3 Things Not to Do When Dealing With Debt Collectors

April 13, 2012 by  Filed under: Bankruptcy 

In the 1968 film “The Graduate” Benjamin Braddock is a new college graduate and the title character. At a party, Braddock is taken outside by Mr. Maguire, who says to him “one word, just one word, plastics”. When asked what he means, Maguire responds, “There’s a great future in plastics.” Moving forward 44 years to a more enlightened era, the new college graduate should be advised “collections”. “There’s a great future in collections.” It’s a massive industry, worth some $40 billion as of 2005 (according to the Federal Trade Commission) and more now.

To a great extent, debt collectors rely on ignorance and fear to be successful. While in many cases they are hard pressed to prove they either own the debt or have the authority to collect the debt, they know from hard experience that 95% of the people they contact will either not respond to anything at all, or if they do respond, not seek legal assistance with the problem. Either way, the debt collector wins.

If anybody reading this article is dealing with a debt collector, there are many strategies and tactics to employ to tip the balance in your favor. More importantly, there are three things that you must never do when dealing with debt collectors.

The first is not to give them access to your bank account. Regardless of how sincere or convincing they sound on the phone, don’t give them your banking information. The reason is simple. While they are telling you that they will only take $50 or $100 out, they are paid on commission. More money out of your account means a higher commission. In order to satisfy the debt, they will clean out your account. Good luck getting the money back, either. Once it’s gone, it’s gone. Don’t, under any circumstances, give bank account information over the phone.

The same advice applies when mailing in a payment. Your checks have your account information. Once they have a copy of the check, they effectively have access to your bank account information. Solution: money orders. Take the money you would pay the collection agency, go to the post office or someplace that sells money orders, and use that instead. No banking information on those.

Second, don’t make the assumption creditors can take your money. If you are on social security, either due to old age or a disability, federal law prohibits social security money from being seized for collection purposes. Some state laws extend this protection to state disability payments as well. If your sole source or major source of income is a social security disability payment, the money cannot be seized by creditors. Don’t be threatened or intimidated into paying out social security money.

Third, never ignore lawsuits. If you are served with a lawsuit you must make the effort to respond to it. Most courts have free legal clinics, and most courts will waive fees and costs in hardship situations. Ask! The way lawsuits work in the real world is that the suing party can make any claim they choose in their complaint to the court. It is up to the opposing party, not the court to sort out the truth. If you ignore the lawsuit, the other side wins by a process called a default. Once the debt collector gets a default judgment, the balance of power shifts to them. While there are rules and procedures for what happens during the course of a lawsuit; all these rules go out the window once the judgment is entered. At that point, you options and choices are sharply limited.

Stand your ground. Demanding debt collectors actually prove their case means you win, since most of the time they cannot. Stand up to them.

Craig Andrews, JD writes on how legal issues impact everyday life. He writes primarily on identity theft, debt collection, bankruptcy and financial elder abuse issues.

His website is http://www.bklifeboat.com

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