**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.
The first thing you need to understand is that most large collection companies have a lawyer at their disposal who writes letters on their behalf and handles any disputes. Some lawyers work exclusively for collection agencies, while others are hired only when needed. These lawyers also represent the collection agency in the likely event a debtor sues them! If the collection agency is not located in your state, there is a very good chance they will not attempt legal suit. Most likely they will call, mail letters, and when you fail to respond… they’ll sell the debt to another collection agency for pennies on the dollar. In order for them to sue you (out of state), they would have to employ the services of a lawyer where you live. This can be very expensive and will usually void the benefits of a civil judgment. It is only when they have a debtor in their state that they prefer legal suit. A good candidate for legal suit is one with at least a balance of $500, at least one asset, and the debt is not in dispute. See also all of my articles on Collection Agencies and make sure to read How to avoid paying a debt.
To file a complaint with the Federal Trade Commission regarding a collection agency click here or call toll free at 1-877-FTC-HELP.
Many Judgments are Never Collected
There’s a good possibility that even with a judgment a collection agency will never be able to collect on the debt. Many debtors are in such a position financially that they cannot legally be collected on. So even with a judgment to repay the debt… the collection agency and court can’t enforce it. To learn more about this read Restrictions on Wage Garnishment for Debt Collection.
Many debtors move to another state which creates more legwork for the collection agency. They have to determine where you moved and then request for the new state to enforce a judgment acquired from your old state. Some female debtors get married and change their last name. This can slow down the enforcement of a judgment. Also, some states don’t consider assets joint – so a person can nullify a judgment by putting all assets in their spouse’s name, not working, or hiding income (hiding your income is illegal). See also, What is a Junk Debt Buyer?
**Some states will consider debts and assets as joint accounts even if your spouse’s name is not on the account. In California they can collect on your spouse’s assets to satisfy a civil judgment.
Is your debt past the Statute of Limitations?
In my home state of Mississippi the Statute of Limitations (SOL) is three years, this is the lowest SOL in the United States – who says Mississippi is last in everything? So if I stop paying on my VISA credit card in August of 2008, the creditor or collection agency has until August of 2011 to get paid or sue me in civil court for the debt owed. If I can put off paying on the debt, or acknowledging I owe it, for three years and the collection agency doesn’t get a judgment… then I no longer legally owe the debt. They cannot take me to court and be awarded a judgment, provided I show up and inform the court that the SOL has expired on the debt. See also, Debt Past the SOL and Collection Agency still sues.
Is the Collection Agency located in your State?
Most collection companies will not file a civil suit for debt collection on a debtor that lives in another state. Most collection agencies have a lawyer on staff or one they regularly work with. Since the collection agency has to sue you in the state where you live, they aren’t likely to hire a lawyer in your hometown to represent them in the case… if they are located out-of-state. They also are not likely to send their lawyer across state lines to collect a debt. Besides, in order for a lawyer to cross state lines he has to be licensed in that state. Most lawyers are only licensed in one state.
The Amount of the Debt
The lower the dollar amount of defaulted debt the less likely the collection agency will pursue legal action. Very seldom will a collection company file suit on a debt of less than $500 and most likely $1,000. Obviously it’s a lot of time and expense involved in a civil court suit… so they don’t like to bother with court unless they feel confident of a decent pay off. However, I should make you aware that some of my readers have been taken to court for less than $1,000.
How many assets do you have?
The more reliable assets you own, the more likely the collection agency will pursue a legal course of action. If the collection agency knows that you have a home, land, or a vehicle which is paid for – they can win a judgment, then via a writ of execution they can be awarded a lien on said property or force a ‘Sheriff’s sale’. A job is considered an asset since they can seek to garnish your wages or bank account.
Is the debt in dispute?
A collection agency cannot file suit on a debt that is being disputed. If you requested validation of the debt, and their information is insufficient (they didn’t accurately prove you legally owe them the debt), their case can be thrown out of court.
Don’t apply for new credit
One of my readers contacted me about a bill collector who was threatening to file suit if she didn’t cough up a payment by the end of the month. The bill collector informed her that he had been watching her credit report and noticed she had recently applied for credit on a vehicle purchase. When you apply for credit on new purchases the collection agency rightly figures you have money to pay them! The information you put on the credit application is also an opportunity for your credit report to get updated with your current address, spouse, and asset information. A collection agency can acquire your credit file and read up on your latest hits.
TIPS for Avoiding the Collection Agency Lawsuit
1. Get any property you own out of your name.
2. Quit your weekly paycheck job.
3. Go into business for yourself (no wage garnishment).
4. Maintain a story of no job, no assets, and a gloomy future.
5. Move to MS (SOL 3 years) or TX (SOL 4 years).
6. Always deny any knowledge of the debt.
7. Do not answer their phone calls.
8. Record their violations of the FDCPA and sue them (or threaten to).
9. Leave the United States with no forwarding address.
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