Frequent calls from debt collectors are one sure sign that you have financial problems. If this is the case, it's time to get proactive. Talk to your creditors as soon as possible.
Here are some tips for talking with creditors:
After speaking to a debt collector, you may have follow-up questions or concerns. The Consumer Financial Protection Bureau (CFPB) provides sample letters to help you communicate with a debt collector if you do not believe the debt is yours, if you would like more information about the debt, to stop the debt collector from contacting you and to specify how they can contact you. To access these letters, visit the CFPB's site.
Bankruptcy is a way to eliminate debts or repay them under court protection and supervision. Child support payments, alimony, fines, taxes, and some student loan obligations are typically not eliminated.
Bankruptcy was created to give a hopeless debtor a fresh start and should always be considered a last resort. A bankruptcy will stay on your credit report for up to 10 years, possibly affecting your ability buy or rent a home and will likely result in higher interest rates on future loans.
There are many different types of bankruptcy, but the most common are Chapter 7 and Chapter 13.
In a Chapter 7, or "straight bankruptcy," you agree to turn over all of your non-exempt assets to a Chapter 7 trustee. The trustee then sells your assets and distributes the money to your creditors.
Chapter 13, or "reorganization," allows you to keep your property, such as a mortgaged house or car. It includes a plan based on disposable income to pay creditors over three to five years with a single monthly payment.
Creditors do not have the right to harass you. The Fair Debt Collection Practices Act is a federal law that protects you. It forbids collectors from:
For more information on debt, debt collection and other important financial topics, visit the Consumer Financial Protection Bureau's Ask CFPB page for clear and impartial answers to make informed choices about your money.
Credit counseling agencies can help you get a handle on your debt. They:
Visit the National Foundation for Credit Counseling website at www.NFCC.org for more information about these debt collection agencies or to find one in your area.
CFPB Orders Credit Union to Pay Millions for Improper Debt Collection Actions
The CFPB ordered Navy Federal Credit Union (NFCU) to pay $28.5 million for making false
threats to collect debts and for placing unfair restrictions on account access. Visit the CFPB’s
Newsroom to find out more about how the NFCU violated the Consumer Financial Protection of 2010.