Understanding Debt Quiz

Study Notes

Debt is an obligation to repay a balance, most commonly with interest and penalties.
Collection processes can include calling, letters, and phone calls, and may use strong tactics to scare the borrower into paying.
Charge offs are when the lender considers the debt to be bad debt and uncollectible, and a debt sold to a debt collector may be farmed out to Debt Collection Agency.
Debt can be sued for at the point it goes into default.
If a creditor or collector does file a suit against you, depending on the state you live in, and whether it is filed as a small claim or a regular case, you will have a certain number of days in which to respond and file an Answer, or other response to oppose the suit.
There are two cases in which the Creditor can obtain a Judgment: the consumer does not respond to the suit in the time allotted to file an Answer or the consumer file an Answer in time, but the facts are such that the creditor prevails.
In both results if a judgement is obtained, many fees will be added to the amount owed for Collection fees, etc.
If you receive a collection letter or threat from an attorney, you should take immediate action and/ or seek legal advice on regarding your options, before the time for response has run out.
Zombie (Old) Debt is debt that is very old (or may not even not be owed by you) that often has been sold several times and has been purchased by a debt collector bundled together with other debts. Sometimes this debt is ten or twenty years old.