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Wednesday, 4 January 2012

Unpaid Debts - Sold to Collectors

Companies buy and sell debts as a business. In this Q&A, a retiree asks who he should pay since different people have been trying to collect from him at different times.

Is the article worth reading? Yes, I'd say so, even though it may at first glance appear to be an Aunty Agony type of column. Thanks to the article I found out that there is such a thing as a Fair Debt Collection Practices Act in America. Perhaps, it'd be a good idea to examine its contents and propose a similar statute here in Malaysia.

Here is an excerpt:
How you're going to deal with the bill. Now that you know your rights, work within them to rectify the problem. Contact the last collector to hold the debt and ask if he would accept partial payments of what you can afford until the account is paid in full. You may also try to settle for less than the total balance, but don't count on acceptance. They're under no obligation to settle. What they do want is the money, so if you start to send some, they should calm down and stop contacting you. If the collector does settle for less than the amount owed, you and your wife will most likely be liable for paying taxes on the amount forgiven.

Actually, most of it is common sense once you understand what has happened to this retiree's debt. I would say that in settling your debts, the creditor almost certainly wants to maximize the collection that he is able to extract from you, and thus by implication, the creditor also wants to minimize the cost of making that collection. Thus, if you are helpful and co-operative, it is almost certain that the creditor will accept your proposal of payment by instalments to settle the debt. Act tough, however, and the creditor will feel threatened enough to want to pull some court summons to intimidate you into paying up.