How to Control a Debt Collection Call

Getting a call from a debt collector is stressful, embarrassing and unsettling.  Debt collectors are taught and trained, in fact its drilled into them, to stay in control of the call!  What does this mean? It means they want to direct where the call goes, the tone of the call and they want to ask all the questions.  Questions are powerful powerful tools.  Many times a collector will ask a question and then simply pause and leave the debtor to stew in that uncomfortable silence.  If the debtor starts to ask a question, the collector is trained to either ignore it or answer as briefly as possible giving the debtor no information and immediately redirect the conversation in the direction they want to go.  A collector has many different avenues he or she can direct a call down; creation of anxiety based upon threat of litigation or economic ruin, creation of a bond through offers of assistance, creation of humiliation through stark review of the financial situation, etc.  All of this is accomplished by asking the debtor questions.  So what can a debtor do in the face of this well trained question asking machine?  Well, take control of the call by asking questions of course.  You have to be confident and professional (not arrogant, abusive or profane).  Start by immediately interrupting the collector and asking what their name is again.  Of course the collector identified them self at the very beginning of the call, but this allows you to thrown them off of their pre-planned pitch and allows you to start asking questions.  Follow up immediately with, how do you spell that.  And then; "and who do you work for and how do you spell that".  Now you have seized control of the call and are obviously taking notes.  If it is an inexperienced collector, they will be thrown totally off of their game.  If it is an experienced collector, they will begin fighting you for control of the call.  Regardless, the best way to control the call is to end the call.  Ask how much the debt is,  who the original creditor is and most importantly ask for contact information; what is an address I can correspond with you at and what is a phone number I can use to reach you.  Immediately after you receive that information, say something to the effect that I will research this and be back in touch with you and hang up. The collector will note the contact in their database and more than likely move on to easier prey and leave you in peace for at least the time being. 

Problems Debt Collectors Don't Want You To Know About #1

There are lots of problems a typical debt collector has in collecting your debt.  Usually, you as the debtor have no idea the problem even exists and so it never comes to light.  In today's debt market and economy, perhaps the biggest problem a collector has is producing a documentable chain of ownership.  Simply explained; you have a legitimate debt, you ran up a credit card that you now can't pay, you had medical bills you couldn't pay or you borrowed money and can't pay it back.  You didn't pay your debt and the original creditor, rather than hound you or after hounding you with no success, bundled your debt with a batch of other debt and sold it for pennies on the dollar.  That package of debt has now probably been sold and assigned several times since then.  Now, a collection agency has your debt (with tons of interest and collection cost and fees added on) and is calling and writing you demanding payment.  One of the most effective tacks to take as a debtor is to say, "yes, I may have had a debt with XYZ, but I don't know who in the world you are.  If you can send me written documentation that you either own this debt now or are authorized to collect it, then I'll pay it." Immediately follow that verbal request up with a letter (ALWAYS certified mail, return receipt requested) asking for the same documentation.  If the collector can't produce that record of ownership or authorization to collect, then they can't collect the debt.  Often times, the collection agency or debt buyer has actually legally purchased the debt for real money.  But that transaction is part of a complicated and lengthy legal document that they have absolutely no desire to share with you and to which a standard floor collector has no access.  It may be simply easier for the collector to move on to the next more compliant debtor. 

Simplest Advice In Settling A Debt

This is a simple piece of advice that you may not already know.  Debt collectors almost always work on some form of a commission basis.  Those commissions and every facet of a collector's performance are calculated at the end of the month.  Therefore, the absolute best time to settle a debt is at the very end of the month.  The deal you may be able to negotiate at the end of the month can be literally thousands of dollars less than the deal you could negotiate at the first of the month.  

The Present, The Future and The Myth That Your FICO Score Will Not Matter

There is a myth being sold to the American people regarding their FICO credit score.  Millions of Americans now find themselves in a situation where because of job loss or other economic hardship they must prioritize how they pay their bills.  I see an endless stream of financial experts who are telling people to pay for food, shelter and transportation and forget about student loans, credit card bills and any other installment or revolving debt because preserving your credit is a futile exercise. First, let me say that I understand, empathize and agree with the need to prioritize food, shelter and transportation.  But do not lead these poor people down the primrose path to believe that the damage they do to their credit will be harmless. The myth is sold under the guise of don't worry, there are so many Americans in similar situations that credit scores will simply have to be a thing of the past.  The truth is absolutely nothing could be further from the truth.  The truth is that the credit markets (home mortgages, car loans, etc.) will after this economic storm passes be more highly governmently regulated than at any time in our lifetimes.  In plain English, that will mean that before a bank can give you a mortgage, it will have jump through a series of government regulatory hoops.  Government programs and government oversight has never and can never be subjective.  It will always be driven by forms, procedures and benchmarks.  Therefore, if though you may have a wonderfully logical explanation why your credit is ruined, it will not matter.  In order for the bank to make you a loan, you will have to fit neatly into a government designed program.  The only existing benchmark that the government will be able to use to design the regulations they believe are necessary to prevent this disaster from reoccurring is your CREDIT SCORE.  So, bottom line, protect your family, but also make ever effort to protect your credit score.  It may not matter one iota today when virtually no one can borrow money, but it will mean everything in a year or two or three when the world rights itself.  

New Job

Well, I'm sure you noticed the lack of posts here since mid November. I have taken a new job. I am no longer practicing law, but am now working as in house counsel and vice president for a privately held company. I considered shutting this site down, but decided against it. Once I am acclimated to my job, I intend to resume posting. Thanks for your patience.

THE TOUGHEST DEBT TO COLLECT - THE SELF-EMPLOYED DEBTOR

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.

INTERNET DEBT MYTHS

The explosion of the internet has led to a proliferation of myths regarding the
uncollectibility of debts and defenses to debt collection. These myths have spread like wildfire across blogs and websites and they are all false and dangerous.

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.

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.

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.

There are hundreds of other myths and I will address them in future articles.

POLL REOPENED

I reopened the poll and set it to run for an entire year. Let me know what you think.

How to Stop Harassing Collection Phone Calls and Profit From Them

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