Debt Prison

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.

**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.

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.

* 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

Having just finished another article entitled “Planning Precedes Performance” where I discussed how to impress your boss, I thought it would be wise to discuss the fact that accepting a promotion on the job is often a bad idea.  Within the last three years I’ve personally been promoted and quit a job as District Manager, witnessed the guy promoted after I quit resign in disgust, and just witnessed a good friend at my current job contact corporate headquarters and actually demote himself.  Some promotions are a good move and others are for the birds, let’s discuss the pro’s and con’s of moving up the rungs of responsibility at your job.

How’s the money?

As you can tell by the title of this blog I need increases in my annual income more than some people.  Being in debt and a slave to finances is enough to get anyone off their butt and working hard.  However, unlike the man I was in my twenties, I now try and balance work with time off.  Psychological health is just as important as physical and financial health.  Flaws in any one of these areas can ruin your chances of success in the other two.

In 2006 I took a promotion with my current employer when they offered me the position for the third time.  Here’s why I waited so long.  I had just quit a job as District Manager where I worked sixty hours per week and was on call 7 days.  I didn’t realize just how miserable and stressed I was until I quit working for the company altogether.  The company that I currently work for had one little deal-breaking detail that was making that promotion look like a bad idea.  As a foreman with employees under my supervision my paycheck would see little increase.  Why should I step up from the level of technician to foreman without a substantial increase in pay?  Besides, the foreman that I had worked around were over-worked and stressed, often working seven days a week for a salary slightly higher than my own.  One quit last year out of frustration and the other one demoted himself.

The reason I finally accepted the promotion was because the company was changing it’s per hour rates and I was about to lose a couple of dollars per hour.  The difference in the upcoming rates of pay were significant enough for me to step up to the plate and take on more responsibility.

Many companies have supervisory positions that pay little more than experienced workers. If that’s the case then I wouldn’t accept the job.  Most employers will rightfully try and save on labor costs where they can, and many just don’t see the need in paying more for these positions.  I’m sure they have their reasons.  For example, many people are willing to accept receiving less money per hour (which is typically the outcome of salary instead of hourly pay) because they are being promoted to a position of authority.  I don’t understand this mentality.  Some people go down this road because it may open doors to a higher pay grade.  This is understandable thinking but you should really weigh the good versus the bad.  I always recommend looking out for number one, because at the end of it all that will be your position anyway – the same is true for the company.

**There’s one other reason why accepting a promotion can be a good idea even though the money isn’t much better.  And that is if the promotion means you’ll learn new skills that can actually translate into higher paychecks on down the road – if not with your present employer, perhaps a competitor.

Does this new position have a good track record?

Did people in the past enjoy this position?  Ask someone who used to perform this job about what they liked and disliked about the advancement.  For example, regarding my previous employer and the position of District Manager, this was a position that was opened from time to time.  If the owners of the company had someone they felt could fill the position they would open it again.  The new District Manager would remain in the job for a few months and then either get fired or quit.  When I asked my old District Manager his advice about my having replaced him he responded “Just quit, it will be the smartest thing you ever did!”  Turns out he was right, it really was honest advice.

If your company is ‘creating’ a new position for you then be forewarned.  This can be trouble because corporate may not even know what results they expect you to perform, and having no history to base expectations on, one could easily fail.  Chances are if the job has a track record of low turnover, generally happy history, and pays enough to reconcile the added responsibility, then certainly it should be considered.

Can you handle the added responsibility?

Just as a promotion comes with added financial incentives it also often comes with more hours worked and more responsibility.  I’ve seen people that were happy and cooperative employees.  But after receiving a promotion the added hours and stress took its course on their personalities.  The once gentle puppies had turned into angry pit bulls.  It was obvious that the new position wasn’t for them.

You should know your limits.  If you’re a free spirit that doesn’t handle stress well then admit it.  Find something else that you can succeed at.  Trust me – being in a position of authority isn’t all it’s cracked up to be.  Some people do it for the psychological authority factor and some for the money, but no one does it because they have nothing better to do.

What will be the effect on your family?

Nothing is more important than our spouses and children.  Making more money has its perks, but children need mothers and fathers a whole lot more than they need a new car in the garage.  Americans have a real problem with this – sponsoring the rat race and all like we do.  No promotion is worth ruining your marriage over.  If the new job means you’ll be traveling all around the country where there’s no possible way for you be there for your spouse and children then turn it down.

Earlier I spoke of psychological, physical, and financial health.  Success in these areas depends on a balance shared between each of them.  Had you rather be a Honda Accord, getting good gas mileage and low maintenance – or a Mustang GT, burning through gasoline, tires, and transmissions?  I’ll take the Honda Accord every day of the week. Promotions and financial wealth are important, but each has its limits for a balanced life.

Whether seeking a promotion or just simply trying to stay under the radar from your boss’s mood swings, learning how to stand out from other employees can make the workplace more enjoyable.  The following are some the best ways I’ve seen to keep the boss off your back while simultaneously increasing your chances for advancement.

Attendance

Always be early for work.  Not half an hour but I would say about ten to fifteen minutes.  This keeps you from possibly running late and pushing the limits of local traffic laws.  If you plan to be at work just barely on time then you will be late sooner or later, there’s just no way around it.

Don’t miss work.  Even if I’m sick I still go to work and if the boss has a problem with that he or she can send me home.  I’d rather show my commitment to the job than to be another employee that’s not showing up today for some reason or other.  Besides, I can feel just as bad at home accomplishing nothing as I can at work getting important things done.  An employee who shows up to work sick can be counted on.  This will be remembered when your supervisor performs a performance review of your work habits and ability.

Appearance

Always dress properly for work.  It’s a good idea to out dress your colleagues just a little if possible.  Now don’t over do it!  You can go too far with this.  For example, you wouldn’t show up an hour early for work because that’s just simply strange and is likely to get you the wrong type of attention.  Dressing for success entails the same principle. If you sell cars at a dealership don’t show up in a tuxedo.  A nicer pair of shoes, the right socks, an impressive belt or tie will suffice.  Incorporate just enough style and charm to lead the pack.

This is just one more area where you can stand out from the average employee.  If you care about always being on time and always looking sharp – your boss may begin to ask what else you may be convinced to care about, like more responsibility.

Know your business

You should constantly educate yourself about the industry you are involved in.  For example, if you work at a car dealership you should strive to learn all that you can about not only the product you’re selling, but the internal affairs of corporate headquarters, the products offered by your competition, any potential problems associated with your vehicles, any new legislation pertaining to the auto industry, etc. etc..

One can accomplish this by reading industry magazines, newspaper articles, watching television broadcasts, and laboring through research using internet search engines.  Keep an eye on what other companies in your industry are up to.  Some businesses are profitable while others aren’t.  They may have the same type of store, sell the same products, facilitate the same employees and uniforms, but one store is profitable and the other store closes down because they couldn’t survive.  Maintaining knowledge on successful companies in your industry will pay off.  The boss may strike up a conversation with you about profits or a lagging product line.  The more knowledge you possess about such subjects, the more you will be regarded by supervisors and other staff members.

Be a problem solver

I can’t stress this one enough.  If you want to become a valuable asset to your boss as well as other employees, then learn to solve problems.  Let’s start with a very basic example.  The copy machine isn’t working and in fact hasn’t been working for the last three hours.  The copy machine repair man has been contacted and will come by your office as soon as he is finished with his current customer.  The copy machine says ‘paper jam’ and when asked, George (the new office supervisor), says he pulled out the paper tray and everything looked normal.  Since you’re a problem solver, and this failed copy machine is causing real problems, you decide to take a quick look at the machine yourself. You open the paper tray and remove it entirely.  Looking inside the copier you can see the end of a piece of paper hanging down from inside the feed.  You unplug the copier, grab the paper and slowly pull it out.  When you plug the copier back in all is back to normal. Not only can copies be made but you saved the office money by not having to employ the skills of a professional copy machine repair man.

Although this is a simple example it’s the preface that’s important to remember here.  As a valuable employee you take the extra steps necessary to correct problems that other people are too lazy or too preoccupied to correct.  This is what separates you from the average employee.  This concept is not only applied to machinery but people as well.  Try and solve problems among employees when possible.  People problems often cause companies a much greater loss of profits than broken machinery.

Work smart

You don’t have to out work all the other employees if you know how to work smart.  My old boss used to have a very wise saying “Planning Precedes Performance”.  This is probably the most applicable phrase ever uttered to lead a person or group of persons to success.  Do you have all the supplies you need to fulfill your day without having to stop and find more supplies?  Do you have all the information you need to fulfill your day?  Did you bring your lunch or will you have to send an employee out to attain food for everyone later?

These are the types of questions that an employee who is working smart asks themselves.  Imagine there are two employees working in an office writing code for a company that manufactures software for medical information databases used at hundreds of medical centers across America.  The company has a deadline of October 2nd to deliver a viable software update to corporate headquarters.  The supervisor only has enough resources to allocate this work to two employees, so she gives each employee what should be an equal amount of work and plans on monitoring both employees progress to guarantee that the deadline is met.  The boss explains the needs of the company and the deadline to both employees.  Today is Monday and this project must be completed by Friday at 5:00 pm.

The first employee (Andy) treats this week just like any other.  He comes in late on Tuesday, takes a longer than usual break on Wednesday, and by Thursday is obviously not going to complete his portion of the work.  Now imagine Sara, who is working smart. Sara is a few minutes early each day, she doesn’t go to lunch but has brought a sandwich so she doesn’t have to leave.  Sara made a little list showing each day of the week and what she should have accomplished at the end of each day to make the deadline.  By Thursday morning Sara has finished her work, and helps Andy finish his work so the deadline can be met.  Which employee do you think is likely to be promoted?

Communication

Learning how to talk at work is an important skill.  In How to Say It at Work author Jack Griffin describes how to communicate with your boss.  On page 78 Griffin lists ‘words to use with your boss’.  Some of these words are create, delighted, encouraging, expertise, great, innovative, positive, potential, resolve, thrilled, workable.

Let’s compare that list to his ‘words to avoid with your boss’ on page 83; afraid, blame, cheap, fault, hopeless, overloaded, stuck, unworkable.  I hope it’s easy to see the difference.  A positive attitude is essential in being highly regarded by your boss.  Griffin continues with ‘phrases to use with your boss’; minimum risk, our company, our department, sink out teeth into it, take the ball and run with it.

Now let’s compare that list with ‘phrases to avoid with your boss’; afraid to do it, beyond repair, bombed out, can’t ask me to do something like this, can’t be done, give me a break, I really don’t deserve this.

When it comes to the way you communicate with your boss, you can easily provide a negative answer without sounding negative.  So instead of saying “we really blew this one” you just might say “at least we learned to how not to do this, next time we’ll get it right!”

Buy your boss a birthday present?

This one may seem a little strange to you but I can promise it works.  Granted you could be viewed as sucking up to the boss.  That’s alright with me if the boss leaves me alone when they are on a tirade.  We had a gentleman cleaning the carpet in the lobby of the business I used to manage.  This man owned the cleaning business and was very successful, making over $100,000 per year just for himself.  He had one employee.  His employee had been with him for years and the owner was telling me that he had just fired the guy.

While discussing with me the reasons why he let the guy go – the fact that this employee never bought him a birthday present had really bothered him.  He said “He didn’t buy me a birthday present, not a gift, not a six pack of beer, I mean nothing.  And after employing the guy for ten years that’s the least of thanks he could give me.”

This conversation really stuck out in my mind because I’d never heard a boss mention receiving gifts from employees.  My boss at the time loved fine wine.  So on his next birthday I bought him a $100 bottle of Opus One.  He was surprised, impressed, and gave me a $25 per week raise within the next month.

Your boss is just like everyone else.  They like it when someone does something nice for them.  Buying your boss a thoughtful birthday present is a great way to get on their good side.

An employee who truly impresses their boss will most likely have attributes found in each of the subjects I have discussed in this article.  Try and implement a combination of each of them.