It was for a apartment I broke the lease on.. I plan on paying it but I was just curious if it was bad to make the payments to the collection agency? Should I do it some other way?
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It was for a apartment I broke the lease on.. I plan on paying it but I was just curious if it was bad to make the payments to the collection agency? Should I do it some other way?
Check the law for your state. Also it will be a good idea to talk to a lawyer. Sometimes those collection agency, do crazy stuff that legaly they can not do! Like if it was on your report for 7 years. Than it should be tooken off, even if they sold it to another agency. If you have a judgement agaisnt you, you just have to pay the court order judgement. NO more than that, on the legal side in Illinois. Each state as differant laws.
I live in Canada..it happened about 4 years ago and I know I owe the amount they say.I just wondered if it was better to pay through a different type of agency? I'm trying to build my credit right now.
You also might find some help at .... Good luck !
Don't pay the collection agency!! Pay the original company you owe. BEFORE you pay anything though, call the company and negotiate a settlement with them. Tell them you will pay the amount owed, if they will remove the item from your credit report. Get them to agree to this IN WRITING. THEN pay the bill. They will have to remove the item from your credit report once it is paid. If a collection agency has the same debt reported to the credit bureaus, you can then dispute it and get the collection agency item removed, because your debt will be paid.
The reason that collections agencies will sue you, is because a judgment assures that the money WILL get paid to them, even if it is involuntary on your part. If you do not pay a judgment after a period of time, then the collections agency will be able to petition to have your wages garnished. That means that up to 25%(they're not legally allowed to take more than that) of your paycheck will be garnished and sent as payment to the collections agency. If you have collateral on the books(car, property, etc), they can seize that too. But they don't seize that stuff right away...usually it takes time elapsing with lack of payment, before they will take those actions. But a judgment allows someone to ultimately do that.
Other than that, I think Bridgette nicely summed up everything else. Also, keep in mind that judgments do not go away unless they are paid. If paid, a judgment stays on your credit report for up to 7 yrs. You might be able to get the collections account off your credit a lot easier than a judgment, because courts are generally more responsible with record keeping than a lot of the shady flimsy collections agencies are. (I've found that at least a few collections agencies are shady and comprised of employees that are not very outstanding examples of citizens! I've helped friends with their collections accounts and some collectors are total deadbeats who will belittle, badger, and violate the law!)
I would add that, for self-employed independent contractors, there really is no mechanism available for a third party to implement 'garnishment' ... since the 'first' entity to get their 'hands' on money earned is the independent contractor ! However, obtaining a court judgement against a debtor does open the door to seizure of assets i.e. money currently on deposit in bank / investment accounts, durable goods owned by the debtor (i.e. car, HDTV, jewelry etc.).Quote:
If you do not pay a judgment after a period of time, then the collections agency will be able to petition to have your wages garnished. That means that up to 25%(they're not legally allowed to take more than that) of your paycheck will be garnished and sent as payment to the collections agency. If you have collateral on the books(car, property, etc), they can seize that too. But they don't seize that stuff right away...usually it takes time elapsing with lack of payment, before they will take those actions. But a judgment allows someone to ultimately do that.
If it's any consolation, there is recent court precedent that money contributed to officially sanctioned IRA / Roth accounts is exempt from seizure for the settlement of debt / bankruptcy judgements.
what about property that you dont own ? Like if you have a car but still owe on it, can someone (other than the car financing co) consider that as collateral?
^^^ in regard to 'collateral' i.e. owning 'equity' in a house / car etc. but also owing lots of remaining debt on that house / car to the primary lender, in 99% of cases it's impossible for any other creditor to 'horn in' on the terms of the primary lender's original loan. This means that for example if you put $10,000 down on a $100,000 house two years ago, you've paid the loan balance down to $85,000, and the market price of the property is now $110,000 you have $25,000 in 'equity' - however that 'equity' is held as collateral by the primary mortgage lender thus a defaulted car loan creditor, a defaulted credit card lender, a defaulted consumer loan lender etc. can't go after it ..... unless ....
.... that defaulted car loan lender and credit card lender and consumer loan lender can drag you into bankruptcy court. When that happens, the primary mortgage lender's original deal re the 'equity' in your house, or the primary auto lender's original deal re the 'equity' in your car, no longer have automatic precedence. The other creditors can and probably will petition the bankruptcy judge to order the sale of your house and car, with the proceeds of the sale (i.e. your 'equity') being distributed on a percentage basis among all of the creditors. Certain states have laws in effect which limit bankruptcy court jurisdiction over houses serving as primary residences, over cars serving as primary transportation etc. but not all of them shield the bankrupt borrower anymore.
Also, state laws have no jurisdiction over the IRS ... meaning that if you are found to owe a s#!tload of back taxes on previously unreported income for example that the IRS can seize every asset that you have i.e. jump themselves to the front of the 'creditor' line and letting the mortgage company and car loan company and every other creditor wait for their money until your taxes have first been paid ! This is a surefire formula for economic ruin i.e. between the IRS and the bankruptcy laws you can work your ass off for the next 10 years and still not come out even !!!
Texas laws protect homestead rights a bit more than some other states. But people still wrongly assume that the IRS can't take away your home because of that. IRS can do what the fuck they want. Even if it means seizing all liquid assets and putting a lien on the home, then the owner is forced to sell the home, and the IRS get their money. Don't fuck with Dyada Sam
^^^ yup, big changes in Florida too re state laws protecting a 'primary residence' from creditors. At one time, between Florida state law and the old bankruptcy law, a person could borrow a couple of million dollars, put the proceeds into an expensive house in Florida, go belly-up on all creditors, file for bankruptcy, have the old debts discharged, then sell the Florida house for a couple of million dollars and live happily ever after ! However, new laws now place dollar value limits on 'primary residence' protections against forced sale in bankruptcy, with at least 50% of existing houses exceeding that dollar value limit. I believe that a new federal law was passed establishing the dollar value limits, with the federal law over-riding more 'generous' state laws.
As to the IRS, yup if they latch onto you they can seize/freeze every dollar in bank accounts, investment accounts, retirement accounts, they can garnish paychecks, they can place leins against assets i.e. house and car --- in other words, for people who aren't 'independent contractors' the IRS can completely separate a person from all of his sources of money, thus forcing the person to sell off their assets in order to buy food and gas, and in the process the IRS is standing first in line to confiscate the equity in those assets to satisfy back tax obligations. 'Independent Contractors' have it a bit better since there isn't a 3rd party 'employer' who is in a position to separate the person from their earnings via garnished wages before those earnings are actually paid !
Thus while it's theoretically possible for an 'independent contractor' to continue living 'hand to mouth' indefinitely when in trouble with the IRS because their nightly cash earnings can't be intercepted, in point of fact the IRS will only put up with this for so long before they will threaten bringing charges of tax evasion. At that point, the 'independent contractor' then faces the possibility of being separated from their cash earnings potential by the presence of steel bars !