Insider Secrets to Credit, Debt & Bankruptcy

Insider Secrets to
Credit, Debt & Bankruptcy

www.StopDebtCollectorsCold.com

• Feb. 12, 2007 - Debt Relief for Members of Military

It is always great to be able to help consumers find solutions to their debt problems, and it is especially gratifying helping out our military members deployed overseas and their families. This week, my StopDebtCollectorsCold.com colleague Gerri Detweiler helped a reader with a debt problem. If you know someone serving in active duty military, you'll want to make sure they read this as well:

Sarah's Question: My husband fell behind on payments on his Chase credit card due to career changes. He just started his job and we were going to start paying it down and quickly off. We actually just got theZilchworks Debt Reduction to get our credit cards paid down and get our credit in control again. Anyways...He's on military orders at the moment and so Chase has been calling me and asking me to make payment arangments. Is this the best choice? I wanted to started just sending in payments and get them to stop calling and work with the Zilchworks program. What do you think is the best approach? I also read in the ABC's of Getting Out of Debt, not to give out your bank info. So I was curious what to do before I answer them. Thanks!

Gerri's Answer: I assume you have created your Zilchworks Debt Reduction program and learned that you can pay off your debts in less than three -- four years on what you earn now. If that's not the case, then you may want to still consider a solution like credit counseling.

But if that is the case, then I would request payment plans with your card issuers and stick with it. Be very firm about what you can afford, and follow up everything in writing with a certified letter. If your proposal is reasonable, you should be able to get it approved. Keep written notes of all conversations with them. I would not authorize any creditor or collection agency to withdraw money from your bank account. Simply agree to send payments and stick to the payment arrangement.

However, you did mention your husband is on military orders right now. In that case, your account may be eligible for interest rate relief under the Servicemembers Civil Relief Act. Here is an excellent website that outlines the protections it offers. I hope this helps, and please do keep me posted.

Sarah's reply: Thanks Gerri!

This website awas a HUGE help! We are in the process of writing a letter to request the interest rate cap, which will automatically bring down his interest to 6%. I would suggest ALL military families should be aware of this Civil Act. It's a huge help when your spouse or family memeber is overseas or out on military duties to know you have rights while they are gone. Thanks again!

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• Sep. 27, 2006 - Nearly half of consumers have been contacted by a bill collector

We are creating a nation of "debt stressed" consumers, according to a report by Demos.

In a study titled The Plastic Safety Net, they report that Americans are increasingly relying on credit cards to pay for essentials that wages no longer cover, reliance on credit cards is having a multiplying effect that is creating millions of "debt-stressed" families:

47 percent of households had been called by a bill collector.

Almost half missed or were late with a payment in the last year, with nearly a quarter of households reporting paying a late feeat least one or two times in the past year.

In addition to charging late fees ranging from $30 and $39, most issuers also penalize cardholders for late payments by increasing the interest rate on the account two- or three-fold, often after only one late payment. A household with the average amount of credit card debt in our survey ($8,650) would pay an additional $1,100 in costs each year if their card's interest rate was increased from the typical 12 percent to the average 25 percent "default rate" for one late payment.

I've seen the effects of debt on individuals and families, and it is frightening. We have our work cut out for us to turn things around.

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• Aug. 28, 2006 - IRS Turns Debts Over to Collectors

In what counts as a truly knuckleheaded move by our federal government, the IRS is turning unpaid tax bills over to private debt collection agencies. This effort is expected to generate less revenue than if the IRS increased its staff to collect the debts itself. And the potential for abuse is significantly high, considering this is an industry that already generates more complaints than any other to the Federal Trade Commission. But those arguments seem to have fallen on deaf ears in Washington.

So at the same time that the IRS is turning the debts over to collectors, it is also warning taxpayers about scam artists. So, for whatever it is worth, here are the warnings from the IRS:

Scamsters try a variety of tricks to impersonate the IRS in hopes of tricking taxpayers into divulging personal or financial information or even conning people out of cash. Scam artists try to impersonate the IRS in person, by phone, by e-mail and over the Internet.

Currently, the IRS is beginning its private debt collection effort, where a small segment of taxpayers who owe back taxes will be contacted by private sector debt collectors. There are several key elements of this program that will alert taxpayers they are part of this program and help other taxpayers from being scammed by impersonators:

    * Taxpayer notification. All taxpayers who will be part of the private debt collection effort will know they are in the program before they are contacted by a private collection agency. If you haven’t previously heard that you’re in the program, be wary of any bill collectors saying they are working on behalf of the IRS.

    * IRS letter. All participants selected for the program will get a letter from the IRS, telling them they’ve been selected for the private debt collection program. The name of the company will be included in the letter.

    * Collection agency letter. All participants will subsequently receive a second letter, this one from the collection agency, informing the taxpayer they will be contacted soon regarding back taxes.

    * Money collected. When paying a collection agency on behalf of the IRS, remember that the check will be made out to the U.S. Treasury – not to an individual or firm. The collection agency will provide the appropriate IRS coupon and mailing address for the payment. The collection agencies will never ask for cash or checks written to individuals.

    * Contact the IRS. If in doubt, check IRS.gov or call the IRS at 800-829-1040 for more information.

“Don’t be fooled by scam artists claiming to be from the IRS,” said Kevin M. Brown, IRS Commissioner of the Small Business / Self-Employed Division. “People selected for the private collection program will be notified in advance from the IRS. There are clear processes in place for this program, so don’t fall victim to fraudsters who are constantly looking for new ways to trick people.”

The IRS sees a variety of different scams on different issues. One recent example involves a bogus e-mail claiming to be from the IRS. In this “phishing” scheme, the scam artist’s e-mail claims to be from the IRS, tells recipients that they are due a federal tax refund, and directs them to a Web site that appears to be a genuine IRS site. The bogus sites contain forms or interactive Web pages similar to IRS forms or Web pages but which have been modified to request detailed personal and financial information from the e-mail recipients.

In general, all taxpayers should keep in mind the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts. If in doubt about someone claiming to be from the IRS or working on behalf of the IRS, call the agency’s toll-free help line at 800-829-1040.

The IRS has a variety of information about scams available at IRS.gov. More information about the private debt collection initiative is also available at IRS.gov.

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• Aug. 27, 2006 - Law Firm Pressuring for Debt Payment

Here is a question I received from a reader this week:

I received your Stop Debt Collectors e-book today and I have an urgent situation. I received a letter from a collection attorney firm requesting I pay in 30 days. Can I send them one of your sample letters in this situation? Will it work for an attorney firm? If not, how do I stop them?

Here is my answer:

As I warn often when dealing with debt collectors: Don't panic!

It is not unusual for debt collectors to send letters that look very urgent and try to get you to pay quickly -- that's their job. As for the law firm, it may simply be a law firm that collects debts. If it is an outside agency that regularly collects debts it is required to follow the Fair Debt Collection Practices Act just like any other debt collector.

Is this your first contact from the collection agency/law firm? If so, you may follow the instructions in the e-book to request written validation of the debt. They must send you written confirmation of the debt before they can proceed. As we instruct in the e-book, be sure to keep good written records of all your contacts with the collection agency/law firm collecting the debt.

If they have served you with any papers indicating that you must go to court, we recommend you talk to a consumer law attorney. Visit www.naca.net for a referral.

I hope this helps! Please let us know how things turn out for you.

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• Aug. 14, 2006 - NCO Collection Account

I receive a lot of question about NCO collection accounts. That's probably because they are one of the largest collection agencies. Here is a question I received about them last week:

Q: Hello I was doing a credit report on myself and found that nco-medclr was on it and I have health insurance. Will you let me know how to contact some one about this? It must be taken care of very soon .

A: It sounds like you accessed your credit report and found a collection account for a medical bill that you knew nothing about. And it also sounds like you expected your insurance company to cover it but they didn't.

First, it is important to understand that simply paying off a collection item does not remove it from your credit report. It can still remain for seven and a half years from the date the payment was due. Secondly, paying it will not likely improve your credit score. There are situations where you must pay off outstanding collection accounts (when a mortgage lender requires it for the loan, for example) but you should not expect to boost your credit because you pay it off. That said, you may want to push for the collection agency to remove it in exchange for payment -- especially if you legitimately believe it should not have been in collections in the first place. If they do agree, get your agreement in writing before you pay them. Otherwise the collection agency may promise you one thing and do another and you won't have proof.

If you want to contact NCO, you can get contact information for NCO here:

But before you contact them, I would encourage you to think about:

1. How old are the debts? Every state has a statute of limitations, which governs how long the creditor or collector has to sue you. If this debt is too old, and they try to sue you to collect, you can raise the statute of limitations as a defense. That means they don’t have much leverage in terms of forcing you to pay. And that gives you more leverage in negotiating a settlement. For more information, and to fully understand your rights, check with the state attorney general's office or a local consumer attorney (Go to www.naca.net for a referral).

2. What can you afford and how do you plan to negotiate? Make sure you have a plan for negotiating the settlement. They may be willing to take as little as 25 -- 50 cents on the dollar if you can come up with a lump sum to settle.

3. You have the right under federal law to dispute that debt on your credit report if you believe it is not valid. Send a certified letter to both the credit reporting agency and the collection agency requesting they investigate. Keep in mind, though, that could result in the collection agency contacting you to try to collect the debt.

You'll find more information about handling debt collectors at www.StopDebtCollectorsCold.com.

Good luck!

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• Aug. 4, 2006 - Even Death Doesn't Stop Some Collectors

Even death isn't enough to stop some debt collectors. Ask Don McNay, a Richmond Register columnist who has written about how debt collectors for MBNA have claimed to have talked to his mother about her debt -- after her debt.

As if the credit card companies and debt collectors aren't already making enough money, now they have to try to extend their reach beyond the grave!

One thing I want to make sure you understand: If your spouse, parent, child, or a close relative dies with credit card debt and you were not a co-signer on the debt, you are not responsible for it. The exception would be spouses in community property states who may be responsible for debts incurred after they were married. Do not let a debt collector bully you into paying debts you cannot pay and are not responsible for! They may try to collect from the estate, if there was one, but they should be communicating with the executor of the estate, and not you personally. If there is no estate, they are out of luck.

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• Aug. 4, 2006 - Collection Calls from Fitness Club Allowed at Office?

Here is the answer to a question I received this week:

Question: I signed a membership contract with a fitness club. Due to financial problems resulting from a divorce, I called them to find out how to terminate the contract. I was informed that there was NO buy out on the contract. I would have to continue for the remaining 2 years to pay. The manager told me that two stipulations to get out of the contract were to move out of the area, or get a Dr to sign you as unable to perform fitness training. I quit paying the acct. Today I got called from an associate in another system who received a voicemail from a representative of this fitness club. I asked him to save the voicemail.

My question is; Are they allowed to leave a voicemail on a phone that clearly states it is not mine, about my acct.? They said they were instructed by their legal dept to call as a courtesy before taking legal action on the acct. Is this legal?

Answer: If the call came from a debt collector and the told a third-party about your debt, that very likely would be a violation of the federal Fair Debt Collection Practices Act. But that law does not apply to companies collecting their own debts. It sounds like it was the fitness company and not an outside debt collector calling.You will have to call the Consumer Protection Office of the North Carolina Department of Justice to find out if there is a state law that prevents this kind of conduct.

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• Jul. 24, 2006 - Statute of Limitations for Credit Cards

Here is a question I received:
I live in Florida and the Statute of Limitations for Credit Card Debt is 4 or five years. Would Credit Card debt be considered A written agreement or a verbal agreement, does the 4 or 5 years start with the last payment made and if I am contacted about credit card debt after the Statute of Limitations is up, can they sue me and do I have to pay the debt?

Here is my reply:
It is helpful to know the statute of limitations for older debts. It is not at all unusual for collection agencies to try to collect on debts that are very old. Consumers who don't know their rights may just assume they have to pay those debts, or extend the time period for collection. Here are a couple of things you will want to know about the statute of limitations:

1. Each state has its own statute of limitations and they vary by type of debt. Credit cards often fall under the statute of limitations for written agreements but there may be a specific statute of limitations for credit card debt.

2. The statute of limitations generally starts when you first default on the account. If you later make a payment agreement or even a token payment (say for $10) you may extend, or even re-start, the statute of limitations. That's why it is so important to review all the information and know your rights before you start paying an old debt.

3. A creditor may try to collect after the statute of limitations has expired but if they sue you, you can raise the statute of limitation as a defense. The collection agency is not allowed under federal law (and some state laws) to misrepresent the debt, and saying things like "we can make you pay forever" or telling you the statute of limitations has not expired on a debt when it has, may be violation of federal and state laws.

To learn about the specifics of the statute of limitations in your state, it is a good idea to consult with a consumer law attorney in your state. They will be familiar with state law and case law that may apply.

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• Jul. 17, 2006 - Debt Collection Agency Sued By Federal Trade Commission

Here we go again...the Federal Trade Commission has taken action against a debt collector for allegedly violating the Fair Debt Collection Practices Act.

White Wing Financial Group Inc. allegedly bought very old debts and tried to collect on them, and in the process misrepresented the status of the debts, leading people to believe that: legal proceedings had begun, that lawsuits to collect debts were not time-barred, or that the defendants had documents showing that the debts were valid when, in fact, they did not. The complaint also alleges that the defendants misrepresented that if the consumer did not pay the debt, the defendants would take actions that they never intended to take, such as reporting the debts to credit bureaus or initiating legal proceedings

The collection agency has agreed to settle Federal Trade Commission charges that its tactics violated federal laws. Under the court settlement, the company agreed to a $150,000 judgment and to refrain from illegal practices when collecting debts, including “time-barred” debts – debts so old they are no longer legally enforceable.

This is yet another example of why consumers must know their rights when dealing with collection agency. I have no doubt that there are consumers who were pressured into paying these old debts, and that they will never know that they could have disputed them or taken legal action if necessary.

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• Jul. 17, 2006 - Creditor Keeps Calling for Payment

Here is a question I received last week:

I receive disabiltiy benefits. I am in a great deal of debt on one card. I was foolish to use the card and I need your expertise. I am going file for bankruptcy, because I am unable to pay. I haven't pay since May of this year. I received a letter today demanding to pay them $700 dollars by Aug 6 or call to work something out. I told them that I receive disabiltiy benefits and unable to pay. I know what I did was foolish, but I don't know what to do. All my bills has escalate I am struggling. I know it is no excuse but here I am.

Here is my response:

First, don't feel panicked about the fact that the credit card company is getting aggressive in their attempts to collect. It is their job to recover the money they have lent you, and they are simply following their corporate policy in trying to do that. There are specific things they can and cannot do to collect, and they cannot send you to jail just because you can't pay!

If your sole income is disability payments (I am assuming that you receive them through the government's Social Security program, not private insurance) and you have no assets, you may be "judgement proof." That means that if the creditor sued you to collect, you could raise the defense that your only income is Social Security disability payments, which they cannot attach.. If the creditor knows you are judgement proof, it may decide it is not worth their time or money to try to collect.

However, if you do have assets, such as bank accounts, home equity, etc., that could be used to pay the debt, then state law will dictate whether those assets are exempt (or "safe") from creditors claims.

It is a good idea to talk to a qualified bankruptcy attorney to find out whether you are judgement proof. If you are, then you may not even have to file for bankruptcy. A letter from you or your attorney explaining that you are judgement proof may get the credit card company to leave you alone. If your situation changes in the future, though, and you are able to pay, they may try again to collect your debt, and you will want to understand the statute of limitations for collecting that type of debt -- another question to ask the attorney.

Good luck and let me know how it turns out.

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• Jul. 11, 2006 - Extreme debt collection threats

A recent news story by KDKA 2 talks about the extreme threats some debt collectors will use when trying to collect debts. The story talks about a collector for a funeral home threatening to dig up a debtor's parents corpses, and others telling consumers they would be criminally prosecuted if they didn't pay up immediately.

I have heard some unbelievable threats from debt collectors in working with my bankruptcy and consumer law clients. But it still amazes me how some debt collectors will completely ignore the law in their attempts to collect. If you know your rights you are much less likely to cave in to unreasonable demands. You will learn more on my website. Remember, harrassment by outside collection agencies is a violation of federal law.

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• Jun. 14, 2006 - Aggressive Debt Collector Attorney Ordered to Pay $2.9 Million

A story in the Cleveland Plain Dealer this week reminds us that attorneys who collect debts aren't above the law. The story describes how a jury found against the owner of the largest debt collection company in the country to the tune of $2.9 million.

This verdict is important because, as a consumer law attorney, I have seen some debt collectors - and attorneys who collect debts - break the law. Consumers who don't know their rights can be pressured into making payments on debts they don't owe, or forced to make arrangements that create tremendous hardships for them. My website StopDebtCollectorsCold.com explains how to stand up for your rights. Collectors who break the rules must pay the consquences. In this case, it's a pretty steep price.

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• Jun. 13, 2006 - Don't Let Debt Collector Threaten Your Home

Q: My vehicle has been repossessed and the debt collector is threatening to put a lien on my home for the $1800 I owe. They will not accept a payment plan. They will not accept the money I can afford right now. They told me to borrow from a friend or relative. What can I do to protect my home?

A: Remember, you have rights when it comes to debt collectors. They are not allowed to make false threats or statements. In Texas, a debt collector cannot take your home for this type of debt. Their threats violate the Texas Fair Debt Collection Practices Act as well as the federal Fair Debt Collection Practices Act. You will learn more about your rights in dealing with debt collectors on my website www.StopDebtCollectorsCold.com. In addition, you may want to talk with a consumer law attorney for help in dealing with this overly aggressive collector.

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• Jun. 8, 2006 - WELCOME!

StopDebtCollectorsCold.com is pleased to announce the opening of our blog, dedicated to providing critical consumer information on credit, debt, bankruptcy, and debt collector harrassment. Be sure to bookmark this blog so you can return for additional information and updates.

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