Things You'll Need:
- Black's Law Dictionary
- Internet information
- Debtor-Creditor books
- Folders for documents
- A lawyer (maybe!)
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Step 1
Having been a loan collector for 5 years I know something about the unpleasant problem of paying off a debt - especially when a debtor is short-of-money. It used to be that many people in debt were scoff-laws and dead-beats. But in today's economic climate where jobs have been destroyed and wages stagnating for 40 years now- most Americans in debt are not dead-beats but rather honest people who have either lost their jobs or work at jobs that pay sub-standard wages. People in debt not only find themselves owing money to a creditor but are also subject to dismaying emotional hostility from the creditor and its hordes of debt collectors who call on the telphone and mail payment demands relentlessly. Sometimes the hostility gets so intense that the poor debtor wonders if they're going to bring back Debtor's Prison! But there are local, state and federal laws that protect individuals who have fallen into debt and they should be vigorously employed by persons in debt to maintain their rights and dignity. If you feel that you have a serious debt problem- then you should consult a lawyer. Sometimes a debtor may contact a consulting agency on-line - which is very helpful - but to get the facts about the law straight - the debtor should consult a lawyer who specializes in consumer debt. This doesn't mean you will need the services of a lawyer in court but it will provide you with information and techniques to deal with your creditors. Some lawyers will give a first consultation over the phone or on-line for free.
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Step 2
We live in a society where most people in the Middle and Lower Class find themselves repeatedly in debt during the course of their lives. In a society characterized by endless job destruction and relentless wage stagnation- most Americans who work for an employer are going to become mired in debt periodically. Americans who try to become self-employed will experience a 90% failure rate in their business efforts- requiring them to try again and again at self-employment. Many such individuals bounce back-and-forth between self-employment failures and exploitative wage-slavery. Unfortunately the creditors, in the person of debt collectors, don't care about the larger system. For the most part an individual in debt will only speak directly to two people about his or her debt - 1) a bill collector on the phone, and, 2) a judge or magistrate in court. So, let's start with how to defend one's self against debt collectors. Remember, the debt collector is probably a young and inexperienced person between the ages 18 and 25. Now, there are still many debt collectors in their 30's, 40's, 50's, and 60's but many of these people are being laid-off or fired in favor of younger workers so that their employers can drive their wages down to as close to minimum wage ($7.50 / hour) as possible. Whether younger or older, these debt collectors get paid to collect a debt. If they fail to collect enough revenue from debts for their employers - they get fired. So, remember the person who calls you on the phone is under his or her own special brand of stress- and probably will not be very friendly. So, don't take the unfriendly tone of voice personally.
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Step 3
These younger people who work as debt collectors are given basic training by their employers about debt law and how to talk to debtors on the phone. However, they tend to be unaware that our society has been constructed to destroy jobs and stagnate wages- making debt inevitable for millions of Americans. The older debt collectors are more worldly and they know full well that your debt is probably not your fault- but, of course, they won't admit it to you! The CEO's and stockholders of debt collection companies care nothing about the problems and hardships of the debtor whose account they have recieved from the original creditors -they only want the money. Toward that end debt collectors are encouraged by their supervisors to be aggressive right up to the threshold of hostility. Collectors will even urge the debtor to borrow money from family and friends to pay off the debt. Collectors also always insinuate to the person who owes money that the debt is the debtor's fault and are quick to point out that the debt stems from a trans-actional contract - which all purchases are. The fact that each human being in our society has signed on, as his or her birth-right, to a "social contract" wherein every individual has a right to have a job and to work for money and get paid enough to "earn a living" and that this "social contract" has been torn to pieces by Vulture Capitalism means nothing to creditors. With these facts in mind you - the debtor - have a greater arsenal of defensive tactics by which to deal with collectors and resolve your debt problem.
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Step 4
When talking to a debt collector on the telephone, especially a younger one, employ 3 tactics while discussing your debt - especially if they are verbally hostile - as follows: 1) Use courtesy, 2) Employ diplomacy and 3) Invoke the Fair Debts Collections Act. The Fair Debts Collection Act (FDCA) enacted by Congress in 1977, provides guidelines whereby a debt collector is prohibited from certain illegal acts- 1) no telephone calls before or after a certain hour of day, 2) no more calls if the debtor is represented by a lawyer, 3) no screaming and yelling on the phone, 4) no threats of physical injury or illegal seizure. As a debtor, if you have some money, negotiate a payment. In today's economic climate, most debtors now pay installment payments - because they cannot afford a lump-sum payment. Offer an installment payment. If the collector refuses, explain to him or her why an installment payment is your only way out. If you tell the collector that you've lost your job, have a job that pays sub-standard wages, have started to receive unemployment benefits it presents your side of the situation to him or her. Make an offer. If your debt is over a $1,000 you'll have pay larger installment payments. As a rule-of-thumb, offer 10% of your paycheck or unemployment benefit check. If your paycheck is $550 take-home every 2 weeks- offer to pay $55 for that 2-week period - especially if your debt is under $1,000. If your debt is over $1,000 offer to pay 15% of your paycheck or unemployment benefit check, i.e. $70 to $75. If the collector objects, tell the collector that you will send a money order for that amount and then inform the collector you are about to hang-up. If the collector becomes vociferous then hang up on him or her. Remember the collector is just an employee -like you - who gets paid sub-standard wages -like you - and who will probably quit, get fired, or laid-off from his company in a few weeks or months - like you -to be replaced by another kid who will be overworked and underpaid until he or she, too, is fired, laid-off, or quits.
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Step 5
If you have an income, i.e. a job (albeit a wage-slave job) or, unemployment benefits, or welfare- then making installment payments will usually discourage the creditor from taking more aggressive action, i.e. suing you. Filing a lawsuit is very expensive for the creditor and they usually pursue that avenue as a last resort for larger debts. Remember, the smaller your debt- the less likely that you will be sued. This is not to say that you won't be sued but creditors will overlook the "small-fry in the sea" especially if they are making installment payments to the creditor. However, you will recieve in the mail periodic demands for payment that will use very aggressive language. This language is designed to intimidate the debtor into paying. Most debtors want to pay off their debt but they can't because they are either unemployed or trapped in wage-slavery. But the creditors don't care about your dilemma, hence, the savagely-worded letters. Simply take these letters and save them in a document folder for future reference especially if you have to go to court over the debt later on. Then just go on making your installment paysments of $50 to $75 every 2 weeks and hope for the best. If your debt is under $2,000 the creditor wil probably do nothing more- because, after all- they want the money - however fast or slow you are paying them.
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Step 6
While you are paying off your debt, the creditor will almost surely report you to national credit-bureau reporting agencies. Although the thought of you yourself having an adverse credit report with these agencies is distressing- remember millions upon millions of Americans have "bad credit reports" through no fault of their own. These people are in debt because they cannot find steady work or because the jobs they have pay next-to-starvation wages. In today's economy- there has arisen a paradox with regard to "bad credit reports" - most Americans simply don't have the money to buy the things that bad credit would deny them in the first place, i.e. a new car costs $25,000 - which is more than a typical U.S. employee earns in an entire year! However, the law gives you the right to protest a bad credit report with national credit reporting agencies. You can write and mail-off a "counter-claim" to these agencies - which they must place in their public records - explaining why your debt is not a "bad debt" or complaining that illegal collection practices are occurring. The Fair Debt Collections Act also gives you the right to stop any and all collection activity. Simply write a letter - using the format provided in many books about debt and collection law - and mail it to your collector. Since the collector is required by federal law to stop contacting you, they will simply send the account back to the original creditor. You then can make installment payments to the original creditor. Again if the debt is under $2,000 - and most certainly if it is under $1,000 - they will be very reluctant to sue. They want the money to flow in as cheaply as possible and filing a lawsuit against you may cost more than the money amount you owe them.
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Step 7
The collection telephone calls and the demand letters will be mailed to you without respite until the last cent of your debt is paid. When you get a phone call use courtesy and diplomacy - as always - negotiate a payment and then hang-up. If the same collector calls you repeatedly then he or she already knows how much you are going to send, i.e. $50, $60, $70, etc. Just repeat your intention of sending the installment payment, politely inform the collector you are about to hang up - and then hang up! Laws vary on how often a collector can call you on the phone or send you letters demanding money. One important thing, however, if you have any change in your income, i.e. you get fired, you get hired to a job, you are laid-off, your unemployment benefits end, or your uenmployment or welfare payments begin, then....get on the horn and let the collector know about the change, how much money you are gaining or losing and what you plan to do about the debt. Collectors love to send letters saying that the debtor has ignored the debt collection efforts even though the debtor is in constant contact with the creditor. When you make such a phone call- write down on a piece of paper the day, date, hour you made the call. Write down the name of the collector - even if its only his or her first name. And write down the nature of the negotiated agreement.
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Step 8
In dealing with debt and debt collectors, the more property you own- the more in jeapoardy you are of having something seized right out of your hands- your house, your car, your wages (i.e. garnishment). The bigger the debt, the more likely the creditor will go after your house, car, bank account, tax-returns and wages. That's the time to visit a lawyer- not just call him or her. A lawyer will help you out in an extreme situation. But if you owe under $2,000 and maintain those aggravating $50 to $75 payments - you should get through these troubled waters with your lifeboat never capsizing once. If you do get sued, it probably will be in small-claims court. If you don't own a house, don't own a car, have a very small bank account, i.e. under $200, and have a very small tax return, i.e. $200 - there is very little the creditor can do to seize anything from you. Many debtors go to small claims court and no counsel for the creditor even bothers to show up because they know the debtor has no money and almost no property.
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Step 9
With the economic situation of the Middle and Lower Classes in this country distintegrating from mere hardship to catastrophe, more and more creditors are accepting installment payments and reduced payments on those intallment payments. Always get official advice from qualified agencies and talk to a lawyer. To help avoid debt in the future consider whether you really need a credit card or not. Would a debit card be better? Maybe, in the future, you might to only want to pay with cash. Ask yourself - "How can I budget myself and my family's expenses" to stay out of debt?" Also, figure out - as hard as it seems right now to do it - how to earn more money. In today's frightening economic decline- it might be easier to budget and save money than to entertain any hope of earning more income. In any case, try to do both.
GOOD LUCK!
