This article is not going to be about foreclosure, per se, like so many of my other articles focus on directly, but as many homeowners also fall behind on other bills during a financial hardship, collections and foreclosure seem to go hand in hand. While taking care of the housing situation should come as the first priority, homeowners can be hounded by collection agency debt for years after the fact.

Most states, however, require collection agencies to be licensed in every state in which they attempt to collect debts. As this would cost potentially tens of thousands of dollars a year in renewal fees and bond postings, many collection agencies conveniently fail to become licensed in more than a few states. Some agencies may also believe that they only need to be licensed in their state to be able to collect everywhere else -- this is not true!

Debts and collection agencies are licensed just like real estate and agents/brokers: on a state-by-state basis. Just because a real estate agent is licensed in Wyoming to buy and sell properties in Wyoming does not mean that he is able to to buy and sell in New Hampshire. The agent may be able to become licensed in New Hampshire, but a Wyoming license is not sufficient to practice real estate in any other state.

Thus, collection agencies need to be licensed in every state in which they attempt to pursue debtors. For homeowners, this means that it is in their best interests to find out if any collection agency is licensed to contact them about the debt. Many times, it will be the Secretary of State in the individual state that oversees this type of licensing. People who have accounts in collections are often very surprised to find out that the company calling them and sending threatening letters is acting in a criminal, illegal manner.

What is even more surprising is that so many of these collection agencies are able to sue people in court and are awarded default judgments against debtors without the judge blinking an eye. The corruption is enormously widespread, with not one collection agency I have ever come across being legally licensed to collect in any state besides the one their business is registered in. But out of state lawyers will take illegal cases and judges will rule on them, just to get their legal fees and filing fees.

Homeowners in foreclosure have enough to worry about during a financial hardship to have to deal with unlicensed collection agencies attempting to hound them at work and home. There is no protection in the courts since they make enormous profits from some of these collection agencies, and corrupt judges would rather not be informed of such matters as a prime customer breaking the law hundreds of times a year to pursue debts illegally.

For this reason, people dealing with collection attempts should find out if their state requires licensing, and request the agencies' license numbers. If the collection agency is unlicensed in the state in which they are trying to pursue a debt, their victims should get in touch with the appropriate regulatory agency as quickly as possible. There is no telling how many people they have criminally targeted with illegal collection attempts in various states, but it is up to all of us to reveal these criminals for what they are and not take their attempts to steal money lightly.

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