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Seeing after time and time again, friends and family have approached me for legal advice about bad debt; I feel it is time I share my expertise with the rest of the world. My credentials are as follows…After working at a law firm that sued those who didn’t pay there debts i realized many people would not have been in this situation if they just would have known how to avoid it. So lets make sure you never fall in this pit. If you have fallen in this pit, this will be enlightening for you. When bill collectors call, you feel out of control so here are a few tips to make you feel more powerful.

AVOIDING THE PIT 

Rule NUMBER 1 get disability insurance!!!  Disability insurance should be for a year or more, not 3 or 6 month but a year or more.  This makes all the difference as to whether or not your life is turned upside down, if  you become disabled.  What many don’t know is that when you become disabled it can take years before the government starts paying you disability.  Can you afford years of not working and maintain all that you have.  Chances are you can’t so get disability insurance. Mistake number one for many is not investing in disability insurance. Others of you may have already learned this the hard way and now you have legal terms thrown at you all the time. What do they mean can anything be done?

Do Not make Mistake number 2. 
When a company tells you we will write it off, or it has been written off this does not mean your debt has ceased to exist.
You are relieved you think it is all over.  The reality is it has all just begun.
Just because you paid a credit card in full does not mean you closed the account. 

Mistake number 3 forgetting to close the account, or maybe not caring enough too. Regardless make sure you get a letter stating “this account has been PAID in FUll.” Many are not told about this letter so seeing they don’t know any better they don’t request it. For one reason or another they don’t get the letter, rather than following up and getting this letter they forget. Or they think it isn’t important. As a result of not getting this simple letter, there credit may be hurt for the next 7-11 years.

Mistake number 4 My best recommendation is don’t pay other peoples debt with your checkbook.
having a friend or family member who asked you hey can i give you a 100 dollars in cash and you pay the credit card company with your check. You being the good and even ignorant person that you are, agree.  This person for one reason or another never pays off this credit card and that should have no relevance to you but it does. All of a sudden your credit is hurt, how did this happen. What happens is your name gets programmed in there system.  Than when this debt is written off another company purchases your unpaid account. They don’t really have the details or paperwork on you but they have your name and assume you have a joint account. Next thing you know your credit displays you have this unpaid debt. Proving it isn’t your is very challenging. It turns into a nightmare. You tell them it isn’t your debt but the bill collectors have heard that from every one that they call so they don’t take you seriously. Not with out proof.  How do you prove it?

ALREADY IN THE PIT?

Bill collectors when they call you are after key things, one your place of work, your bank name, these will be used to garnish you.
Once your debt has made it to collections If you ever make monthly payments with your check than they have your bank name.

Mistake 5 not investing in a waterproof fireproof safe.  It must be both, put in there your debt letters that state paid in full settled in full. Put not just that letter but the proof of that payment stapled to it.  Sometimes that proof is crucial.
A debt that is written off is not paid in full.  Written off no matter what they tell you means they will resell the account.
A debt that is resold accumulates interest, a lot of interest.  In the end you pay a 1000.00 to many thousands extra or more. If you don’t care about it because you think it won’t effect you you are wrong.  

If that debt makes it to a collection agency that has a law firm these are a few legal actions you should expect:

#1. You can be sued, you can not go to jail if you don’t pay off your debt.  Getting served is embarrassing, it can happen anytime anywhere they will try to track you or any family member down. The moment they do you are on a time crunch to pay that bill.  No more negotiating is open to you.  They will go to court on a set date and time and when they confirm it is your debt,not showing up counts as confirming it is your debt than the collection agency obtains judgement.  When that judgement is obtained it is similar to having a bankruptcy on your credit. It is very damning to your credit.  Do everything to prevent it from getting to that point. Once they obtain judgement is when you can expect the garnishing to begin.

#2 In addition you could go to your own bank account and be denied access.
A freeze is placed on your bank account, what is happening, you are being garnished.  If you are being garnished it means any money that was in your bank account when they placed that freeze seizes to exist.  At least the portion you owed them.  In addition since your account is frozen, any check that was suppose to go through or automatic payment cannot go thru, hence you accumulate a lot more charges.  You have no control for 30 days straight no access whatsoever to your money. Even if you have a joint account your spouses money will be frozen too.  IMPORTANT RULE OF THUMB********whatever your social security is attached to can be garnished.
Ranging from joint bank accounts to your children’s savings account to your home (sharing a title), your car, anything.  #3 We can not take your home but a lean can be placed on it. What that means is the home can’t be resold until you pay off that debt.  The longer you wait to pay the debt the more the thousands accumulate. All of this could have been avoided if you just paid of the debt to begin with, and if you really couldn’t than at least sacrifice the joint ownership to single ownership to prevent garnishment.  Yet even though you run you can’t really hide. 

#4 Eventually if you don’t tell them where you work, they will find out. By not telling them you simply slowed them down and built some time for yourself. When they do they can force the job to pay a large portion of every paycheck to them (20%).  If you are a government employee often that means you loose your job. At this point You can’t do anything to make the garnishing stop except pay your debt in full. Not the one you originally had but the one with all the additional legal fees included.  Before garnishing you are offered settlements after that you will not be offered anything.

The worse cases are fraud cases, someone opened an account in your name.  If you didn’t go to the police straight from the get go, chances are you won’t be believed if you wait until a legal collection agency is knocking at your door.  If it really is fraud, by the time it goes to court make sure you show up. It will be during a work day with little to no notice of a heads up.  Go to court it is your only salvation.  The judge will ask you is this your debt. If you say no and show any proof you can such as police reports whatever, than the law firm can’t obtain judgement.
It doesn’t mean the debt is gone, often it will continue to be sold from one agency to another and this hassle will last 11 years from the date the account was opened.  Once 11 years are up the statues of limitation prevent any one to collect.

If  social security  is your only source of income you cannot be garnished.  However the legal collection agency requires evidence your on social security, these days with so many scams you must be positive it is a law firm calling you and not a scammer. Most often the elderly which aren’t as trusting don’t send us the proof
needed and in the end a freeze or garnishment is placed on their bank account. As a result the elderly debter is unable to get medication but are more than willing to provide us with evidence of being on social security.  It takes many many days (15) to remove the freeze and it totally turns the elderly lives upside down.  It was the most
painful thing for me to witness seeing i have a soft spot for the elderly.  And i wouldn’t recommend that you just give the sensitive information needed just to anyone who asks.  It is all very risky and if you have a member that could help you handle this and make sure it is a legit agency collecting than so be it but do be careful.

If you do pay a debt collection agency all of the money owed or any company, than get a paid in full letter. Just because you pay off your debt doesn’t mean they will not sell your account by accident. WE ruined the lives of people who swear up and down that they paid this debt off to a previous company but because they where never given a letter stating the key words PAID in full, or settled in full than it isn’t paid as far as any collection agency is concerned.  Often what i recommend is that you have them fax you a letter stating that if you commit to paying x amount that
the account will be considered paid in full or settled in full.  That way if you do pay it and you don’t keep up with getting the letter stating the account has been paid in full or settled in full you at least have the proof that you did commit to paying it with the proof of your check that cleared the bank account. Yet I insist you get the latter.  Getting both doesn’t hurt either.  Just so you know just because something gets removed from your credit does not mean that you are free of that debt if it gets reposted if you don’t have your proof being that sif or pif letter.
Put these letters in your safe.  One woman’s house burned down and her proof was gone. She had to repay it all. Save all letters for 11 years.  after 11 years the statutes of limitation for most things should expire.

Feel free to comment and ask questions or add on. Our economy is in a recession and we need to team up to educate those who may not know.

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