Texas collection agencies are often criticized for behavior that sometimes
borders on harassment. However, a tactic employed in debt collection that
is growing in popularity does not involve any direct contact with the
debtor. The practice, which is known as parking a debt, involves placing
information about an outstanding debt on an individual's credit report
and then waiting until they apply for credit. The practice is often used for
unpaid medical bills.
The Fair Credit Reporting Act requires banks and other financial institution
lenders to notify borrowers about negative information that may appear
on their credit reports, but the law does not apply to health insurance
companies because they are not in the business of extending credit. The
parking debt creates problems for those applying for a mortgage or car loan because
negative information on their credit report may harm their chances of
securing an approval before they even know that it is there.
Matters are sometimes made worse by the fact that collection accounts often
remain on a credit report and continue to impact credit scores long after
they have been paid off. Consumers can take steps to protect themselves
from debt parking by regularly checking their credit reports and disputing
questionable items directly with the credit bureau concerned. Consumers
may also contact debt collectors and demand that they verify a debt in writing.
Experienced bankruptcy attorneys are unlikely to be surprised to learn
of yet another dubious tactic employed by debt collectors. Filing a
Chapter 13 or
Chapter 7 personal bankruptcy puts an end to harassment from debt collectors and
provides the opportunity for a financial fresh start. However, there are
many myths associated with bankruptcy that may prevent those with unmanageable
credit card debt or other financial difficulties from pursuing these options. A
Houston bankruptcy attorney may dispel these myths while explaining the merits of the various debt
relief options available.
Schedule a consultation with Guzman Law Firm today.