Debt Settlement Laws That Can Benefit You

When you have fallen into debts which you are not able to service, you can take recourse to debt settlement laws to derive the maximum benefits from them. The Fair Debt Collections Practice Act includes your personal, family and household debts but excludes business debts. This article discusses four statues that may come to your rescue in enabling to come out of debts or at least get you the time so that you can re-organize your debts and life.

Statute of Limitations

By statute the creditors are limited in terms of time span within which they can legally claim back the debts from you; this varies from state to state but typically ranges from three to seven years and applies to credit card, utility and even medical bills accrued. The time period to become eligible under this statute normally starts ticking from when the creditor has done a 'charge off' which means this was the amount owed by you on the original debt when the payment had stopped. You can find this out as this would appear on your credit history; this however would be subject to change if you had made any payment in between under an agreement to pay and afterwards again stopped it, for under such a circumstance, the limitation would get accordingly extended. The exception wherein the statute of limitation may not apply is when you are covered under any bankruptcy proceedings.

Fair Debt Collections Act

The objective of this Act is to protect you as a debtor from the unscrupulous practices which a collection agency may indulge in their bid to recover the debts from you. Many a times the collection agencies may transcend the limit but once they know that you are aware of your legal rights, they would become conscious. The best way to ward them off is to ask them to legally validate the debts you owe and in case they fail to do so this in all probability means that the creditor has charged it off and you would be relieved from the obligation of paying it.

Mortgage Forgiveness Debt Relief Act

The Mortgage Forgiveness Debt Relief Act benefits you in an indirect manner in the mortgage debts you have incurred on which a default has taken place and property is foreclosed. But for the relief provided under this Act, when a lender foreclose your home and in the event it writes off, the deficiency amount ( the difference between your accumulated debts and the proceeds it receives by way of reselling the property) due from you is treated as income in your books which leaves a tax liability on your side. The Mortgage Forgiveness Act relieves you from this liability and its validity has been extended up to 2012.

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