water Management. Second issue was 1st mortgage on my residential property. The Third item as my 2nd Mortgage on my residential property.

    I spoke to a representative from Recorder of Deeds about a Federal Tax lien that was released in 2007 that did not show up in recorder of deeds. I told her I also received letter of release from the Department of water for $826 water debt that was paid off. This did not show up either on my records either! She told me to bring document #082332658 to recorders office for tax lien and copy of letter from Department of Water, but get it notarized before bringing them.

    The second issue I had was with my first mortgage. On July 2011 Litton Loan Charged off my mortgage three years after I filed a chapter 7 bankruptcy in October 2008. My credit report shows the mortgage company with a zero balance but they are unclear as to the status of my mortgage. When I told the recorder of Deeds about this they said that I needed to file my chapter 7 bankruptcy on recorder's office along with a copy of letter from Litton Loan charging off my mortgage to federal government. According to them this should clear up the confusion on mortgage! I'm asking you, is this all I need to do to clear up my mortgage problem? I'm confused. I've been told by people that although the current mortgage holder, Nationwide Credit, cannot remove me from property, they still hold the lien and that I have to make a settlement with them. They sent a letter stating I owe $171,000 including accumulated interest! I spoke to my foreclosure lawyer about this and he told me they may have not paid more than $10,000 to take over this mortgage that was written off! In June 2013 I returned Nationwide Credit's call and told them that my mortgage was charged off and that I filed chapter 7 three years before; I never received a call from them again! I looked at my chapter 7 and saw this quote, "A creditor may have the right to enforce a valid lien such as a mortgage or security interest against a debtors property after the bankruptcy if that lien was not avoided or eliminated in the bankruptcy case. Litton Loan was included in chapter 7 bankruptcy.I read information off the web about release of liens. They say that if you've filed a chapter 7 you can have a total debt wiped out and can be allowed to have the judgment removed in court proceedings! What actions do I need to take? Is the information sufficient in the Recorder of Deeds? To record documents to make clear of mortgage status?

    When I talked to the Recorder of Deeds about my third issue, they said that recording my chapter 7 bankruptcy will release my 2nd mortgage from HFC. Is this correct? In 2001 I got a 2nd mortgage with HFC and after 3 years of high payments I received a judgment in February 2004 with a lower fixed amount. I was told by my attorney about 7 year statue of limitations and the judgment was removed from my credit file February 2011. I reviewed record on Recorder of Deeds Webpage and found no release of this on record. Can I apply for release based on statue of limitations?
  • Hi. On 4/15/14 I filed a skeleton petition (just what was necessary

    Hi. On 4/15/14 I filed a skeleton petition (just what was necessary to open a case) due to a pending wage garnishment. Due to the automatic stay, my employer did not garnish my wages. I am filling out the schedules now and have run into a couple of questions.

    Regarding the garnishment, it is by a law firm that represents Discover Card. The date of the judgment is May 28, 2010. The title of the garnishment is "JUDGMENT DATE: May 28, 2010
    CONTINUING LIEN GARNISHMENT SUMMONS AND AFFIDAVIT FOR GARNISHMENT

    THIS GARNISHMENT IS EFFECTIVE FOR 120 DAYS

    I don't know how to deal with this in the petition. Do I list the law firm and Discover Card in Schedule F? Are they considered a creditor holding a "secured claim" since there is a lien? I don't get the lien part. If the debt is discharged in the bankruptcy, do the lien and judgment just vanish?

    Also, do I need to list the original judgment and/or the garnishment on the Statement of Financial Affairs, question 4? Again the judgment was granted in 2010, well outside the year mentioned in the question.

    Oh - I should also mention that I own almost absolutely nothing. No real property. Everything I own will be exempt under the laws of my state (South Dakota). Everything I read about a lien talks about property. I have none. I guess the "lien" is against my future earnings.

    I want to make certain that the wage garnishment, the judgment, and the lien do not survive the bankruptcy. Again, this was an unsecured credit card debt.

    I have a couple of other questions but they are small compared to this one. Please help me out! I have read about getting read of judgments, etc., but it is very confusing because everything talks about property ownership.

    Thank you so much to whomever clears this up for me. And please feel free to ask any questions if you need further information. WILL SOMEONE PLEASE HELP ME?
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