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The Debt Collectors
Debt collectors are in the business of doing one thing: Collecting money. Often
feared and dreaded, they can be very aggressive and make your financial life
very stressful. Knowing your rights when it comes to debt collectors, though,
can relieve some of that stress and help you take care of those annoying
accounts.
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt After Death – The Debt Collector
Elena was grief-stricken. Joseph, her husband of fifty years, had just passed
away. He had worked to the end but Elena was not left in a good financial
condition. They were living in a decrepit mobile home on the edge of town.
When Joseph passed, she was to receive a small life insurance settlement of
$2,000. Elena had another $1,000 in the bank. That was all she had. At age 88,
she would somehow have to survive on that amount.
Two weeks after Joseph’s passing, Elena received a card from XYZ Services,
Inc. The company offered its deepest condolences on the death of her husband
Joseph. The letter also brought up the $9,000 amount Joseph owed on a credit
card.
Elena was confused. She had never known about this account. It wasn’t in
her name.
A day later the calls started. The people on the phone were very smooth.
They offered their respects but then talked about Elena’s need to make a
‘morality payment’ to clear up her late husband’s debt. “You have been through
tough times,” they would say, “but we need to resolve this issue.”
Elena explained that she was destitute. Her car had been repossessed. She
couldn’t work. She did not know how long she would be able to make the
monthly mobile home park payment. She had no idea what would happen next.
That did not deter the collectors.
The collection agency called Elena ten times a day. They learned that she
would soon receive a $2,000 life insurance payment. They strongly suggested that to clear her husband’s name she turn the $2,000 over to the agency. They
would wipe out Joseph’s $9,000 debt with a $2,000 payment and the matter
would be resolved.
A neighbor in the mobile home park happened by when Elena was on the
phone with a collection agent. He could hear the fear and anxiety in Elena’s
voice.
After the call, he interceded. He learned that the credit card was in Joseph’s
name. That meant when Joseph died the debt was extinguished. Elena was under
no obligation to pay. The neighbor had Elena talk to an attorney friend of his.
After reviewing the case, the attorney, on Elena’s behalf, sued the collection
agency for harassment.
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
As the case shows, in most cases, when you die your debts die with you.
Surviving family members are under no obligation to cover those debts.
If you co-sign on a loan for a mortgage or a credit card, the cosigner is still
responsible. But when the loan is in the deceased party’s name alone, as it was
with Joseph in Elena’s case, the survivors are off the hook. (Keep in mind, if you
live in a community property state –Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas, Washington, Wisconsin – you may be responsible
for debts incurred by your spouse during your marriage.)
Does that stop the collection agency from pursuing collection? Of course not.
They will use the arguments of morality and family obligation to get whatever
they can out of you in your time of grief and weakness. Many will even say there
is no legal requirement to pay but will continue to call until some sort of
payment is made, or until you decide to talk to an attorney to make it stop
(which is highly recommended).
Beware of agency callers who misrepresent the law. You may think that you
are not obligated until the caller starts questioning how the decedent passed.
Some collectors will argue that the particular cause of death – be it an accident, old
age, disease, or suicide – means that you are still responsible. This is not true.
The cause of death has no effect on responsibility.
What if the decedent (like Joseph, the person who passed) left an estate? In
that case, the collectors can file a claim in probate to get paid. Like creditors in a
bankruptcy, they may or may not receive anything. Once the probate is finalized,
the collectors cannot pursue family members. If this happens speak to an
attorney.
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Know your rights. And know that some collection agencies will do and say
whatever they please, whether legal or not, to get you to pay. They are on commission, after all, and could care less about you in your time of grief.
There is a federal law called the Fair Debt Collection Practices Act (FDCPA)
that requires that debt collectors treat you fairly. It doesn’t stop them from trying
to collect, but it does place certain limits on how they can collect.
The FDCPA applies to personal, family, and household debts. Business debts
are not covered by the FDCPA. But if you used a personal credit card for
purchases that were used by your business, the collector isn’t likely to know that
and is likely to follow the FDCPA if you know your rights.
A debt collector is any person who regularly collects debts owed to others.
This includes attorneys who collect debts on a regular basis. It generally only
applies to outside debt collection agencies, and not to creditors collecting their
own debts, though your state may have laws that apply to creditors as well.
When you are first contacted by a debt collector, you should do several
things:
- Get the contact information for the debt collector, including a phone number
and address. You’re entitled to this information under the FDCPA.
- Dispute the debt if you think it’s incorrect. Write to the collection agency
immediately disputing the debt and requesting verification. Send your
letter certified mail, return receipt requested. You’re entitled to this
verification under the FDCPA. Unless you are certain that you owe the full
debt, disputing it will place the debt under dispute and give you time to
figure out your options.
- Start a correspondence file to keep notes about all your contacts with the
collection agency: Who called, what they said and what was agreed. Also,
keep copies of all written correspondence. If the collector acts improperly,
you may have legal remedies.
- Verify that the statute of limitations for collecting the debt has not expired.
If it has, and the debt collector tries to sue you for the debt, you can raise
the statute of limitations as a defense against the lawsuit. And if you tell
them to stop contacting you about the debt, they must comply (see below).
- Do not pay a collector anything until you have established the debt is
legitimate and worked out a payment arrangement. Don’t be bullied
around.
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Notification- The Debt Collector
Within five days after you are first contacted about a debt, the collector must send you a written notice telling you the amount of money you owe; the name of
the creditor to whom you owe the money; and what to do if you dispute the debt.
Each state has laws that describe how long creditors or collection agencies
can use to collect various types of debts. These are called the statutes of
limitations. In some states, for some types of debts, it can be as little as four
years, while in others it can be twenty years or more. This is important
information because it’s not unusual for collection agencies to make a last-ditch
the effort to try to collect a debt right before the statute of limitations has expired.
If you make a payment on a debt, it may extend or revive the statute of
limitations. Let’s say a collector contacts you about a ten-year-old debt that was
outside the statute of limitations. They can’t sue you to collect (if they do, you
can raise the statute of limitations as a defense against the lawsuit) and they can’t
report it to the credit reporting agencies. So there’s not a lot they can do to
collect, especially if you tell them to leave you alone (see below). But if you pay
them – even a token payment – it may start the statute of limitations over again.
It’s also important to understand that paying a collection agency something,
even a token payment, does not stop them from taking legal action to collect the
debt. Collectors may pressure you to pay something to show “good faith.” If you
really can’t afford to pay the debt or if you believe the debt is incorrect, you may
be better off just refusing and asking them to leave you alone until you can pay.
Again, remember that making a payment – even a small one – may extend the
statute of limitations.
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
how to stop debt collectors from calling
A collector may contact you in person, by mail, telephone, telegram, or fax.
However, a debt collector may not contact you at inconvenient times or places,
such as before 8 a.m. or after 9 p.m. your time, unless you say that’s OK. A debt
collector also may not contact you at work if the collector knows that your
employer disapproves of such contacts. If you tell a collector that you’re not
allowed to take calls at work, make a note of that conversation. If they do it
again, call an attorney.
Privacy
Collectors are not supposed to tell anyone who is not a cosigner on your debt
about your debt, other than your spouse. They can call neighbors or employers to
get your contact information, but that’s about as far as they are allowed to go. They’re not allowed to say that they are calling regarding a debt. And once
they’ve found you, contacts with third parties must stop.
If you hire an attorney to represent you, the collectors should contact your
attorney, not you. I have provided this service to clients who are being roughly
hounded by debt collectors. Collectors don’t talk tough to an attorney (at least
not after the first minute), and my clients can get some sleep.
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Harassment, False Statements, and Unfair Practices –The Debt Collector
Anyone who has dealt with debt collectors for a while will discover that it’s not
unusual for them to lie and say just about anything to get you to pay. There are
legal limits on what they can say and do, but most people don’t know their rights
and so they just put up with it.
Watch out for any of the following types of statements or actions by
collectors. Keep notes. If it looks like they are illegally harassing you, making
false statements, or engaging in unfair practices, contact a consumer law
attorney for help.
Examples of harassment:
- Threats of violence or harm;
- Obscene or profane language; or
- Repeatedly using the telephone to annoy you.
Examples of false statements:
- Falsely implying that you have committed a crime; or that you will be
arrested if you don’t pay your debt;
- Falsely representing that they operate or work for a credit bureau;
- Misrepresenting the amount of your debt;
- Indicating that papers being sent to you are legal forms when they are not;
- Falsely implying that someone not responsible for the debt (usually a
spouse or family member) will be responsible;
- Threatening action that they cannot take (garnishing your wages
immediately without taking you to court, for example);
or
- Indicating that papers being sent to you are not legal forms when they are.
Important: A collector may threaten to notify your employer and garnish
your wages if you don’t pay immediately. For almost every type of consumer
debt (except taxes and some student loans) the collector or creditor must first take you to court and get a judgment, then get the court’s permission to garnish
your wages. Whether or not they will actually go to those lengths depends on a
number of things including how much you owe and how likely they think they
are to collect. But it’s not something that can generally happen overnight. Be
alert to false statements like that from collectors and write them down.
Bankruptcy: If you have successfully completed bankruptcy and received a
discharge, most remaining debts will be wiped out in bankruptcy. That means
you do not owe those creditors any more money.
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
But that doesn’t stop all of them. Some will still try to collect debts wiped
out in bankruptcy, even though doing so is illegal. As soon as you are contacted
by a creditor or debt collector trying to collect on a discharged debt, begin
fighting their efforts.
Notify your attorney (if you have one) or the bankruptcy court of their illegal
actions. An attorney may be more than happy to help you because the collector
will have to pay your attorney’s fees if you successfully sue them for violating
the FDCPA.
Unfair practices
Debt collectors may not engage in unfair practices when they try to collect a
debt. For example, collectors may not:
- Collect any amount greater than your debt, unless allowed by state law;
- Deposit a postdated check prematurely;
- Take or threaten to take your property unless this can be done legally; or
- Contact you by postcard.
As Gerri and I both agree, never, ever send a postdated check to a debt
collector. The risks are too great. If you knowingly bounce a check you can be
subject to criminal penalties.
How to Stop a Debt Collector
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
If you send a letter to a debt collector asking them to stop contacting you, they
must stop. But it won’t stop them from taking legal action to collect the debt.
You can still be sued. It may make sense to write a “cease and desist” letter (just
a fancy name for a letter telling them to leave you alone) if:
- You believe the statute of limitations has expired (point that out in your
letter).• You truly don’t have the money to pay it (include a succinct description of
your hardship situation).
- The debt collector is pressuring you to the point of creating unhealthy stress
or physical side effects.
- You really don’t believe you owe the debt and figure a judge would side
with you, if it ends up in court (describe why you believe you don’t owe the
debt).
See the Resources section for a sample Cease and Desist letter.
Negotiating credit card debt after death
Collection accounts can often be negotiated for pennies on the dollar, especially
if you can come up with a lump sum payment quickly. Most people are
uncomfortable with negotiating but it’s one of the most important skills you can
learn and hone. I recommend you start your negotiations at about 20 cents on the
dollar. The debt collector may insist that there is a minimum amount they can
accept, and that may or may not be true. You don’t know. So you have to
negotiate just as hard as they do.
It’s much easier for debt collectors to try to get you to pay more than for you
to pressure them to take less because:
- the more they collect, the more they are likely to be paid, so it affects their
bottom line,
- it’s not as emotional for them as it is for you, and
- they negotiate debts every day, you don’t.
Two other things to keep in mind:
- Don’t agree to something you can’t afford. If you can’t afford what
they are proposing, tell the debt collector you can’t and state that you’ll
call back when you’ve pulled some more money together. If they start
threatening you, keep written notes and tell them you’ll call back at
another time.
- Always at least try to get them to agree to remove any negative items
from your credit report in exchange for payment. They may not agree,
but if they do, get that in writing first, before you pay. Note that just
listing a collection account as “paid” on your credit report is unlikely to
raise your score. There are companies that will do this negotiating for you if you’re too
uncomfortable. See the Resources section.
Scared and Pressured
If you are being pressured by debt collectors and are scared of what they can do
if you don’t pay, it may be worthwhile to talk with a consumer law attorney
about your rights. The first consultation is usually free, but be sure to ask. You’ll
find more information in the Resources section.
Get Help – The Debt Collector
If you think the collector may be violating the law, get help from a consumer law
attorney with experience in the FDCPA. You have the right to sue a collector in a
state or federal court within one year from the date the law was violated. If you
win, you may recover money for the damages you suffered plus an additional
amount up to $1,000. Court costs and attorney’s fees also can be recovered. A
group of people also may sue a debt collector and recover money for damages up
to $500,000, or one percent of the collector’s net worth, whichever is less.
Report It – The Debt Collector
As we have discussed in this chapter, you need to know your rights. Report any
problems you have with a debt collector to your state Attorney General’s office
(go to the naag.org website and click on your state’s listing). You can also
contact the Consumer Financial Protection Bureau (CFPB) at
consumerfinance.gov. The CFBP has the authority to enforce the FDCPA. While
government agencies don’t usually get involved in individual disputes, they may
take action against a collection company when they see a pattern of violations.
Speak up!
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
Debt Collectors, negotiating credit card debt after death, How to Stop a Debt Collector, how to stop debt collector from calling, debt after death
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