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Debt collectors can be used to prepare for bankruptcy

New Jersey residents who are having financial issues do not need the added stress that debt collectors induce through harassing phone calls and letters. However, if someone is preparing to file for bankruptcy, debt collectors can be a valuable source of information. The Fair Debt Collection Practices Act (FDCPA) requires that consumers be provided with certain information about their debts, and that information can help in preparing a Chapter 7 or Chapter 13 bankruptcy petition.

Debt collectors can include the original creditor, a company that purchases debts and attorneys. If someone attempting to collect a debt contacts a consumer, the person or entity making contact has five days to send a "validation letter" to the consumer. This letter must outline certain information about the debt including information about the original creditor.

Once this letter is received, a consumer has 30 days to dispute the debt in writing. The debt collector may not contact the consumer until additional information verifying the debt -- such as a copy of the bill -- is sent to the consumer. If a New Jersey resident agrees that he or she owes the debt, it can be added to the bankruptcy petition.

When an individual files for bankruptcy, it is important to ensure that every debt is added to the petition. If a debt is not included, the consumer will still be considered responsible for it even after other debts are discharged. Since many debt collectors are either working for creditors or have purchased the debt from another creditor, it is important to know who the original creditor is. A consumer can turn the tables on debt collectors by making them provide invaluable information needed in order to file for bankruptcy.

Source: consumer.ftc.gov, "Debt Collection", Accessed on Aug. 12, 2015

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