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9 Personal Loan Requirements, And How to Apply

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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From paying hefty car repair bills to consolidating high-interest debt, there are many reasons for why you might suddenly need some extra cash. Personal loans are one way to get funds quickly to cover financial obligations.

Typically offered as unsecured installment loans, personal loans are not backed up by any collateral. That’s why lenders rely heavily on your creditworthiness as a way to determine both your eligibility and your ability to pay them back. Here are common personal loan requirements to expect, as well as some pointers to keep in mind when applying.

9 common personal loan requirements

Because personal loans are not secured by an asset like a car or a house, they may be more difficult to qualify for and involve higher interest rates than other types of loans. The lender doesn’t have the ability to seize and sell your property to cover the cost of your loan if you can’t pay it back. As a result, they may set out more comprehensive requirements to ensure you have a solid credit history.

While eligibility criteria may vary from lender to lender, here are some of the most common personal loan requirements:

  1. Have U.S. citizenship, permanent residency, a valid Social Security number or a long-term visa. Some lending institutions won’t lend to non-U.S. citizens at all as they are deemed to be too great of a risk, though they may consider it with an eligible cosigner. Lenders who do specialize in non-citizens may request information such as a verifiable job, a valid credit score, two years of credit history and other documentation.
  2. Live in a state where your lender of choice conducts business operations. Not all lenders operate in all 50 states. Some may offer different minimum and maximum amounts, loan terms and caps on APR rates depending on their area of jurisdiction.
  3. Be at least 18 years of age to get approved for a personal loan.
  4. Meet credit requirements set by the lender: Minimum credit score requirements may vary from lender to lender, but they usually revolve around the borrower’s FICO Score which is pulled during a hard credit check, their debt-to-income ratio and regular source of income.
  5. Show government-issued identification. Examples of acceptable documents could include a passport, driver’s license or Social Security card.
  6. Have a permanent address.
  7. Have a verified source of regular income. The lender may ask to see your recent tax returns, monthly bank statements and pay stubs to verify your income. Others may ask for a signed letter from your employer.
  8. Provide requested documentation. The lender may ask for proof of residential address such as a utility bill and proof of income such as a bank statement.
  9. Request a loan for an approved purpose: You may be unable to use a personal loan to fund certain postsecondary educational expenses such as college tuition, illegal or gambling activities, business or commercial purposes or the purchase of securities.

How to qualify for a personal loan in 5 steps

How to apply for a personal loan
Check your credit, and determine your financial needsLenders rely on your credit to determine eligibility. But you should also know how much you need to borrow, and why.
Research lenders and apply for prequalificationPrequalification doesn’t affect your credit, but it can allow you to see loan terms and interest rates you could be eligible for and compare lenders.
Choose a lender and submit a formal applicationFill in the appropriate paperwork and submit to a hard credit check.
Gather documentation and submit what’s requestedProvide copies of documents such as proof of employment, income and verification of your identity.
Wait for loan approvalOnce approved, your funds could be deposited into your bank account as soon as the next business day.

Check your credit, and determine your financial needs

Before applying for a personal loan, you’ll want to determine whether you can meet lender credit requirements. You can check your credit score for free from a number of places, such as your credit card issuer, the Discover Bank Free Credit Scorecard or by signing up with My LendingTree, a credit monitoring service offered by Through, you can get a free credit report once every 12 months from the three major three credit bureaus: Equifax, Experian and TransUnion.

Knowing your credit score and what’s in your credit reports will give you an idea of the range of credit offers and interest rates you may be eligible for. For example, some lenders require a minimum credit score of 640.

You should also take a look at your overall budget and clarify your financial needs to determine how much you may need to borrow. (You can use this online personal loan calculator to see what’s affordable for you.) Personal loan lenders typically have borrowing limits between $1,000 and $50,000, while repayment terms generally last from 12 to 60 months or longer.

Research lenders and apply for prequalification

Make sure you shop around for the right lender for you, whether it’s a traditional financial institution like a bank, a credit union or an online lender. Depending on your overall financial health, you may discover you are eligible to borrow more funds with some lenders, pay better APRs (annual percentage rates) or benefit from longer terms in which to repay your loan.

As member-owned institutions, credit unions may be more forgiving of borrowers with dings on their credit. Online lenders, meanwhile, may offer lower interest rates as they have lower overhead costs. The flipside is that these lenders may not offer the same lending experience as traditional lenders, where you have the option of face-to-face interaction with your loan officer.

The prequalification process is a quick, convenient way to compare lenders online based on your credit profile, without affecting your score since only a soft pull is placed on your history. When applying for prequalification, expect to provide basic information such as:

  • Name
  • State where you live
  • Citizenship status
  • Your income
  • Requested loan amount and purpose

Choose a lender and submit a formal application

Once you have chosen a lender with the right terms for you, you will have to submit a formal application. This may be done either online or in-person if you have chosen a brick-and-mortar institution. The application will authorize the lender to perform a hard credit check, which will ding your credit score in the short term.

Gather documentation and submit what’s requested

As part of the application process, the lender will request supporting documentation, such as:

  • Government-issued ID
  • Proof of address, such as a utility bill
  • Proof of income, such as a bank statement or tax forms

You may also need to show what other debts you’re currently paying off. Depending on your personal circumstances you may be asked for other documentation such as a letter from your employer.

Wait for loan approval

Depending on your lender and your credit profile, you may be approved for a loan as quickly as the same day. Funds are typically deposited electronically directly into your bank account within a few business days, depending on the lender.

What to do if you’re denied for a loan

If you’re rejected for a personal loan, you can reach out to the lender to find out why. The reasons could be related to a low credit score, low income, unstable employment history or having too much debt.

Knowing why you were rejected can help you decide on your next steps, whether you’ll take time to improve your credit or seek out lenders with more relaxed credit requirements, such as personal loans for borrowers with bad credit.

To improve your overall creditworthiness, consider following these basic steps:

  • Review your credit reports regularly for any errors that could be lowering your credit score and file a dispute, if needed.
  • Pay your bills on time and in full every month.
  • Diversify your credit mix between mortgage, credit cards, student loans and other types of credit.
  • Pay off as much of your balances as you can to lower your overall credit utilization score.
  • Increase your cash flow, such as by increasing your income or by passing off debt.
  • Get a cosigner or coborrower with a high credit score.

Take caution with personal loans with easy approval

Because traditional personal loans rely heavily on your credit health, can come with high interest rates to offset your risk of defaulting on it. Be aware of predatory lenders with exorbitant rates and make sure to read the fine print before you sign anything.

A secured personal loan may be a viable alternative

Unsecured personal loans can be a better option for borrowers with high credit scores who are perceived to be at low risk of defaulting. A viable alternative may be getting a secured personal loan through a lender such as OneMain Financial. Since these loans are backed by a tangible asset such as a car or a home, they can be easier to qualify for as well as offer lower interest rates.

Beware payday loans

If you have bad credit, you may be tempted to take out a payday loan. These short-term loans come with high triple-digit APRs. Though some personal loans can come with over 100% APR for borrowers with bad credit, some lenders will offer much lower caps.

When shopping for lenders, be sure to review lender terms and fee structures. If this information isn’t readily available on the lender’s website, get in touch with their customer support team. They should be willing to help you so you can make an informed borrowing decision.

If a personal loan isn’t a viable option for you but you need to borrow funds, consider alternative options. You might charge the cost to a credit card, ask your workplace for a paycheck advance or borrow money from friends and family, for example.

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Building Credit

Do Credit Builder Loans Actually Work?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

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If you have no credit or bad credit, getting a loan may seem impossible.

When lenders are considering a loan application, their main concern is whether the applicant can pay the loan back. If there is no loan repayment history, or a record of late payments or loan defaults, a lender will likely determine the applicant is too risky.

A credit builder loan is one way you can start building a strong credit history that should eventually help qualify you for other loans.

What is a credit builder loan?

Building good credit, whether you are starting from scratch or repairing a bad credit history, requires patience. You’ll need to put in the work to show lenders you are a consistently reliable borrower who makes on-time debt payments.

A credit builder loan is a great way to begin establishing a good credit history. Here’s how it works:

A financial institution such as a credit union, which typically issues credit builder loans, deposits a small amount of money into a secured savings account for the applicant. The borrower then pays the money back in small monthly installments — with interest — over a set period of time. At the end of the loan’s term, which typically ranges from six to 24 months, the borrower receives the total amount of the credit builder loan in a lump sum, plus any interest earned, if the lender offers interest.


As low as 2.49%

Credit Req.

Minimum 500 FICO®


24 to 60


Origination Fee



on LendingTree’s secure website

LendingTree is our parent company


LendingTree is not a lender. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. Terms Apply. NMLS #1136.

As of 17-May-19, LendingTree Personal Loan consumers were seeing match rates as low as 2.49% (2.49% APR) on a $20,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected). Terms Apply. NMLS #1136

How a credit builder helps boost credit

A credit builder loan helps borrowers build credit by providing an opportunity  to make small monthly payments. As the lender reports regular loan payments to credit reporting agencies, your credit history will show you can make regular, on-time loan payments over the life of a loan.

Most credit builder loans are small, ranging from $300 to $1,000, which means they also have small monthly payments. Interest rates vary by bank, so be sure you compare all your options to get your best rate.

To apply for a credit builder loan, you can visit a local lender’s branch or apply online. Because you won’t receive any money until the loan is paid in full, credit builder loans are typically easy to qualify for.

What to watch out for

Credit builder loans are not free, so be sure to ask about fees and interest rates. Some lenders may charge an application fee, and interest rates vary widely among lenders. While some offer rates in the single digits, other lenders’ rates may be significantly higher.

Where to get a credit builder loan

Here are examples of a few types of credit builder loans.

Credit unions

Many credit unions list details of their loans online and provide an online application.

1st Financial Federal Credit Union, for example, offers these terms:

  • Minimum Loan Amount: $300
  • Maximum Loan Amount: $1,000
  • Loan Term: 12 months
  • Interest Rate: 12%
  • Payment history reported to credit bureaus
  • 50% of interest refunded back with on-time payments


Some regional or local banks offer credit builder loans with the intention of helping clients build a good credit score as they work toward good financial health.

The Sunrise Banks Credit Builders Program, for example, places loan funds into a Certificate of Deposit (CD) for the borrower. The CD earns interest as the borrower repays the loan, which can be withdrawn when it’s paid in full. Consumers can borrow $500, $1,000 or $1,500, and they are assigned a repayment schedule of monthly principal and interest payments. Payments are reported to Experian, Transunion and Equifax.

Self Lender

Self Lender, based in Austin, Texas, is designed to help consumers increase their financial health. Working in partnership with multiple banks, Self Lender offers a credit-builder account that is essentially a CD-backed installment loan. In other words, you open a CD with the bank and they extend a line of credit to you for the same amount. When you make payments, they report it to the credit bureaus.

The money you put in the CD itself is what secures the loan.

Self Lender offers four loan amounts, each with 12 or 24 month terms. Borrowers can receive loans of $520 to $1,663. Fees vary from $9 to $15. See Self Lenders website for more details.

Pros of credit builder loans

  • A credit builder loan forces you to save money, as you are essentially making payments into a savings account.
  • Credit builder loans are secured by the money the bank has deposited for you, so they are typically easy to apply for.
  • When the loan is paid off, you will receive a payment in the amount of the loan. Some lenders also pay you dividends, or refund a portion of your interest.
  • You will develop good savings habits through a credit builder loan, which requires you to set aside money every month for a loan payment.
  • As you make payments on time every month, you’ll develop financial discipline that you apply to bigger loans.

Cons of credit building loans

  • Late or missed payments will be reported to credit reporting agencies, which could hurt your credit score.
  • They aren’t all free. For one, Self Lender charges a $15 non-refundable administrative fee.

Learn more:

Why your credit score matters

Credit scores are calculated by using your credit report, which is a record of your credit activity that includes the status of your credit accounts and your history of loan payments. Many financial institutions use credit scores to determine whether an applicant can get a mortgage, auto loan, credit card or other type of credit. Applicants with higher credit scores typically qualify for larger loans with lower interest rates and better terms.

Three federal credit bureaus, Equifax, Experian and Transunion, collect information from data providers and lenders, and use it to calculate your credit score.

Consumers typically have multiple credit scores. The two key scores are FICO and VantageScore.

FICO scores

FICO scores represent the likelihood that a borrower will pay back a loan on time. Scores range from 300 to 850, and over 90% of lending decisions in the U.S. are influenced by an applicant’s FICO score.

Five factors determine a consumer’s FICO score:

  • Payment history (35%)This is a record of your loan payment, and notes whether they were on time, late or missed.
  • Amounts owed (30%)Also known as utilization, this shows how much you use your credit limit. For example, if you have a credit card with a $15,000 limit and you have a debt of $3,000 on the card, your utilization is 20%. Ideally, your utilization should be less than 30% on all debts combined.
  • Length of credit history (15%)This measures the length of time you’ve had credit. If you opened your first credit card 20 years ago when you were a college student, for example, your credit history likely would be better than someone who took out their first loan a year ago. The longer you have credit, the longer you have had a chance to prove you are a responsible card user.
  • New credit (10%)New credit looks at how frequently you’ve inquired about your credit and opened new accounts. For example, when you open a new credit card, your credit score could be slightly lower for six months before going back up, because there will have been a “hard pull” by the lender on your credit report. Overall, however, you shouldn’t be hesitant to apply for new credit. In the long run, it may be better for your score, even if you experience a short-term hit.


VantageScore, which also measures your credit risk, is used by 20 of the 25 largest financial institutions. As is the case with FICO scores, higher Vantage scores lead to better loan opportunities. VantageScores range from 300 to 850, and are available for free online. VantageScore takes six factors into account.

Extremely influential

  • Payment history

Highly influential

  • Your age and type of credit (maintaining a mix of accounts over a long time is beneficial)
  • Percentage of your credit limit used (utilization)

Moderately influential

  • Your total debt balance

Less influential

  • Recent credit inquiries and credit behavior (don’t open a lot of new accounts at one time)
  • Available credit

How do I get my credit score?

There are numerous ways to get your FICO and VantageScore for free. Check out our guide on Ways to Get Your Free FICO Score. MagnifyMoney’s parent company, LendingTree, offers free access to your VantageScore, along with regular credit monitoring.

Other ways to build credit

Credit builder loans aren’t the only way to establish a good credit score. Here are some other options if you don’t want to take out a loan.

Secured credit cards

Like credit builder loans, secured credit cards are an easy way to build or rebuild credit history. The application process is the same, but secured credit cards require a deposit between $50 and $300 into a separate account. The bank then issues a line of credit that is typically equal to the deposit, allowing you to build a credit history without putting the lender at risk.

Many secured credit cards allow you to “graduate” and move to a traditional credit card after you’ve proven you can make payments consistently. Lenders will report your payments to credit reporting bureaus, and some offer autopay, online payments and alerts to help ensure you pay your monthly bill on time.

Keep in mind: Some secured credit cards have annual fees, along with APRs as high as 25%.

Unsecured personal loans

Unsecured personal loans can be easy to qualify for, and can help you build credit. These loans typically range from between $2,000 and $50,000, and some lenders will offer them to borrowers with lower credit scores.

The borrower will receive the money in a lump sum upfront, and can then use the money to repay the loan.

Using an unsecured personal loan to build credit, however, can be risky. Many unsecured personal loans come with origination fees, and interest rates can be high, which means the loan can be an expensive way to build credit.


As low as 2.49%

Credit Req.

Minimum 500 FICO®


24 to 60


Origination Fee



on LendingTree’s secure website

LendingTree is our parent company


LendingTree is not a lender. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. Terms Apply. NMLS #1136.

As of 17-May-19, LendingTree Personal Loan consumers were seeing match rates as low as 2.49% (2.49% APR) on a $20,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected). Terms Apply. NMLS #1136

The bottom line

While credit building loans can be a key step in establishing a strong credit history, it’s imperative you make all your payments in full and on time. When you are committed to building a strong financial future, successfully paying off a credit builder loan can be a significant factor in someday getting favorable terms on a mortgage and other loans.

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Pay Down My Debt

Fair Debt Collection Practices Act: Understanding Your Rights

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

fair debt collection practice act

Falling behind on debt payments can be stressful, and the last thing anyone wants is a barrage of calls or letters from a debt collector threatening repercussions if you don’t pay up now. While companies do have the right to ask consumers to pay their bills, there are government rules in place to keep debt collectors from unduly harassing you.

Calls from unscrupulous debt collectors can be frightening and unsettling. Before engaging with anyone who contacts you claiming that you owe money, it’s important to know your rights. Often, debt collectors may be lying or breaking federal law.

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act (FDCPA), a federal law that was passed in 1978, provides guidelines on the actions that debt collectors can take when they try to get consumers to make payments on their debts. It prohibits abusive, deceptive or unfair practices and puts limits on when and how third-party debt collectors can contact people who owe money.

The FDCPA covers the collection of credit card, mortgage and medical debt, as well as debts from household, personal or family purposes, including student loans and auto loans. The FDCPA does not cover business debt or debts for agricultural purposes.

In-house collection versus third-party collection

One important aspect of the FDCPA is that it only applies to third-party collections. That means that the company where the debt originated, such as a bank or credit card company, does not have to abide by FDCPA rules when collecting debt.

But original creditors typically don’t collect their own debt or sue people who owe them money because it would make them look bad, said Ira Rheingold, executive director of the National Association of Consumer Advocates. Instead, these companies hire someone else — a third-party collection agency — to do it for them.

“It’s reputational,” Rheingold said. “If you are a credit card company, do you really want your name on all these lawsuits?”

If a debt collector contacts you, they likely are working for a third party such as a debt buyer or a debt collection agency. Some of these companies buy past-due debts, often at pennies on the dollar, and then use abusive means to try to collect the debt.

5 illegal debt collector practices

What debt collectors CAN do

What debt collectors CAN’T do

Call, email or send letters and texts

Harass you or anyone else with obscene language, lies or threats of violence

Contact you and your spouse

Contact you at work or call your employer

Contact other people once to get your address, home phone number and employer name

Claim to be attorneys, federal officials or government agents

Threaten to take your property if the process would be legal

Threaten consumers with postdated checks

Call you during the day at a convenient time

Contact you at an inconvenient time or between 9 p.m. and 8 a.m.

The bottom line is that third-party collectors are allowed to contact you within the FDCPA’s guidelines if you owe money. But if their behavior breaks the law, which includes threatening to call your grandma or your neighbor about your debts, you have recourse.

How to stop debt collector calls and letters

If you get a call from a debt collector, do not engage with them. That means do not give them personal or financial information, no matter how forcefully they ask. Instead, here’s how to handle unwanted calls and letters.

1. Be brief

It’s important to make calls short, but make sure you get some important information before you hang up. Tell the debt collector you want verification of your debt in writing. “Say to them, ‘I don’t believe I owe this debt. What proof do you have?’” Rheingold said. By law, the debt collector is required to tell you:

  • The creditor’s name
  • The amount you owe
  • That you can dispute the debt
  • That you can ask for the original creditor’s name and address

The debt collector is required to send you the information within five days of the initial contact.

While it can be tempting to try to negotiate over the phone with a debt collector, Rheingold recommended proceeding with caution, and don’t fall for a debt collector’s argument that you have a moral obligation to pay your debt.

Often, debt collectors pile exorbitant fees on top of the amount you owe. “Be very careful,” Rheingold said. “Oftentimes, it’s just throwing good money after bad.”

2. Get their information

Ask the caller for their company’s name and mailing address. If you receive a letter, save the return address.

3. Send a letter

Send the debt collector a letter by certified mail telling them to stop contacting you, and keep a copy for your records. This letter will trigger FDCPA rules that require the debt collector to leave you alone.

Keep in mind, however, that a letter will not magically banish a third-party debt collector. They are still legally allowed to contact you to confirm there will be no further contact or to notify you of any actions it can legally take, including a lawsuit or reporting negative information to a credit reporting company.

— Get more information on how to handle debt collection calls here

What to do if a debt collector does something illegal

If a collector contacts you, they could be breaking the law as they try to get you to repay debts. Rheingold said one common fraud is debt collection companies buying past-due debt for extremely low prices at “debt auctions” and then trying to collect it. Often, the debt collection company only has a little information about the debtor and no information about the actual debt. If you don’t pay, however, they may try to take you to court.

“They use our court system to collect debts when the debt is not provable,” Rheingold said. “They don’t have the original contract or accounting of how much money is owed. They will say you owe money, and if you don’t pay it, they sometimes will sue you.” If you don’t show up in court, the debt collector may get an easy win.

If you think a debt collector is doing something illegal, here are some options:

  1. Call your state attorney general’s office. Many states have additional laws about debt collection practices that may apply to original creditors and fraudulent lawsuits, and the office can give you details about your state’s laws.
  2. File a complaint with the Consumer Financial Protection Bureau (CFPB) online or by calling 855-411-2372.
  3. Talk to an attorney who specializes in debt collection. Attorneys can investigate whether a debt collector is breaking state or federal law and whether the claim is valid, defend you in court against a fraudulent lawsuit and respond to legal summons for you. You can get representation through a nonprofit legal aid clinic (where legal services are free), pro bono clinics at courthouses or private attorneys.

Debt collection: FAQs

Personal debts typically are considered delinquent after you miss the first payment, and if you don’t make any payments for six months or respond to the original lender’s collection efforts, the lender may turn the debt over to a third-party debt collection company.

At this point, you may start receiving letters, emails and phone calls to get you to make payments on the debt. Third-party debt collectors typically will try these tactics for about 90 days, and then they may sue you or sell your debt to another collection company.

Yes. The law requires a debt collector to send you a “validation notice” within five days of making contact with you. The notice must include the name of the creditor you owe money, how much money you owe and information about steps you can take if you don’t think the debt is yours.

First, never agree that the debt is yours. The FDCPA requires debt collectors to provide validation, such as a copy of a bill showing how much you owe on the debt, when you ask.

After you get the debt collector’s mailing address, send the company a letter within 30 days stating that you don’t owe the money and asking for verification of the debt. The debt collector also is required to stop contacting you if you ask in writing.

It’s likely that the debt collector has the incorrect amount for your debt or has tacked on high fees — Rheingold said you may owe $500, but a third-party debt collector may inflate that number to $2,500 with fees. Both of these practices are illegal. Third-party debt collectors cannot misrepresent the amount you owe or collect fees or interest above what’s stated in your original contract.

After sending a letter requesting that the debt collector verify the loan amount, file a complaint with the CFBP. If the debt collector sues you, seek legal assistance and respond to all court summons.

There’s a possibility that a third-party debt collector will sue you if you don’t agree to make payments on your debt, regardless of whether you actually owe the money. If you do receive a court summons, do not ignore it, Rheingold said. Be sure to show up on your appointed date, with an attorney if you can, to make sure that the court doesn’t rubber-stamp a judgment against you.

If a debt collector is contacting you about more than one debt and you do want to make payments, you can dictate where the payment goes. It’s illegal for a third-party debt collector to apply your payment to a debt that you have said you don’t owe.

You also may want to consider a serious assessment of your financial situation, Rheingold said. “You need to have a real understanding of what you can afford and what you can’t,” he said. “Maybe that’s the time to sit down with a financial counselor.”

You’ll also want to figure out which debts to prioritize. If you need your car for work, for example, you’ll want to pay your auto loan.

Any payments you can make need to be substantial, Rheingold said. “Paying a little money here and a little there isn’t going to do you any good,” he said. Making minimum payments while accumulating more debt will not lead to financial health, and, in extreme situations, consumers may want to look at bankruptcy options.

It depends. Debt collectors can have money taken from your paycheck and your bank account with a court order. But the debt collector first must sue you. That’s why it’s vital that you respond to any legal notices from debt collectors, preferable with legal counsel.

Federal benefits such as Social Security typically cannot be garnished for repayment of debts.

A statute of limitations, which begins when you miss your first debt payment, limits the window of time that debt collectors have to sue you and win payment. When that time frame passes, an unpaid debt is considered “time-barred.”

The length of the statute of limitations is determined by the type of debt and the laws in the state where your contract originated. Be careful: If you make a payment or acknowledge your debt in writing during the statute of limitations, the time will reset.


While debt collectors may be annoying or bordering on abusive, at times they are trying to collect a legitimate debt. In most cases, you can legally make debt collectors leave you alone, but your inability to pay outstanding debt remains.

“If you owe the debt, you can’t get blood from a rock,” Rheingold said. “But you can still say, ‘I don’t want you to call me anymore.’”

When you get the debt collectors off your back, take a hard look at your options. Making minimum payments typically isn’t enough to reduce debt, and it could prove difficult to rein in spending while you make debt payments.

Rheingold said nonprofit credit counselors will provide free guidance for people struggling to get out of debt, including information about bankruptcy. “Sometimes you’re better off getting a fresh start so that you can renew your credit (history),” he said. “If you find yourself in that position, think about how you got there and maybe seek help.”

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