News You Can Actually Use But Hopefully Won’t Have To

Here’s a timely personal-finance story with information I actually haven’t read a million times.

The LA Times’s Kathy M. Kristof writes about how to deal with debt collectors—something more Americans are certain to have to learn about in the near future.

Don’t pay dormant debt: If you’re being contacted about an old debt, the first thing to do is consider whether you actually owe the money, Detweiler said.

Every state has a statute of limitations that specifies how long you can be hounded about an unpaid debt.
Typically, once that limit — typically three to 10 years — has been reached, you no longer need to pay…

Dispute inflated debts: In many cases, an old debt will be inflated by late fees and debt collection costs. You may be liable for those charges, Detweiler said, but sometimes the amounts can exceed limits imposed by state law…

Stop abusive calls: Federal law bars debt collectors from calling repeatedly “with the intent to annoy, harass or intimidate” you, McClary said.

Negotiate: If you have more debt than you can afford to pay, the creditor may be willing to take less than what’s owed to keep you out of Bankruptcy Court. That’s what ultimately happened with Ruiz.

Once she dumped the settlement company and signed up for credit counseling, her creditors became convinced that she was doing all she could. At that point, she said, they began to work with her. One $1,900 debt was settled for $654, she said. A $900 debt was cut to $450.

We’ll be seeing more of this type of coverage now that the financial difficulties are really hitting the upper middle class.

And I bet LAT owner Sam Zell is wishing he could use some of this advice. After all, he knows a little something about crushing debt.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.