Showing posts with label collectors. Show all posts
Showing posts with label collectors. Show all posts
Tuesday, February 4, 2014
Credit Card Authorized Users Hounded By Debt Collectors
Lets say that six months ago you had no credit whatsoever. Knowing that you needed to build a credit rating, you asked your friend to add you onto his credit card as an authorized user. The credit card company then began reporting his credit card history in your name as well as his. This established a credit report for you. Although the authorized user account didnt contribute to your credit score (it only does so if the authorized user is an immediate family member, such as a parent or spouse) it did create a stable credit history.
Fastforward three months and your best friend loses his job. Hes using his credit card to make ends meet but eventually succumbs to the financial pressure and defaults on the card. The collection calls commence...and guess who theyre calling?
YOU
Theyve called him, of course, but he has no job and no assets. You, on the other hand, are finally doing well for yourself and have a bit of extra money to tuck away each month. Now the collection agency is threatening you with bad credit and – could it be? – a lawsuit if you dont pony up the cash to cover your friends defaulted credit card bill.
But know this: Authorized users are not legally responsible for credit card debt the primary card holder incurs. Too many consumers are frightened by calls from bill collectors over debts they arent even liable for. Dont let it happen to you. Send the collection agency a written notice informing the company that you are merely an authorized user on the account and, as such, are not responsible for the debt. Note that the company is violating the Fair Debt Collection Practices Act by informing you, a third party, of the primary account holders debt. Demand that the collection agency never contact you again.
And if you havent already, contact the credit card company and remove your status as an authorized user. The longer the account remains on your credit report, the worse the situation becomes.
ReadThe RestEntry..
Fastforward three months and your best friend loses his job. Hes using his credit card to make ends meet but eventually succumbs to the financial pressure and defaults on the card. The collection calls commence...and guess who theyre calling?
YOU
Theyve called him, of course, but he has no job and no assets. You, on the other hand, are finally doing well for yourself and have a bit of extra money to tuck away each month. Now the collection agency is threatening you with bad credit and – could it be? – a lawsuit if you dont pony up the cash to cover your friends defaulted credit card bill.
But know this: Authorized users are not legally responsible for credit card debt the primary card holder incurs. Too many consumers are frightened by calls from bill collectors over debts they arent even liable for. Dont let it happen to you. Send the collection agency a written notice informing the company that you are merely an authorized user on the account and, as such, are not responsible for the debt. Note that the company is violating the Fair Debt Collection Practices Act by informing you, a third party, of the primary account holders debt. Demand that the collection agency never contact you again.
And if you havent already, contact the credit card company and remove your status as an authorized user. The longer the account remains on your credit report, the worse the situation becomes.
Sunday, January 19, 2014
Collecting Debt From the Dead Survivors Rights Against Collectors
When I was in my late teens, my father died. He wasnt feeling well one evening so he went to bed early...and just never woke up. He left behind some debts that ended up in collections and before too long, collectors were calling our house on a semi-regular basis. My mother wasnt emotionally capable of taking these calls, and I was trying to take care of her the best way I knew how: by fielding away my fathers creditors. My story to any collection agencies that called was that my mother had packed her bags and left myself and my father three years prior and I had no idea where to find her. Once I even mustered up some fake sobs and asked the collection agent if he found her, would they please call and tell me?
Long story short, I didnt have to give the collection agencies a lie when they called to collect after my fathers death. If I had a time machine, one of the things I would do is go back in time and give my young self instructions on how to handle this. I cant do that, but I can give those instructions to you.
But first, the basics.
Debt After Death: The Probate Court
When a person dies, that individuals estate goes into probate. The estate isnt limited to property the deceased owned, but encompasses all of his/her worldly assets (there are some exemptions that are not included in the estate, but they arent relevant for the purpose of this post). Its the creditors responsibility to file claims with the probate court against the estate within the time limit set by the state. At the end of the probate period, the court "settles" the estate by paying off creditors that filed legitimate, timely claims and turning the remainder of the deceaseds assets over to his heirs.
Oftentimes, there are creditors that dont get paid. Those creditors, unwilling to do what theyre supposed to do and write off the account as a total and complete loss, "accidentally" sell that account to a collection agency. Thus, they get some scratch for the debt while simultaneously passing the buck to someone else.
The natural course of events transpires and debt collectors begin calling the deceaseds house nonstop. The surviving family members inform the bill collectors that the debtor is dead, but the debt collectors dont believe that. The family might even send the collection agency a copy of the death certificate. Sometimes, this is the end of the story, but more often than not the dog and pony show is just beginning.
You Owe Your Dead Parent/Husband/Wife/Brother/Grandmothers Debt!
First and foremost, debt collection is an industry with a high turnover rate. Agents dont stay at the job very long. Its just too disheartening and most people arent nasty enough – or desperate enough – to make that a long-term profession. Because of this, bill collectors rarely have the training and experience necessary to know all of the small ins and outs of collection law – especially when it comes to the deceased.
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| Make the collection calls stop |
To make matters worse, bill collectors work on commission. The more money they collect, the more money they make. This gives collectors who know better a strong incentive to toe the line of the law or even jump over it entirely. Most consumers know their basic rights, but have no idea how to handle debt collection activity after the death of a loved one.
So the debt collector calls and demands that you pay the debt of your husband/sister/brother/grandparent and you say..what? Youve been put on the spot. You know nothing about this debt, but this person says you have no choice but to pay it. If the collector is particularly nasty, hell threaten to do something like sue you, garnish your wages, take your car and home or ruin your credit rating. If youre like many scared consumers, youre blinded by grief and confusion and you either promise to make a payment or worse – give the debt collector your banking information to allow the company to debit the money directly from your bank account.
How the Law Protects Survivors
Heres the first thing you need to know. With few exceptions, you do not owe this debt. Let me say that again for emphasis. YOU DO NOT OWE THIS DEBT. Got it? Good.
The law is a grey area as to whether or not a bill collector who knows your loved one is dead can still call and ask you for payment. The Fair Debt Collection Practices Act makes it perfectly clear that collectors can only discuss the debt with the debtor, not a third party (in this case, you). But when the debtor is dead, the debt collectors almost always ignore this rule and, to the best of my knowledge, theres no case law on this yet.
But one thing is painfully clear: a bill collector can never, ever threaten someone with legal action they cannot actually take. The collectors cannot lie to you in an effort to scare you into paying off your dead loved ones debts. Theyll do it without blinking an eye, but its illegal.
(If youre curious about just how low collectors will go to collect the debts of the deceased, this New York Times article, Youre Dead? That Wont Stop the Debt Collector is both fascinating and cringe-worthy at the same time.)
What To Do When the Collection Calls Start
When your phone starts ringing off the hook with calls from collectors wanting you to pay off the deceaseds accounts, your first course of action should be to inform the collector that the individual has passed away and ask for an address to send the death certificate to. Contrary to what you may believe, most debt collectors arent evil beings sent from the bowels of Hades to terrorize the living. Theyll give you the correct address and hang up the phone. So here we go, step by step:
1. Get a copy of your deceased loved ones death certificate.
2. Write a cease and desist letter to the collection agency noting that the only individual legally responsible for paying the debt in question is dead and that the company is not to contact his/her family members any further.
3. Mail the death certificate and cease and desist letter to the collection agency via certified mail with a return receipt requested.
4. Repeat the process for every collection agency that calls until the calls finally stop.
5. Sue at your discretion.
Exceptions to the No Liability Rule
In rare circumstances, family members can be liable for a deceased loved ones debts. Namely, if you were a joint account holder for the account or you live in a community property state that applies the community property rules to debt as well as assets. Thats important. Collection agencies and creditors alike would love for all consumers to believe that living in a community property state is enough to be saddled with their spouses debts upon their death but it simply isnt the case. All community property states treat debt after death differently, so know your states rules before you assume you have to pay your deceased family members collection debts after theyre gone.
Related Posts:
Send a Cease and Desist Letter to Debt Collectors
Fighting Collection Agencies
Tuesday, May 28, 2013
How to Respond to a Bill Collectors Lawsuit
Summons and Complaint: Notice of the Lawsuit
When a bill collector files a lawsuit against you, the company is legally required to send you a summons and complaint package. The summons serves as official notice of the pending case while the complaint lists the collection agencys allegations against you. Basically, the complaint says "Were suing because you didnt pay your debt. Heres what you owe."
If you dont file an Answer with with court within the time frame specified in the paperwork, youre classified as a no-show. Fail to respond or show up in court and guess what? The bill collector wins the lawsuit by default. It can then pursue your assets through wage garnishment, bank levies, real estate liens and even, in some states, sending a sheriff to seize your personal property, such as jewelry and electronics.
ReadThe RestEntry..
When a bill collector files a lawsuit against you, the company is legally required to send you a summons and complaint package. The summons serves as official notice of the pending case while the complaint lists the collection agencys allegations against you. Basically, the complaint says "Were suing because you didnt pay your debt. Heres what you owe."
If you dont file an Answer with with court within the time frame specified in the paperwork, youre classified as a no-show. Fail to respond or show up in court and guess what? The bill collector wins the lawsuit by default. It can then pursue your assets through wage garnishment, bank levies, real estate liens and even, in some states, sending a sheriff to seize your personal property, such as jewelry and electronics.
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| Guess who? |
Fill Out the Complaint Attached to the Summons
Before I delve too deeply into this, I have to state that every district in every state does things their own way. The basic process is the same across the board, but dont expect your summons and complaint forms to look like summons and complaint all over the country. It isnt going to happen.
The typical complaint lists each charge the bill collector made against you with the court. Next to these charges will be one of two things or both:
1. Multiple choice options for selecting whether you agree or disagree with the debt collectors claim.
2. Blank spaces allowing you to explain whether you agree or disagree and why.
If you agree with all of the collection agencys claims, returning your Answer to the court is pretty pointless. Youre getting a court judgment levied against you either way at that point. If you dont agree or if you simply want to avoid the negative consequences of a court judgment from a bill collector, you must select "disagree" when given the option.
It is possible to answer "agree" to a certain claim from the collector yet disagree with another. Always be careful when agreeing to a collection agencys claims in the summons paperwork. Generally, if you disagree with any aspect of the debt collectors allegations its best to simply mark that you disagree with the claim. You can always explain your position at the lawsuit hearing.
State Your Defense When Answering a Collection Summons
While merely taking the time to fill out and file an Answer with the court lowers your risk of the lawsuit going any further (more on that in a minute), it doesnt provide you with airtight protection from a collection judgment. You must have a defense to lean on in court – provided the bill collectors case ever gets that far.
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| Over time, the SOL expires |
Some defenses are better than others. Take the statute of limitations defense for example. In this defense, the debtor claims that whether or not he owes the debt is irrelevant because the states statute of limitations for a debt collection lawsuit has already passed. Thus, any lawsuit the collection agency files based on that particular debt is illegal.
Regardless of the defense you opt for, remember to include your defense with your summons. If you do not have room to write in additional information about your defense, type out a letter noting the defense you plan to use on a separate sheet of paper and attach it to the debt collectors summons and complaint.
Answering a Summons Decreases Lawsuit Risk
When you answer a summons, it decreases the chances that youll end up riddled with anxiety, trying to defend yourself in court against a bill collectors much more experienced attorney. The collection agencys goal, however, isnt to fight you and win – it doesnt want to fight with you at all. The company files its suit hoping that you will ignore the summons and complaint and the court will award a default judgment in the debt collectors favor.
Because most debt collectors accounts dont complain complete information, its exceedingly hard for a collection agency to prove in court that you legitimately owe a debt. This inability to prove your responsibility for payment often makes it difficult for the bill collector to prove its case in court. This is especially true if youve taken the time to educate yourself about what to expect in court and how to walk away a winner with your finances still intact. The New York NEDAP has information regarding what rights collection agencies and consumers have during a lawsuit and how to defend yourself. I highly recommend checking it out if you receive a summons and complaint from a debt collector.
NEDAP – Defending Creditor Lawsuits
While some collection agencies will proceed with the lawsuit even after you file an Answer, few will do so if you state a solid defense you plan to use at the hearing. When you respond to a bill collectors lawsuit, the company knows that winning the case just became a good deal harder and will often withdraw the lawsuit in an effort to save time and money.
Related Posts:
Make Yourself Judgment Proof
The Debt Collection Lawsuit Threat
How a Collection Agency Debt Can Turn Into a Default Judgment
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