Know More about First Capitol Collections

Many debtors find themselves dealing with debt collection calls in regards to past due debts that were originated and charged off several years ago. It is common that the debtor has forgotten about the debt and has moved on with life and past the stresses of paying the debt. When they get a call or letter from a debt collection company they may never have even heard of, it can be a confusing and shocking event. Many debtors do not understand what that statue of limitations represents and the right they have in regards to not having to pay the debt. States are now stepping up new rules which requires debt collection agencies to explain to the debtor in clear writing on letters that they cannot be taken to court over the debt in question. see this here

Many states, including New York have adapted these new rules in a effort to educate and protect the debtors. Recently, New Mexico joined the ranks of states coming on board with the new rules. Many politicians and debtors see that as a victory in the fight to prevent shady debt collection companies from using scare tactics to bait the debtor into paying debts that have passed the statue of limitations. In some states, such as New Mexico, a credit card debt passes the statue of limitations after four years. This will prevent a debt collection company from taking a debtor to court in regards to a past due debt that is more than four years old. Most will agree this new rule is beneficial for most but collection agencies argue that this will only force credit card companies and other companies who hand out loans to raise interest rates and decrease lending in a already tight credit market. Furthermore, collection agencies warn that in the current economic conditions this will only slow down the recovery of banks.

Collection agencies can collect on a debt typically for as long as they want. If a debtor ask do they have to pay the debt or not, a collection agency must tell them they do not have to pay the debt but it may still show up on a credit report if they continue to refuse to pay the debt. Even if the debtor cannot be taken to court, the debt can still be reported on a credit report which could haunt the debtor for years to come as they try to finance items on credit. Many collection agencies are worried if the the debtor is told they cannot be pursued in court, they will refuse to pay the debt all together even if they point out the credit reporting impact as many of the debtors are not concerned with personal credit scored as it has already been ruined and beyond repair for years to come.

Both sides seem to have good reasons to be worried about the new rules and it will take time to see how the public reacts to the new changes. Many will always support new regulations to prevent debtors from being taken advantage of but will unknowingly be paying a higher interest rate as collection agencies are unable to recover the money at previous rates.