Letters from debt collection agencies need to be taken seriously by customers

September 6, 2011 3:36:09 PM PDT
The last thing people want to deal with is a threatening letter from a collection agency. But if you have past credit card debt, you are very likely to get one.

Collection letters are on the rise and while you may not want to deal with it, ignoring the letters could be a disaster.

The recession of 2008 put a lot of people out of work and forced folks to make tough decisions about which debts got paid and which ones went to collections. If you decided to skip the credit card payments, do not be surprised by letters threatening to take you to court.

Karla Aparicio has all but stopped using credit cards.

"Too much debt," she said.

While Aparicio has always paid off her credit card bill, millions of Americans cannot say the same thing. For those who stopped making payments when the economy crashed in 2008, a letter from a debt collector is probably on the way.

Attorney Michael Weston explained, "A lot of these debts are turning into lawsuits now."

Weston represents hundreds of people who are now getting letters from debt collectors threatening legal action. Incredibly, Weston says most people simply ignore the letters.

"There is a huge influx of these cases and probably 90 percent of the consumers that get these lawsuits don't even respond to them," Weston said.

If you do not respond, debt collectors will get a default judgment against you which can lead to huge problems.

"With a judgment, creditors in Texas can actually garnish your bank account," Weston explained. "They can clean out your bank account and some say, 'I don't have anything.' But maybe that is the mortgage payment for the month."

Weston adds if you have a judgment against you, buying or selling a home could be delayed until the judgments paid off. Weston adds some debt collection letters are being filed by companies that claim to be reviewing the payment history when in reality the companies signing affidavits while doing little research.

"They are basically robo-signing these affidavits, 300 to 400 a day claiming that people owe this money," he said.

The Texas Attorney General's Office is suing debt collectors over robo-signing. One company filed more than 60,000 debt collection lawsuits in Texas and the AG says many of the affidavits supporting those lawsuits contain errors.

If you get a letter from a debt collector threatening to take you to court, find out what the debt is and how long it has been, because you may be able to get the case thrown out. But if you ignore the letter and the incident goes to court, a judge will likely rule against you.


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