Lenders in Tennessee naturally expect that when they issue a loan, it will be paid back. Unfortunately, things do not always run so smoothly and, sometimes, lenders must work with debt collectors to recover debts. Therefore, it is important to understand what debt collectors can and cannot due.
Unsecured debts are those that are not backed by collateral. Some examples include medical debt and credit card debt. These types of debts “expire” after the statute of limitation period has ended. Once that happens, the debtor cannot be sued by lenders to obtain the payments they are due. However, it doesn’t extinguish the debt. Thus, debt collectors are permitted to use lawful measures to continue seeking payment on expired debts.
Also, debt collectors cannot make threats against a debtor or make misleading statements. However, they are still permitted to call debtors daily, send letters or pursue legal action. Debt collectors cannot make phone calls before 8:00 in the morning or after 9:00 in the evening. They also cannot harass debtors.
Debt collectors are also permitted to pursue a lawsuit against debtors who are delinquent in their payments. Some results of such lawsuits include bank levies and wage garnishment. If a debt collector is unable to secure payments from debtors, they may resell the debt. Debt collectors can also try to negotiate a settlement with the debtor. This may result in the debtor paying less than they owe.
As this shows, while there are limits on what debt collectors can do, they do have lawful methods to recover debts. This is important for lenders who are owed money from debtors. Since there are regulations that apply to debt collection, debt collectors and lenders should make sure they have a good understanding of how these regulations apply to them, so they do not make any legal missteps in collecting what they are owed.