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| By Max Power - ConsumerFight.com I am referring to unsecured debt in this report. If you have put up your house, car or other collateral, you should obtain legal advice. Eventually you will have to make a decision. To pay or not to pay. Or more accurately, can you pay? If you have gotten yourself into a financial mess with no hope of getting out, the following advice and solutions are for you. You will be on the end of the original creditor first. This is where your account is located. The average time the original creditor will hold on to your account is approximately 90 days. If you have not been making regular payments during this time period to catch up then the original company will most likely sell or transfer your debt to a professional collection agency. The original company has decided to give up on trying to get you to pay. Now the pros's take over. Collection companies are very sneaky and will try to scare you into paying. If you have found yourself on the end of a debt collectors phone call for the first time DON'T PANIC! Regardless of what they may say, the police are not coming over to your home, you will not have a warrant out for your arrest and you will not be going to jail. Collectors are notorious for lying. They are paid a percentage of what they can collect from you. This is why they will say whatever they think they can get away with. You will also be sent official looking "scary" letters. You may be so scared you might try to borrow from family or friends. You might even consider selling your car or possessions because you are so afraid of these collectors. Some use a lawyer service with the lawyers name and official letterhead on the letters they send you. Again, don't worry. This tactic is to scare you into paying. The lawyer charges the collection company a fee or percentage to use his name. Sometimes they are employed by the collection agency. He may be a real lawyer but this lawyer is not going to do anything. If you have reached this point your credit will be ruined for 7 years. That is one of your punishments. You will be given a second chance after some time but for now what are you supposed to do? Survive through the storm. The company that extended you the credit took a chance on you. They lost. You are not a criminal (unless you obtained that credit with a false ID, Social Security #, etc.). Depending on how much you owe will determine the collection process. I want to make it clear that I'm referring to an unsecured debt. Credit cards, store credit, gym contracts, small loans, rental centers and other types of unsecured credit. If you put up your house, car or any other item up for collateral you should consult with an attorney or your local legal aid office (see my links page for help) as you have a lot to lose. You have rights to protect you from abusive and harassing collectors. The following options are probably what the collection company will attempt. They (the collectors) will call you constantly, call your work, call your relatives and your references on your application if they can't get in touch with you. They cannot discuss with others about your debt. They will try to wear you down mentally until you find some money to send in. They can sue you to try and obtain a judgement from the court so that they can legally pursue other options such as garnishing a portion of your wages to be paid directly to them automatically. This is usually only done by the original company you owe and not a collection company. Of course, they will verify if you still have a job before they proceed. If you can make arrangements to pay back your debt, try to do so. You can call a debt consolidation company to see if this option is right for you. You would make one monthly payment to the debt consolidation company who would then divide that up with everyone you owe. CAUTION: THERE ARE MANY FOR-PROFIT DEBT CONSOLIDATION AND COUNSELING COMPANY'S THAT WILL RIP YOU OFF. The only one I can recommend is the National Foundation for Credit Counseling (NFCC.org) which is a non-profit organization. If making payments means you would then have no money for your rent, utilities or food then you have no choice but to not pay, ruin your credit for 7 years and fight back the collectors to get some peace of mind and get your life back. If you are at the "I can't pay anything" point, then the following will be your best course of action (In my own opinion of course.) The next time a collector calls do not let them control the conversation. Tell them the following 4 things without allowing them to interrupt you. 1. You have no intention of ever paying this debt. 2. They can do whatever they legally want to do to you. 3. You do not want him/her or their company to ever call you again. 4. And you are recording this call as proof of everything you have stated. They will try to engage you in further conversation trying to make you feel guilty or implying you will be in legal trouble if you don't attempt to make some kind of payment. They will ask you why did you take out this debt if you had no intention of repaying the debt. DO NOT ATTEMPT TO DEFEND YOURSELF BY ANSWERING ANY OF THEIR QUESTIONS. Do not keep listening to them! Repeat that you have already told them what to do and hang up. THIS IS VERY IMPORTANT! REMEMBER, AT THIS POINT YOU HAVE NO MONEY TO PAY THEM. THIS IS THE ONLY WAY TO STOP THE CALLS. To stop all collection activity, you need to put in writing the above 4 items and send it to the collection company with return receipt to prove you mailed it. If they call you again, repeat the 4 statements again and hang up. Remember, if they threaten you with "legal action" tell them that is fine which you have already stated to them. Remind them you are recording the conversation and if they call you again you will be filing a lawsuit against them and their company for not following the law. If they tell you that's not the law tell them it is the law and hang up. Once you put in writing that you will not pay the debt and that they may do anything they legally want to you, they may not contact you again. If they keep trying to collect the debt, you have the legal right to sue them as they are now breaking the law. Don't worry if you are not really recording the conversation. They don't know that. If they say you don't have their permission to record the call tell them you are going to do it anyway to protect yourself and will let a judge determine if it can be used when you file your lawsuit against them if they call you again. You must play hardball with them. Do not give in. Take the offensive position. What is the absolute worst that can happen? They can transfer the debt back to the original creditor who then can sue you in court. If you are sued, you can show up to defend yourself or chose not to go. If you don't show up they will win a judgement by default. Even if you chose to go you will lose about 99% of the time. You really have no legal defense. What's next if you are actually sued and they win a judgement against you? They now have to try and collect what you owe. They can order you to court and make you provide them with a list of all your assets and work information. This is rare for debs under $10,000 as they should already have most of the information in your original application. The best bet for them is to try and garnish your wages from your job. They first have to know where you work. Then they must file paperwork with the court and serve your company with the paperwork. You will receive a copy in the mail. There will be a dollar amount that has been determined to be deducted from every paycheck you receive until the debt is paid in full. If you feel the amount is too much for you to still survive, you will have instructions on your copy on how to ask for the amount deducted to be lowered. It is simple to fill out this form and it will ask you for proof of items such as what you pay in rent, bills and other monthly expenses. Even if all this was to happen (which is very rare) it is much better than collectors calling all the time. The odds are in your favor that the debt will be charged off by the original company and you will just ruin your credit for the next 7 years. One note. It's possible when your debt has left the original company and has wound up in collections hell, you will get rid of one collection company by following the 4 step method above. But then that company might sell or transfer your debt to a different collection company, triggering the process to start all over again with this new company. You will then have to use the 4 step process again with this new company to stop them. Unfortunately this process can go on for years with the collection company transferring your debt from one to the other unless you do the following. Change your phone number. Get a rental mail box address like Pak Mail (not a P.O. Box). Change employers. Then you have to be careful to never put the above new information or your Social Security number on any form, survey, credit application, online registration or anything else that can lead a collection company back to you. Were did I learn all this information? I have been a collector and I have been the target of collection agencies. I have sued others and received a judgement, and I have been sued by companies that won a judgement against me. Judgements mean nothing unless it can be collected. That's another report for another time. Good Luck and never give in to collectors. Put them in their place and be direct. Remember, hanging up the phone on them is the number one thing they hate, SO DO IT! |
| HOW TO BEAT DEBT COLLECTORS AT THEIR OWN GAME |