When it comes to talking with debt collectors, Silence is Usually Golden.
The biggest risk you face when dealing with debt collectors – especially when sued for debt – is that you will do or say something wrong. Be careful when talking to debt collectors, and know that anything you say could come back to haunt.
But if you have something it is in your interest to say, then say it – and hang up afterwards.
Debt collectors and their lawyers are not, of course, all the same, but the process of litigation, and the relationship between debt buyers and the people they’re chasing for money are pretty similar. It will help you to know the nature of the beast that is debt law.
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This video was originally part of a tutorial on what people facing debt trouble should do.
Like most things, trouble can be analyzed as a series of discrete steps you can consider. And you can fix them one thing at a time, too.
| Life before Trouble | (this may be mythical) |
| Distant Rumbles | Something is not right – you know you aren’t doing something you should, either to prepare, protect, or conserve. |
| Closer Rumbles | Rumors of Doom – bills mounting, spouse complaining, you complaining, boss warning. |
| Dark Clouds in Sky | Collection letters and calls, serious conflict with important people |
| Debt Collection | |
| Litigation | Has its own process (See Litigation Timeline) |
| Clean-up and Move on | Win or Lose, life goes on. The quality of your life depends on handling this well. |
This time-line probably doesn’t tell you anything you don’t already know. Our point here is to “build system” to help you approach things systematically. It’s easier to take things one step at a time and in order than to take everything on at random. So much of what makes debt troubles so hard is that they are overwhelming and dispiriting. If you break them into simple steps and allow yourself the patience to do them one at a time trusting the results to add up over time, you can handle the problems.
We also suggest that you think “strategically,” which means keeping your end-results in mind from the very beginning.
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If you have been watching bills pile up or fear answering your phone because of debt collectors, this product will be good for you. It includes information about your right to require “verification” of debt and a sample letter you can simply copy and use on debt collectors that will often make them simply go away.
Also includes an article about your right to force debt collectors to stop talking to you at all (“cease communication letter”) and advice as to what effects this might have on you in the future, along with a sample letter to use to make the debt collectors stop communicating with you.
And it includes an article about finances and planning that will help you get ahead and keep the debt collectors from ever bothering you again.
These materials are designed to help you gain control of your debt, whatever it may be. The first step is to control the way and times the debt collectors contact you – if at all, and to assert your rights to force them to verify the debt. Beyond that, though, you need to take back control over your life by controlling your budget and improving your ability to earn and keep money.
You’ve probably seen (we have) simple debt verification letters selling for fifty or a hundred dollars. With this package you get two sample debt verification letters designed by a professional who has been in the business a long time. In addition, you get a “cease-communication” letter you can use to make the debt collectors stop contacting you altogether, along with information that will help you know how to use the letters with confidence. Plus you get actually meaningful and helpful advice on reining in your debts permanently. Click here to see more on this product.
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Sometimes it just rains.
This is the second part of this article. Click here for the first part. In the first part we talked about how people sometimes get lucky in defending themselves from debt lawsuits, but that doesn’t make them “good” – it makes them lucky. The question is, how can you increase your chances of being lucky, too. Should you do what worked once for somebody? or do what has repeatedly worked for a lot of people in a lot of ways over time? The answer is obvious. The rest of this article talks about how you can be lucky, too.
A debt lawsuit starts with a “petition” – although it is sometimes called a “complaint,” and there may be other names for it, too: it’s the statement that you supposedly owe the debt collector money, some legal reasons why the court should order you to pay, and a “request for relief” (also known as the “wherefore clause”). The debt collector files this petition with the court and needs no permission to do so. When they file it, the also get a summons.
Some courts let the debt collectors issue the summons, too, although technically it comes from the court. The debt lawyer, as an _ of the court, writes it up, a clerk stamps it (or they may come pre-stamped), and the power of the court – over the case and over you – has been invoked. The summons tells you when to be at court and what to expect (“default judgment for the amount sued upon”) if you fail to show up. In all courts of which I am aware, proper service of the summons, which can happen in several ways, is necessary for the court to have jurisdiction over you.
What the debt collectors know is that somewhere between 80 and 95% of people who are served will not show up in court. If you do show up, and the other side does not – you should immediately ask the case be dismissed, and many courts (perhaps most) will grant that motion. That would be lucky – but only if you were there and knew enough to request the court to dismiss the case, as absent the request the courts will often simply continue (postpone) the case until the next court date.
Assuming the other side actually appears for court as scheduled, your next step is either to move to dismiss the case or answer the petition. Check your rules to see what the rules of pleading are, and if the plaintiff’s case does not comply – and they almost never do in Pennsylvania, for example – you might file a motion to dismiss or its equivalent (Preliminary Objections in PA). Often enough they don’t comply in whatever jurisdiction you may be in, and a motion to dismiss can be a quick way out of the lawsuit. Or you file an Answer. Whichever action you take, the debt collector might choose to walk away from the suit at this point: as I have often pointed out, there are a lot easier people to chase than those who file bothersome Motions to Dismiss or Answers.
Often the debt collector will not walk away at this point, so the next thing you must do is both serve discovery on it and answer discovery if they serve it on you. It is important for anybody to serve discovery on the other side first, but especially for pro se debt defendants: you would never believe the games the debt lawyers play – you want to see those games in action before you start responding to their discovery.
Sometimes the mere service of discovery drives the debt collectors away, but most often, of course, it does not. You will receive vague and unresponsive “answers” like “pursuant to national banking regulation, credit card applications need not be retained beyond a period of two years” (What does that say, anyway?) or “Plaintiff is conducting a search for records and will make them available to defendant as they come into Plaintiff’s possession.” It is the task of the pro se defendant to push past these objections and vague statements to discover what, if anything the debt collector has, and to force it to admit it has nothing more. This, of course, is the reason for a motion to compel. If you do that appropriately, the chance of the debt collector dropping the case is actually pretty good.
Performing legal actions with no reason other than to increase the cost and effort the other side must undertake in order to win its case is “bad faith” in litigation. An action with no reasonable basis in law or fact is “frivolous.” Both of these sorts of forbidden actions and motives can create significant problems for a person caught doing them. None of the actions listed above, however, come anywhere close to these forbidden zones: they all accomplish purposes for which the discovery and pleading rules were designed. The motions seek to weed out unwinnable claims, and the discovery probes the other side to find out what, if anything, they have in support of their claims. Following this broad pattern, you are not only increasing the chances that they will walk away at any point leading up to trial, but you also increasing your chances of winning if the matter does go to trial.
Lawyers are constantly performing a balancing act, always deciding whether it is potentially more profitable to act in one way rather than another. This is not because lawyers are greedy – although many of them are, of course – but is in fact part of their ethical responsibility to act in ways which promote their clients’ interests. These interests are virtually always financial, and thus as you continue to defend yourself with skill, you raise the issue more and more insistently that the lawyer would be better off pursuing other claims. When your skill has actually pushed the lawyer to take the step of cutting you loose, you are “lucky,” and the debt collector drops its suit. If you have a pending counterclaim at this point, you can force it to do so “with prejudice.”
This article talks about an important piece of the bad debt puzzle: debt negotiation and settlement.
Pretty much everybody knows what debt negotiation is, at least in theory. It goes like this. Obviously there’s somebody who says you owe a bunch of money, you negotiate, and you end up paying either less than or none of what you supposedly owe. That’s the view from a mile up. Sweet, isn’t it?
It sounds like free money, but it really isn’t. If you think of it as an opportunity for something free, you will not be able to do it – you’ll be left wondering what went wrong as your financial security goes out the window. Instead, debt negotiation and settlement is a cross between a hard-nosed, back-room negotiation and a game of “chicken.”
You know, it’s interesting that people rarely ask what debt negotiation is all about – what are you “giving up?” What are they getting in return for the large amounts of debt you hope for them to give up? Suppose you owe a credit card company $20,000 and you have been making the minimum payments most of the time – but sometimes you can’t, so they have hit you with a bunch of fees, and you’re watching the debt pile up at an incredible rate. What do they get if they agree to take a single payment of $1,500?
It feels like you’re stuck – there may be no way you can make payments that would significantly reduce that debt. So what do you have to negotiate with? A whole lot of “nothing.”
You have risk and the difficulty of collection. In other words, you have the fact that unless you agree to pay and really try to do it, they will likely get nothing at all – or will get much less than they could.
That doesn’t sound like much, does it? And yet it is much more powerful than you might suppose. Anybody you owe a lot of money to is feeling the pinch. Even a large credit card bank, which doesn’t need your money for its survival by any means, is watching that debt mount and realizing that every time it gets higher, you get less likely to pay it. At the bottom of your options may be the possibility of bankruptcy, but they know that long before that you will simply stop paying and dare them to sue you.
In essence, that it what makes debt negotiation work. You stop paying them and dare them to sue you – and then you offer to pay them again, only much less. Sounds crazy, doesn’t it? But it works if you take it seriously and don’t think of it as some sort of gold mine or a way to “get away” with something. Instead, think of it as a significant part of a serious turn-around in your life. It has several costs – you should have no doubt about that, and it is something you do when there are no better choices available. There’s a chance that withholding payments will result in your being sued, and it almost certainly will result in at least a temporary trashing of your credit report. How you manage these risks and costs will determine, more than anything else, how well you do in negotiation.
There are ways to make it work much better than others, though. There are things you can do to manage your risks of being sued, and when the negotiations actually begin, a few techniques that can help. The main thing about debt negotiation and settlement, however, is that it, like other kinds of negotiation, is much less about negotiation than positioning. People only give you what you want because they believe it is the best outcome for them, too – the question is, how to do you give them that feeling when you’re asking to pay ten cents on the dollar of debt? And how do you make the risks to yourself “acceptable?”
How you answer those questions will determine how good a deal you get from your creditors.
