August 2nd, 2010 at 09:14am
Under Consumer Debt+ Harassing Phone Calls
One of the most difficult concepts for most borrowers to grasp when you fall behind on your credit card payments or your mortgage (or both) is the idea of charge-offs.
When a lender (regardless of the type of debt) decides that you are no longer likely to pay your debt, they will “write off” or “charge off” your account. This will happen anywhere from a few months to a year or more after you fall behind. When this happens, they take your account off their books and no longer expect you to pay. Usually, they will take a tax write-off for your bad debt, and in some cases they will collect on an insurance policy that they hold which pays them in the event you cannot.
So… this is the end of your debt, right? Well… for the specific creditor, yes. They no longer expect you to pay. However, frequently this is not the end of your debt for you as the borrower. In fact, this is where things can get nasty. In most cases, creditors will sell your account to a collection agency. More on this in a moment.
As long as you are working with your creditor (talking to them and making attempts at paying them), they will most likely not write off your account. If the payments you’re making aren’t large enough or frequent enough, you’ll be talking to an in-house collector. These creditors would rather see you strung along as a borrower of theirs than charge off your account and sell it to a third-party collection agency.
Remember: the whole goal of these lenders is to loan you money. As long as they can keep you classified as a borrower, they want to do so…
This means that they’ll typically work with you by lowering your interest rate, making accommodations so that you can move payments to the end of your note, or make lower payments for a while. It all depends on the type of debt. But they have all sorts of unadvertised in-house programs that they can put you in which are designed to keep you on board as a borrower. With the exception of mortgage lenders (which are in a class of their own and have their own practices and policies), the lender would most likely love to do whatever it takes to string you along and keep you making endless payments on a balance that never decreases (even better: one that grows because you’re not even fully paying the interest).
But at some point… if you quit paying for a long enough period of time or stop responding to their harassing phone calls, the lender will charge off your debt.
How a Charge-Off Affects You
What happens next raises some interesting legal questions. Can you legitimately be expected by anyone to pay a debt that the original lender says you no longer owe? If the lender has taken a tax benefit or collected on an insurance policy, should you be harassed by anyone to make payment?
For collateralized or secured debt, typically the collateral will be seized. If you have a car note, for example, the lender will attempt to repossess your vehicle. This will happen without any warning. A tow truck will pull up to your home or work and take off with your car. Laws vary from state to state, but you may not legally be able to stop this person from taking your car. Some people try all sorts of crazy tactics — parking a car in an unusual or hard-to-reach location, or hiding it entirely, or even skipping town with it. But chances are… if the lender wants to repossess your car, they’ll get it.
If you have a mortgage, then seizing your collateral amounts to foreclosure. The only good thing about foreclosure right now (as I’ve talked about previously here) is that your state’s court system is likely to be really clogged up right now and it will take some time before they can actually complete the process. In short: you have options.
But if the debt we’re talking about here is unsecured, the situation is different. Some examples of unsecured debt include:
- credit cards
- “signature” loans
- a second mortgage or home equity line of credit — if you’re underwater on your first mortgage (meaning that you owe more than the property is worth)
- anything else for which you didn’t pledge collateral
With unsecured debt, when the lender charges off or writes off your account, you have a situation that actually is to your advantage.
Most people don’t realize that they have options now. They just assume that dealing with collection agencies is a new fact of life. They never think to challenge the legal grounds that a third-party collector may be using as a basis for harassing you.
The fact is that significant legal questions remain as to whether or not certain types of unsecured debt can be sold.
For example, credit card debt is not the same as a loan. With a loan, there is a clear contract that includes an exact amount to be borrowed (usually on a one-time basis) along with the exact repayment terms. A credit card, however, is a series of continuing offers to contract. This type of contract is not transferable due to the nature of the series of continuing offers.
If you allow yourself to be bullied by a collector who has bought up bad debt from a credit card company, however, you will find yourself inadvertently agreeing to allow them to collect. And your agreement is what they need! If, however, you challenge the legitimacy of the debt, they frequently have no legal footing! If the debt wasn’t transferable, then you must specifically agree to the notion that you owe the debt buyer any money in order for them to have a valid right to collect!
Unfortunately, most people agree to the debts by not requesting verification within 30 days of being notified in writing. This is a major mistake.
We’ll talk more about this in the future. Feel free to comment here if you have questions about this topic or if there are specific areas of this that you’d like to see us discuss.
The bottom line is: always dispute the debt, its legitimacy, and the amounts. Do it in writing. And do it within 30 days of receiving notice from a collector.
By Average Joe
July 10th, 2010 at 07:13pm
Under Consumer Debt
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Americans now depend more heavily upon credit than any other society on Earth, or any other time in history. Borrowing has become a way of life for millions of families, and it is hard to imagine a time when charge accounts did not exist. Nonetheless, it would be a mistake to assume that, because a wallet filled with plastic instead of cash is a relatively new phenomenon, Americans have not been borrowers and lenders since the colonization of the New World. Author Peter J. Coleman proves otherwise. In one Form or another -- notes of hand, book credit, commercial paper, mortgages, land contracts -- settlers borrowed to pay their passage from Europe, to buy and clear land, to build and operate mills, to purchase slaves, and to gamble and drink. Debtors' prison awaited those who could not pay their debts, and a pauper's grave received the unfortunate who lacked the private means to feed and clothe himself in prison. While the debtors' prisons described in this book no longer exist, the author maintains that our credit-oriented society has yet to devise cheap, efficient, equitable, and humane methods of enforcing contracts for debt.
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By Average Joe
July 6th, 2010 at 08:18pm
Under Consumer Debt
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Everything you need to get out of debt and repair your credit.
Feeling overwhelmed by your debts? If you're ready to regain your financial freedom, this book is exactly what you need! Step by step, Solve Your Money Troubles shows you how to:
prioritize debts
create a budget
negotiate with creditors
stop collector harassment
challenge wage attachments
contend with repossessions
respond to creditor lawsuits
qualify for a mortgage
rebuild credit
To make the process easier Solve Your Money Troubles also includes sample letters to creditors, as well as worksheets and charts to calculate your debts and expenses and help you create a repayment plan.
The 12th edition now covers the latest bankruptcy laws, the Fair Debt Collection Act and the new credit-scoring system used by some credit bureaus.
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By Average Joe
July 6th, 2010 at 04:46am
Under Consumer Debt
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With a hands-on approach that includes case studies and learn-by-doing exercises, this new text builds a critical bridge between simply understanding bankruptcy concepts and employing them confidently, like an experienced paralegal. Broad coverage includes basic bankruptcy, debt creation, secured transactions, the law of liens, and debt collection. Practical, accessible, and timely, The ABC's of Debt features:
Learning-by-doing exercises, problems, and hypotheticals that bring a strong hands-on, skill-building component to any study of bankruptcy law;
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A clear, readable format that facilitates understanding;
Realistic case studies that encourage students to apply new concepts;
Examples throughout the text that make abstract principles concrete;
Case excerpts and summaries that link theory to doctrine;
Thought-provoking ethical queries that raise issues arising in practice;
Key terms and review questions in every chapter that aid study and review.
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By Average Joe
July 2nd, 2010 at 05:25am
Under Consumer Debt
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HOW TO SETTLE YOUR DEBTS, by Norman H. Perlmutter, CPA, is the book that everyone needs to prevent economic meltdown. Its the essential, up-to-date, comprehensive and gutsy survival guide to meet this ever growing serious problem of financial ruin that faces so many of us.
In a step-by-step format it guides individuals, families and businesses through a process that will end debt and reverse insolvency without filing bankruptcy. Even if you're on the brink of financial ruin, with this book you can regain financial health and get a fresh start without committing "financial suicide".
HOW TO SETTLE YOUR DEBTS provides legitimate workable solutions to repair financial chaos. Its written in a conversational style and organized in an outline format that promotes understanding and ease of reading for the average person. You will learn in no uncertain terms how to climb out of the hole you are in and get your financial life under control without causing irreparable damage to your future in the process.
The author is a practicing CPA and Financial Advisor who formerly owned a Debt Collection Agency. He understands the tactics of the conniving moneylenders and their debt collector enforcers and all the other scam artists who are out there waiting to rip you off. He knows how to deal with these people and how to stop them from harassing you and from ruining your credit and your reputation. Furthermore and most important, with this book he will teach you how to take control of your financial life and get out of the mess you are in.
HOW TO SETTLE YOUR DEBTS is for all those individuals, families and businesses whose debts grow deeper by the day and whose lives are being adversely affected by them. Heres a summary of how the book will help you deal with your problems with debt:
It will teach you the basics what you're up against, who the predators are, how to recognize and avoid their debt traps, the fundamentals of debt, the risks you take when you don't pay, and what they can and cannot do to collect from you.
It will help you understand your problem by following the steps outlined you will be able to expose, examine and evaluate your dilemma with debt, how it's affecting your life and the options you have to deal with it.
You will learn to know your enemy what makes creditors and bill collectors tick, what motivates them, what their weaknesses are, how you can exploit them and how they are vulnerable to attack.
It will show you how to keep the wolves at bay by creating doubt as to the validity and the collectability of your debts and by using "Dirty Tricks" and Counter Attack Techniques to frustrate and discourage creditors and bill collectors.
It will teach you about your rights and how to take advantage of them federal and state laws enacted to protect you from abuse and to punish bill collectors who violate them.
You will learn how to negotiate a debt settlement plan using basic negotiating skills and built in leverage to set up an advantageous arrangement with your creditors to workout and settle your debts.
How to use the "Golden Rules of Debtsmenship" - to protect your assets and your privacy and to safeguard credit, and where necessary, how to repair credit and rebuild it.
How to deal with lawyers to negotiate debt settlements, contest lawsuits and protect your assets from judgment levies.
How to settle secured debts and tax debts by recognizing and seizing upon opportunities to settle or otherwise favorably resolve these debts that creditors have more power to collect.
How to settle business debts by understanding the differences that must be considered when negotiating workouts and settlements with business creditors.
Where to get help if you need it - and how to watch out for all the scam artists who are out there waiting to take advantage of you.
Its a reference manual as well as a guide with its outline format and comprehensive index the book can be used to easily and quickly obtain information on any of the many subjects covered relating to debt and debt relief.
HOW TO SETTLE YOUR DEBTS ~ Without Committing Financial Suicide ~ shows you how to end debt and reverse insolvency without resorting to the self-defeating and demeaning ordeal of filing bankruptcy. It provides you with all the knowledge, the techniques and insight required to successfully accomplish this.
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By Average Joe
June 23rd, 2010 at 03:57am
Under Consumer Debt
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Superior debt-collection strategies to prevent running out of cash--and running off customers.
Great products and super sales don't mean a thing if a company can't get its customers to pay their bills. In fact, bad debt can quickly turn a healthy company into an ailing, cash-strapped company--or even a bankrupt one.
Which is why it's imperative to collect as much money as possible, as fast as possible, while still maintaining the goodwill of debtors. It's a tall order, but one that's totally feasible with the effective collection strategies outlined in this lively and important new book.
Readers learn how to: * use collection letters, telephone calls, and personal visits * collect debts with limited resources * evaluate outside collection services * make debt collection a fun activity * negotiate win-win solutions with debtors, and more.
In addition, the book supplies practical strategies for avoiding bad debts in the first place--such as taking good credit applications, verifying the information, and ensuring that the first payment is made on time.
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By Average Joe
