Debt Prison &#187; Personal Finance

* What is a Junk Debt Buyer?

* Restrictions on Wage Garnishment for Debt Collection.

* Reasons not to file Bankruptcy or Settle Your Debts

Francis Newton predicts Dow headed for 6250

Debt Prison — Tue, 06 Jan 2009 22:41:51 +0000

With the Dow Jones currently at 9,000 points, Francis Newton (a Murrey Math high tech trader featured on the Gerry V radio show in New Orleans) suggests the Dow will drop to 6250 by April or May of 2009. I haven’t heard any forecasters throw out specific numbers like this so it caught my attention. These forecasters expect a small rally through March and then a fast drop. So why 6250 and how does she come up with this number?

Her reasoning on the swing of the Dow is based on the Murrey Math Line. Francis says if the Dow drops below 8437 (within the first quarter of 2009) – then it will definitely continue dropping to 7812. If the market has enough momentum to move 1/8 from the midline – it will continue moving until a 3/8 move is achieved. Sound crazy? If the market drops below 8437 you’d better cash out… well that’s what she says.

The Dow is expected to rise in the beginning of the year and will appear headed for 10,000 (as high as it can climb at this time). The Dow has the “opportunity to go up, but the obligation to go down.” The brief rise in the stock market is due to a rebound from the severe drop it took in the last six months, bounced back with the recent influx of capital by the Federal Reserve.

Why does the Dow have an obligation to drop?

Due to the rough economic news constantly being delivered over the airwaves: consumer confidence is weaker, investors are nervous, folks are getting out of the market, buying power is down, and credit is tighter. All of this uncertainty in the market makes it all too easy for the market to fall again and perform what traders call the “dead cat dance”.

Unemployment numbers are rising and unfortunately we don’t receive those numbers until after the quarter has already passed. Across the nation stores are closing and workers are being laid off – much more than what the spoiled American, whose economy has been artificially inflated for over a decade, is used to witnessing.

An introduction to Murrey Math Trading

Every activity in creation requires three fundamental elements: Space, Matter and Time.

Where every repeated activity creates a pattern or rhythm. Seasons, celestial movement, tides, growth cycles, etc. (what goes up must come down). Recording the repeated activity draws a picture of the rhythm. The fundamental rhythms in creation are the same. The math is the same, the picture is the same, the result is the same: predictable change. By knowing the TIME of a cycle we can consistently anticipate the likely future direction of the rhythm by knowing where we are NOW in the cycle. Half moon to full moon etc.

The Murrey Math Trading System is based on the precise measurements of these universal cycles.

In order to understand how stock market cycles are created there is one thing we must know. A few legal insiders, trade in such large volume that they almost single handedly determine the direction of the market. They in effect own the goose. These insiders make massive amounts of money by constantly changing directions as soon as enough people follow their previous move! These traders are the pied piper of Wall Street. Their functional control enables these legal insiders to make millions from small percentage profits (from 2% to 10%), EVERYTIME they change directions.

This constant flow of huge profits from modest percentages in BOTH directions enables the truth to be camouflaged through official explanations of the market Up and Down. The noise of the market place serves as a verbal smoke screen that hides the real profit taking activity.

What is a Junk Debt Buyer?

Debt Prison — Fri, 26 Dec 2008 18:00:07 +0000

Junk Debt Buyers, also known as Debt Acquisition companies, buy debt by the bulk in large portfolios. Often, original creditors are selling debts that were absolved due to bankruptcy or debt settlement. And collection agencies also sell debts in bulk to other collecting companies. Why would anyone buy debt that legally can’t be collected on? Because many people pay up!

**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

Why would anyone pay on a debt that they don’t legally owe?

There are some laws, that should be on the books that aren’t (I cannot believe I just said that), and therefore creditors are able to use leverage to force consumers to pay such debts. For example, the law does not clearly require creditors to report to the credit reporting bureaus that debts are no longer valid as the result of bankruptcy or debt settlement. Creditors are using loopholes in the law to still ding your credit report with a debt that has been legally absolved. They often claim they never received the proper ‘paperwork’ that would have obliged them to report the debt accurately. As a result, many people who still want to use credit (idiots) will pay off the old debt to clear up their credit report. They do this, because having not learned from the perils of credit already, are actively seeking to make additional purchases using credit. Bankruptcy law prohibits efforts to collect on discharged debt. These collections take place below the radar screen despite being a huge industry.

DebtConnection.com posted on June 20 an offer to sell a batch of Chapter 7 bankruptcy accounts with a face value of $200 million. The sale was on behalf of Collect America, one of the nation’s largest debt buyers and collectors.

In some instances these companies use their ability to ding your credit report, which artificially lowers your credit score and history, to persuade you into paying. Therefore if you are trying to buy a house on credit after recently having filed bankruptcy (idiot), you may pay the old debt in your haste to acquire the home, and thus acquire more debt.

Also, many people simply have no knowledge of the Statute of Limitations on debt and will pay a debt past the SOL because they believe the collection agency can take them to court, acquire a judgment, and garnish their wages. These collectors cannot take you to court, and even if they did, presenting the court with proof that the debt has been legally absolved would be the end of the matter. So why do people pay on these debts? They pay because they need a clean credit history (idiots) or because they simply don’t know their rights (the uninformed consumer).

How junk debt purchases work

Here is how the process works. Let’s say that Chase Bank has 40,000 Visa cards that were defaulted on by the consumer. They were unable to collect with in house collections and charged off the debt. The average balance of each card is about $2,000. Chase Bank needs to get some money, any money, for this batch of defaulted debt. The collection process can be expensive and require legal action. Rather than build an empire of collectors and lawyers and have to deal with all sorts of crap – they package and sell the debts.

They gather these accounts into a portfolio and put it on the market to the highest bidder. Let’s say that bidding starts out at 5 cents on the dollar. The junk debt firms have limited info to work with on the portfolios they have. It’s kind of like a storage unit auction. You know there are household goods and clothes, but until you bid and win, you won’t know exactly what you got. The junk debt firms are told the number of accounts, the average balance, the average charge off date, and how many have phone numbers. The junk debt firms have to decide if they are going to lose money on the package - or if it is collectable and profitable. Skip forward… Junk Debt Company A wins the bid at 8 cents on the dollar and now gets the portfolio. The manager of Chase Bank signs a bill of sale and Junk Debt Company A is now the owner of the debt, and has all rights that Chase Bank once had. They now possess the same rights as the original creditor, with the exception that, since they aren’t the original creditor (Chase Bank is), the collection firm is subject to the Fair Debt Collection Practices Act.

Inside a Junk Debt Firm

From debtconsolidationcare.com

How in the world are these junk debt companies coming up with all of this money? Investors. They peddle themselves around and get people to invest in the company. I’m going to digress a quick second to collector behavior. I am not condoning illegal or bad practices on a collector’s behalf, but I would like you to see what kind of conditions collectors work under. Let’s stick with the theme of “It rolls downhill.” OK, so Mr. Investor wants a return. He is going to be mad if he loses money, and won’t be back next year. Junk-debt CEOS don’t like that. They set up aggressive portfolio tracking, goal setting, quotas, financial planning, etc. This gets passed down to the senior managers and directors, who now have to produce results from their subordinates. Senior managers pound team-leaders into the ground with hours of training, and force them to work 50 hour weeks to make sure their teams all hit quota.

The team leader has to answer to the senior managers if his team, as a whole or each individual, doesn’t hit their personal goal. Personal goals add to up team quota and that equals the floor goal. The team leader is on each of their collectors to get the money. The collectors often work over 40 hours, and normally have their calls monitored and recorded by management. They have QA forms they have to meet 100% on. They have training on FDCPA. They constantly have this quota looming over them. Quite usually, it is very high. Collectors, by and large, do not live by salary alone, so they depend on their bonus checks. So, starting from the beginning of the month, all they see is the end of the month, and how many dollars away from their goal they are. If the collector is not at quota… you will hear it in their voice.

Junk-debt buyers are aggressive. They want their money. Their investors want returns. IF THEY CAN SUE YOU, THEY WILL. Normally, there is a legal department working within the agency. They are given a percentage of the accounts to work, just as the other collectors are. It’s the luck of the draw. If the account is suit worthy, and the legal department has it, they will attempt to sue you. I know this isn’t going to be popular, but I am going to state the facts as they are. If you call attention to yourself, and the account is in-stat, you are risking being sued. What do you mean? I mean that if you file a debt validation claim, cease & desist, refusal to pay, etc…you have just called attention to yourself. These accounts are given to a special department. Yes, they will usually try to collect from you. It costs money to sue, but if all else fails…they will attempt to sue you. (I want to note that if you ever have any question about a debt, do not let them scare you out of your rights. You have a right to know what the debt is, who the company is, and you certainly have the right to not be contacted at work.)

Think it can’t happen to you

I have personally been contacted by many readers whose debts are far beyond the Statute of Limitations – only to have collection agencies calling their home daily.

The case of John Pfister provides one illustration. Pfister, 63, a retired AT&T technical supervisor in Denton, Tex., received a Chapter 7 discharge in 2001. Then, last January, while applying for a mortgage, he learned that two discharged credit-card debts, a Discover Card balance of $6,306 and a former Chase account for $2,683, were showing up on his credit reports. Lenders turned him away because of what appeared to be unpaid obligations, he says.

The FTC has sued several collection agencies over their practices. In 2004, NCO Group – a major buyer of old debt — agreed to pay a then-record $1.5 million civil fine after the FTC accused it of reporting inaccurate information to credit bureaus. In 2005, the FTC won a $10.2 million judgment against National Check Control for, among other violations, threatening consumers with lawsuits and jail for purported debts. In many cases, the consumer didn’t owe the debt, or the amount had been vastly inflated.

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

Does Debt Validation Actually Work?

Debt Prison — Fri, 26 Dec 2008 04:58:06 +0000

A recent reader at Sample Debt Validation Letter questioned as to whether or not requesting debt validation would prevent a collection agency from pursuing a judgment. Since his debts were nearly past the Statute of Limitations he was hoping to prevent payment and a possible appearance in civil court. Debt validation often works on Junk Debt Buyers. Junk Debt Buyers (Debt Acquisition) often buy packages of defaulted debt from an original creditor or another collection agency. Therefore as this debt is passed from collector to collector, some crucial details regarding your debt may become lost through the various transfer of hands.

A collection agencies initial letter to you should indicate the original creditor and the dollar amount you owe. If your name, original creditor, or dollar amount appears incorrect you may want to consider debt validation. However, debt validation is not simply a means of getting out of paying your debts. In fact, a debt validation letter will draw attention to your account. Therefore, if you owe the debt, you may be better off simply ignoring their calls and letters. Whether or not this is a good idea will depend on many factors. You should use debt validation only when necessary. Since you probably don’t know anything about the collection agency… you won’t know if they:

Don’t have legal representation in your state in which to represent the collection agency in civil court.

Don’t have a track record of suing debtors.

Don’t have a track record of winning judgments.

Some collection agencies have no legal representation in your state. The smaller the collection agency the more likely they will not have legal representation. If their office is located inside your state then obviously they have legal representation. However, if the collection company has no legal representation in your state, they won’t bother suing you in civil court. They will not attempt a judgment. The only circumstance that may cause them to attempt to file suit, would be if they acquired knowledge that you, the debtor, has access to monies or assets which they could acquire. And the monies and assets are significant enough to warrant their time and expense.

Dear Barry,

Let me start by saying thank you for the website. It was extremely insightful and I had no clue that there were so many rights afforded to consumers, especially those who had gone through hard times. To make a long story short, I have received a letter from a collection agency, (Nelson, Watson and Associates, LLC) who claim to represent Palisades Acquisition. I checked my credit report and Palisades is on there and dinging my report. However, there is no mention of the other collection agency anywhere and the amounts are vastly different (hundreds of dollars).

I won’t lie about it this was my fault. About 2 to 3 years ago, after being laid off, I went to a free counseling service. They very subtly told me to get my student loans and such paid current as I would never get out of it. However, they advised to let the smaller balances go to see if they would be written off (not morally right, I just didn’t have it). I was told to get a pre paid credit card that reported to the Credit Bureaus. They helped me plan a budget and told me in time the smaller balances might drop off. It would still affect my credit, but in time I could rebuild. I did everything they asked and things are improving, and my credit score is going up, very slowly but is improving.

I found your website and am very curious about the Debt Validation process and what the success rate is, if any. Also, if there are any negative repercussions that can come from this. In theory it sounds correct, however, I am a newbie at the collection game and am a little gun-shy. This account is also approaching the SOL for the state of Texas, where I live and while I know this was wrong I want it to go away. I am frustrated because things are finally starting to look up and here I am hit up again for money that is almost past the statue of limitations.

If I may I have a couple of quick questions….. I checked my credit report last night and Nelson, Watson and Associates are not on it anywhere, however, Palisades Acquisition is….. but Palisades Acquisition is not the original lender, it was originally XXXXX XXXX. In essence it appears to have changed hands three times. I feel that I have two decisions, I can attempt to settle, however, like you said, it starts the SOL clock all over and I am about three months away from paying one of my student loans off and maybe a DV could stall them until then, and then I could take that money and apply it towards the new bill…. I thought about what you said about the appearance of looking undesirable to them. I really don’t own much, but I do have a decent job and I don’t want my wages garnished. Any thoughts you wanted to throw my way would be appreciated. Thank you again and good luck towards your own endeavors to get debt free. You’re an inspiration to all of us in prison block D (debt)…. Can you believe all this trouble is over a $600.00 tab I racked up a few years ago?

Best Regards, Terry

Debt Prison response….

Debt validation is often used to get rid of junk debt buyers. JDB’s are agencies that often buy debt past the SOL or was absolved by bankruptcy. Since a lot of people don’t know what their rights are… many just pay up when they shouldn’t… and that’s how the JDB s make their money. Or maybe you never heard anything about this debt before and you want to know exactly from where and when it originated. Many consumers who take the time to research and write a debt validation letter (those who know their rights) end up never hearing from the agencies again (though the agency may sell the debt to another CA).

Debt validation is used to insure that the CA actually obtained the legal right to collect the debt from the original creditor. It should also be clear how much is owed and the dates of default etc etc… In your case the CA probably has the right and can produce such paperwork. You have the right to ask them to validate in which case they’ll send a letter stating that you owe certain creditor x amount of dollars. Likely this is what they’ve already done with the first letter you received. Debt validation won’t get rid of a legitimate collector with good paperwork and a SOL on their side. And remember that any response from you – admitting you owe the debt or are willing to make payments – resets the clock on the SOL, which in TX is 4 years on a contract.

You could choose to ignore the letters in which case the CA may seek a civil judgment against you. If you receive a summons for court you can go show up and dispute any part of the amount you feel like is questionable. If you are looking to prevent the CA from pursuing and want to stall them you could try a simple debt validation letter like this one only if the original letter didn’t already answer these questions.

Date

Your Name Address City, State Zip

Debt Collector’s Name Address City, State Zip Re: Account Number

Dear Debt Collector:

I am writing in response to phone call/letter received from you on date xx/xx/xx. Pursuant to my rights under federal debt collection laws, I am requesting that you provide validation of this debt. Note this is not a refusal to pay, but a request that your offices provide me with evidence that I have a legal obligation to pay you.

Sincerely,

Your Name

This is a basic DV letter and the original letter may have provided this info. If you are hoping to stall a civil court date I doubt such a letter alone would prevent them from filing. One thing that might keep them from filing suit is if they believe it would be a waste of their time. If they believe.. that even with a judgment against you it would be difficult to collect the debt… they may not bother suing you.

I’m not giving legal advice, but rather my opinion. I forget to throw that in sometimes.. not that it’s necessary but in the world we live in today it seems you can get sued for anything.

Yes it sounds like the Watson Assoc group works debt collection. And PA is a collection agency with a heck of a fancy name… Yes I would request validation of the debt immediately. Now likely this company has gotten these letters before and is expecting it. I would request validation by sending a registered letter (keep a copy of the letter for your records). I would use a simple letter like the one I emailed you before. You just want to make sure that PA has the legal right to collect this debt and that their paperwork is in order. Also, I would contact the original creditor and ask them if they sold the debt to PA.

Now you stated that the original amount was $600. You can dispute any amount above the $600 if you feel it is unfair or not legitimate. You can dispute any part of their claim you’d like and even your credit report. For example, if the original amount was $600, but now its $1500 due to interest and fees… well I’d inform them (if they validate) that I am willing to pay $600 through monthly payments (or lump sum if you could afford it) and nothing more. If they won’t agree to your terms you can just ignore them. If they pursue civil action, that would be another opportunity for you to lower the amount by persuading the judge that some of the balance is not legitimate. “Hey your honor… this debt was originally $600 and now its $1500… this isn’t right” You could explain about your struggle with debt and how you had to make hard choices and couldn’t pay all your debts back at once. As a result you’ve been focused on paying one back at a time. Meanwhile the creditors and collectors ran up your balance with interest and fees. Any paperwork you have would be helpful.

Just bear in mind that civil action is not the end of the world, but may be another opportunity to lower the amount you repay. Also, if the amount is $1500 they may not even pursue a civil suit because of the time and expense involved. So you can further delay payment (possibly) if you dispute any part of their claim. Also, if the law firm seems hell bent on going to civil court.. you could write a letter to them explaining your desire to cooperate if only they’d come around and agree to your terms. You could tell them that their terms are unjust and unfair, and that if they’d agree to dismiss the part of the debt you feel isn’t fair… you’d glad begin payment on the debt.

However, agreeing to repay the debt under any circumstances is a last resort just prior to civil court. And if you do write such letters make copies, send registered mail, and make sure you show these to the judge so that it appears that were trying to satisfy this debt but the CA’s are unreasonable.

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

Debt past the Statute of Limitations and Collection Agency still suing?

Debt Prison — Tue, 09 Dec 2008 01:34:34 +0000

If your debt is past the Statute of Limitations a collection agency or creditor can still sue you in civil court as an attempt to obtain a judgment. So why does the Statute of Limitations (SOL) exist and how can you use it towards your defense? If you have any questions pertaining to this article please leave a comment at the end of this page. See also, Debt Prison related article Sample Debt Validation Letter.

A statute of limitations (pertaining to debt) is a statute in our legal system that sets forth the maximum period of time, after certain events (default on payments), that legal proceedings based on those events may be initiated. The SOL for defaulted debt will vary state by state which you can look up by clicking here. The SOL can vary wildly… in New York it’s 6 years but in Ohio it’s 15 years (sucks to be in Ohio). The date on which you miss your first payment starts the clock on the SOL. For example, in Texas the SOL for defaulted debts is four years. So if you miss your first payment on August 30, 2008 – your creditor has until August 30, 2012 to file suit and still be within the SOL. So why would a collection agency or creditor file suit on defaulted debt after the SOL has expired?

You need to show up in court to defend yourself

Though the debt may be past the SOL… someone needs to show up in court and explain that to the judge. That someone should be you. So if your debt is past the SOL and you get served a summons for a civil suit from a collection agency – just make sure you walk into court on the assigned day and explain to the judge why the debt is past the SOL. The judge will then dismiss the case. It would be a good idea to take any paperwork into court with you to help support your defense.

If you fail to show up in court and defend yourself the collection agency will likely win a default judgment. So you want to make sure you show up in court to prevent the default judgment. Also, it would be a good idea to converse with the collection agency and try and convince them to drop the suit before the court date. Since their appearing in court and having their case dismissed would be a complete waste of their time…. not to mention yours. Sometimes it’s worth a phone conversation to convince the plaintiff that their case won’t stand up in court and therefore should be dropped.

Can the collection agency still sell my debt to another agency?

Selling debt is becoming a world wide industry. Junk debt buyers are buying up debts on which the SOL has expired and even debt that was absolved due to bankrtupcy. Why would a company buy such debt? Because many people will become intimidated and pay the debt. Most people simply don’t know their rights.

But can’t the clock on the SOL get reset?

Yes…. the clock on the Statute of Limitations can be reset by a couple of different circumstances. First, if you make any payment (no matter how small) on the defaulted debt the clock on the SOL will be reset. So in Texas the collection agency would then have a fresh four years to drag you into court to obtain a judgment. Also, in some states if you acknowledge, over the telephone, that you owe the debt or that you will try and make a payment – the SOL just got reset! So be careful what you say over the phone.

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

* Restrictions on Wage Garnishment for Debt Collection.

Will debt follow you abroad?

Debt Prison — Thu, 04 Dec 2008 04:17:12 +0000

Can you avoid paying your debts by leaving the United States and will your debt or credit report follow you to another country? If you leave, will you be arrested when you return to the United States? Can you be arrested in the country you’re moving to for the debt you leave behind in the U.S.? Can you be deported back to the U.S. for debt? Apparently these are complex questions and there is little information on the web that provides a complete explanation for leaving debt behind. So I’ve created this article to piece together the bits and pieces to form a reasonable answer. Now bear in mind that I’ve fitted this article together from information I’ve gathered. As far as I know the information I provide here is accurate and I’ll provide links indicating the source. The correct answer to this question is… it depends on the circumstances! Fraud (criminal charges) related to debt I’ve already addressed in Can you go to jail for not paying your debts.

Debt can only follow you if it knows where you are

Let’s assume that you are a debtor with $50,000 in credit card debt and you can no longer make the minimum payments. Your goal is to make a fresh start. Filing bankruptcy is one option. Leaving the country is another… but also staying in the U.S. and avoiding being located by the collection agency can provide resolution. Here’s why.

If you default on your payments your accounts will likely move into the hands of a collection agency or ‘law firm’. Either way they still have to follow the law in order to force you to pay. This means taking you to civil court to obtain a judgment. But before they win a judgment against you in civil court, you have to be served a summons. They can’t service you if they don’t know where you are. Therefore, if the court cannot service you the collection agency or ‘law firm’ will be unable to obtain a judgment in their favor. Now all of these bill collectors will likely hit a brick wall if they can’t locate you.

How is a civil court summons usually served?

The plaintiff (creditor/collector) has a duty to notify the defendant (you) that a law suit has been initiated. This notification is performed via the serving of a summons which must be performed according to a set of guidelines. Generally these guidelines require that a third party (deputy/constable) physically present a written summons to the other party. Generally, the law suit can not continue until the defending party has been properly notified by the service of a summons.

Normally the collection agency will provide the court with your last known address. So if you no longer live at that address the summons will not be served and the court date postponed. The suit will then sit idle until the collection agency provides another address where you can be served the summons.

UPDATE: 9/14/2009 on summons and service

Some version of this applies in most or all states…

How do I serve the defendant?

There are 3 ways to “serve” the defendant with papers to start your case:

Personal service:
Personal service means that someone gives the Summons and Complaint to the defendant.

Service by mail:
This means that someone mails the Summons and Complaint to the defendant. And,

Service by publication:
This means that you publish the Summons and Complaint in the newspaper that the defendant’s most likely to read. You have to ask the court’s permission to do this. Usually you have to try personal service a few times first.

This means they can have court against you and gain a default judgment even if they cannot personally hand you the summons. From what I’ve read this is rare… but does happen sometimes. If they have reason to believe you have valuable assets in the U.S. then this scenario becomes more likely.

***If a collection agency gets a judgment against you, even if the judgment is about to expire (SOL on the judgment), they can go back to court and get the judgment renewed! This just happened to my best friend. He thought the judgment was about to expire and then he got a summons for more court…. to renew the SOL on the judgment.

However, sometimes you can have the same name as another person – this can create problems for you.

THEN the attorney went to the county in which we both live and put a lien on my fathers house thinking it was my house. Amazing because I don’t own ANY real property and his house is in HIS name with HIS SSN. The Attys office believes his house is mine because his address is on my credit report (our stuff gets mixed up all the time on our credit reports). Their using his address as “my last known address”

I can’t believe you can go put a lien on someone’s property that easy…and then THAT person will end up having to pay an attorney to fix the problem. My father should be able to sue the attys office for placing a lien on the wrong property.

As you can see, sometimes credit history can be attached to the wrong person. And sometimes the court may think they served the correct person when they haven’t. If the court served the court summons to the wrong person then the creditor will likely get a default judgment against you. Since you won’t know about the summons – you won’t know the judgment occurred. For the sake of discussion here… we’re assuming you didn’t receive bad service and that the court was unable to deliver the summons. In which case, the collection agency’s claim against you is dead in the water. That is, unless they can find where you are!

The goal of avoiding debt payments, default judgments, and wage garnishment can often be accomplished if the collection agency cannot locate you before the Statue of Limitations expires on the debt! Whether you go abroad or stay in the U.S. – that is the only legal way of avoiding repayment on defaulted debt. You have to prevent being served until the SOL on the debts has passed. Granted, an aggressive collector may opt for the ‘post your summons in the newspaper’… in which case the court may consider you served.

So whether you stay in the U.S. or move to another country…. their harassment of you will only end when they no longer know where you are.

See also, Debt Prison related article Debt past the SOL but Collection Agency still suing.

What about tolling a debt?

Concerning the Statute of Limitations the issue of tolling was mentioned. Tolling means to stop the running of a statutory period (the SOL) for a certain period of time. However, in order to toll a debt (in California), you must leave the state before the cause of action accrues. In other words, you’d have to have left before you defaulted on your debts. Therefore, for the toll (to stop the SOL clock) to occur you would have to leave the country with your debt in good standing – this means you haven’t defaulted yet. For California:

If, after the cause of action accrues, he departs from the State, the time of his absence is not part of the time limited for the commencement of the action.

Creditors only see your social security number

One of the ways that banks/collectors locate us is by utilizing a successful tracking system. In the United States the system is successful because the government forces all businesses to adhere to certain legislation. Examples are the I-9 form, the W-4 form, and the 1099. Therefore, your taxes due, your credit report, your credit history, and even your income history all are traced by utilizing your social security number. Therefore, becoming a working immigrant of another country or a naturalized citizen could mean no longer utilizing your SSN. As a result, leaving the country in exchange for a new life may seem appealing to many folks.

Can a bad credit report follow you to a new country?

The short answer is no. The long answer is… if you allow it to. Some credit reporting agencies (Equifax – Transunion) may have offices in other countries. For example, Headquartered in Atlanta, Georgia, Equifax Inc. employs approximately 6,900 people in 14 countries through North America, Latin America and Europe. If applying for credit in a foreign country (with a U.S. based CRA) your U.S. credit report may be pulled by utilizing your SSN.

In several scenarios, people have found that the United States TransUnion and the Canada TransUnion share the same data in their systems. In result, there may be a possibility of a Canadian financial institution pulling your U.S credit history. This could be good for people with positive credit and bad for those with not so good credit. Equifax may do the same and share their data between countries. We have found that Experian has no effect in foreign credit because it only conducts reports on U.S residents.

So don’t apply for credit in your new country.

How to leave the United States

To learn more about this concept please visit this link.

** If you are $2,500 or more behind on child support payments you cannot receive a passport.

I think it’s also important to point out that collection agencies follow leads they get from people they call on the phone. So if they have your old number and your old room mate still lives there…. the old room mate could give them all of your forwarding information into your new country. Though they won’t know if it’s accurate… they’ll give it a shot and see what turns up. So make sure there are no people they could call who would give them any information (of any kind) as to your whereabouts. One of my readers had a room mate do just that up in New York. Now the collection agency has his phone number and address in Canada. However, in Canada he received a clean credit record and fresh credit.

What if you leave the United States and the collection agency finds out where you are?

Let’s suppose the collection agency achieved a judgment against you to repay the debt. And for arguments sake, let’s assume they’ve located you in another country. Have you ever heard of a long arm statute? Well neither had I. Normally this is a statute that is applied when the court of one state needs to obtain jurisdiction in another state. In that case they try and implement the long arm statute. But can this statute be applied internationally? The short answer is yes. But the long answer is…. it depends on the other country. Some countries may allow a U.S. court to obtain jurisdiction through their court system. Now at this point… I’m thinking you must have owed this creditor a truck load of money because the price tag for your harassment is getting expensive!

If the collection agency has a judgment and your new address… the agency could push for long arm jurisdiction through the court system. This request would be made possible through your new country’s U.S. Embassy or other such legal representation. The new country may then decide to assist the U.S. court in exercising the judgment. Some countries arrest defendants for debt… while others do not. Does this mean if your new country cooperates with the U.S. court you may be arrested until court is held? Maybe, I honestly couldn’t find a definite answer to that question. But the best solution would be to select a country which is favorable to debtors.

However, I failed to find an actual source where this situation occurred concerning overseas arrest for U.S. debt collection. But for fun you can read up on Personal Jurisdiction.

Can you be arrested returning to the United States for old debt?

I honestly don’t know, but based on what I read on other sites and forums the following is my opinion.

If you had an old judgment the court may have issued a ‘bench warrant’ to force you to show up and explain why you haven’t satisfied the judgment. If you are returning to the United States can you be arrested by Immigration or police at the airport upon entry? I found nothing suggesting you would. You just want to make sure that you don’t do anything that would cause the police or immigration to run your passport or drivers license through their database. The best general answer I could find on this subject:

The answer depends on where the bench warrant was issued, for what and if the warrant is in the same jurisdiction as the airport and if you are flying international or domestic.

You can be arrested anywhere in the jurisdiction covered by the warrant. If you are trying to leave the country and they run your passport or driver’s license and the warrant comes up the person will certainly be arrested.

I also found nothing to suggest that you could be deported back to the U.S. for a judgment regarding a civil suit for debt collection. The worse that could happen would be your new country participating in enforcing a judgment against you to repay the debt. A very unlikely event. I didn’t find a single source where this enforcement has occurred under these circumstances. Now I’m not assuming that everything I’ve implied here is 100% accurate. I’m only presenting this information based on what I was able to find.

So why do collection agencies call debtors in new countries?

Harassment is a very effective tool. Intimidation, caused most often by lies and emotional persuasion, convince debtors to pay up… even when there’s no legal reason for them to… and even when they don’t legally or morally owe the debt. Collection agencies are collecting on debts that were wiped out by bankruptcy or the Statute of Limitations years ago. They wouldn’t do this unless some people pay up.

If you have further information on this subject or if you believe any information in the above article is incorrect – please let me know by joining the forum or send email to info [at] debtprison [dot] net.

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

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When Can I Start Settling My Debts?

Debt Prison — Tue, 02 Dec 2008 01:18:43 +0000

A reader at How to settle your debts on your own wants to know when he should start trying to settle his unsecured debt. He also wants to know which one to settle first. Now bear in mind that you can’t miss a payment in October and expect to settle your debts in November or December. Credit card companies and collection agencies aren’t stupid! If you could afford a lump sum settlement that soon after having missed a payment…. then common sense will tell you that the debtor can afford to continue making the minimum payments.

My wife and I owe more or less $40,000 on our credit card debt and an unsecured loan. We plan to settle our debt on our own. We stopped paying our credit card bills two months ago and they immediately started calling and harassing us. Also, I lost my job so my wife is the only one working and we can’t afford to pay the minimum monthly payments. We’ve got a $25,000 unsecured loan and more or less $15,000 in credit card debt. I don’t know when will I start sending them letters and who’s the first one I will talk to and negotiate with. And I’m worried that if I don’t take action in the near future they will sell my account to a collection agency! Please help – thank you very much!!!!

Angelo

Hey Angelo,

First off it’s too early to even start discussing settlement with these guys. That’s because you need a cash lump sum to settle with the collectors. And if you could afford a lump sum you could afford the minimum payments. You’re gonna have to let this thing sit for at least a year most likely. Meanwhile you can just tell them that you’re broke for the time being and will make payments when you have money… but for now you’re living from check to check to eat.

Sometimes the original creditor will not settle the debt – they sell it off to a collection agency instead. If they sell or assign the debt to a collection agency then I suggest you exercise your rights under federal law and write them a Debt Validation Letter. This is just to insure that the collection agency is following correct procedures.

Now let me ask you this question…

Would you rather have to deal with this crap (collectors calling, judgments, wage garnishment) for the next three to ten years… or would you rather get a job (or two jobs) and work like crazy to pay this debt off in full. That’s about your only options…
Now if you can’t or are unable to work then the best thing to do is settle with these guys later on. But in the meantime you might want to change your phone number and deal with your collectors through the mail only. And then there’s always the possibility of getting a judgment slapped on you in civil court. Bear in mind the better record keeping you undertake the better off you will be. See also, How to deal with collection agencies.

Also, is there anything you could sell to help get you out of this jam? Can you sell your cars, your houses? Can you downsize to cheaper cars or cheaper houses? Can you move in with a relative and pay no rent? You and the wifey need to have a serious discussion and think of these types of questions.

If you do decide to settle I would use the ‘debt snowball’… starting with the smallest debt and working my way towards the largest. I’d initially try and settle for 50 cents on the dolllar with the debt of lowest balance. Bear in mind that I would try and settle based on what the balance is RIGHT NOW. Not what it will be in one or two years.

That’s because once the credit card companies and collection agencies get through tacking on their satanic onslaught of fees, penalties, and interest… these debts could easily double in balance before you’re ready to settle them. So what may be a credit card balance of $4,000 today… may be 8 or $10,000 in two years. I would inform them that I’ll settle for 50 cents on the dollar based on the original default amount… in this case I’d offer $2,000 for the initial defaulted debt of $4,000.

Good Luck and Happy Holidays!!!

Barry

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

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Restrictions on Wage Garnishment for Debt Collection

Debt Prison — Sun, 30 Nov 2008 16:13:23 +0000

Many debtors that have defaulted on their credit card debt or other unsecured loans are concerned about their wages being garnished. Often collection agencies will threaten to turn your debt over to their ‘legal department’, or take you to civil court to get a judgment, or garnish your wages. Well what can they really do and how much of your wages can they actually garnish? Relax… I found this very important information for you… at no charge.

The U.S. Department of Labor has developed The Federal Wage Garnishment Law, Consumer Credit Protection Act’s Title 3 (CCPA) - which defines how much of a person wages can be garnished by debt collectors via a judgment. The best way to overcome your defaulted debt is to gain knowledge. The more you know about what can happen in the ‘real world’ (not the world of phone calls with debt collectors and their often empty threats) the more likely you’ll be able to get out of debt, salvage your credit report, and get on with a happy life.

Here’s what you need to know from the above mentioned Act

What are the restrictions on wage garnishment?

The amount of pay subject to garnishment is based on an employee’s “disposable earnings,” which is the amount left after legally required deductions are made. Examples of such deductions include federal, state, and local taxes, the employee’s share of State Unemployment Insurance and Social Security. It also includes withholdings for employee retirement systems required by law.

Deductions not required by law—such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise—usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA.

The law sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments (i.e., those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $6.55 an hour).

For illustration, if the pay period is weekly and disposable earnings are $196.50 ($6.55 × 30) or less, there can be no garnishment. If disposable earnings are more than $196.50 but less than $262.00 ($6.55 × 40), the amount above $196.50 can be garnished. A maximum of 25 percent can be garnished, if disposable income earnings are $262.00 or more. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts.

What about child support and alimony?

Specific restrictions apply to court orders for child support or alimony. The garnishment law allows up to 50 percent of a worker’s disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60 percent if the worker is not. An additional 5 percent may be garnished for support payments more than l2 weeks in arrears.

Are there any exceptions to the law?

The wage garnishment law specifies that the garnishment restrictions do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes.

If a state wage garnishment law differs from the CCPA, the law resulting in the smaller garnishment must be observed.

The world of defaulted debt is no different from any other aspect of our lives. The more information and truth you acquire on the subject… the sooner you’ll be able to escape from Debt Prison. If you are new to the world of defaulted debt please take the time to read my best articles listed below.

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

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