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Debt Consolidation Facts

1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

Fair Debt Collection Practices Act (FDCPA) - Consumer Credit Protection Act (CCPA)

(August 17th, 2007)

The Fair Debt Collection Practices Act (FDCPA) was initiated in 1978 as a statute of law under the Consumer Credit Protection Act (CCPA). It was voted as Law by the Congress to protect consumers from harassment by debt collectors. When original creditors sell their accounts receivable to debt collectors, it is often reported that consumers are harassed to an extreme extent by debt collectors. Harassing phone calls to their homes, workplaces as well as on their cell phones was the case. This extreme verbal abuse led to the filing of record level personal bankruptcies, and Congress had to act on this matter. The uniqueness of the FDCPA is that it allows consumers to dispute debts that they owe as well as request validation of these debts from the collection agencies. This was not possible before the FDCPA became law.

Definition of Debt Collector?

Debt collectors can also name themselves as "Factoring Company" or "Collection Agency" in order to confuse consumers and immune themselves from the rules of the Fair Debt Collection Practices Act. A debt collector is anyone regularly collects debts from consumers on behalf of the original creditors or third parties. Debt collectors use the 2 main communication methods: mail and phone.

What Kinds of Debt?

The Fair Debt Collection Practices Act (FDCPA) is applicable to the following types of debt:

- Auto loans
- Medical care debts
- Mortgages
- Credit card debt
- Retail business loans

The FDCPA does NOT apply to the following types of debts:

- Agricultural or farming debts
- Business debts

Code of Conduct

The FDCPA strictly prohibits debt collectors from conducting any of the following activities:

1) Phoning up consumers outside of the hours 8:00am to 9:00pm (consumer's local time).

2) Contacting consumers in any other way after receiving written notice that the consumer disputes the debt and refuses to make payment. The only way the debt collector can hereafter contact the consumer is via litigation or a court judgement.

3) Contacting consumers at their workplace (after receiving written or phone notice that the consumer does NOT wish to be contacted at his/her workplace)

4) Pursuing futher collection efforts after consumer sends a debt validation request which has not been fulfilled by the debt collector.

5) Misrepresentation of the debt or inflating the debt

6) Publishing the consumer's name on a "Bad Debt" list

7) Adding erroneous fees or charges to the original debt amount

8) Threatening to arrest consumers or take legal action that is impossible to do

9) Using profane or foul language when communicating with the consumer

10) Revealing the consumer's debt to other unrelated parties (except for the consumer's attorney or spouse).

11) Threatening to report false information to the consumer's Credit Bureau in order to hurt his/her credit score.

12) Filing for litigation in places other than where the consumer resides or where he signed the debt contract.

13) Wrongfully portray themselves as working for a Credit Bureau.

14) Wrongfully indicate that consumers who owe debts have committed a crime

15) Wrongfully indicate that they are government employees or debt attorneys

16) Threaten to seize and sell your property/assets.

Debtor's Rights

If you are wrongfully harassed by a debt collector, the FDCPA allows you to sue to the collector in federal court within 1 year after the harrasment. If the court awards you the case, you will receive the following compensation:

1) Cost of actual damages

2) Attorney fees and costs incurred by the debtor.

3) Additional damages of 1% of debtor's net worth, for a maximum of $500,000.

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