If you have an unpaid debt go into collections, you may feel like there’s nothing you can do to fix the situation. Phone calls, letters, and threats of legal action from debt collectors only add to that helpless feeling. It seems easier to ignore these calls, hoping they will go away, but if ignored, an unpaid debt can lead to years of difficulty.
It’s important to know that you’re not alone, and that you do have rights as a consumer. The Raleigh business law attorneys at Kirk, Kirk, Howell, Cutler, & Thomas can work with you to avoid legal action, remove accounts when they are past their statute of limitations, and stop a creditor from breaking the law attempting to collect a debt.
Understanding Debt Collection in North Carolina
There are two main types of debt: secured and unsecured. Secured debt is backed by real property, such as a car or a house. In the event a consumer can’t pay back the loan, the real property is repossessed or foreclosed on.
Unsecured debt comes from a legally binding contract stipulating that the consumer will make payments, but the debt that can’t be settled by forfeiting property. Examples of unsecured debt include:
- Credit cards
- Medical bills
- Home repairs
A credit card agreement or payment plan from a hospital are considered legally binding contracts. If those bills go unpaid for a period of time, usually past 120 days, the account will be charged off and will often move into the hands of a third-party debt collector.
Not only can an unpaid debt linger on your credit report, preventing you from buying a car, renting an apartment, or even getting hired at a job, it can also lead to serious legal issues.
Legal Ramifications of Debt Collections
In North Carolina, once a collection agency takes over a debt, they may take you to court. If you receive a summons, it’s important to immediately contact a debt collection lawyer in Raleigh to assist you with your case to help you get the best possible outcome. Failing to appear in court means your collector has automatically won the case, and the court can place a judgement.
A judgement is the court order for you to pay the debt, which gives the collectors more legal standing to attempt wage garnishment, property liens, and even levying your bank account.
In North Carolina, most unsecured debts can not be garnished from your paycheck. The only types of debts that can cause wages to be deducted directly from your pay are:
- Unpaid taxes
- Child support and alimony
- Student loans
- Payment of ambulance services
If a debt collector of a debt not related to the items listed is threatening to have your wages garnished, that is actually a form of harassment, which is prohibited in North Carolina.
A creditor can put a lien on property until a debt is paid off. The lien means that if the property is sold, the creditor gets the first cut of profits off the sale to satisfy the debt. Liens can be put on a property due to:
- Mechanic’s Lien: Also called a construction lien, this is filed on behalf of construction companies. When a homeowner does not pay for work completed, the court can grant a lien on the property until the work is paid off.
- Judgement Lien: When a person fails to pay unsecured debt, the creditor can file a lawsuit against the consumer. If the judge finds in favor of the creditor, and the consumer doesn’t pay, the judge can put a lien on the consumer’s vehicle, land, or house.
- Tax Lien: If property taxes aren’t paid, a lien is placed on the property until all taxes are paid.
The enforcement of liens can lead to property foreclosure and other serious problems.
Levying Bank Accounts
If your creditor wins a judgement, they may attempt to levy your bank account, meaning any money in your account is frozen and the bank must send your funds to your creditors. This can continue until the debt is satisfied.
In order to levy your account, the creditor must provide a statement to your bank verifying proof of a legal judgement. Your bank, nor your creditor, is legally obligated to notify you that a levy has taken place, but you should have an opportunity to dispute it. Once you are aware of a bank account levy, you should contact a Raleigh debt collection lawyer to determine your options.
Debt Collection Laws in North Carolina
North Carolina has a multiple laws in place determining how debt collectors can attempt to collect a debt. Many collection agencies, assuming consumers don’t know their rights, engage in illegal activities, including:
- Threatening violence.
- Threatening to arrest a consumer.
- Using profanity or obscenities when speaking with a consumer.
- Repeatedly calling you or calling outside of normal waking hours (usually 9 A.M. – 9 P.M.).
- Calling your work when they know your personal phone number or you’ve requested they stop calling your job.
- Threatening to seize your property or wages outside a court judgement.
Statute of Limitations
Additionally, a collection agency must file suit or take action within a statute of limitations. In North Carolina, the statute for most unsecured debt, like credit cards and medical bills is three years from the time when the bill goes unpaid. For example, if your last payment to a credit card bill is May 15, 2016, a collection agent can’t attempt to collect the debt after May 15th, 2019.
It’s important to note that if a promise to pay a debt is made in writing or a partial payment is submitted, the clock is reset. Also, if a debtor has already filed a suit and received a judgement, the statute of limitations to collect is ten years.
Contact Our Raleigh Debt Collection Law Firm
To learn more about your rights as a consumer and prevent years of legal and financial difficulties, contact our team of Raleigh debt collection attorneys. We will work with you to help you end harassment, avoid a judgement, and move forward in your life!
Call us today at (919) 615-2473 to speak with our attorneys.
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