Debt Prison

* Restrictions on Wage Garnishment for Debt Collection.

* Reasons not to file Bankruptcy or Settle Your Debts

Helpful hints for Debt Settlement

By Debt Prison on July 28, 2009

Today a reader asked me how she should go about beginning the debt settlement process with collection agencies and creditors she’s avoided for three years. I thought it would be a good idea to give her a short ‘duty’ list of how to handle talking with bill collectors. Collection agencies thrive on debtors who don’t know their rights, don’t know the law, and therefore can easily be intimidated. Remember, the bill collector just wants some money, and if possible, they’ll do whatever they can to grasp that money today! Most bill collectors work on commission and know how to handle different types of debtors. You must understand up front that these collectors have a career on the phone talking about debt settlement and you do not. Therefore you must arm yourself with knowledge before beginning the arduous task of negotiation. Here’s my response to June on how to proceed with her debt settlement issues.

Remember to check out all my articles on collection agencies.

Hey June,

First a reminder that this is not legal advice but is my opinion on how I would handle this situation.

First you need to pull your credit report and look at it. Go to http://annualcreditreport.com and review your credit report since the collection agencies may be listed there. Next you need to create a list of your debts, how much the balances are, and who owns them. You must do this before you can make any settlement offer.

Once you know how much your balances are on each account, and who owns the account, then you can request validation of the debt. You can answer the phone, but you must be careful. You must know your rights and what you can afford to pay.

After reviewing my credit report I would start answering my phone… this is how I would do it.

1. Have paper and pencil sitting next to the phone.

2. Always assume the collection agency doesn’t have the legal right to collect on the debt.

3. Admit no knowledge of the debt.

4. Request validation of the debt over the telephone.

5. If they don’t know your address then hang up…. ignore them for now.

6. Wait on their validation letter, if they don’t validate, or refuse to validate, then tell them to call back when they are ready to mail you a validation letter.

7. Keep an accurate log of who you talked with, the name and address of the collection agency, date and times of the call, and the name of the supervisor on duty. To understand why this is important read Collection Agencies and Their Lies.

8. Once the collection agency validates the debt, if it looks correct you can begin to negotiate with them.

9. You can also opt to request a copy of the original contract (signed by you) that indicates you ever entered into any such contract with the original creditor. At the end of the day this is about contract law. Requesting the collection agency to produce the original contract that you signed is a reasonable request and your local judge will likely agree.

10. Since its been three years since you made any payment I’d start out by offering 20% of what they claim you owe, since what they claim you owe is heavily bloated with late fees and interest, and they only paid a few cents on the dollar for the debt.

11. I’d stick with whatever I could pay and nothing more.

12. Don’t make any promises you cannot keep.

13. Pay in lump sum if possible and get a letter from them in advance stating that this payment 100% satisfies your obligation to this debt and is considered ‘paid in full’ and will not be transferred or sold to another collection agency nor will they attempt to collect on the remainder of the debt. The devil is in the details and you can smother them with the details.

Remember, they are counting on you not knowing your rights!!! They will lie to you and intimidate you. If you sense this is happening just hang up and do some research, call a lawyer, or come back here and talk to me!

Discuss this article and meet new people at Debt Prison Forums.

Related Articles

* Restrictions on Wage Garnishment for Debt Collection.

* Reasons not to file Bankruptcy or Settle Your Debts

How to survive debt in the UAE

By Debt Prison on July 26, 2009

A Debt Prison reader contacted me two months ago in regards to the desperate financial crisis she was facing in the UAE with outstanding debt. She began calling her creditors daily to convince them that negotiation was in their best interest as well as hers. With persistence and daily phone calls she convinced the creditors that they must agree to a workable payment plan. For Iara, the key to success against the UAE collectors was to keep the lines of communication open and contact them daily until a favorable solution is gained. The same can often be said about collectors here in the U.S..

Without the valuable real-life experiences of my readers this blog would not serve as a reliable source of information for debtors. My thanks to each and every one who has taken the time to share their experiences with collection agencies! Here’s the comment Iara posted about winning against her debtors in the UAE.

Dear Barry,

You asked me to come back to you, so I came back to tell you what happened to me after that disastrous affairs with credit cards in UAE. I mentioned to you how helpless I felt, and I wanted to run for my life and go back to Philippines, my home country. Well, the end was quite the opposite. “FIGHT OR FLIGHT”, I’ve chosen to fight. I am not a criminal to run away.

I started my personal struggle by reading your articles, and it really inspired me, and it taught me the things I need to know: the lies & intimidation of the collections department and how to deal with it. It hasn’t been an easy journey. I decided to tackle my Royal Bank of Scotland credit card first because it was smaller & easier to kill (only AED 6600). I spent almost two months calling them every single day. I’ve gotten to know all the people working there in Collections Department, from the several agents to the Team Leader and then finally the overall Manager.

I was turned down many times or was being referred to various, different people. They kept on telling me that someone will call me back, but nobody ever did. But I never gave up, I called the customer service and I asked for their help. I told them how unhelpful the agents of Collection Department were and if they could just give me the Manager’s number and name. Surprisingly, I got the information, and I talked to the Manager and recounted to him that I’m willing to pay but nobody’s helping me. I told him that I am planning to leave the country for good, and if nobody will arrange my account, I will just leave without paying it. After 30 minutes somebody called me back, they told me to pay the AED 1640.00 and for the succeeding 5 months, I will pay only AED 1000, INTEREST FROZEN (CREDIT CARD SETTLEMENT).

My other credit card started calling me, but I followed your advice. I didn’t talk to them, they would just make me depressed, and there was nothing I could do, having no money to pay the AED 5000 they wanted. So I just dropped AED 200 or AED 500 monthly to that said bank, and I was continuously charged the OVER LIMIT FEE & LATE PAYMENT FEE & ALL THE INTEREST (which is shockingly more than AED 850 per month)!!!!!!!!!!!!!

Weeks crept on. Then few days ago, I received an email from FGB offering me an Easy Payment Plan that has no other fees but only the 1% per month (so that’s only 12% per annum), and payable for 36 months . . . I was really happy when I received it. Imagine, I am charged more than AED 800 per month for the penalties and interest alone, but with this plan, I am actually paying only AED 238 interest per month with my outstanding divided to 36 months.

I signed the offer, and now I cannot imagine the relief I feel for having a debt-free life. ALMOST.

I hope that my story will serve as an inspiration to those desperate souls out there.

6 months ago, I thought about ending my life because of debt.

Now, I am sooo good. I lost a lot of money, but I earned an experience and I learned a lesson.

Grateful,

iara

DP Reader Wins Civil Suit Against Bill Collector

By Debt Prison on May 26, 2009

Recently I exchanged emails with a reader who went to court to defend himself against a collection agency. I thought it would be a good idea to release the contents of the email (after receiving permission from the author) to demonstrate a real life experience in a court of law. The debtor walked away from court WITHOUT a judgment against him. In court you have the right to force the plantiff to produce the documentation which would prove you ever entered into a legally binding agreement with the creditor. You have the right to request the collection agency provide a copy of the original contract, which would include your signature, that indicates you ever entered into an agreement with any lender. If the collection agency fails to produce a copy of the contract with your signature, there’s a good chance the judge will move to dismiss their case against you. Details of this email have been changed to protect the identity of the email’s author.

Dear Barry,

On May 5th, 2009 I was summoned to appear in my County Court as I was being sued by a collection company by the name of **Debt Collector. As sat and waited my turn to be called, there were several people who found themselves in the same boat as I was. Each of them agreed that they owed money and made some sort of payment arrangement.

When I was called the Judge asked me how I felt about owing this money to this company. I stated that I never heard of **Debt Collector until I received the summons and as far as I knew I had no contract with this company stating that I did owe them anything. The Judge looked at the paperwork and said, he didn’t see any contract and that I might have a point. He since dismissed the case, but gave **Debt Collector 20 days to come up with a signed contract between myself and this collection company.

Also, on April 10, 2009 I sent the attached file (letter private via author), through snail-mail, to **Debt Collector, the Clerk of Courts and the Federal Trade Commission. I know they all received my mail, as I required signature confirmation.

What I need to ask you is, is there a possibility that **Debt Collector would continue with this case in the 20 days allowed, in other words, could they possibly proceed unless they could produce a signed contract (not a copy), with my original signature and a signature from the company?

Please, if you have the time to reply I would certainly appreciate it. Thank You.

Sincerely,

For the debt collector to continue with the suit, a signed contract must be produced, indicating that the defendant ever entered into any legally binding agreement with their client. Failure to produce the signed contract should prevent the case from moving forward. This debtor handled this properly.

When you are sued by anyone… defend yourself!

Debt Validation: FDCPA Rules

By Debt Prison on March 30, 2009

One of the most important sections of the Fair Debt Collection Practices Act is Section 809 Validation of debts. This Section lays down the guidelines for conduct pertaining to the debt validation process. Within 5 days from the first time a collection agency contacts you (phone or mail) you should write a Debt Validation Letter.

In their response to this letter, the collection agency is to provide you with the following:

* The amount of the debt.

* The name of the original creditor (Capital one, Bank of America, Discover, etc, etc..).

* Their response letter should state, that unless you dispute this validation within 30 days, that this debt will be considered valid and collection attempts will commence. It should also state that if the debtor does in fact dispute the debt, the collection agency will mail you a verification of the debt or a previous judgment from a civil court case.

* If the debtor disputes the debt, the collection agency must halt all collection attempts for 30 days until they can provide a mailed copy of the applicable information: 1. amount of debt and/or 2. original creditor’s name and address and/or 3. verification of debt and/or 4. civil court judgment.

Please understand that failure to ask the collection agency to validate the debt would not be used as an admission that you owe the money – if you later find yourself in civil court over the matter.

809. Validation of debts

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this title may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.

(c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

(d) A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a).

(e) The sending or delivery of any form or notice which does not relate to the collection of a debt and is expressly required by the Internal Revenue Code of 1986, title V of Gramm-Leach-Bliley Act, or any provision of Federal or State law relating to notice of data security breach or privacy, or any regulation prescribed under any such provision of law, shall not be treated as an initial communication in connection with debt collection for purposes of this section.

Discuss this article and meet new people at Debt Prison Forums.

Related Articles

* Restrictions on Wage Garnishment for Debt Collection.

* Reasons not to file Bankruptcy or Settle Your Debts

How to avoid a lawsuit from a collection agency

When will the Collection Agency sue you?

By Debt Prison on March 26, 2009

There’s no absolutes as to when a collection agency will sue you for debt owed. Today a friend of mine received a summons for a civil suit from a collection agency. This article is pretty much part two of this article which I wrote earlier on. He was trying to wait them out hoping they wouldn’t sue. This is the second friend I’ve seen sued over the years by collection agencies.

Here are the facts on the recent case.

He owed $5,000 to creditor on a high interest credit card.

He stopped paying the debt one year ago.

Received a collection letter from collection lawyer (debt ballooned to $6,000) in another state not licensed in Mississippi. I advised to ignore the letter since the collector couldn’t sue in MS court.

Debt was transferred to another collection agency in TN which has a lawyer on staff in MS. They mailed out a collection letter to my friend two months ago describing the debt in the amount of $6,200.

My friend ignored the letter and did not request validation of the debt.

Summons came yesterday for civil suit for debt.

It doesn’t always happen this way. And in the case of my friend he is an unlikely candidate for civil suit. He has no assets, is a student in college, and has a part time job. Even though it will take the creditor probably years to retrieve their money with a judgment, they still pursued the civil suit/judgment.

My other friend was sued under the same circumstances. He was a full-time student and had a part time job with no assets. However, some people go years without being sued.

So what makes a person more likely to be sued than another?

There really are no certain criteria for determining when and if a collection agency will sue you.

For some hints check out the following articles I’ve written on the subject:

The more money you owe the more likely you’ll be sued within 18 months or less.

If you move to another state and fail to update your information (by not registering to vote, getting a new Drivers License, or applying for new credit) you can make it difficult for the collection agency to locate you. If they can’t locate you before the Statute of Limitations has passed you should be in the clear.

If you have assets like a car or home and a decent job then you are a good candidate for a lawsuit. However, the lack of all of these items doesn’t necessarily mean they won’t sue. And the more debt you owe the more likely they’ll sue.

Don’t forget to mail out a Debt Validation Letter in response to each collection letter you receive.

I’m advising my friend to get a lawyer to represent him. This can prevent him from being abused by the collection agency by paying a bunch of phony charges. Often, without any assistance, you can end up paying much more than what you should.

** Remember, the best way to solve these problems is to pay the debt and get it out of your life.

Discuss this article and meet new people at Debt Prison Forums.

Related Articles

* Restrictions on Wage Garnishment for Debt Collection.

* Reasons not to file Bankruptcy or Settle Your Debts