Personal Finance Care

The silver lining has already started to emerge on the mortgage market after the falling interest rates. These will ease up some of the pressure on the mortgage companies and potentially open up new opportunities for debt consolidation. When the economy falters, the interest rates often start to fall.

When the interest rates were lowered, the Federal Government made the headlines in August, but often the case may be, the Fed was following the lead of the bond market which had already brought the interest rates down. Due to the lower interest rates, the mortgage companies are able to increase the spread between the rate at which they borrow money and the rate at which they lend it out. Due to this increased spread, there will be less pressure on the mortgage rates.

Mortgage industries are in the business of making loans. They may be able to raise their credit standards for a short period of time, or lend out a small percentage of home equity, they still want to make new loans rather than just stand by passively while some existing loans go bad.

If you are considering using your home equity to consolidate some of the debts, review the mortgage industry carefully for the lower interest rates. The mortgage market is cyclical and many companies are getting up to speed again, with new rates to offer.

People in debts are often hounded by collection agencies to make the payments. The debt collector will often use illegal techniques to recover the debts from the consumers.

Sometimes, the collection agencies do not have the authority or enough information to collect on your account. If you are aware of your consumer rights, you can legally safeguard yourself from making unnecessary payments.

Debt validation is a complicated process. In most of the cases, when the customer has defaulted in his payments to the credit card companies, these big companies do not have the time to chase down the debtors who owe money to them. They usually hire a debt collection agency to recover the amount and pay a certain percentage on the amount recovered.

For legal purposes, any entity that is not an original creditor will be considered as debt collectors, including the attorney’s office. Debt collectors are legally required to follow the Fair Debt Collection Practices Act (FDCPA) which will be the basis of your debt validation proceedings. It applies to those companies also who have bought the debts from the original creditors and have now become the current creditors.

Debt validation is the process of verifying the debt in question, as well as the collection attempts. According to the FDCPA laws, the burden of responsibility to provide necessary information about the debt rests on the debt collector. Generally debt collectors must be able to prove the following things before attempting collections.

The debt collector has been authorized to collect on the account that you owe to the original creditor.
The full amount of debt with accurate calculations of the principal and interests as documented by the original creditor.

The debt collector should be able to show the original contract copy signed with the original creditor if they are doing legitimate collections.

If someone is trying to collect on an account that you do not recognize, or you believe the account is already paid, or if the debt is past the statute of limitations period, you must pursue debt validation. You should also pursue debt validation if you know by any chance that the company is trying to collect on an account that they cannot prove in writing.

• Take the following actions to demand your right to debt validation:

Send a debt validation letter to the collection agency through certified mail with return receipt requested. Allow them 30 days to respond to your request.

If the collection agency is not able to give you the required information related to the account, make sure that you contact the credit bureau and get their collection remark disputed if they have already hit your credit report.

If the collection agency is able to give you the required information as per the FDCPA laws and you still want to dispute the account, you may want to check the licensing of the collection agency in your state. A collection agency collecting on an account in your state has to be licensed in your state. If they are not, it is a violation of the FDCPA and you have the rights to take legal actions against them.