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He is an IT Consultant turned Blogger, Interested in Technology, Personal Finance, Humans and Life...
With bankruptcy it depends on what is there, after the feds and state get paid, and proportionally distributed by amount owed to each creditor.
Ignore the phone calls for about a year, gather up about half owed, call the collection agency and tell them this is all you got, and it’s all you are going to get to settle this account. They may bicker 100 bucks one way or the other. If you don’t like it hang up, and call back in a month, and do it over. Hell I have had them even send me unsolicited offers that reflect the above scenario.
I used to run a collections department for 8 years, we had over 20,000 accounts, with local districts, HMO’s, Veteran’s Affairs and private citizens, guess how many people worked there? 4. The stress of legitimizing an amount is not worth the payoff because that debt is really purchased for maybe forty cents on the dollar, at most. Sometimes they use a fee based collection system where a flat fee is taken for each account to see it through litigation beginning to end. Those are usually just as willing to deal before it goes to court.
Another method is setting up a payment plan, or just start sending them small amounts every month in order to keep out of court.
Here’s a great letter for responding to collection agencies, making them legally put EVERY thing in line is a great way to get them to drop the debt all together. I prefer this when I feel like I am getting screwed. Either way.
Today’s Date
Your Name Your Address
Collector’s Name Collector’s Address
Dear {},
I am writing in response to your (letter or phone call) dated {}, (copy enclosed) because I do not believe I owe what you say I owe.
This is the first I’ve heard from you, or any other company on this matter therefore, in accordance with the Fair Debt Collection Practices Act, Section 809(b): Validating Debts:
(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
I respectfully request that you provide me with the following information: (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) Provide a verification or copy of any judgment (if applicable); (4) Proof that you are licensed to collect debts in (insert name of your state)
Be advised that I am fully aware of my rights under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. For instance, I know that: (a) because I have disputed this debt in writing within 30 days of receipt of your dunning notice, you must obtain verification of the debt or a copy of the judgment against me and mail these items to me at your expense; (b) you cannot add interest or fees except those allowed by the original contract or state law. (c) you do not have to respond to this dispute but if you do, any attempt to collect this debt without validating it, violates the FDCPA;
Also be advised that I am keeping very accurate records of all correspondence from you and your company including recording all phone calls and I will not hesitate to report violations of the law to my State Attorney General, the Federal Trade Commission and the Better Business Bureau.
I have disputed this debt; therefore, until validated you know your information concerning this debt is inaccurate. Thus, if you have already reported this debt to any credit-reporting agency (CRA) or Credit Bureau (CB) then, you must immediately inform them of my dispute with this debt. Reporting information that you know to be inaccurate or failing to report information correctly violates the Fair Credit Reporting Act § 1681s-2. Should you pursue a judgment without validating this debt, I will inform the judge and request the case be dismissed based on your failure to comply with the FDCPA.
Finally, if you do not own this debt, I demand that you immediately send a copy of this dispute letter to the original creditor so they are also aware of my dispute with this debt.
Signature here Your Printed Name
Very Helpful! Thanks..
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Sefas last blog post..What Every Consumer Needs to Know
i have lost my job and owe over 40.000 in credit card debt what is going to happen to me if i can not in any way repay this. will i go to jail. my circumstances are that i am now totally disabled and will probably never be able to work again. and will never be able to pay this debt
David, I would recommend READING THE ARTICLE! It answers your questions.
i own like $8.000 plus two houses and a car… i was doing my resident ship and everything was fine but now immigration said that i was married just for my papers and that is not true so i stop paying my bills i can’t even work in USA any more until this is clear.. so what i did was send letter to all debts telling to charge the ins (immigration) because they don;t allow me to work here any more… jajaja I’m cool i don’t need a work any more i have good saving and off course the money is in my country already.. and i love this country honestly god bless America but i was a good citizen i went to college i was in the university and i am not one of those crappy Mexicans but hey this country sucks when they choose who they want to live here and who they not.
I am going to lose my job soon.. and I have about 9000 in debts.. do let you hold payments till you get a job?
I am going to lose my job soon.. and I have about 9000 in debts.. do they let you hold payments till you get a job? does anybody have any suggestions??
It was the banks fault and the banks should pay!
After watching my family’s net worth tumble, through no fault of our own, I stopped paying my credit cards last November. Just recently I was able to settle with the first company for about 60 cents on the dollar. I’m sure the rest will follow, since they are in worse shape than I.
Sure, I’ve hurt my credit score but frankly I am not concerned. I have a mortgage, with a decent rate, that I will continue to pay. And I own my cars outright. (Anyone that would take out a loan on a new car AFTER LAST FALL is asking for trouble, IMO – especially from GM. Save your money!) No one is certain the banks will ever lend freely again, and who needs them? Last fall, we all came dangerously close to watching our Wal-Marts become trading posts. The system collapsed, and if it wasn’t for the government throwing money at the banks a Mad Max-type economy might have replaced capitalism. And who knows, it still could since no one is sure the “bad bank” solution will work.
No matter what, don’t let the banks bully you. At this point, they need us MORE than we need them.
I did the same as the fellow before me, but i didn’t wait for it to get into collections. I refused to pay for just under 3 months, until they settled with me. They gave me ZERO percent interest until i pay off the entire balance, which essentially cut my bill in half.
They just wanted their initial investment back i suppose. I stopped paying because they raised my interest rate from 9 to 19 for NO reason. Its just a game of chicken, and if you aren’t worried about damaging your credit a little bit (who cares its worthless now anyway) then do the same.