Do you have outstanding accounts in debt collection? If you’ve been unable to pay your bills lately, the three major credit reporting agencies know about it. This can make you the target of predatory lending and even identity theft.

People with poor credit and past bankruptcy are frequent targets of predatory lenders. The New York Times recently reported on bank data collection to target people with credit problems.

Businesses go through many sources, including court and bank records, to create financial profiles for over 100 million Americans. This information is sold to banks, mortgage lenders and credit card companies.

These marketing leads are often called “trigger lists”. Lenders target trigger lists to promote high interest products. They know you are already in debt and don’t care if you get in deeper. Accepting these promotions in the mail or over the phone only gets you into more financial trouble.

Predatory lenders started to use “mortgage triggers” in 2005. Mortgage triggers are lists of people who recently applied for home loans. The lists are sold to lenders by the three major credit reporting agencies, Experian, TransUnion and Equifax.

Steve Ely, president of North America Personal Solutions at Equifax, comments that during the housing boom, “The mortgage industry was coming up with very creative lending products and then they were leaning heavily on us to find prospects to make the offers to.”

Responding to one offer means you will likely be targeted for another. “Predictive modeling” is used by financial institutions to determine who responds to their offers favorably. You are “rewarded” with more offers that tempt you to make more poor financial decisions.

If you receive a letter or telephone call offering to extend credit, think twice. Predatory lenders are only looking out for their own best interests. In light of our recent posts, some predatory lenders even attempt identity theft. You wind up with debts you didn’t even create instead of a loan.

Predatory lenders are not the solution to your debt collection problems. Review your credit reports carefully to ensure their accuracy. Consult with a professional about your options. Remember, if it sounds too good to be true – it probably is.

Yesterday we covered fake debt collection. People who took out past payday loans were targeted for identity theft by scammers.  The Wall Street Journal reported on payday lenders backing Election Day ballot initiatives challenging state restrictions on payday loans.

Payday loans are short term loans secured by a person’s income. The lender verifies the borrower’s income to determine a loan amount. Direct deposit paychecks are verified by a bank statement. A postdated check from the borrower acts as security for the loan.  The loan is repaid on the borrower’s next payday.

Typically interest charged on payday loans is $15 to $20 per $100 borrowed. Loans are paid back within one to four weeks. If the borrower needs an extension, similar interest rates are charged. Due to the high interest rates, payday loans are now illegal in 15 states.

Payday lenders spent about $30 million on Ohio and Arizona ballot initiatives. Payday lenders promise financial freedom, which states find misleading. Payday loans are costly and even more expensive when borrowers can’t repay them.  Excessive interest accrues and borrowers face possible collection abuse.

If you took out a payday loan in the past, verify your debts. Order reports from the three major credit reporting agencies to review your credit history. Don’t talk to misleading debt collectors who will not provide identification.  Instead, discuss your situation with a professional to find out your options.

A payday loan is only useful in a short term crisis. If you have an emergency car repair and need to get to work, a payday loan may help. Payday loans are not a longterm solution. Often a vicious cycle begins causing you to get deeper in debt.

Another alternative is to workout a deal with creditors. Ask for an extension until your next payday rather than taking a payday loan. Remember only the lenders achieve financial freedom with payday loans.

Scammers are getting more savvy, finding new ways to steal your identity and compromise your credit. In a difficult economy, more people face mounting debts. Scammers, aware of this fact, now call posing as debt collectors.

If you owe several creditors, you might not unsure if the caller is one of them. These unscrupulous people try to get information about your identity before you can think - and the result is identity theft.

From jail threats to invoking the wrath of God, fake debt collectors will stop at nothing.  Legitimate debt collection does not involve these tactics.  ABC News reported about posers who call consumers to collect debts that don’t exist.

Norman Googel, West Virginia Assistant Attorney General, stated, “The way they’ve hidden themselves is pretty slick.”  So how can you tell if a debt collector is a poser or the real deal? Here are a few tips:

• According to Googel, scammers are operating under various names including U.S. National Bank, United Legal Processing and Federal Investigation Bureau. An official name doesn’t mean the call is legitimate.

• Many of these scammers appear to be from foreign countries. They are unfamiliar with American names and use celebrity names such as Denzel Washington and Steve Martin.

• Debt collectors cannot threaten or harass you in any way. Mentioning God or threatening jail is inappropriate. God is never be part of a general business conversation. No debtor’s prison exists in the United States.

• Googel found groups target people who took out payday loans online in the past. If you took a payday loan, be aware scammers may have access to your Social Security number and other personal information.

There are also ways to protect yourself. Review your credit report frequently to find inaccuracies. Be aware of your current creditors and how much you owe. Ask creditors for identification before you provide any information over the telephone.

When collectors use misleading statements and fail to provide identification, they are breaking the law. Never pay money to a possible thief. Keep cool when you hear from collectors to avoid this collection abuse.

Bankruptcy is all over the news these days. With the global economic crisis strengthening its grip on stock exchanges and banks across the world, there is little question why large-scale bankruptcies have become common. As news of financial collapse is splashed across the headlines and television screens of America, people are feeling apprehensive about their own financial futures.

People are saving money and tucking it away to prepare for a financial emergency. While this is a good idea, the slower economy might also be a good time to start decreasing your credit card debt.

In times like these, many people feel the need to cut back on luxury items and save money. But why not use the money that is being set aside to catch up on debt?

Part of preparing for tough times is to eliminate as much debt as possible. If you have begun to cut back on entertainment, eating out, or Sunday drives, you might consider applying some of that money to paying off credit cards. If you’ve decreased your spending, you’re probably not using your credit cards as much, so this is the perfect time to erase some of that debt.

Carrying a balance on your credit cards hurts your credit rating. With the global financial system in a tailspin, loans are becoming difficult to obtain even if you have a good credit score. Paying the minimum balance each month is not enough to lower your credit card debt. A large portion of the minimum payment goes to paying the interest, not the principle. By taking a little extra of the money you’re already saving, you can lower your credit card balances and improve your credit score.

Sometimes you run across a website that gives good information on a topic.  If you’re dealing with zombie debt and just want to know what to do if it happens to you, read this article.