|When it comes to debt collection, a consumer's best defense is knowing the boundaries of the law.|
NEW YORK ( TheStreet) -- Collection of bad debt has grown into a billion dollar industry. It's no surprise that complaints about those collecting the debt are on the rise also. In 2000, JPMorgan Chase recouped $130 million from bad consumer debt of all kinds. By 2009, Chase recovered over $1.2 billion on credit cards alone, according to American Banker.
Debt collection consistently ranks extremely high in any survey or studythat tracks consumer complaints. Debt collection is an industry with anaggressive reputation, known to sometimes use strong and harassingtactics in an attempt to collect debt that is past due. In its 2011 report to Congress, the Federal Trade Commission received more than 140,000 consumer complaints regarding unfair, deceptive and abusive debt collectors. For help sorting through the confusing world of credit cards, visit
Lowcards.com. Debt collection is complicated, and some collectors may push the boundariesof the regulations and law to get money out of you. The best way to protectyourself is to be familiar with the laws. Your credit card minimum payment is due at least 21 days after youreceive your bill. If the minimum payment is late, it will be reported to the credit bureaus (if this is your first time, and you are a good customer, they may not report you until the account is 60 days late). If you don't make your minimum payment in 60 days, your account is turnedover to the collections department and the delinquency is reported on yourcredit report. If you can't make your minimum payment now or over the nextfew months, this is the time to call your credit card issuer to try to workout a payment plan. If your account is 90 days past due, this is serious delinquency and youwill receive insistent calls and letters from your creditor. Late fees and interest payments will accumulate and the issuer will probably shut down your credit card. Beyond this point, your account will be charged-off by your credit card issuer and turned over to a collections agency or a third-party debt collector. The debt collector will contact you through phone calls, emails and letters. The Fair Debt Collections Practices Act provides guidelines forcontact from debt collectors. Before you make a payment, verify the amountand the creditor. You may be better off negotiating a settlement with thecredit card issuer. The third party collector can even sell your debt to another collector. If this doesn't work, the third party collector can sue you and take you tocourt. They will send you a summons to appear in court. Do not ignore thisbecause if you do not show up, it is an automatic win for the collector. Ifthe debt collector of the creditor wins the case and receives a judgment, it canseize assets or garnish wages to pay off the debt. The judge could alsocreate a payment plan. There is a statute of limitations to sue for credit card debt, and if thedate is passed, you can have the case dismissed. This limit is set by the states and varies from three to ten years. It is up to you to know and prove this. The debt collector can still attempt to collect on debts. Information about a delinquent account remains on your credit report forseven years from the date you first missed a payment. -- Written by Bill Hardekopf Hardekopf is the chief executive of LowCards.com, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."