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Scammers may threaten wage garnishment

It can be easy for people to fall behind on their debts. New York residents can have a lot of obligations that they just can't meet each month. If the pattern continues for too long, creditors can become aggressive about collecting the debt. In some cases, the creditors might turn to asset forfeiture techniques in order to collect some money. These can include wage garnishment, repossession or foreclosure, depending on the type of loan.

When people face these financial challenges, they should know that there are people who are willing to take advantage of them. According to reports, there has been an increase in fraudulent debt collection activities. In these scams, people will call consumers who have usually recently applied for a payday loan. These people will pretend to be collection agencies and may have a lot of information about a person.

During these phone calls, consumers have reported that these fake collection agencies will use the threat of repossession or garnishment in order to get people to pay them money. They may also use other illegal and threatening behavior such as threatening to send police and using aggressive threats and language. However, they will usually be willing to settle the debt for only a few hundred dollars, even if the debt owed is much higher.

Federal agencies estimate that at least $20 million has been fraudulently collected in this manner. New York residents need to understand when a creditor is really trying to collect a debt, and when someone is trying to complete a scam. In order to make sure a creditor is legitimate, people should ask for a written verification of the debt. Furthermore, experts suggest contacting the original lender to confirm the outstanding balance and determine if they sent the account to collections before sending anyone money. By taking these steps, and understanding their legal options, people can avoid scams and keep their property.

Source: CNBC, "Don't fall for the 'phantom debt collector' scam," Herb Weisbaum, April 13, 2014

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