Credit and Debt Collection Overview

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Credit and Debt Collection Overview

Consumer credit issues affect us all. Here are the answers to a few of the most commonly asked questions.

What if I am sued on a debt?

One common problem is being sued by a creditor, often by a credit card or utility company. If this happens to you, don't ignore the court papers you receive. Try to get legal help right away. At the very least, file a written answer with the court before the deadline.  If you do nothing, you will be "defaulted."  This means that the creditor has a court judgment against you.  You have given up the right to raise any legal defenses you may have had.

You may be able to get legal help from a low-income legal services office, or, if you are active military, from a JAG or civil legal assistance officer.

Active servicemembers may also be temporarily protected from being sued. Learn more here.

Each state has laws that protect your most basic assets and income.  For example, even if a creditor has a court judgment against you, they can’t reach the protected value of your home. Also, a basic portion of your earnings is protected from attachment by a creditor. Most people who rely on SSI, TANF or other needs-based income are protected from collection. Your local legal services agency can tell you whether your income and assets are protected from collection.

How can I protect my credit rating and protect myself from identity theft?

Make it a practice to check your credit report at least once a year. There are three big credit reporting companies: TransUnion, Experian, and Equifax.You can get one free report every year from each company. This means that every 4 months, you could ask for a free credit report from a different company. If there are any errors on it, follow the company’s dispute procedure.

Go here to get free annual credit report

Tips:

  • The credit reporting company will also offer to give you your "credit score." They charge money for this. You don't have to order it.

  • Other online companies - posing as the free credit report site www.annualcreditreport.com - charge money. Don't pay for your credit report!


Helpful online resources for consumers

Find a large volume of information about credit cards, collections, identity theft, marketing scams, predatory lending and more, on these quality sites: 

National Consumer Law Center Consumer Brochures

Federal Trade Commission Consumer Information

Center for Responsible Lending Tools and Resources

FTC's Identity Theft: Deter, Detect, Defend

National Do Not Call Registry - stop unwanted marketing calls

SafeLink Wireless - Free limited cellphone service for low-income consumers