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Debt Consolidation Facts

1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

Statute of Limitations Laws for Debt Collection Agencies in Alabama

Applicable Cities: Auburn, Birmingham, Decatur, Dothan, Gadsden, Hoover, Huntsville, Mobile, Montgomery and Tuscaloosa
Interest Rate Charged:


Legal -> 6%
Judgement -> 12%

Statute of Limitations (in years):
  • Open Account -> 3 yearsWritten Contract -> 6 yearsPromissory Note -> 6 yearsDomestic Judgement -> 20 years
  • Foreign Judgement -> 20 years
Bad Check Law:

-> Considered as Civil Penalty
-> Greater of $10 or actual bank penalties

Wage Garnishment Exemptions: 75% of wages are exempt from Wage Garnishment Penalties.
  • i) Open Account: An open account is a revolving line of credit that has varying balances over the course of its life. Example of an open-ended account is a credit card. For example, the statute of limitations period that debt collectors have to collect credit card debts owed in the state of Alabama is 3 years.
  • ii) Written Contract: A written contract, as the name states, is a loan agreement that is signed by both you and your lender, stating the terms of the loan e.g repayment date, applicable interest rate, any late payment penalties, etc.
  • iii) Promissory Note: A promissory note is very similar to a written contract, the only big difference is that the scheduled amortization of payments and applicable interest rates is all defined within the promissory note. A mortgage agreement is an example of a promissory note.
  • iv) Domestic Judgement: A domestic judgement allows the creditor to collect debts owed in the State where the loan agreement (written contract) was signed. Once a debt collection judgement is received from the court, collectors can recover their debts from the state where the judgement was issued or the state where you (the person owing the debt) reside.

    Example:
    You live in California where the statute of limitations for Open-Ended accounts is 2 years. You have a debt collector trying to collect his debts owed from you in the State of California by following the statute of limitations law. If the statute of limitations period is over, the creditor can sue you in another related state where the actual transaction occured. For example, if you repaired your car in the State of Alabama, the creditor can be granted a "Domestic Judgement" clause in the state of Alabama allowing him to collect debts owed by you in the State of Alabama, where the car was actually repaired.
  • v) Foreign Judgement: A foreign judgement is a court issued judgement from any state, OTHER than the state where the debtor currently resides in. For example, if Peter who owes $5000 debt resides in Arizona, a debt collector can ask for a Foreign Judgement from any state OTHER than Arizona to pursue his/her debt collection efforts.
  • vi) Civil Penalty: A civil penalty is a type of fine levied against a wrongdoer who has committed a civil crime and must pay the state a penalty. This penalty is in the form of monetary value ($$$). A civil penalty is NOT a criminal punishment, it is merely a form of compensation to the state for wrongdoing carried out by a person. For example, if a person dumps toxic waste in a park owned by the government, that person could be charged a civil penalty or monetary fine to compensate the state for cleaning up the mess created by that toxic waste.

 

 

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