Recently the New York Attorney General has initiated a state wide assault on phony debt settlement companies and debt collection companies which have brazenly violated the Federal and State Fair Collection Act. The Attorney General has provided consumers with both critical information and action.
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New Yorkers Need to Know What is Wrong about Debt Settlement Companies!
According to the New York State Attorney General’s office debt settlement companies are for profit companies that allege they can eliminate consumers’ debts by negotiating settlements with creditors for a fraction of the outstanding debt. Many of these companies accomplish little for consumers and charge very hefty fees. Many debt settlement companies make promises that they simply cannot keep. Often they leave NY consumers in a worse financial state then when they first hired the “debt settlement” company. These shyster companies advise consumers to stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made at a later date to any creditors. Almost all NY consumers who sign-up with such debt settlement companies soon find the companies’ promises are empty. Creditors are under absolutely no obligation to settle for less money. They often refuse to do so.
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Know what you should and should not be doing with a "Debt Settlement" company!
Here are some tips from the NY Attorney General:
• Be suspect of debt settlement companies which promise to obtain settlements for much less money than you owe. Many debt settlement companies misrepresent their typical results and their success rates.
• Avoid debt settlement companies that require (usually large) payments in advance of obtaining the promised settlement.
• Remember: debt settlement plans often do not stop creditors from charging interest, late fees, or other penalties on outstanding debts, and do not prevent creditors from bringing collection lawsuits. If you get a summons and complaint from a creditor, it is proof that your debt settlement company is NOT doing what it promised you. Also, failure to make required payments on your debts will negatively affect your credit score.
• Creditors are under no legal obligation to accept a settlement offer for less than the outstanding balance owed.
• Few consumers who enroll in debt settlement ever succeed.
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Critical Information about Debt Collection Companies from NY Attorney General
Debt Collection companies:
There are two types of debt collectors: • firms that collect debts owed to third parties and
• creditors (firms to whom you owe money directly).
The Federal Fair Debt Collection Practices Act (FDCPA) regulates both debt collectors who contact you on behalf of your creditor and debt collectors who contact you because they have purchased your defaulted account from the original creditor (or another debt collector), and are now trying to collect from you. Keep in mind that lawyers are NOT exempt from these rules. In NY and across America law firms who regularly work on debt collection actions are also governed by the FDCPA.
In addition, all debt collectors operating in New York, whether acting on behalf of a third party or on behalf of themselves, are required to follow New York State law (Article 29-H of the General Business Law) governing debt collection practices.
Both federal and state laws regulate and restrict various debt collection practice
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Debt Collection: The First Two Rules from the New York Attorney General:
New York rules on debt collection according to the Attorney General Office:
1. How May Debt Collectors Contact You?
A debt collection agency may contact you in person, by telephone or in writing. They must disclose the purpose of the contact. Debt collection agencies are restricted, however, from contacting you at inconvenient times or places (for example, before 8 AM or after 9 PM), unless you agree. A debt collection agency is prohibited from contacting you at your place of employment if the agency knows that your employer disapproves. Any debt collection service which does this is violating the law and should be reported to the Attorney General’s Office.
2. What If You Do Not Owe the Debt?
To dispute a debt, you must write a letter to the debt collection agency within thirty days of their initial contact with you. If you dispute a debt, the debt collection agency is prohibited by law from contacting you again until it sends you verification of your debt.
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The Third Rule on Recognizing Harassment from the New York Attorney General
3. How Can You Stop Debt Collectors From Contacting You?
To stop a debt collection agency from contacting you, you must write a letter to the debt collection agency to ask that they stop contacting you. Once a debt collection agency receives your letter, the agency may not contact you any further except to inform you that there will be no further contact or that the agency or the creditor intends to takes some specific action. However, submitting a letter asking a debt collection agency to stop contacting you does not prevent the agency from instituting legal action against you to collect the debt. However if they continue to contact you by phone or letter they are violating the law.
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