Dealing With Debt Collectors: Taking Control!

Adrian Klenz Financial Literacy Specialist HUD Certified Housing Counselor At Western Dairyland ext

 There are roughly 4100 debt collection companies in the United States.  They employ roughly 450,000 people  Businesses placed $150 billion dollars in debt into collections in 2010  Debt collections companies recovered $40 billion  By 2016 there will be an expected 23% growth in the debt collection industry. Source: Huffington Post 9/21/11

 July 29, 2014 report shows 35% of Americans have debt in collections. (USA Today)  Average of $5,200 in collections.  Late payments is the biggest factor in your credit score 35%.  25% of adults have never checked credit.(FindLaw.com)  40% of people failed basic credit quiz (Consumer Federation of America)

 DEBT COLLECTORS BUY DEBT FOR ABOUT 5 CENTS ON THE DOLLAR. So if you owe $100 to a cable company they probably sold that debt for about $5.  DEBT COLLECTION COMPANIES HAVE A RECOVERY RATE OF ABOUT 16-20%. THEY DON’T WANT YOU TO KNOW THIS!  THIS IS YOUR ULTIMATE WEAPON!!

94 % of mass bought debt has little to know information. Expired debt bought for as little as a penny on the dollar. Collected roughly $3 billion dollars in expired debt last year.

 Get the facts:

Look at all 3 credit reports: Transunion, Experian, & Equifax. Make a list of all your debts. Make sure you know everything out there. Roughly one-third of credit reports have errors Check yearly Debt collectors pray on people’s lack of knowledge.

 Positive Credit-7 years  Late Payments-7 years  Collections-7 years  Chapter 7 Bankruptcy-10 years  Chapter 13 Bankruptcy-7 years  Foreclosure-7 years  Public Records-7 years  Tax Liens/Student Loans-until paid

 Go through the three reports and add up your total debts. Keep in mind you aren’t sure if they are accurate yet. It gives you a sense of what you will need to pay off your debts assuming they are legit.

Secured vs. Unsecured The loudest isn’t the most dangerous!!

 50% for new debts (less than 1 year to 4 years)  25% for old debts 5-7 years.  Lets say you owe $2500 try to save $1250.  Remember how debt collectors buy for pennies on the dollar? Remember how they only settle roughly 16-20% of total owed?

 The $1000 rule  These letters don’t make your problems vanish. The debt doesn’t go away.  Keep notes and a file on your debts. Phone calls, letters. Dates, times, and names.  CERTIFIED MAIL  Keep copies of everything!

 If you get a court summons NEVER NEVER NEVER ignore it. Make sure you show up.

 Sometimes it’s a good idea to mention public benefits.  Mentioning bankruptcy can get their attention but you have to be careful.  Don’t lie but don’t be afraid to “spice it up.”

 Debt collectors must call between 8am-9pm (your time zone).  If you ask them to stop contacting you in writing they have to honor it.  Can’t talk to 3 rd party without identify their name but they CAN”T state you owe money.  Can’t threaten you, swear, or call repeatedly.  Can’t advertise or publish your debt.  Can’t threaten jail.  Can’t threaten legal action unless they are actually going to take it.

 Debt collectros are sneaky. They want to get you to enter into an agreement so they can keep you on the hook for as long as possible.  The only exception is if your debt is over $1000 and there is the fear of being taken to court.  If you have to enter into a repayment agreement you must get it in writing!!

So you have saved enough money. Now what?

 This is a consumers biggest weapon in dealing with debt collectors.  Sadly it is rarely used.  You have a right to make the debt collector PROVE you owe them a debt.  Remember 94% of mass bought debt has little info.  Consumer Financial Protection Bureau #1 complaint is…

 You must make sure to send all validation letters via CERTIFIED MAIL.  Keep copies for your files.  Watch the calendar. They have 30 days to respond.  What will happen…

 Once again make sure to send the letter via certified mail.  Keep a copy for yourself.  Don’t pay until you get their agreement to your offer in writing.  Always pay with money order or cashier’s check.

 Remember certified mail!!!

 Don’t trust the debt collectors to be honest.  Write Transunion, Experian, and Equifax to ask them to update your credit reports.  Check your credit reports yearly  Roughly one-third of credit reports have errors  Keep your records  Beware the zombies!!  Be patient!

 If you aren’t confident about dealing with debt collectors yourself, seek the help of a financial counselor, credit counselor, or an attorney. Community action agencies like Western Dairyland often have someone like me on staff who can help you.

Adrian Klenz ext.1151 THANK YOU!!