In spite of past due loans that were originated and paid off many years back, several debtors are struggling with debt collection calls. It is normal for the debtor to worry about the debt and get on with life and beyond the debt payment pressures. It may be a frustrating and surprising occurrence when they get a call or letter from a debt settlement firm they might never have ever heard about. Most debtors do not realize what the constraint statue means and the freedom they have to not settle the debt. States are also stepping up new regulations that enable debt management companies to state in specific letters to the claimant that they should not be called to arbitration over the debt in dispute. Visit us on First Capitol – Dept Collection Agency The Dept Recovery Specialists.
These updated laws have been adapted by several jurisdictions, including New York, in an attempt to inform and safeguard debtors. Recently, with the latest laws, New Mexico entered the ranks of states coming aboard. Some lawmakers and debtors see it as a win in the fight to stop the usage of scare tactics by shady debt management firms to bait the debtor into settling debts that have reached the limits statue. In certain jurisdictions, such as New Mexico, after four years, a credit card default clears the statute of limitations. In terms to a past due loan that is more than four years old, this would prohibit a debt management agency from bringing a claimant to arbitration. Most would accept that this latest regulation is good for most, but collection agencies contend that this would only cause credit card providers and other loan-giving businesses to increase interest rates and reduce lending in an increasingly tight credit environment. In addition, the collection agencies warn that this would just slow down the rehabilitation of banks under the existing economic conditions.
Usually, collection agencies can collect on a debt for as long as they wish. When a debtor questions whether or not they have to pay the debt, a payment agent must inform them that they don’t have to pay the debt, however if they decide to fail to pay the debt, it will also appear in a credit report. Even if the debtor can not be called to arbitration, it is also likely to record the debt on a credit report that may torment the debtor for years to come as they continue to finance loan products. Many collection companies are afraid once the debtor is told that they will not be charged in court, they would fail to settle the debt all together even if they find out the effect of credit reports since many of the debtors are not concerned about personal reputation scored and for years to come it has already been destroyed and unrepaired.
It appears like both parties have legitimate reasons to think about the new regulations and it will take time to see how the public is reacting to the new reforms. To discourage debtors from being taken advantage of, they will still endorse current legislation, but will unknowingly pay a higher interest rate when collection companies are reluctant to reclaim the money at former rates.