Credit Academy

#1 way to legalized theft of your savings

The convenience of paperless statements delivered to your email address has helped to avoid reduced mail and paper cuts on your fingers. But, did you know that ignoring mail that requires timed responses is the #1 way to legalized theft of your savings is to not read your mail?

Creditors send letters through the mail, as required by law when requesting payment of a debt. Debt collection requests and actions require notification by mail to the debtor as a record of notification. With the volume of mail you may receive it’s easy to ignore important communication.

I got a summons from a debt collector

Situations like this are common occurrences we encounter during seminars and calls to our office for help. Here is an example:

“Please can you help me! I tried to buy groceries and the transaction was denied. I called the bank to find out that $2000 was taken from my savings from XYZ company and I don’t know why. “

You probably have fell victim to a default judgment action. A default judgment is a situation where you were sued by a collector who told the court that they served you and you did not respond to the complaint. So the court awarded the creditor a judgement for the amount filed in the complaint. How could this have happened?

The common answer is that a letter sitting in the pile of mail you have includes a letter from a debt collector that you did not open.

For the sake of this post, the mail was in your possession, although there are situations where you did not receive the summons, and the way to reverse this action will be in a future post.

Read and understand

It is very important that you read and understand what they are claiming and the action they are prepared to take. The wording of these debt collection letters is designed to confuse, elicit doubt, and make you fearful. If you react how they want you to, you will submit payment to settle the debt, that may not be yours.

Review your credit history

After reading the debt collection letter, review your credit history. Go online and purchase your full 3 bureau credit report. You won’t be sharing your report with the company or individual who issued the letter. Its recommended that everyone review their credit history regularly to make sure it is accurate.

Here is a link to our partners at IdentityIQ, you can purchase your report here for $1.

Save and print your report to review your credit history for the amount stated in the letter.

Verification of debt collector

Verification of the collector is the #1 priority after receiving one of these letters. The first step is to Google the company that issued the letter to you. Make sure the contact information on the letterhead and online directory are the same. Although you will not be calling them, it’s good to verify their identity.

During your search, look for news in connection to the debt collector about fraud or complaints of bad practices.

Responding to a debt collection letter

There is often a grace period for you to provide a response after receipt and you must respond, even if you know that the debt isn’t yours.

Here are the demands your letter must include:

  • Ask for the name, address of the original creditor.
  • Name of the account holder and contact information
  • Amount of debt purported to be owed
  • Date it was charged off
  • Was the debt assigned or purchased from the original creditor
  • Have any judgments been obtained by any creditor regarding this count
  • Has a 1099C been issued for this account
  • Have you been retained by the original creditor as their consul?

Does this matter?

Our mission is to teach financial literacy and securing the capital you have is important. There are tons of examples of fraudulent activity around debt collection.

We had a client who received such a letter from someone claiming to be a debt collector. They claimed that they owed $2000.  Unfortunately, the client did not respond by asking any of the questions we recommend. The client blindly paid the debt and guess what? After paying the amount claimed in the letter, we discovered that no such debt existed and the company name and information were faked.

Does the IRS use collection agencies.

Yes, the Internal Revenue Service uses private collection agencies to collect outstanding debt. On the website, you can read which companies are contracted to recover debts.

Ignoring your mail is the #1 way to legalize theft of your savings. Debt collectors are ruthless in their means and methods. Don’t give them a chance to ruin your financial future.

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