Typically these are middle-income individuals who own their own small business, for example a general contractor, plumber, or beautician. These individuals tend to consider themselves judgment proof and that mentality is reinforced by the economic nature of their employment. They are well experienced in dealing with cash flow problems and pay all of their bills when they are flush with cash and pay none of their bills when they have no cash. They are typically not intimidated by having past due bills and are for the most part, are immune from typical judgment collection activities. The main reason that they are immune or consider themselves immune is that a standard garnishment on the employer, either themselves or the business that they own and run, results in no cash. They will typically answer the garnishment that the business either makes no money, if it’s a garnishment on the business itself or if it’s a garnishment on the owner, that he takes no salary from the business. However, there are several effective methods for collecting debts from a self-employed debtor.
This simply means issuing a Writ of Garnishment, which is a court order authorizing the Sheriff or Law Enforcement Official to go to the business and seize any money found at the business. The garnishment may be issued for the cash draw and/or the cash register and/or any money found on the person of the business owner. The Writ of Garnishment for the cash draw will not typically result in the collection of enough cash to satisfy the debt. However, it does not take this occurring more than once or twice before the self-employed debtor will contact you and make arrangements for satisfaction of the debt.
A second effective method of collecting from the self-employed debtor is a Writ of Execution or Attachment on the work vehicle and tools of the business or business owner. Again, this is a court order issued by the court directing the Sheriff to go to the place of business and seize certain physical assets of the business. I typically file Writs of Execution for the vehicles and for the tools of the trade of that business. For example, for a plumber, the Writ of Execution would specify the work truck and all of the plumbing tools found on the premises. Again, auction of these items on the courthouse steps, will not typically generate sufficient cash to satisfy the outstanding judgment. However, before you can proceed to auction, I guarantee you will be contacted by the self-employed debtor seeking arrangements for satisfaction of the debt and return of his vehicle and tools.
Sunday, June 29, 2008
Wednesday, June 25, 2008
How To Beat An Old Credit Card Debt:-1
What is the best weapon to beat an old credit card debt? The answer is time or said in fancy legalese, the Statute of Limitations. The Statute of Limitations is a deadline you have to sue someone. The Statute of Limitations is different for every type of lawsuit and varies from state to state. For example, in the state of Tennessee the Statute of Limitations for an open account or contract is six years. That means that a company has six years to file a lawsuit against from the day you default on your agreement. One day beyond that six years, and their lawsuit is barred by the Statute of Limitations. So the questions are; what Statute of Limitations applies and When did default occur. The most applicable Statute of Limitations will likely either be one for contract (may be for breach of contract) or for open account. An open account is essentially a line of revolving credit. You can find your state's appropriate Statute of Limitation from a link on the right side of this blog entitled "Debt Law for All 50 States". Once you know how long the right Statute of Limitations is for your state, then you need to determine when did default occur. If you are being sued for an old credit card debt that has been sold several times, then it is likely that the current owner has no idea or more importantly, no proof, of when you defaulted. You should argue that your default occur ed the day your first payment was due that you did not pay. Hopefully, you have some written evidence of that; a past due bill, a collection letter, etc. If you do not, then file an affidavit alleging the date and then the burden will shift to the debt purchaser to prove that the suit was not brought in violation of the Statute of Limitations.
Thursday, June 19, 2008
How To Beat An Old Credit Card Debt:-2
The second best weapon to defeat a suit based upon an old credit card debt is CROSS EXAMINATION. The majority of collection suits filed by second or third hand debt buyers are based upon a sworn affidavit. That is an affidavit from someone who works for the debt buyer that says they are familiar with the books and records and your account and that you owe x number of dollars. If no one shows up on the day the matter is set in court, that document is sufficient to allow the debt collector to take a judgment. However, in all courts, you as the defendant have a Constitutional right to cross examination of the party testifying against your interests. And you cannot cross examine a piece of paper. What that means is that the company suing you has to produce a real live breathing witness who can truthfully and accurately testify about your account and be subject to being cross examined by you. Most credit card debt purchasers deal in a volume business and have no interest in going to the expense of making such a witness available in your jurisdiction. Many judges, however, will gloss over your right to cross examination unless you clearly assert that right and demand the opportunity. Your ability to actually cross examine is not as important as forcing the debt collector's hand in producing a live witness.
Sunday, June 15, 2008
How To Beat An Old Credit Card Debt: Part Three
Read the contract. Almost all debt collection law suits based upon aged credit card debts are breach of contract suits. What that means is that you are being sued for breaking your written promise to repay the debt. Therefore, the key to the suit is the actual written contract. In this case, that means the long, very fine printed, agreement you signed way back when you were first issued the credit card. You need to get a copy of this and read it, every word of it. Getting it may be difficult. If you are being sued in small claims type of court, you may not have the benefit of formal discovery. Formal discovery is used by lawyers to learn about the other sides case. One tool of formal discovery is the Request for Production of Documents. If the court you are being sued in is governed by Rules of Civil Procedure, then you may file a formal Request for Production of Documents before your trial date and obtain a copy of the contract. If the court is an informal or non-rule court, then you need to request a copy of the contract from the collection attorney. You need to make that request politely, in writing and by certified mail. That way if you aren't provided a copy and you see it for the first time at trial, the judge will be sympathetic with you and grant you either a break to review the document or a continuance. So now you have the contract, what are you looking for? You need to examine the maximum amount of interest you are allowed to be charged under the agreement. Has the debt buyer exceeded that amount? Has the debt buyer exceeded that amount by adding on collection fees and costs? Does the amount now sued for exceed your state's usury statute? Next, does the agreement require the suit to be brought in a particular jurisdiction or state? If so, you may be able to have the suit dismissed in your jurisdiction. Does the agreement require either arbitration or mediation? Again, if so you may be able to have the suit dismissed. In the last two examples, particularly with aged debt, the delay in having to either refile in the proper jurisdiction or in the proper forum may run the creditor past the statute of limitations we discussed in part one. So, the bottom line is get a copy of the contract and read it. Read every word of it.
Tuesday, June 10, 2008
THE TOUGHEST DEBT TO COLLECT
The most difficult debt to collect is the one owed by the self-employed debtor. Typically these are middle-income individuals who own their own small business, for example a general contractor, plumber, or beautician. These individuals tend to consider themselves judgment proof and that mentality is reinforced by the economic nature of their employment. They are well experienced in dealing with cash flow problems and pay all of their bills when they are flush with cash and pay none of their bills when they have no cash. They are typically not intimidated by having past due bills and are for the most part, are immune from typical judgment collection activities. The main reason that they are immune or consider themselves immune is that a standard garnishment on the employer, either themselves or the business that they own and run, results in no cash. They will typically answer the garnishment that the business either makes no money, if it’s a garnishment on the business itself or if it’s a garnishment on the owner, that he takes no salary from the business. However, there are several effective methods for collecting debts from a self-employed debtor.
First, you can garnish the cash draw. This simply means issuing a Writ of Garnishment, which is a court order authorizing the Sheriff or Law Enforcement Official to go to the business and seize any money found at the business. The garnishment may be issued for the cash draw and/or the cash register and/or any money found on the person of the business owner. The Writ of Garnishment for the cash draw will not typically result in the collection of enough cash to satisfy the debt. However, it does not take this occurring more than once or twice before the self-employed debtor will contact you and make arrangements for satisfaction of the debt.
A second effective method of collecting from the self-employed debtor is a Writ of Execution or Attachment on the work vehicle and tools of the business or business owner. Again, this is a court order issued by the court directing the Sheriff to go to the place of business and seize certain physical assets of the business. I typically file Writs of Execution for the vehicles and for the tools of the trade of that business. For example, for a plumber, the Writ of Execution would specify the work truck and all of the plumbing tools found on the premises. Again, auction of these items on the courthouse steps, will not typically generate sufficient cash to satisfy the outstanding judgment. However, before you can proceed to auction, I guarantee you will be contacted by the self-employed debtor seeking arrangements for satisfaction of the debt and return of his vehicle and tools.
A third effective method for collection of a debt from a self-employed debtor is the issuance of a Subpoena in Aid of Execution. A subpoena is a court order requiring a person to appear at a given place and time and give sword testimony. I subpoena the self-employed debtor to my office to give a post-judgment deposition regarding his or her assets, the business assets and include in the subpoena a requirement that they present the tax returns that they have filed for the previous five (5) years, copies of all bank statements, for all checking, savings accounts they and the business have, copy of any retirement account information and copy of any business records they have. The tax returns can be invaluable, especially when you discover that a self-employed debtor has not filed taxes for a given year or years. During the deposition, my primary focus is asking the self-employed debtor about current work they are performing and who those clients are and how much they are owed. I then issue a Writ of Garnishment the same day to those clients. This requires the people who owe the self-employed debtor money for work he has performed to pay that money into the registry of the court. In this case, this leaves the self-employed debtor performing work and not getting paid for it. Again, these Writs of Garnishment typically do not generate enough cash to satisfy the judgment, but get the attention of the debtor to the point that he or she will do practically anything to satisfy the judgment.
Collecting a debt from self-employed debtors is difficult. It requires going the extra mile and thinking creatively and uniquely. However, if a debt collection attorney is willing to go the extra mile, these debts can be collected.
Monday, June 9, 2008
Some Ways To Pay Your Attorney To Collect Your Debts
This perception was created by and is perpetuated by the legal profession. Too often attorneys have taken a collection matter for an hourly fee and treated it just like any other piece of litigation without regard for the client or for the debtor they are pursuing. The attorney "works" the file running up the bill without focusing on the ultimate goal of getting the debt paid. The end result is that the client pays three times the amount of the debt in attorney’s fees and at the end of the day only has a piece of paper from the court saying the debtor legally owes them money. A debt collection lawyer takes a case, he should make a fundamental determination of whether the debt is collectable. If the debt is not reasonably collectable, the debt collection lawyer should candidly discuss that with the client and let the client make the decision as to whether or not to pursue the debtor. Once the decision is made to sue the debtor, the debt collection lawyer should devise a plan to get the debt paid. Payment of the debt is the goal and the debt collection lawyer must keep that goal foremost in his mind and in his actions. . The goal is not to milk the client out of fees, nor is it to punish the debtor, nor is it to get a judgment, nor is it harass, intimidate or scare the debtor. The only goal is to get the client paid the most money possible in the shortest period of time. Sometimes, that goal doesn’t even require the lawyer to file a lawsuit and sometimes it requires the lawyer to abandon what he thinks is an excellent suit in exchange for a good settlement.
Hourly rates can vary greatly depending upon geography, experience and quality. If you hire an attorney by the hour, you will most likely pay him in one of two ways. The first way is for him to bill you each month for the time he spent working on your case. You should receive an itemized bill telling you exactly what he did, how long it took him and how much it cost you. You would then mail your attorney a check paying that invoice. The second method of hourly billing is to have the client deposit a retainer. A retainer is a sum of money deposited with the lawyer that the lawyer bills against. You should still receive a monthly invoice from the lawyer showing you exactly what he did, how long it took him and how much it cost you, but you will not have to mail him a check. The invoice will also tell you the retainer balance.
(1) his hourly rate,
(2) the smallest increment of time for which he will bill–if he answers the phone and talks a minute is that charge recorded as a tenth of an hour, a quarter of an hour, etc., and
(3) the amount of any up front retaine
Hourly rates can vary greatly depending upon geography, experience and quality. If you hire an attorney by the hour, you will most likely pay him in one of two ways. The first way is for him to bill you each month for the time he spent working on your case. You should receive an itemized bill telling you exactly what he did, how long it took him and how much it cost you. You would then mail your attorney a check paying that invoice. The second method of hourly billing is to have the client deposit a retainer. A retainer is a sum of money deposited with the lawyer that the lawyer bills against. You should still receive a monthly invoice from the lawyer showing you exactly what he did, how long it took him and how much it cost you, but you will not have to mail him a check. The invoice will also tell you the retainer balance.
(1) his hourly rate,
(2) the smallest increment of time for which he will bill–if he answers the phone and talks a minute is that charge recorded as a tenth of an hour, a quarter of an hour, etc., and
(3) the amount of any up front retaine
Sunday, June 8, 2008
How to Not Pay Your Debt
I could get excommunicated from the fraternal order of blood sucking collection attorneys. But in my purpose I told you I would tell both sides of the story and so I will. This article comes with a giant very real DISCLAIMER. This article does not and is not meant to give legal advice. I am not YOUR attorney and we have no attorney client relationship. If you use any of the information imparted by this article, you do so at your own risk and I strongly urge you to consult your own attorney.
This article is written with the assumption that the debt that you are being sued over is a valid debt and it is your debt. If neither of these assumptions is true, then there are other articles here which are more applicable.
First and most importantly, it buys you some time. Under the FDCPA, all collection activity must cease until the attorney puts that verification in the mail to you. The verification is usually a simple statement signed by the creditor and it will not take the collection attorney long to obtain it. But for that brief period, nothing will happen. Secondly, it sends a signal to the collection attorney that you are not going to be a roll over debtor. He knows you will be active in the defense of the suit. A high percentage of collection suits simply proceed to default judgment without any response from the debtor. This request moves you out of that category. Now, some simple advice. Don’t use a form from the internet to make the FDCPA verification request. I’ve seen a lot of them lately and they ask for information and documentation the FDCPA doesn’t require the collection attorney to give you. That tells the collection attorney you really have no idea what you are doing. The form letters also make threats which simple irritate the collection attorney.
Simply ask the attorney to verify the debt in accordance with the FDCPA. Next, don’t be antagonistic or stupid. Don’t threaten the lawyer or lie. Don’t threaten to sue him or report him to the Bar or say you have an attorney if you don’t. These tactics don’t intimidate collection lawyers and simply mark your file for extra special attention. Finally, a certified mail written request for an FDCPA verification may end the collection process. That is true in a very small percentage of cases, but it is worth taking as a first step.
This article is written with the assumption that the debt that you are being sued over is a valid debt and it is your debt. If neither of these assumptions is true, then there are other articles here which are more applicable.
First and most importantly, it buys you some time. Under the FDCPA, all collection activity must cease until the attorney puts that verification in the mail to you. The verification is usually a simple statement signed by the creditor and it will not take the collection attorney long to obtain it. But for that brief period, nothing will happen. Secondly, it sends a signal to the collection attorney that you are not going to be a roll over debtor. He knows you will be active in the defense of the suit. A high percentage of collection suits simply proceed to default judgment without any response from the debtor. This request moves you out of that category. Now, some simple advice. Don’t use a form from the internet to make the FDCPA verification request. I’ve seen a lot of them lately and they ask for information and documentation the FDCPA doesn’t require the collection attorney to give you. That tells the collection attorney you really have no idea what you are doing. The form letters also make threats which simple irritate the collection attorney.
Simply ask the attorney to verify the debt in accordance with the FDCPA. Next, don’t be antagonistic or stupid. Don’t threaten the lawyer or lie. Don’t threaten to sue him or report him to the Bar or say you have an attorney if you don’t. These tactics don’t intimidate collection lawyers and simply mark your file for extra special attention. Finally, a certified mail written request for an FDCPA verification may end the collection process. That is true in a very small percentage of cases, but it is worth taking as a first step.
Saturday, June 7, 2008
part-2
The second statement I hear when a debtor calls and the most used statement is, "I know I owe the money, but I can't pay it all and I want to make arrangements.'" I then have to explain to the debtor that the time for making "arrangements" (typically the debtor thinks a payment of $20, $50 or $100 per month for the next 72 months is arrangements) may have been available from the original creditor and or from any collection agency the creditor utilized, but that the time for making "arrangements" passed the instant their debt was placed with my office for suit. That is not to say that I don't make arrangements with judgment debtors. I do. I make arrangements for full payment broken into reasonable amounts. I have a schedule based on dollar figures that I break debts down into, typically not running out more than six (6) payments . The only way I will enter into payment arrangements based on that schedule is if I receive payment in full in my office as of that day. By that I mean that the debtor has to make arrangements for either the automatic draft of their checking account with all drafts set up and scheduled that day for the next number of months the payment schedule lasts or the debtor has to set up pre-arranged automatic drafts of the debtor's credit card for the next number of months the payment arrangements last.
The third statement I hear when a debtor calls is, "I know I owe the money, but I simply don't have any money to pay." I have a stern, but reasonable response to that statement. I do not argue with the debtor that they do have the ability to pay a debt once they have told me they don't have that ability. I explain to the debtor that I have a duty to my client, the creditor, to reduce that debt to a judgment and that I will take the steps necessary in Court to accomplish that. Most debtors do not object to a debt being reduced to a judgment after they have acknowledge they owe the money, but simply cannot pay it. I also tell them candidly that once it is reduced to judgment, I will take whatever action is necessary and proper to try to collect the debt. That simply means that once the debt is reduced to a judgment, I will attempt to garnish bank accounts, garnish wages, have the Sheriff take possession of personal property, have the Sheriff take possession of automobiles and put a lien on any real property the debtor owns. That discussion more times than not results in the debtor finding some means to pay the debt.
The final statement I hear when a debtor calls is the one threat that some debtors think they have; the one arrow in their quiver. "If you don't forgive this debt, I am going to have to file bankruptcy." I suppose the debtor makes that statement thinking that the creditor will immediately accept penny on the dollar to satisfy the debt out of fear that the debt is going to be wiped out in bankruptcy. My response is usually surprising to the debtors who call. I keep a Rolodex of the attorneys I consider the very best bankruptcy attorneys in the City of Memphis next to my telephone. When a debtor tells me that they are thinking about, planning on or will have to file bankruptcy, I immediately refer them to at least two (2) reputable and stellar bankruptcy attorneys, complete with names, telephone numbers and addresses. The result is usually a dramatic shift in the conversation as to how payment can be made.
Bankruptcy is simply not a threat to a debt collection attorney.
First, very few of the debtors who threaten bankruptcy will actually file. There are a number of reasons that they will not actually file bankruptcy.
Bankruptcy is expensive. Filing fees are hundreds of dollars and while bankruptcy attorney fees can be spread out over the life of a bankruptcy plan, the filing fees have to be paid up front.
Bankruptcy is complex and time consuming. A good bankruptcy attorney cannot file bankruptcy without reviewing all of a debtor's financial records and documents. This requires the debtor to actually put all of those documents regarding all of his assets and all of his debts together and to actually be able to present a true and accurate picture of his financial position. This requires proactive effort on the part of the debtor and is not easy. Bankruptcy is time consuming. The process of putting everything necessary together to just file bankruptcy is time consuming. Attending the required bankruptcy hearings is time consuming. Meeting with your bankruptcy lawyer is time consuming.
Finally, bankruptcy is like a nuclear bomb on the debtor's credit. Bankruptcy will stay on the debtor's credit report for ten (10) years. This has know become common knowledge among the American consumer.
Therefore, when the debtor threatens bankruptcy, I know that there is a greater likelihood than not that this is an idle threat and that the debtor will not actually proceed to Bankruptcy Court.
The second great myth of the bankruptcy threat is that the creditor will receive nothing in payment of his debt out of the Bankruptcy Court. This myth ignores one of the first rules of the debt collection lawyer; a skilled debt collection lawyer must be a skilled bankruptcy lawyer. A combination of a skilled bankruptcy lawyer and the current creditor friendly bankruptcy laws will not in most cases result in a creditor's debt being zeroed out. The general result of bankruptcy is that a debt will be extended out over a longer period of time than the creditor would normally accept with little or no interest being paid.
A diligent creditor's lawyer will carefully examine a bankruptcy debtor's assets at a 341 First Meeting of Creditors, object to any bankruptcy plan that does not adequately fund repayment of their client's debt and continue to track the bankruptcy with the knowledge based on experience that some full fifty percent (50%) of Chapter 13 bankruptcies will ultimately be dismissed before the debts are discharged based on the debtor's failure to comply with Court rules or failure to make scheduled payments. When that occurs, it is key to be one of the first creditors to be aware that the debtor is no longer protected by the automatic stay of bankruptcy.
Thus, the threat of bankruptcy is not actually a threat, but simply a different arena of debt collection in which any competent debt collection attorney must be skilled and experienced.
The third statement I hear when a debtor calls is, "I know I owe the money, but I simply don't have any money to pay." I have a stern, but reasonable response to that statement. I do not argue with the debtor that they do have the ability to pay a debt once they have told me they don't have that ability. I explain to the debtor that I have a duty to my client, the creditor, to reduce that debt to a judgment and that I will take the steps necessary in Court to accomplish that. Most debtors do not object to a debt being reduced to a judgment after they have acknowledge they owe the money, but simply cannot pay it. I also tell them candidly that once it is reduced to judgment, I will take whatever action is necessary and proper to try to collect the debt. That simply means that once the debt is reduced to a judgment, I will attempt to garnish bank accounts, garnish wages, have the Sheriff take possession of personal property, have the Sheriff take possession of automobiles and put a lien on any real property the debtor owns. That discussion more times than not results in the debtor finding some means to pay the debt.
The final statement I hear when a debtor calls is the one threat that some debtors think they have; the one arrow in their quiver. "If you don't forgive this debt, I am going to have to file bankruptcy." I suppose the debtor makes that statement thinking that the creditor will immediately accept penny on the dollar to satisfy the debt out of fear that the debt is going to be wiped out in bankruptcy. My response is usually surprising to the debtors who call. I keep a Rolodex of the attorneys I consider the very best bankruptcy attorneys in the City of Memphis next to my telephone. When a debtor tells me that they are thinking about, planning on or will have to file bankruptcy, I immediately refer them to at least two (2) reputable and stellar bankruptcy attorneys, complete with names, telephone numbers and addresses. The result is usually a dramatic shift in the conversation as to how payment can be made.
Bankruptcy is simply not a threat to a debt collection attorney.
First, very few of the debtors who threaten bankruptcy will actually file. There are a number of reasons that they will not actually file bankruptcy.
Bankruptcy is expensive. Filing fees are hundreds of dollars and while bankruptcy attorney fees can be spread out over the life of a bankruptcy plan, the filing fees have to be paid up front.
Bankruptcy is complex and time consuming. A good bankruptcy attorney cannot file bankruptcy without reviewing all of a debtor's financial records and documents. This requires the debtor to actually put all of those documents regarding all of his assets and all of his debts together and to actually be able to present a true and accurate picture of his financial position. This requires proactive effort on the part of the debtor and is not easy. Bankruptcy is time consuming. The process of putting everything necessary together to just file bankruptcy is time consuming. Attending the required bankruptcy hearings is time consuming. Meeting with your bankruptcy lawyer is time consuming.
Finally, bankruptcy is like a nuclear bomb on the debtor's credit. Bankruptcy will stay on the debtor's credit report for ten (10) years. This has know become common knowledge among the American consumer.
Therefore, when the debtor threatens bankruptcy, I know that there is a greater likelihood than not that this is an idle threat and that the debtor will not actually proceed to Bankruptcy Court.
The second great myth of the bankruptcy threat is that the creditor will receive nothing in payment of his debt out of the Bankruptcy Court. This myth ignores one of the first rules of the debt collection lawyer; a skilled debt collection lawyer must be a skilled bankruptcy lawyer. A combination of a skilled bankruptcy lawyer and the current creditor friendly bankruptcy laws will not in most cases result in a creditor's debt being zeroed out. The general result of bankruptcy is that a debt will be extended out over a longer period of time than the creditor would normally accept with little or no interest being paid.
A diligent creditor's lawyer will carefully examine a bankruptcy debtor's assets at a 341 First Meeting of Creditors, object to any bankruptcy plan that does not adequately fund repayment of their client's debt and continue to track the bankruptcy with the knowledge based on experience that some full fifty percent (50%) of Chapter 13 bankruptcies will ultimately be dismissed before the debts are discharged based on the debtor's failure to comply with Court rules or failure to make scheduled payments. When that occurs, it is key to be one of the first creditors to be aware that the debtor is no longer protected by the automatic stay of bankruptcy.
Thus, the threat of bankruptcy is not actually a threat, but simply a different arena of debt collection in which any competent debt collection attorney must be skilled and experienced.
Debtor Responses And The Myth of The Bankruptcy Threat Part -1st
Unlike collection agencies, my office does not call debtors. Instead, debtors call my office. They either call once they receive an attorney demand letter or if they don't call then, they call once they are served with a lawsuit, or if they don't call then, they call once a judgment has been taken against them. In most cases, the debtor doesn't even show up in Court and a judgment is taken by default in their absence. The defendant debtor learns of the judgment through a letter they receive from any number of local bankruptcy attorneys who pay college students to go through the court records daily and make a list of everyone who has a judgment taken against them. The debtor would then receive a letter from a bankruptcy attorney saying, "Michael Herrin's client just took a judgment against you. I can help you get out from under that judgment by filing bankruptcy for you." Regardless of when, eventually the debtor calls my office.
When the debtor calls my office, invariably I hear only one of four things.
First and rarest, I want to pay the debt in full. Believe it or not, that is the least often statement heard. It does happen, but not as often as the remaining three.
When the debtor calls my office, invariably I hear only one of four things.
First and rarest, I want to pay the debt in full. Believe it or not, that is the least often statement heard. It does happen, but not as often as the remaining three.
Friday, June 6, 2008
How to Stop Harassing Collection
If you are receiving calls from a debt collector who is harassing you and violating the FDCPA,
you can take action to put an end to that illegal activity. This article is not directed toward legally compliant FDCPA calls. However, if a collector is violating the Federal Fair Debt Collection Practices Act by making improper threats or allegations such as that he is going to have you arrested if you don’t pay the debt or he is going to tell your employer that you are a deadbeat, you can take action. The simplest, cheapest and quickest action you can take to stop harassing, illegal collection calls is to purchase a voice recorder. For a minimal amount of money at Radio Shack or other similar stores you can purchase a easy to plugin device which will allow you to record your own telephone conversations. At this point, I must give you a legal warning, however. The laws regarding the legality of taping telephone conversations vary from state to state. Some states are one party states and some states are two party states. That simply means that in a one party state only one party to a telephone conversation must be aware that it is being recorded for it to legally be recorded. In a two party state, both parties to the telephone conversation must be given notice that it is being recorded for it to be recorded legally. Of course, in no state is it legal for a third party nonparticipant in the telephone conversation to record the telephone conversation without a court order. Regardless of whether you live in a one or two party state, I would highly recommend that you give the collector notice that you are recording the telephone conversation. This should have an immediate impact on the nature of the call. At the very outset of the telephone conversation, you should inform the collector that you are recording all of your telephone conversations and in a two party state, ask their permission to record the call. If a collector is prone to use illegal or harassing tactics, they will typically simply hang up rather than be recorded. If a collector is only occasionally prone to cross the line and use improper collection techniques, they will, once they know they are being recorded, mind their manners and be on their best behavior with regard to complying with the FDCPA. Therefore in the majority of cases, you will have eliminated the harassing nature of the collection calls, simply by placing the collector on notice that the call is being recorded. However, if a collector did violate FDCPA by harassing you or making illegal assertions or threats, you know have tape recorded evidence of that violation. You now need to do two things with that tape. First, you need to file a written complaint with the government authority or agency which regulates and governs debt collection agencies in your state. They typically will have a form online that you can print off, fill out and mail in. These forms typically do not carry much weight with the government agencies. However, if you make a copy of your tape and attach it to your complaint, your complaint now has instant credibility and will be given special attention. You should also copy the collection agency with the complaint and a copy of the recording. Secondly, you should file a complaint alleging violations of the Federal Fair Debt Collection Practices Act with your local small claims court. FDCPA violation claims can be brought in any state or federal court. On the day of trial, you can give testimony that the call was received on a given date and at a given time and that you personally recorded it and then present the tape as evidence to the court. The tape should be sufficient evidence for you to recover the statutory fine or penalty of $1,000.00 as set forth in the FDCPA. In this way, you have not only put a stop to the harassing phone calls, but you can even profit from them giving yourself $1,000.00 per violation to pay your debts
Thursday, June 5, 2008
Introduction to a Debt Collection Lawyer
I am an attorney living and practicing in Memphis, Tennessee. I have devoted a substantial amount of my practice to debt collection. While I have clients in virtually every business sector, I have two large blocks of clients in the area of commercial construction and health care providers. I file an average of 250 debt collection lawsuits per month. I utilize up the minute technology to track and monitor a large volume of cases while minimizing required manpower. I utilize an automated case management system which intergrates with a collection accounting software program to allow me immediate access to specific information regarding each and every suit.
I am starting this blog because in an attempt to always gain every advantage possible, I have scoured the internet and have not found a single collection attorney offering up the benefit of his experience. I have found literally thousands of sites either selling or giving away free advice on how to thwart the collection attorney, but no sites offering the other side of the coin. And so, I start this humble blog to aid my fellow collection attorneys, educate creditors and even to provide some unbiased and truthful advice to debtors. I hope you find something of use in the posts to come.
I am starting this blog because in an attempt to always gain every advantage possible, I have scoured the internet and have not found a single collection attorney offering up the benefit of his experience. I have found literally thousands of sites either selling or giving away free advice on how to thwart the collection attorney, but no sites offering the other side of the coin. And so, I start this humble blog to aid my fellow collection attorneys, educate creditors and even to provide some unbiased and truthful advice to debtors. I hope you find something of use in the posts to come.
online debt myth
I haven’t heard anything about this debt for 1, 2 or 3 years and therefore you can’t sue
me for it.
The only time limitation for the collection of a debt is a state’s statute of limitations. A statute of limitation is a deadline established by the Legislature of a given state for the collection of an open account debt. The mere fact that no one has contacted you about a debt for 1, 2, or even 3 years does not render it uncollectible. You should also be aware that typically the statute of limitations for the state within which you reside will not govern your credit card debt. Credit card applications contain a choice of law provision. This is an agreement between the parties to be governed by the law of a particular state. The credit card companies typically choose a state with an extremely long statute of limitations. Rhode Island, a typical state chose by credit card companies, has a ten year statute of limitations for open accounts.
You can’t sue me because you don’t have a signed contract.
Most people fail to understand that when they sign a credit card application and send it back in they have actually signed a contract. I now advise all of my personal clients to keep copies of those applications when they sign them and send them back in. However most individuals typically do not. Regardless a credit card company will typically not issue a credit card without a signed application and therefore without a signed contract. However, even if there is no signed application, you still are parties to a contract. The contract may be an implied and equitable contract. In other words, the credit card company has extended you credit and you have taken advantage of it by purchasing things on their credit. You now have a legal obligation to repay that money and the court will construe that to be a contract.
You can’t sue me I am making payments.
Perhaps the most prevalent myth circulating on the internet is that if you are making minimal regular payments you cannot be sued. The truth is that once you default on a debt you can then be sued for the full balance at any time. Even if you recommence making the full payment, your default has rendered the full balance due and payable at any time. The mere fact that you are making minimal or nominal payments on a regular weekly, monthly or bi-monthly basis does not prevent a creditor from suing you.
I have never heard of the company that is contacting me or suing me and I have no agreement with them, therefore I don’t have to pay them.
There is an entire industry in this country now devoted to the purchase and collection of debt. Once you default on a credit card debt and the credit card company is unable to collect it, they will package it or bundle it with thousands of other delinquent debts and sell it to a debt buyer. The debt buyer will pay pennies on the dollar for the debt and then will attempt to collect it. This is perfectly legal. All contracts are assignable, unless there is a written provision in them barring assignment. What this means is that a credit card company can assign (sell) your debt to another company and they do not have to get your permission or even give you notice. That new company simply steps into the shoes of the original creditor.
me for it.
The only time limitation for the collection of a debt is a state’s statute of limitations. A statute of limitation is a deadline established by the Legislature of a given state for the collection of an open account debt. The mere fact that no one has contacted you about a debt for 1, 2, or even 3 years does not render it uncollectible. You should also be aware that typically the statute of limitations for the state within which you reside will not govern your credit card debt. Credit card applications contain a choice of law provision. This is an agreement between the parties to be governed by the law of a particular state. The credit card companies typically choose a state with an extremely long statute of limitations. Rhode Island, a typical state chose by credit card companies, has a ten year statute of limitations for open accounts.
You can’t sue me because you don’t have a signed contract.
Most people fail to understand that when they sign a credit card application and send it back in they have actually signed a contract. I now advise all of my personal clients to keep copies of those applications when they sign them and send them back in. However most individuals typically do not. Regardless a credit card company will typically not issue a credit card without a signed application and therefore without a signed contract. However, even if there is no signed application, you still are parties to a contract. The contract may be an implied and equitable contract. In other words, the credit card company has extended you credit and you have taken advantage of it by purchasing things on their credit. You now have a legal obligation to repay that money and the court will construe that to be a contract.
You can’t sue me I am making payments.
Perhaps the most prevalent myth circulating on the internet is that if you are making minimal regular payments you cannot be sued. The truth is that once you default on a debt you can then be sued for the full balance at any time. Even if you recommence making the full payment, your default has rendered the full balance due and payable at any time. The mere fact that you are making minimal or nominal payments on a regular weekly, monthly or bi-monthly basis does not prevent a creditor from suing you.
I have never heard of the company that is contacting me or suing me and I have no agreement with them, therefore I don’t have to pay them.
There is an entire industry in this country now devoted to the purchase and collection of debt. Once you default on a credit card debt and the credit card company is unable to collect it, they will package it or bundle it with thousands of other delinquent debts and sell it to a debt buyer. The debt buyer will pay pennies on the dollar for the debt and then will attempt to collect it. This is perfectly legal. All contracts are assignable, unless there is a written provision in them barring assignment. What this means is that a credit card company can assign (sell) your debt to another company and they do not have to get your permission or even give you notice. That new company simply steps into the shoes of the original creditor.
Wednesday, June 4, 2008
Tools of the Debt Collection Lawyer
The first tool employed by an attorney in collecting a debt is the Attorney Demand Letter. I will normally make a decision on whether or not to send the debtor an Attorney Demand Letter based on the debtor's prior history and the creditor's prior attempts to collect the debt. A creditor may question why an attorney is going to send a letter asking for payment when the creditor has done this on a number of occasions or may have even sent the debt to a collection agency who has not only sent demand letters, but made telephone calls to the debtor's home and place of employment.
An attorney has a wide variety of tools available to collect a debt. This arsenal of tools extends well beyond what is available to an original creditor or even a collection agency employed to collect the debt prior to the attorney becoming involved. Additionally, these tools offer a step-by-step increase in the ability to involuntarily wrest money away from the debtor.
There are three primary reasons for utilizing the Attorney Demand Letter. First, it has been my experience that somewhere between fifteen and twenty percent of debtors who have been adamant in their refusal to pay will, upon receipt of an Attorney Demand Letter, pay the full amount owed. There is something intimidating about receiving a letter saying you owe the money on an attorney's letterhead. The Attorney Demand Letter ratchets up the seriousness of the matter substantially.
The second reason for sending out the Attorney Demand Letter is to comply with certain state statutes and to allow for the possibility of recovery of attorney's fees in certain circumstances. For example, in the state of Mississippi when a debtor owes money and that debt is not based upon a contract or agreement which allows for attorney's fees, if the attorney sends an Attorney Demand Letter and gives the debtor a reasonable period of time to satisfy the debt prior to filing suit, the attorney may then recover attorney's fees in that suit.
Many times or the creditor or a collection agency employed by the creditor has told the debtor, "If you don't pay this debt, I am going to send it to an attorney for suit." Many times the debtor sees this merely as a bluff. When the letter arrives on attorney letterhead giving the debtor an exact number of days before a lawsuit is going to be filed, the debtor now realizes that the creditor has not been bluffing, nor making idle threats. That has the two-fold effect of creating increased credibility with that particular debtor and creating a reputation for the creditor that it does not make idle threats or bluff.
An attorney has a wide variety of tools available to collect a debt. This arsenal of tools extends well beyond what is available to an original creditor or even a collection agency employed to collect the debt prior to the attorney becoming involved. Additionally, these tools offer a step-by-step increase in the ability to involuntarily wrest money away from the debtor.
There are three primary reasons for utilizing the Attorney Demand Letter. First, it has been my experience that somewhere between fifteen and twenty percent of debtors who have been adamant in their refusal to pay will, upon receipt of an Attorney Demand Letter, pay the full amount owed. There is something intimidating about receiving a letter saying you owe the money on an attorney's letterhead. The Attorney Demand Letter ratchets up the seriousness of the matter substantially.
The second reason for sending out the Attorney Demand Letter is to comply with certain state statutes and to allow for the possibility of recovery of attorney's fees in certain circumstances. For example, in the state of Mississippi when a debtor owes money and that debt is not based upon a contract or agreement which allows for attorney's fees, if the attorney sends an Attorney Demand Letter and gives the debtor a reasonable period of time to satisfy the debt prior to filing suit, the attorney may then recover attorney's fees in that suit.
Many times or the creditor or a collection agency employed by the creditor has told the debtor, "If you don't pay this debt, I am going to send it to an attorney for suit." Many times the debtor sees this merely as a bluff. When the letter arrives on attorney letterhead giving the debtor an exact number of days before a lawsuit is going to be filed, the debtor now realizes that the creditor has not been bluffing, nor making idle threats. That has the two-fold effect of creating increased credibility with that particular debtor and creating a reputation for the creditor that it does not make idle threats or bluff.
Collection Before It Is Even A Debt
* In the current business environment, a business owner, a health care provider, a construction services provider or anyone who provides a service expecting to be paid after the fact needs to be aware of what is necessary to legally collect a debt before it even becomes a debt. The key to what makes a debt collectible is good information. The more information, the more accurate information and the more up-to-date information you have, the more likely you are to collect one hundred percent of a debt that is owed. The less information, the older the information is, and thus the less accurate it is, the more likely you are to not be able to collect a debt.
* The two items I would like to see every creditor come through my office door with are a complete credit application and a signed contract allowing for the recovery of attorney's fees and the costs of collection. I realize that is not always possible. However, if there is no impediment to you obtaining those two items from a customer, you should, no matter the cost and time involved, do so. A credit application should at the very minimum contain a customer's employer, including the name and telephone number of their immediate supervisor. That information is necessary so we can call to verify their employment prior to garnishing them. The credit application should also list all of the customer's banking accounts, including the name of the bank, the type of account and the account number. This information will be necessary so we can garnish their accounts. Although not commonly seen on most form credit applications, I would like to see information about any and all vehicles the customer owns identified by make, model, year, color, VIN and tag number. This information is priceless when sending the Sheriff out to pick up a debtor's vehicle.
* The second item every business owner should obtain is a signature. Under Tennessee, and under most states' laws, a creditor cannot recovery the cost of filing a collection lawsuit, and most importantly attorney's fees, unless they have a written agreement to that effect signed by the debtor. This does not need to be a long document or anything fancy. It can simply say, "I agree to pay all costs of collections and attorney fees if it becomes necessary to file suit on any unpaid balance." This simple language will allow you to recover attorney's fees. While that may sound like the debt collection attorney looking out for himself, in actuality it means that the creditor can recover one hundred percent of the debt owed, and not be out of pocket twenty to fifty percent of the debt for having to collect it through a lawyer's office. A business owner should think of that signature as debt collection insurance.
* The two items I would like to see every creditor come through my office door with are a complete credit application and a signed contract allowing for the recovery of attorney's fees and the costs of collection. I realize that is not always possible. However, if there is no impediment to you obtaining those two items from a customer, you should, no matter the cost and time involved, do so. A credit application should at the very minimum contain a customer's employer, including the name and telephone number of their immediate supervisor. That information is necessary so we can call to verify their employment prior to garnishing them. The credit application should also list all of the customer's banking accounts, including the name of the bank, the type of account and the account number. This information will be necessary so we can garnish their accounts. Although not commonly seen on most form credit applications, I would like to see information about any and all vehicles the customer owns identified by make, model, year, color, VIN and tag number. This information is priceless when sending the Sheriff out to pick up a debtor's vehicle.
* The second item every business owner should obtain is a signature. Under Tennessee, and under most states' laws, a creditor cannot recovery the cost of filing a collection lawsuit, and most importantly attorney's fees, unless they have a written agreement to that effect signed by the debtor. This does not need to be a long document or anything fancy. It can simply say, "I agree to pay all costs of collections and attorney fees if it becomes necessary to file suit on any unpaid balance." This simple language will allow you to recover attorney's fees. While that may sound like the debt collection attorney looking out for himself, in actuality it means that the creditor can recover one hundred percent of the debt owed, and not be out of pocket twenty to fifty percent of the debt for having to collect it through a lawyer's office. A business owner should think of that signature as debt collection insurance.
THE TOUGHEST DEBT TO COLLECT
The most difficult debt to collect is the one owed by the self-employed debtor. Typically these are middle-income individuals who own their own small business, for example a general contractor, plumber, or beautician. These individuals tend to consider themselves judgment proof and that mentality is reinforced by the economic nature of their employment. They are well experienced in dealing with cash flow problems and pay all of their bills when they are flush with cash and pay none of their bills when they have no cash. They are typically not intimidated by having past due bills and are for the most part, are immune from typical judgment collection activities. The main reason that they are immune or consider themselves immune is that a standard garnishment on the employer, either themselves or the business that they own and run, results in no cash. They will typically answer the garnishment that the business either makes no money, if it’s a garnishment on the business itself or if it’s a garnishment on the owner, that he takes no salary from the business. However, there are several effective methods for collecting debts from a self-employed debtor.
First, you can garnish the cash draw. This simply means issuing a Writ of Garnishment, which is a court order authorizing the Sheriff or Law Enforcement Official to go to the business and seize any money found at the business. The garnishment may be issued for the cash draw and/or the cash register and/or any money found on the person of the business owner. The Writ of Garnishment for the cash draw will not typically result in the collection of enough cash to satisfy the debt. However, it does not take this occurring more than once or twice before the self-employed debtor will contact you and make arrangements for satisfaction of the debt.
A second effective method of collecting from the self-employed debtor is a Writ of Execution or Attachment on the work vehicle and tools of the business or business owner. Again, this is a court order issued by the court directing the Sheriff to go to the place of business and seize certain physical assets of the business. I typically file Writs of Execution for the vehicles and for the tools of the trade of that business. For example, for a plumber, the Writ of Execution would specify the work truck and all of the plumbing tools found on the premises. Again, auction of these items on the courthouse steps, will not typically generate sufficient cash to satisfy the outstanding judgment. However, before you can proceed to auction, I guarantee you will be contacted by the self-employed debtor seeking arrangements for satisfaction of the debt and return of his vehicle and tools.
A third effective method for collection of a debt from a self-employed debtor is the issuance of a Subpoena in Aid of Execution. A subpoena is a court order requiring a person to appear at a given place and time and give sword testimony. I subpoena the self-employed debtor to my office to give a post-judgment deposition regarding his or her assets, the business assets and include in the subpoena a requirement that they present the tax returns that they have filed for the previous five (5) years, copies of all bank statements, for all checking, savings accounts they and the business have, copy of any retirement account information and copy of any business records they have. The tax returns can be invaluable, especially when you discover that a self-employed debtor has not filed taxes for a given year or years. During the deposition, my primary focus is asking the self-employed debtor about current work they are performing and who those clients are and how much they are owed. I then issue a Writ of Garnishment the same day to those clients. This requires the people who owe the self-employed debtor money for work he has performed to pay that money into the registry of the court. In this case, this leaves the self-employed debtor performing work and not getting paid for it. Again, these Writs of Garnishment typically do not generate enough cash to satisfy the judgment, but get the attention of the debtor to the point that he or she will do practically anything to satisfy the judgment.
Collecting a debt from self-employed debtors is difficult. It requires going the extra mile and thinking creatively and uniquely. However, if a debt collection attorney is willing to go the extra mile, these debts can be collected.
Debt collection tips from WSJ
Six years after her divorce and default on her credit-card debt, Ms. Scott of Phoenix heard from an Asset lawyer that she was about to be sued. Unable to pay for her own lawyer, she says she went to a free legal-services agency where a lawyer told her there was no point in showing up in small-claims court. That was bad advice, which Ms. Scott says she followed.
Asset won a default judgment of $7,731 in February 2002, a sum that included interest costs and $2,035 for Asset's legal expenses and court fees. Two months later, Asset offered to settle for $3,290. Ms. Scott says she didn't have it. By August, Asset had withdrawn the offer, and the total bill had risen to $9,537. Then, last month, Ms. Scott offered to pay the company another $3,000 that a relative agreed to lend her. Asset accepted the settlement. "I had to get it behind me," Ms. Scott says.
Some former debtors and lawyers who have skirmished with Asset say Ms. Scott may not have had to pay the company anything if she had gone to court and contested its claims.
Asset acknowledges that, when buying a pool of debt, it typically gets a bare-bones list of debtors' names, their social security numbers, the amounts creditors were owed and the date of last activity. To acquire more information would require creditors to dig deep into their files, which would cost Asset dearly. In many instances, where debts have already changed hands, industry executives say it is very difficult to obtain definitive documentation.
As a result, if a debtor can plausibly argue in court that the amount Asset is seeking may be incorrect, a judge may dismiss the case for lack of evidence, some consumer attorneys say. "They usually don't have the documentation," says Glen Chulsky, an attorney in Dover, N.J.,
who now represents individuals but previously did work for debt-collection firms.
Jason David Fregeau, a lawyer in Longmeadow, Mass., says he has faced off against Asset seven times in recent years, and each time the company has settled because it lacked documentation. "I have yet to see them prove their case," he says.
Asked about these assertions, the company says it has acted appropriately. Asset confirms that it is often hard to prove old debts and that consumers are challenging its documentation more often.
Asset executives say the vast majority of debtors know they owe money, and those complaining about court proceedings are merely trying to escape from paying. "If a person has a plausible or legitimate reason why they cannot pay, or if the debt is fraudulent, then we will work with them to resolve the issue," the company said in its written statement. "However, from our experience, we find that most people accept their responsibility and pay their past obligations."
Idalberto de la Torre appeared in a Miami small-claims court in November 2003 to contest Asset's suit against him. The company demanded $1,800 in old Providian Financial Corp. credit-card debt, plus another $900 in legal fees. Mr. de la Torre, an administrator for Delmonte Fresh Produce Inc., hired an attorney and was able to produce copies of credit reports that he says showed that Asset's records were wrong. Asset agreed to drop its suit.
Debt Management
Compare debt management plans using our calculator - Search online now!
www.trapped.co.uk
Asset won a default judgment of $7,731 in February 2002, a sum that included interest costs and $2,035 for Asset's legal expenses and court fees. Two months later, Asset offered to settle for $3,290. Ms. Scott says she didn't have it. By August, Asset had withdrawn the offer, and the total bill had risen to $9,537. Then, last month, Ms. Scott offered to pay the company another $3,000 that a relative agreed to lend her. Asset accepted the settlement. "I had to get it behind me," Ms. Scott says.
Some former debtors and lawyers who have skirmished with Asset say Ms. Scott may not have had to pay the company anything if she had gone to court and contested its claims.
Asset acknowledges that, when buying a pool of debt, it typically gets a bare-bones list of debtors' names, their social security numbers, the amounts creditors were owed and the date of last activity. To acquire more information would require creditors to dig deep into their files, which would cost Asset dearly. In many instances, where debts have already changed hands, industry executives say it is very difficult to obtain definitive documentation.
As a result, if a debtor can plausibly argue in court that the amount Asset is seeking may be incorrect, a judge may dismiss the case for lack of evidence, some consumer attorneys say. "They usually don't have the documentation," says Glen Chulsky, an attorney in Dover, N.J.,
who now represents individuals but previously did work for debt-collection firms.
Jason David Fregeau, a lawyer in Longmeadow, Mass., says he has faced off against Asset seven times in recent years, and each time the company has settled because it lacked documentation. "I have yet to see them prove their case," he says.
Asked about these assertions, the company says it has acted appropriately. Asset confirms that it is often hard to prove old debts and that consumers are challenging its documentation more often.
Asset executives say the vast majority of debtors know they owe money, and those complaining about court proceedings are merely trying to escape from paying. "If a person has a plausible or legitimate reason why they cannot pay, or if the debt is fraudulent, then we will work with them to resolve the issue," the company said in its written statement. "However, from our experience, we find that most people accept their responsibility and pay their past obligations."
Idalberto de la Torre appeared in a Miami small-claims court in November 2003 to contest Asset's suit against him. The company demanded $1,800 in old Providian Financial Corp. credit-card debt, plus another $900 in legal fees. Mr. de la Torre, an administrator for Delmonte Fresh Produce Inc., hired an attorney and was able to produce copies of credit reports that he says showed that Asset's records were wrong. Asset agreed to drop its suit.
Debt Management
Compare debt management plans using our calculator - Search online now!
www.trapped.co.uk
debt recovery tips
A debt settlement or debt recovery, usually takes place when a debtor is unable to pay the debt and the attempts of the creditor to take back his money have failed. This process where the creditor cancels a part of the debt and agrees to accept the remaining is also called debt negotiation. There is some difference between debt settlement and debt negotiation. The settlement is an agreement and the negotiation is the process employed for the same. The consumers either approach a debt settlement company or approach their own creditors before this. They also take debt counseling conducted by experts in which they negotiate with the creditors to settle the debt for a lower amount than owed, as the debtor saves their money for a lump-sum settlement payment. In this process the debtor receives a letter from the creditor stating that the debt obligation is fulfilled.
Debt settlement programs are also provided by third party debt resolution firms who coordinate the payment plans, and then collaborate on behalf of the consumers. These programs lower the monthly payment contributions to a minimum and get consumers debt free in a short span of time.
Reputable agencies employ numerous resources for tracing debtors. They have an access to many public databases which help to trace the debtor’s recent activities. They hire professionals who investigate into the affairs of the debtor.
There are basically five main objections for debt settlement. They are as follows:
Damages credit
The method of negotiating and reaching debt settlements with creditors requires the debtor to set aside money into a settlement fund from which settlements are paid. Due to the debtor’s financial hardship, the debtor is unable to make minimum payments towards credit card debts while saving up and setting aside money to payoff settlements.
Increased collection calls
The failure to continue the planned debt repayment results in increased debt collection activities that cause the debtor undue stress.
Possibility of lawsuits
The fright of lawsuits is also an objection to debt settlement.
Tax consequences
Another common objection to debt settlement is that debtors whose debts are partially canceled outside the bankruptcy system will need to report the canceled portion of the debt as taxable income.
Debt settlement trade associations are also being set up to promote the state governments as many state legislatures are passing laws that restrict out-of-state companies from providing debt negotiation services to in-state residents. Two examples of these associations working at the global level are the United States Organization for Bankruptcy Alternatives (USOBA) and The Association of Settlement Companies (TASC).
Debt settlement programs are also provided by third party debt resolution firms who coordinate the payment plans, and then collaborate on behalf of the consumers. These programs lower the monthly payment contributions to a minimum and get consumers debt free in a short span of time.
Reputable agencies employ numerous resources for tracing debtors. They have an access to many public databases which help to trace the debtor’s recent activities. They hire professionals who investigate into the affairs of the debtor.
There are basically five main objections for debt settlement. They are as follows:
Damages credit
The method of negotiating and reaching debt settlements with creditors requires the debtor to set aside money into a settlement fund from which settlements are paid. Due to the debtor’s financial hardship, the debtor is unable to make minimum payments towards credit card debts while saving up and setting aside money to payoff settlements.
Increased collection calls
The failure to continue the planned debt repayment results in increased debt collection activities that cause the debtor undue stress.
Possibility of lawsuits
The fright of lawsuits is also an objection to debt settlement.
Tax consequences
Another common objection to debt settlement is that debtors whose debts are partially canceled outside the bankruptcy system will need to report the canceled portion of the debt as taxable income.
Debt settlement trade associations are also being set up to promote the state governments as many state legislatures are passing laws that restrict out-of-state companies from providing debt negotiation services to in-state residents. Two examples of these associations working at the global level are the United States Organization for Bankruptcy Alternatives (USOBA) and The Association of Settlement Companies (TASC).
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