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 practice of 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.
