Debt collection harassment: Beware of the abusive practices

If you have credit cards and have done some shopping with them, you must pay them off as soon as possible so that you don’t incur debts. When you keep the credit card balances unpaid, debt collectors start harassing you over the phone. The calls are not usually friendly or understanding in nature. They demand the payment money from you. If the debt is yours, they can send you legal notice if you don’t answer them. However, they are not entitled to harass the debtors.

FDCPA (Fair Debt Collection Practices Act): what is it?

According to the Fair Debt Collection Practices Act (FDCPA), the debt collection agencies are not entitled to use abusive language. They can’t practice unfair means to collect the debt from the debtors. The debts that are covered under the FDCPA are personal and family debts, auto loans, mortgages, etc. But if you’ve incurred debts while running a business of your own, the FDCPA won’t cover them.

Read the article to know how the debt collectors can harass you to collect debts. It will help you to understand when to take action against them.

Be aware of the ways the debt collectors may harass you

There are certain ways by which debt collectors abuse their powers to collect debts from the debtors. But the FTC has put a stop to these practices by enforcing the FDCPA. According to FDCPA, debt collectors are not entitled to harass the debtors.

Read the article to know which debt collection practices are considered abusive:

Harassing someone else for your debt

If the collection agency or the debt collectors harass your friends or your family members for the debt you’ve incurred, you can take action against them and complain to the FTC. The debt collectors are supposed to contact your attorney first, but if you have none, then they can contact someone else for your contact information and phone numbers.

Contacting at their convenience

Even if you owe to the debt collectors money, they cannot contact you before 8 in the morning or after 9 at night. If you have given them permission to do so, they can do it and not otherwise. They are also not supposed to call you during office hours. If they don’t abide by these rules, you can sue them in the state court. If you don’t owe the debt, the court can ask debt collectors to pay you for the damages.

Harassment for debt

The debt collectors cannot harass you for collecting the money you owe them. They cannot keep calling you for the money or use profanities to collect debts. They can never insult you publicly or even over the phone. If they threaten to harm you or resort to any violence, you can report it to the FTC or your local attorney general. They cannot also publish the names of the debtors but they can report it to the credit reporting companies.

False threats

The debt collectors cannot tell you things that can upset you such as they can put you in jail for not paying their money. They also cannot threaten you with a garnishment or falsely claim that they can seize your property if you don’t pay their money. They can sue in a court of law but cannot resort to things that are illegal. So get all the knowledge about what a collection agency can do if you do not pay their money.

False claims

Debt collectors can never pose as someone else to collect a debt from you. If you see that they falsely claim to be attorneys or a person of law to collect your money, complain to the FTC. They also can never take more than what you owe or even claim to work for the credit reporting companies. They are no one to tell you that you’ve committed a crime by owing their money and not paying it. Just check the document that they send you to see whether or not they’re legal.

Unfair practices

To collect their money, debt collectors cannot harm you physically. They cannot collect any extra amount on the debt unless the state law allows it. They cannot contact you by postcard or deposit a post-dated check in your account. Illegal practices are completely prohibited by the FDCPA and if they break the rules, they can be sued in state court.

Try to pay off what you owe so that you don’t have to fall into any such situations. But if you are still harassed for the debt you don’t owe, contact the FTC for further information.

Is it possible to find free legal help to avoid debt collection harassment?

The debt collectors can threaten you to retrieve the owed amount if you default on your payment. They can employ illegal debt collection practices to take money from you. To avoid the harassing collection calls from the creditors. You can get legal help to avoid collection calls as there are many options that you can avail of.

Where can you get free legal advice?

There are different ways to get free legal help to get rid of debt collection calls. You can get help from the public websites that provide information regarding debt related issues. There are many sites that can help you deal with the harassing collection calls. The National Foundation for Credit Counseling or NFCC provides a number of certified counselors who can help you pay back the owed amount and guide you to avoid getting into debt in the future.

How to avoid the debt collection harassment

File bankruptcy

Bankruptcy is feasible if you are unable to repay the total debts. Filing bankruptcy can take a toll on your credit score. Thus, debt settlement can be an option to repay debts. If you are facing financial hardship and are unable to repay even the reduced amount, then bankruptcy is the last resort.

Once, you file bankruptcy, you can get rid of the collection calls and harassment. The court will calculate your property worth to repay your debts. It will affect your credit health. After getting out of debt, you can start afresh to build your credit score. If you manage your bills and credit cards well, you can get back to a good credit score pretty fast.

Consider settlement

If you have an insurmountable amount of debts, then it is advisable to negotiate with the creditors to lower the outstanding balance. Thus, you can afford the debt payments. You can hire the services of a debt settlement company for this job. It might suggest a suitable debt relief program after reviewing your financial situation. The firm will design a repayment plan in accordance with your financial situation so that it can be affordable for you to pay off debts.

Lastly, if the creditors file a lawsuit against you, then the court might order wage garnishment or use other methods to retrieve the owed amount. Therefore, it is advisable to avoid legal hassle. You can seek free legal advice to eliminate your financial woes.

What is medical debt and how do you deal with it?

What is medical debt?

Medical debt in America is one of the biggest financial issues that is turning the lives of common people into a living hell. Medical bill debt is commonly called the debts which are incurred by people while getting health care and related services.

Medical debt is different from other types of debts because medical services are needed when people become ill or experience an accident or any other health-related emergencies. People do not plan to fall ill or hurt themselves, and they can’t also avoid health care remedies as they need to be cured asap.

People usually avoid talking about their medical debt, as they feel guilty about it. They think that failing to pay off medical debts is a serious matter of one’s life. That’s why they also feel shy to get help with medical debt from others.

Medical debt is a notable factor of the national debt number in the United States. As per a poll from the Pew Research center, medical debt in the US is a top public matter and concern as Americans are truly worried about their health care issues. Research also revealed that in 2020, about 137.1 million Americans experienced financial difficulties or debt due to medical bills.

Check out some important statistics about medical debt:

  • The average age of people who go through a medical bankruptcy is 44.9 years. (American Journal of Medicine, 2009)
  • Among people who experience medical bankruptcy, 46.3% are married. (American Journal of Medicine, 2009)
  • Among people who experienced medical bankruptcy, 60.3% attended college. (American Journal of Medicine, 2009)
  • The average monthly household income of medical bankruptcy filers is $2,586/month. (American Journal of Medicine, 2009)
  • Among families who experience medical bankruptcy, 20.1% are military families. (American Journal of Medicine, 2009)
  • The average debt for households that experience medical bankruptcy is $44,622. (American Journal of Medicine, 2009)
  • About 19.5% of consumer credit reports include one or more medical collections. (Consumer Financial Protection Bureau, 2014)
  • The average unpaid medical debt recorded on credit reports is $579. (Consumer Financial Protection Bureau, 2014)
  • 22% of consumers with debts in the collection have only medical debts. (Consumer Financial Protection Bureau, 2014)
  • 54% of consumers with medical debt have no other debts listed on their credit reports. (Consumer Financial Protection Bureau, 2014)

Data courtesy –

What type of debt is a medical bill?

An unpaid medical bill normally becomes a medical debt. It is another form of unsecured debt, like credit card bills, utility bills, phone bills, etc.

Debt due to medical bills is considered an unsecured debt as it does not have any collateral engaged with it.

It is difficult to avoid medical debt in the first place as it is connected to health-related issues. Health issues can’t be controlled by humans, so they have to opt for medical services if they need to. As a result, medical bills will occur normally. The cost of treating a sudden illness or unexpected operation may create issues to maintain the family budget.

There are few stages through which medical bills become medical debts.

a) Unpaid medical bills

If an individual can’t pay his/her medical bill, the health care provider will try to recover the money directly by contacting the debtor via emails or calls. If the debtor does not respond to the creditor, then the creditor may hire a bill collector.

Nonprofit hospitals and most federally-qualified health centers may need to take a few steps before determining a patient’s eligibility for financial assistance. So, most of the medical debt cases are seen in private hospitals and medical service providers.

b) Bill past due

The healthcare company or hospitals will assume a bill past-due if the patient does not pay the bills entirely or sort out an alternate payment plan with the creditor. On average, hospitals and health care providers may want to recover their medical bills within 90-180 days of billing a patient. To be on the safer side, consumers or patients may opt for multiple solutions to handle medical bill problems.

  • 53% said they worked out a payment plan with their provider.
  • 37% said they borrowed money from friends or family.
  • 34% said they increased their credit card debt.
  • 70% said they would cut back spending on food, clothing, or other basic household items.
  • 41% said they took an extra job or worked more hours.
  • 59% said they used up most or all of their savings.
  • 35% said they have been unable to pay for necessities like food, heat, or housing.

Source: Kaiser Family Foundation / The New York Times, 2016

d) Medical debt in collections

Healthcare providers may hand over unpaid bills to in-house or third-party debt collectors or sell those debts to a debt buyer. Debt buyers normally purchase those medical bill debts with lesser amounts. Debt collectors and debt buyers may contact patients or debtors via phone calls and may charge penalties and interest.

If the patient does not pay the debts at all, the debt collectors or debt buyers may file a lawsuit against them. As a result, the patient or debtor may have to face multiple consequences, such as wage garnishment or personal property seizure.

What happens when you can’t pay medical debts?

“Should I pay a medical debt?”

You might be thinking about this if you have a big load of medical bills on your head. But apparently, the answer should be big…yes! If you can arrange money to pay off medical debt, then you should actively pay it off as soon as possible.

But if you are seriously suffering from a low funding issue or facing financial hardship, it can impact your ability to pay off medical debt. If you have received a bill and are thinking about skipping the payment, here’s what you can expect:

a) Late fees will be charged

If you skip your medical bill debt payment, you’ll make it more costly for you. Missing the due date of your debts can be expensive as it will add late fees or interest with the original debt. As a result, your debt will be bigger. Most of the medical debt in America is increasing due to this particular reason…missing the due date!

Depending on your state’s law, you might avoid penalty fees. In a few states, medical service providers can’t charge late fees if you skip the due date. Minnesota, California, New York, and Illinois are states where late fees on medical bills are banned.

b) You’ll encounter a hired collection agency

If you do not make payments on medical bills for a long time, the service provider might hire a professional debt collector for medical debt collection. In the case of debts like credit cards, the creditor sends the account to collections after six to nine months.

But healthcare service providers normally send unpaid medical bills to the collection department asap.

In most cases, a debt collection agency will contact you if you’re more than three months past the payment due date.

It is quite difficult to handle debt collectors than the original creditor. The creditor will easily agree to negotiate with you regarding the medical debt settlement. You may even get a great offer from the original creditor. But once the medical debt collection process is initiated, the collection agency won’t be so soft on you. They might try to harass you, scare you, make your life awful, even in your workplace.

You shouldn’t avoid their calls and ignore your debt if it is genuinely yours. If you do, it will make you fall into legal traps and the situation may become worse for you.

c) Legal action can be taken against you

The longer you take to pay off medical debt or arrange a settlement option, the more difficult your situation will be. The debt collection agency may take legal action against you if you do not pay the debt.

Initially, your medical service provider can sue you for unpaid medical debt. The court may give you a severe punishment called wage garnishment.

The court will issue an order to your employer (if you do a job) that a certain amount of money from your income will be garnished and given to the creditor regularly until the debt is settled. In the case of medical debt in the US, Americans who are earning between $25,000 to $45,000, on average 5% of them are affected by wage garnishment. If you want to get help with medical debt, then you should act fast and contact the creditor before they file a legal action against you.

You must remember that a collection agency won’t be so generous to you, and they probably can sue you if you do not entertain their collection efforts.

Since medical debt is considered a civil debt, you cannot be sent to jail for it. However, if a wage garnishment is ordered against you and you ignore the court order, then you can be put behind bars for sure.

d) Your credit score will be affected

Does medical debt affect your credit? Of course, it does!

The three credit bureaus – Experian, Equifax, and TransUnion have amended their rules on medical debt collection. In 2016, they released the National Consumer Assistance Plan, which is targeted to help consumers against unfair credit reporting practices.

If you are facing medical debt collection, you have 180 days before the credit bureaus report it as past due. It also gives you time to repay the debt within that allotted time before the account will appear on your credit report.

If you can’t pay off the bill, be sure to see the addition of medical debt on the credit report. As a result, it will immediately affect your credit score. But even if a medical debt collection does get reported, it won’t harm your credit score too badly.

According to the newer credit scoring models, both FICO 9 and VantageScore 4.0 consider medical debt as a less “weight” debt, compared to other debts such as credit card bills or payday loans. So, medical debt won’t negatively affect your score as badly as other collection accounts.

Will medical debt go away?

Once added to your credit report, it will take 7 long years to dissolve.

Medical debts will be removed naturally once you pay them off or are being paid for by your insurance coverage. Unpaid medical debt in collections will still affect your credit report for those 7 years from the original delinquency date.

But is it that simple to get out of medical debts after 7 years? No.

Your unpaid medical bills will be removed from the credit report after 7 years. So, you won’t face a problem while applying for a new credit card, a loan, a job, or buying a home.

But you’ll still be responsible for the medical bill debt.

To get out of this situation, you should pay off all the medical debts, or arrange an alternate repayment plan. You can enroll in a medical debt consolidation program or settle the debt through a medical debt settlement option.

How can you deal with medical debt?

Like any other debt issue, you also might be thinking about how to get rid of medical debt easily. But practically, the thing is not so difficult if you follow some simple ways.

If you are being contacted by a collection agency, you have the right to ask for a written confirmation of the debt (debt validation) as well you can dispute it.

Under the federal Fair Debt Collection Practices Act and the federal Fair Credit Reporting Act, you own the right to dispute inaccurate information on your credit reports.

Check out some best ways to deal with medical debt:

    • Do not ignore the debts if you owe them – Do not avoid paying off medical debt if you can afford it. Ask your provider for all the details about healthcare service costs before you opt for one. Once you receive the service, you should communicate with your insurance provider. You must check whether or not you are eligible for coverage of that medical service.

    • Always ask for debt validation – Whether it is a medical service provider or a collection agency, once you get a billing statement, you should always ask for debt validation from that party. You have the right to get that information. If you are your creditor, request a written, detailed bill to ensure that they are charging you for the services you receive. If it is a collection agency, make sure the debt is yours.

    • Compare medical bills to insurance EOBs – Your insurance explanation of benefits or EOB will break down each medical charge for you. An EOB is a statement included in your health insurance plan explaining the details about the costs covered for the medical services you received. The EOB will be generated when your medical service provider submits a bill for the services you received. An EOB should inform you about how much the provider charged you in total, how much the insurance will cover/disallow, and how much you owe to the creditor.

    • Don’t use credit cards to make payments – You might be interested to pay off medical debt by using your credit cards and get your medical service provider off your back. But beware! You should never choose credit cards as an option as by doing so you will be converting your medical debts into high-interest credit card debts. If you can’t pay the credit card bills somehow, then it will hurt your credit score much more.

    • Negotiate for an interest-free payment option – Don’t wait to negotiate your bill until it is delinquent or in collections. If you do so, at that point your credit score will be seriously damaged. So, negotiate as soon as possible. You can have interest-free payment plan benefits if you can find it written in the fine print on the medical bill statement. Don’t be afraid to negotiate with the service provider and initiate the monthly payment option. Make sure you have written documents as proof of this. That way, if they report a negative item on your credit report, you can dispute it by showing the agreement and prove that you are doing everything lawfully. If you are paying through a lump sum amount, don’t forget to ask for a prompt pay discount.

    • Ask others to provide help with medical debt – If you have financial hardships and can’t afford to pay medical bills, you may ask for financial help from your family, friends, or any other person who is close to you. But make sure you return their money whenever you have the funds available to you.

    • Seeking professional help – The medical service provider or collection agency may ignore your negotiation request and may not cooperate with you. But you have to get a suitable alternate payment plan, considering your budget. For this reason, you may hire a professional medical billing advocate or claims assistance specialist to get help with this issue.

      Apart from legal support, you may also seek medical debt relief from non-profit organizations. But before that, you should try to get out of this issue all by yourself. You may try some DIY methods such as budgeting, money-saving tips, doing side hustles, and withdrawing funds from investments or from retirement accounts, etc. Make sure you refill all the money taken from your investments whenever possible.

      Next, pay off your medical debt with ease, and also keep your credit score intact by opting for a medical debt consolidation option. This way you may consolidate all of your medical bills into one single monthly payment. By doing so, you will pay off your debts entirely and your credit score will be safe and untouched.

      In most cases when people face a medical debt collection process, professionals would recommend them to settle that debt asap. If you want to keep yourself away from debt collectors and also want to settle your medical bill debt into a lower value, choose the medical debt settlement option. But remember, settling your debts will have a negative impact on your credit score.

    • Seek federal help– Get help from the government with medical bills and insurance options. As per, some programs may help you get support in medical debt:

      Medicaid and the Children’s Health Insurance Program (CHIP) provide help with paying medical costs for children of families who cannot afford health insurance or don’t get it through their work.

      Local Social Security Administration (SSA) offices help those on Social Security and Medicare find help. People over 65, people with disabilities under 65, and people with end-stage kidney disease are eligible for Medicare.

      You may qualify for Medicaid, a joint federal and state program that helps with medical costs for some people with limited income from the Centers for Medicare and Medicaid Services (CMS). Each state has different rules about eligibility and applying for Medicaid for adults. Each state has different application requirements for Medicaid for adults. Call your state’s Medicaid program to see if you qualify and learn how to apply. helps you find insurance options, compare care, learn about preventive services, and more. If your employer does not offer insurance, you are self-employed, or you prefer to purchase your insurance, you and your family can get health, dental, and vision insurance through the Health Insurance Marketplace. Everyone is eligible for health insurance through the Marketplace. You may also qualify for subsidies to help pay your premiums. 2019 Open Enrollment runs from November 1, 2018, to December 15, 2018. If you’ve experienced certain life changes, like the loss of a job or childbirth, you may be eligible to make changes to your health insurance during a Special Enrollment Period. How you apply for a plan in the Health Insurance Marketplace depends on what plan you choose. Visit the Health Insurance Marketplace’s top questions section for additional help with finding or applying for health care. To file a complaint, call 1-800-318-2596 (TTY: 1-855-889-4325).

      Data courtesy –

  • File bankruptcy of your medical bills if needed, any of the above-mentioned options do not work for you, and you may choose to file for bankruptcy as the final medical debt relief option.
    Medical debts might be discharged in bankruptcy, but professionals would suggest not to choose a medical bankruptcy in the first place. Bankruptcy will damage your credit and make it difficult to qualify for any consumer debt in the future.Bankruptcies will stay on your credit report for 3 more years than a medical debt on the credit report. So, it is better to talk to an attorney and get help with medical debt, if you are thinking of bankruptcy as a way to get rid of old medical bills.

Can medical debt be forgiven?

Many people like you are also looking for an answer to this question. As per a 2016 Kaiser Family Foundation survey, nearly 26% of American citizens are having critical issues paying their medical bills.

The perfect and safe way to get medical bill debt forgiveness is to contact your medical health provider or the hospital’s billing department. Talk to them and get information on how to qualify for any medical debt relief programs such as “financial aids” or get discounts on your medical bills.

Medical health providers often communicate with patients who can’t afford high medical bills. So, they also sometimes offer a variety of options to reduce medical costs for the patients and also provide information on how to apply for medical debt help. The eligibility criteria of these programs are solely determined by the hospitals or medical service providers.

Some programs they offer are:

  • Provide financial assistance to patients who do not have sufficient insurance coverage or any medical insurance at all.
  • Offer discounts to pay upfront medical bills.
  • Initiate interest-free payment plans for patients who can afford monthly payments.

As per the federal laws, governed by the National Consumer Law Center, half of all states have strict rules regarding what kind of financial assistance a hospital needs to offer to their patients. The rules may vary according to the state, but most of them indicate that hospitals should give financial support such as free or reduced-cost medical care, or an interest-free payment plan. Patients with income below the federal poverty level (FPL) or those who are uninsured will receive such medical support at a low cost.

6 states which provide lower-cost medical care based on a four-person household under the medical bill’s debt forgiveness program:

Washington New York California Connecticut Colorado Maryland
Free care for uninsured patients at or below 100% FPL.
Discounted care for patients between 100% and 200% FPL.
No more than a nominal fee charged to patients who are at or below 100% FPL.
Discounted care for patients between 100% and 300% FPL.
Free or discounted care for patients at or below 350% FPL (now $91,700). Free or discounted care for uninsured patients who do not qualify for Medicaid, Medicare, or other coverage, and who are at or below 250% FPL. Discounted care for uninsured patients at or below 250% FPL ($65,500). Free care for patients at or below 200% FPL ($52,400).
Discounted care for patients between 200% and 300% FPL ($78,600).


I hope all of your queries on debt due to medical bills are answered above. Medical bills might look less expensive than other high-interest debts such as credit card bills or payday loans, but it can harm your finances and credit a serious level of damage, which may take several years to restore. So, be prepared and well informed. Best of luck!

Should you consider a personal loan to pay off your debt?

If you are carrying multiple high-interest debts, then you may think of using a low-interest personal loan to pay off debt through one manageable monthly payment. It might be a wise and easy way to reduce the amount of interest you’re going to pay every month, as well as wiping your debt faster.


Yes, you also have to pay interest on your new personal loan. However, if you can negotiate with the creditor and get a low-interest personal loan, then your overall interest payment on that single monthly payment will be much lower than your existing multiple debt interest combined.


Choosing a personal loan to consolidate high-interest debts may sound easy, but you shouldn’t take it lightly.


Remember, you’ll be paying off all your debts with a new loan and your interest rate will be reduced, but the overall debt amount remains the same.


You have the option to consolidate all different debts using a personal loan. But you should first analyze whether or not it’s your ultimate option.


These are the two valid reasons why you should take out a personal loan to pay off debt:


a. It is cheaper


If you are dealing with high-interest debts such as credit card debt or payday loans, the interest rates payable will be quite high. Popular credit cards such as American Express, Discover, MasterCard, Visa, etc. have high-interest rates over 15%, even for consumers with a good credit score.


So, if you compare the interest rates of your debts with the interest rate of a personal loan, you’ll find that a personal loan is a cheaper option to choose. If you have a good credit score, the creditor/lender might offer you a better interest rate compared to the market rate.


b. It will improve your credit score


Personal loans are considered unsecured installment loans. They are different from revolving credit accounts such as credit cards. So, if you choose to borrow a personal loan, your credit score won’t be getting a negative impact in the same way as it would get when you have a credit card debt.


For example – if you are paying off credit card debt with a personal loan, your credit utilization ratio will be zero, and your credit score will increase to a good level. But to achieve that, you should make the monthly payments on your new personal loan on time.


How to pay off debt with a personal loan


If you have multiple unsecured debts, such as credit card debts, high-interest loans, overdrafts, and payday loans, paying off debt quickly will be easier through a single monthly payment. You may also manage your finances better and save a good amount from interest payments.


You can take out a personal loan and use it to pay off your existing high-interest debts. Once you pay off all the debts, you may start repaying your new loan in monthly installments, practically at a lower rate of interest.


This way you will be making one payment every month. As you will be taking out a low-interest personal loan, your monthly payment will also be lower than before. As a result, it will be easier for you to afford it. You may make higher payments towards the loan and pay it off faster.


But still, before taking out a personal loan to pay off debt, you must consider all the pros and cons and then decide if it suits your needs.


The pros and cons of taking out a personal loan to pay off debt


Check out the pros and cons of using a personal loan to consolidate debt. It’s quite crucial to consider them before making any decision.


Pros Cons
  • You have the option to make a single payment each month, to only one lender.
  • Paying off debt quickly is possible once you reduce your overall interest rate.
  • You can reduce the total interest rate you are currently carrying while paying off your multiple debts
  • You’ll have a fixed tenure to pay off the loan. This way, you will know the exact time when you will be debt-free.
  • The monthly installment of the personal loan is fixed. So, it will be easier for you to create a household budget.
  • Making on-time payments on your loan may help you to improve your credit score.
  • Few lenders may not approve your personal loan application. This is because they might not entertain your request to use a personal loan to pay off debt.
  • To pay off debt fast, you might have to bear a fee, as well as an early repayment charge.
  • Many lenders offer cheaper personal loan rates to borrowers who have excellent credit scores; so if your score isn’t up to the mark, you won’t be getting the best rate.
  • You’ll have a fixed tenure to pay off the loan. This way, you will know the exact time when you will be debt-free.
  • With a higher interest rate, sometimes you may end up paying more in monthly payments.
  • If you choose a longer period to pay off the loan, then you may also end up paying more.
  • If you miss your due date to pay the monthly installments, it can affect your credit score.

Things you must consider before applying for a personal loan


If you want to use a personal loan to pay off debt, you should analyze whether you can save a decent amount by doing this. For this, you may need to consider a few things:


1) Analyze your financial status


Before you get a personal loan, review your finances to make sure you can afford to pay off the loan and your other outstanding debts too.


2) Know your debt amount


You need to determine how much money you need to consolidate debt. You should add up the total amount of your existing debts, additional charges for prepayment, and other conditions for borrowing such a big amount.


3) Fix the loan term


You should determine the possible loan term in which you can repay the personal loan. Choosing a longer loan term would lower your monthly installments, but you might be paying more interest in the long tenure.


4) Look for additional charges


You need to confirm if there are any prepayment penalties or additional charges associated with the loan. This additional cost may impact your savings.


If you have a better credit score, it will be easier to get a competitive interest rate on a personal loan to pay off credit cards or other high-interest debts. The lower your interest rate, the more savings you can get.


Bottom line

A personal loan could be a great way to consolidate debt. But it’s not always the perfect option for every consumer. For a better assessment, you must review your debt situation and see if it is wise to use a personal loan to pay off debt. If this is not a suitable option for you, you may try other ways to pay off your debt fast.

What makes it hard for millennials to pay off student loan debt?

Millennials are different! They think differently, they do differently, and they live differently.

They believe in experiences rather than spending life in materialistic beliefs, and stereotypical career growth.

They love to be at peace, maintain amicable relationships with everyone, and very seldom rely on war, fights, quarrels, and immoral debates.

These might sound like strong words, hard to digest, but that’s what defines millennials.

Still, this highly intelligent generation is finding it troublesome to pay off their education/student debt, and some other consumer debts as well.

Why is that so? Why can’t this generation aim to become the most progressive financial generation, even though they are progressive in all other aspects when compared to the past generations, who still believe that life is an endless struggle of becoming successful, where the money takes up a big part of being independent and stress-free!

The answer runs deep, with reasons turning out to be more complicated than what meets the eyes.

Millennials starting off in costly education industry:

What’s the price of education these days, when compared to 30 years ago? It’s really huge.

Millennials are mostly successors of Generation X and at times the Baby Boomers. Both generations have seen political unrest and financial crisis.

By the time the first class of millennials entered schools and colleges, the education field has become a lot pricey, with new money earning opportunities coming up in this field, for the Gen Xers and Boomers.

So, did those two predecessor generations make this costly foundation? We can’t readily say that, as market inflation will also come into the picture if we are being unbiased.

But, education did become a lot costlier in the past 3 or 4 decades gradually. We have several reports to support the claim, based on recent statistics.

As Forbes quotes it, the price of college is increasing at a rate of 8 times higher than wages. When compared to the college costs of 1960-1970, it has increased by more than 1000%.

With this high surge in education costs, millennials are not finding enough income to take care of their student debts. And, just to dress it up a bit more, there are even some Gen Xers and Gen Zs, suffering from this rising education cost.

The maximum increase happened between 1980 and beyond. So, all those who pursued/are pursuing degrees in this time period, are the sufferers, with millennials comprising most of the victims.

Millennials quite often indulge in splurging:

The youth of this world is mainly made up of millennials and the ‘coming of age’ Generation Z. They are surrounded by technology, and they make costly purchases related to gadgets, fashion, and many other lifestyle accessories.

Not to forget, tackling education costs is hampered by other expenses, that takes up a chunk of one’s income.

When you are busy passing away most of your money to expand lifestyle costs, you can’t handle the increasing education costs, if your income is static and is of a fixed amount.

But what makes millennials splurge so much at times? The world of advertisement, media, social networks, peer pressure, and oftentimes the pampering they receive from their parents.

Baby Boomers and Gen Xers have seen several wars and fights, and they never wanted a single scratch on millennials. This amount of love has spoiled many youngsters, which many of us won’t disagree with at all!

So, it is a big-time for millennials to realize that it is important to take hold of their own life, their own finances, and their own dignity.

A better future definitely awaits for this brilliant generation!

Many millennials are not aware of debt relief:

In the current financial market, we have so many wonderful ways to clear debts. One just does not have to sit for a decade to pay off their consumer debts, like credit cards, personal loans, and so on.

The same gets applied for student loans too. Federal student loans have many options for repayment, student loan debt forgiveness, consolidation, and even settlement in extreme cases.

Private loans, on the other hand, may not provide so many repayment options, but they can be served well with debt settlement or debt consolidation (in case of multiple loans), by working with a good debt relief company.

Moreover, millennials can address their consumer debts pretty quickly and save money on debt payments, by working out consolidation or settlement plans.

After the miscellaneous consumer debts are gone, they can focus on getting rid of the student loans.

We belong to the modern world!

There’s absolutely no time to waste, especially when it is concerning debts.

Act fast Millennials! Get a stable financial life by clearing your debts as soon as possible!

Types of debt consolidation loans and the best places to find them in 2020

Debt consolidation loans are primarily used to pay off and simplify existing debts. You may consolidate multiple debt payments and credit accounts into a single account with a single lender and one easy payment.


Considering your creditworthiness, you might be offered lower interest rates from lenders. The interest offered should be lower than your existing interest. This way you can save money on monthly payments by cutting off the overall interest payment.


Another way to reduce your monthly payment is by extending your loan tenure. However, with a long loan term, you might end up paying more interest in total.


Typically, a debt consolidation loan can be used to consolidate unsecured debts. Common types of debt that can be handled through debt consolidation are



  • Credit card debts
  • Medical bills
  • High-interest personal loans
  • High-interest payday loans


Now check out the different types of debt consolidation loans available to you.


1. Personal loans


Taking out a personal loan to consolidate unsecured debts is the prime object of a debt consolidation loan. If you can borrow a big loan with a low-interest rate, you can use that money to pay off all the debts easily and save on interest payments. Multiple high-interest debts may cost you more on interest payments than a big personal loan with a low-interest rate.


A personal loan is typically one of the most common types of debt consolidation loans. This is an unsecured loan where you need to make fixed monthly payments over a certain period.


Your credit score plays a crucial part when you want to get approved for a personal debt consolidation loan. If you carry an average credit score, you might get approved, but with a higher interest rate. You may not get approved at all if you have a bad credit score.


It is not wise to opt for a high-interest personal loan; because in the long run, you won’t be able to afford the monthly payments. Due to the high monthly payment, you might face difficulties to carry it till the end. So, you should research well and choose a personal loan that you can afford to pay throughout the loan term.


Once you’re approved for a suitable personal loan, you can use it to consolidate all your unsecured debts easily.


2. Balance transfer on credit cards


The balance transfer method is one of the most common strategies of a debt consolidation process. By using the credit card balance transfer method, you may transfer your unpaid credit card balances into one or several credit cards. , you should find a 0% APR balance transfer card (offered by credit card companies) to transfer your balances.


However, you should make sure you choose a card that has a zero transfer fee, and 0% APR applied also on the new purchases made by that card. Stay focused and pay off the balances before the promotional rates expire, typically within 6 to 12 months.


Keep track of interest rates if you want to use a balance transfer credit card as a debt consolidation loan. After the 0% introductory period, the interest rate might increase and become very expensive; so act accordingly. Also, you’ll need a big credit limit, enough to transfer all of your other credit card balances.


You should also consider the drawbacks of consolidating credit debts with the balance transfer method. First of all, you can only consolidate your bills that you have paid through credit cards. Secondly, transferring your credit balances may hit your credit score.


If you use too much of your available balance on one credit card, it might harm your credit score, as it will increase your overall credit utilization. However, you may normalize your credit score once you pay off the entire balance.


3. Home equity loans


A home equity loan is also considered one of the different types of debt consolidation loans.


You may take out a home equity loan using your existing home equity as collateral. The word equity stands for the market value of your house minus your outstanding mortgage loan. To get a home equity loan you must have a good amount of home equity in your pocket and a good credit score.


A home equity loan offers lower interest rates than other types of loans. But one major drawback you should not ignore about home equity loans. You are deliberately using your home as collateral and taking out money to pay off unsecured debts.


Practically that means you will be converting your unsecured debts into secured debts (with collateral) through the entire debt consolidation process. If you can’t afford the payments, you’ll be facing foreclosure on your property. So, normally it’s not wise to pick up a home equity loan to consolidate unsecured debts.


4. Loans taken out from family or friends


If you decide to borrow money from a friend or relative, it can be a safer option to consolidate your unsecured debts. If you can get a debt consolidation loan from them, you may not have to worry about interest payments at all.


If you have a good relationship with your family and friends, they might give you more than enough time to repay the money. Compared to commercial lenders, they sometimes even spare your interest. But in most cases, your friend or relatives may charge a lower interest rate compared to a bank.


So, this type of loan is quite affordable for debt consolidation and easy to repay with time. Also, your friend or relative might be less strict if you miss one or two payments.


There is a catch if you ignore paying off the loan to your relatives or friends. If you fail to make monthly payments or repay the entire loan, as a result, your relationship with a friend or relative will be at stake. For that reason, you should think twice about getting a debt consolidation loan from someone close to you.


If you still need to borrow money from a friend or relative, make sure you get the loan agreement in writing, just as you do with a bank. The written agreement will be signed by both parties, you and your friend/relative.


The agreement should include each detail of the loan in the agreement. You need to meet the deadline for paying off the loan every month. As there are no penalty charges or late fees associated with that loan, you must pay off the entire balance as per the agreement and within the time frame.


The best debt consolidation loan companies of 2020


These are the most popular companies that may provide you with different types of debt consolidation loans as per your specific financial situation:


  • Discover – Best Lender with no fees other than late fees
  • LightStream – Best Lender for funds in a day
  • Avant – Best Loans for Average Credit
  • Marcus by Goldman Sachs – Best Lender for Customer Service
  • Prosper – Best Lender for a loan for $2,000 or more
  • SoFi – Best Lender for Overall Loan Services
  • Upstart – Best Lender for Borrowers With FICO Scores As Low As 620
  • OneMain – Best Debt Consolidation Loans
  • Earnings – Best Personal Loan Alternative


Data courtesy –


U.S. News examined all the top lenders and lending partners who deal with personal loans for debt consolidation purposes. Research reveals each lending company’s prime eligibility criteria. They are as follows:


  • credit score requirements,
  • loan terms,
  • additional fees,
  • repayment options,
  • additional benefits/limitations.


Each borrower has different requirements while choosing the best debt consolidation loan. So, as a borrower, you should keep these in mind. This way you may find the best-fit loan provider, as per your specific credit background and requirements.



How to build a debt collection defense against possible lawsuit

You might face a collection lawsuit when a creditor files a lawsuit with the court against you. A debt collection lawsuit can take time and can be expensive. Most creditors do not want to choose this option while collecting old debts. Creditors will always go for other available options.


In most cases, creditors prefer to repossess your assets like cars, homes, or other precious things. A debt collection lawsuit is rarely issued for debts under $1,000.


There are collection agencies that may aggressively threaten consumers to garnish employee wages to collect debts. However, the creditor or collection agency cannot garnish your wages without a proper court judgment. Still, debtors might face collection harassment from the very beginning of the collection process.


If a collection agency filed a lawsuit against you, do not panic and prepare your next steps to deal with this issue. You may follow the below-given strategies to create a debt collection defense and win a debt collection lawsuit.


1. Give proper response to the lawsuit


Being a consumer, if you do not respond to the debt collection notice, it will be a grave mistake. This notice normally comes as a summons and complaint. If you have debts and can’t pay it, the creditor may file a lawsuit as a last resort.


If you do not attend the summons, the collection agency might get a default judgment against you. Through this, they may be able to garnish your wages and get money from your bank account. As per the collection law in different states, the debt collector may even collect their attorney’s fees, court costs, or interest from your wages.

So, when the plaintiff (the creditor or collection agency) files a lawsuit, you can’t contact the plaintiff via email or phone. You must reply to the lawsuit via legal briefs called an Answer. Here’s how you should do it:


  • Do not accept debt at first glance. Ask the creditor to validate the debt first.
  • File your Answer with the clerk of court.
  • Get a stamped copy of the Answer from the court.
  • Send a stamped copy via certified mail to the plaintiff.

Please send your Answer within the stipulated time as per the lawsuit summons. The given time may vary from 20 to 30 days from the date on the notice. Don’t miss the deadline at all. As per the Consumer Financial Protection Bureau (CFPB), once a judgment is given, you can’t dispute the debt from that point on.


2. Challenge the debt lawsuit


You may challenge Plaintiff’s right to file a lawsuit against you. Collection agencies normally purchase your debts at a lower value from creditors and get a transfer of the signed debt agreement. Through this, they establish the right to collect this debt and initiate collection harassment. But here is the catch. Normally 99.9% of debt cases are not properly transferred to the collection agency through a proper agreement signed by the creditor.


You may request the court to dismiss the case as Plaintiff does not possess the “chain of custody” documents. If the court finds that debt collectors do not have the required “chain of custody” documents, they may dismiss the case.


3. Check the statute of limitations


Sometimes, debt accounts may take too much time to get transferred from the original creditor to the collection agency. It will also take longer to start the debt collection lawsuit process. Each state has a different statute of limitations for debts. That means in every state there are different times allotted to file a lawsuit. If the debt collector exceeds the statute of limitations period, the consumer may request the court to dismiss the lawsuit.


However, the statute of limitations clock may start again if you start making payments on an old debt.


4. Hire a good attorney


One of the best ways to create a debt collection defense is by consulting a good attorney. He/she will help you choose the best options in defending against a debt collection lawsuit and raise any applicable defenses to the claim. You may get free consultations from many attorneys regarding your issue.


A good attorney may help you to:

  • Know if you have any options left and which one is the best.
  • Check if you are getting equal benefits compared to the legal costs.
  • Provide a helpful view of your case as a third party

If you have a strong case, your attorney may deal with your case without fees. It is because there might be a possibility that the court may order the creditor or collection agency to pay all legal fees, including the fees, to your attorney.


5. Take legal action against the plaintiff


If you have solid proof that your debt collector has violated the laws of debt collection, as per the Fair Debt Collection Practices Act (FDCPA), you may be able to take strict legal action against the debt collector. You may successfully sue them for violating the debt collections practices act and get statutory damage charges of $1,000, plus other monetary losses.


6. File a petition for bankruptcy


Devastated with the collection harassment, If you can’t pay off your debts and there’s nothing you can do to improve your financial situation, filing for bankruptcy might be the only option. When you file a petition for bankruptcy, it will initiate an automatic stay which will stop all debt collection activities from that moment.


You must talk to your lawyer first before choosing a Chapter 7 or Chapter 13 bankruptcy. If you want to wait until you get a summons, just before the date of the hearing, your attorney might have to file an emergency bankruptcy petition to save you. But that would be more expensive.



There are multiple options to create a debt collection defense against possible lawsuits. Just remember that you should be honest with yourself and with your attorney. Only then may your lawyer help you to get yourself out of this misery. Good luck.