**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.

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 Debt Prison,

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

The first thing you need to understand is that most large collection companies have a lawyer at their disposal who writes letters on their behalf and handles any disputes. Some lawyers work exclusively for collection agencies, while others are hired only when needed. These lawyers also represent the collection agency in the likely event a debtor sues them! If the collection agency is not located in your state, there is a very good chance they will not attempt legal suit. Most likely they will call, mail letters, and when you fail to respond… they’ll sell the debt to another collection agency for pennies on the dollar. In order for them to sue you (out of state), they would have to employ the services of a lawyer where you live. This can be very expensive and will usually void the benefits of a civil judgment. It is only when they have a debtor in their state that they prefer legal suit. A good candidate for legal suit is one with at least a balance of $500, at least one asset, and the debt is not in dispute. See also all of my articles on Collection Agencies and make sure to read How to avoid paying a debt.

To file a complaint with the Federal Trade Commission regarding a collection agency click here or call toll free at 1-877-FTC-HELP.

Many Judgments are Never Collected

There’s a good possibility that even with a judgment a collection agency will never be able to collect on the debt. Many debtors are in such a position financially that they cannot legally be collected on. So even with a judgment to repay the debt… the collection agency and court can’t enforce it. To learn more about this read Restrictions on Wage Garnishment for Debt Collection.

Many debtors move to another state which creates more legwork for the collection agency. They have to determine where you moved and then request for the new state to enforce a judgment acquired from your old state. Some female debtors get married and change their last name. This can slow down the enforcement of a judgment. Also, some states don’t consider assets joint – so a person can nullify a judgment by putting all assets in their spouse’s name, not working, or hiding income (hiding your income is illegal). See also, What is a Junk Debt Buyer?

**Some states will consider debts and assets as joint accounts even if your spouse’s name is not on the account. In California they can collect on your spouse’s assets to satisfy a civil judgment.

Is your debt past the Statute of Limitations?

In my home state of Mississippi the Statute of Limitations (SOL) is three years, this is the lowest SOL in the United States – who says Mississippi is last in everything? So if I stop paying on my VISA credit card in August of 2008, the creditor or collection agency has until August of 2011 to get paid or sue me in civil court for the debt owed. If I can put off paying on the debt, or acknowledging I owe it, for three years and the collection agency doesn’t get a judgment… then I no longer legally owe the debt. They cannot take me to court and be awarded a judgment, provided I show up and inform the court that the SOL has expired on the debt. See also, Debt Past the SOL and Collection Agency still sues.

Is the Collection Agency located in your State?

Most collection companies will not file a civil suit for debt collection on a debtor that lives in another state. Most collection agencies have a lawyer on staff or one they regularly work with. Since the collection agency has to sue you in the state where you live, they aren’t likely to hire a lawyer in your hometown to represent them in the case… if they are located out-of-state. They also are not likely to send their lawyer across state lines to collect a debt. Besides, in order for a lawyer to cross state lines he has to be licensed in that state. Most lawyers are only licensed in one state.

The Amount of the Debt

The lower the dollar amount of defaulted debt the less likely the collection agency will pursue legal action. Very seldom will a collection company file suit on a debt of less than $500 and most likely $1,000. Obviously it’s a lot of time and expense involved in a civil court suit… so they don’t like to bother with court unless they feel confident of a decent pay off. However, I should make you aware that some of my readers have been taken to court for less than $1,000.

How many assets do you have?

The more reliable assets you own, the more likely the collection agency will pursue a legal course of action. If the collection agency knows that you have a home, land, or a vehicle which is paid for – they can win a judgment, then via a writ of execution they can be awarded a lien on said property or force a ‘Sheriff’s sale’. A job is considered an asset since they can seek to garnish your wages or bank account.

Is the debt in dispute?

A collection agency cannot file suit on a debt that is being disputed. If you requested validation of the debt, and their information is insufficient (they didn’t accurately prove you legally owe them the debt), their case can be thrown out of court.

Don’t apply for new credit

One of my readers contacted me about a bill collector who was threatening to file suit if she didn’t cough up a payment by the end of the month. The bill collector informed her that he had been watching her credit report and noticed she had recently applied for credit on a vehicle purchase. When you apply for credit on new purchases the collection agency rightly figures you have money to pay them!  The information you put on the credit application is also an opportunity for your credit report to get updated with your current address, spouse, and asset information. A collection agency can acquire your credit file and read up on your latest hits.

TIPS for Avoiding the Collection Agency Lawsuit

1. Get any property you own out of your name.

2. Quit your weekly paycheck job.

3. Go into business for yourself (no wage garnishment).

4. Maintain a story of no job, no assets, and a gloomy future.

5. Move to MS (SOL 3 years) or TX (SOL 4 years).

6. Always deny any knowledge of the debt.

7. Do not answer their phone calls.

8. Record their violations of the FDCPA and sue them (or threaten to).

9. Leave the United States with no forwarding address.

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

Related Articles

* What is a Junk Debt Buyer?

* Restrictions on Wage Garnishment for Debt Collection.

* The Fair Debt Collection Practices Act

* Reasons not to file Bankruptcy or Settle Your Debts

* Can you go to jail for not paying your debts?

* How to settle your debts on your own

* How to deal with collection agencies

* Sample Debt Validation Letter

When possible pay the original creditor and bypass the collection agency.  If your creditor has ‘assigned’ your defaulted debt over to a collection agency for collection… call the creditor and ask if you can just pay them directly.  If they agree to accept payments then pay them and eliminate the third party.  See also, How to deal with collection agencies.

Dear Debt Prison,

Here is my situation. We are overdue on a fairly large American Express bill. We owe the money but can’t pay it off right away. We are not disputing the fact that we owe the money.

We have been sent over to a collections agency, NCO Financial Systems. I do not yet know if they have purchased the bad debt or if AMEX has just assigned the case to them. If I call the AMEX number on the back of my card, I get an automated message that I need to talk with NCO Financial.

Of course, NCO Financial wants all of the money and they want to setup a payment plan of something like 30% down and some other payments. None of this has been in writing, just phone conversations.

I was able to talk with someone at AMEX. They said that they could NOT accept any payment plans since NCO was handling the account now but they will still accept any payments that we make to them. So, while they can’t officially agree to any sort of payment plan, they will accept any payments that we send them.

This is interesting! I basically said to AMEX, “Well, if I just keep sending you money, I will eventually payoff my account and I won’t owe anyone any more money, right” “Yes”. I can still login to the AMEX site and see all of my account information.

So I wonder if it’s in our own best interest to just keep stringing along NCO while continuing to make payments to AMEX for the next 6 months until the debt is paid? I am sending NCO a debt validation letter. We know we have to pay AMEX, but I don’t have to pay NCO until they can prove to me that I need to pay THEM, not AMEX.  It will probably only take 6 months or less to pay off the debt.

Steve

Debt Prison response…

Good question. Yes NCO has been ‘assigned’ the debt by Amex. I would continue to make scheduled monthly payments to Amex and no longer speak with or have any correspondence with NCO. You owe the money to Amex, and if possible, I would pay them. Have you still been receiving monthly statements from Amex?

I would try and avoid dealing with a third party if at all possible.  By ignoring NCO Financial you eliminate the need for a third party and any corresponding paperwork they’ll bring to the table.  However, you should keep all correspondence from both NCO Financial and American Express just in case there is a problem on down the road.

NCO Financial may ‘accidently’ place negative strikes on your credit report.  If so, you’ll need all paperwork to correct your credit report – if the negative strikes are inaccurate!

Protect your family — let a bankruptcy lawyer help you explore whether Chapter 7 bankruptcy or Chapter 13 bankruptcy will offer you the most financial clarity. The first step to financial renewal is completing this free evaluation form.

Related Articles

* What is a Junk Debt Buyer?

* Restrictions on Wage Garnishment for Debt Collection.

* The Fair Debt Collection Practices Act

* Reasons not to file Bankruptcy or Settle Your Debts

* Can you go to jail for not paying your debts?

* How to settle your debts on your own

* How to deal with collection agencies

* Sample Debt Validation Letter