Never Make Part Payments

Never Make a Partial Payment

For a free copy of this article in pdf form, click here: Never Make a Partial Payment

The Set-Up

Suppose you get called by a debt collector about a debt that you might want to pay. That is, you think it’s legitimate, you think the company calling you may be legitimate (subject, always, to proof!), and for other reasons you’re inclined to pay. But you don’t have enough money. “Not a problem!” says the debt collector. “You owe us $2,500, but why don’t you just make a payment of $75 tonight? Then you can pay the rest whenever you can afford it.”

Should you do it?

What you should do

This is a made-up situation, of course, but some variation of it occurs many times every day all over the country. The collector is either nice, and you want to help him out by chipping in “just a little” to help his statistics, or the debt collector is mean, and you think that making a payment will be the fastest way to get her off the line.

Of course you know they’re paid to make you feel the way you do, but that doesn’t really matter. There are times when the way you feel trumps whatever you know – and the debt collectors are paid to know about that, too.

The question is, should you make that little payment?

To Pay or Not to Pay

The question you need to answer first is NOT whether you want to pay. The first question you must ask yourself is whether you can see exactly how you will be able to pay – and not just the payment you’re being asked to make, but all the rest of it. The debt is $2,500. Can you see how you would pay all of that? Can you think of terms that would actually work – as you can see at the moment and without hoping for something surprising and unusual happening?

To be frank, most people being contacted by a debt collector on a bill they thought they should pay can’t see a way to pay it. If that’s you, you should not pay any part of it.

If you can see a way to pay the debt and believe you should, and if the debt collector will agree – in writing – to the terms you think are necessary, THEN you can ask whether you think it’s the right thing for you to do. Often people may conclude it is, for a variety of reasons, and if this is you, then make the deal and whatever payments you agree to. We’re not here to tell you not to pay legitimate debts – only to make sure the debt collectors don’t crucify you.

Why Should You Act as we Suggest?

You should ask the questions in the way we suggest, and act according to the answers you come up with because making a payment is not a legally neutral act. It has major legal consequences.

Making Payment CAN Admit the Debt

We tell people all the time that one of the biggest difficulties debt collectors have is establishing by legitimate evidence that you owe them the debt. Can you see how making a payment seems like admitting you do? The debt collectors will argue that it is an admission, and some courts will buy that argument. Your argument that you only made the payment to make the debt collector feel better or to get them off the phone will cut no legal mustard because that is not a rational thing to do. The courts will hold you to a standard of reasonability, often, that ignores either your compassion or fear or desire for peace and quiet. Paying someone you don’t owe isn’t rational, and there’s a good chance the court will view your payment as admitting you do owe.

Making Payments WILL Restart the Statute of Limitations

One thing most courts agree is that making any payment at all will restart the statute of limitations. That is, if the debt is four years old and the statute of limitations is set to run out next month, your payment of any amount will give them four more years to harass and possibly sue you. And the fact that you paid them will almost guarantee that they’ll use the opportunity since they know you’ll roll over.

I have argued that making a partial payment that does not “cure the breach” (isn’t enough to say you haven’t broken the contract) should not restart the statute of limitations because the breach still dates back to the time you failed to make payment. I think that makes sense, but as far as I know, no court has ever agreed. Every decision I’ve seen on the issue has held that any payment starts the clock running from the very beginning again.

And this is a large part of why debt collectors are so eager to get you to make a payment. It’s also why I emphasize that in asking whether you can afford to pay, I refer to the entire debt. Making a partial payment is a commitment to paying the whole thing whether you mean it that way or not.

Never Make a Partial Payment

All the above factors suggest that, for almost every person being contacted by a debt collector, making a partial payment is a terrible idea. If you are that rare “other person” and can afford to pay the whole thing – and want to – then it’s fine if you do. Most people should steer far clear of the temptation. You can hang up on an angry caller and even make them stop calling. And the nice caller will find her victim somewhere else. Don’t let it be you.

 

Should I talk to a Debt Collector and What Should I Say

If you are being called or harassed by a debt collector, one of the purposes of that debt collector is to get you to talk. Should you? This is going to depend on whether you have anything to say.

Debt Collectors Target Struggling People

As I have mentioned before, the debt collection business is targeted at distressed people. The debt collectors already know you don’t have much money, and they know you probably have other people trying to get money from you. Their job is not to force you to pay somebody—it’s to force you to pay them. Another way to put that is that they are not competing with you—they’re competing with other debt collectors. You are the football in a game between the debt collectors, the string in a game of tug of war. Does that make sense?

Silence Can Be Golden when Dealing with Collections

The job of the debt collector is to get you to pay them instead of someone else. They can do this either by annoying you so much that you pay them to get them off the phone or by establishing a sympathetic connection to you so you gladly do it for the voice on the other end of the line. Both of these methods involve keeping you on the phone and the connection open, and neither of these methods is directed at your well-being. Also, if they can get you to reveal information about your job or bank, or any kind of assets you have, they can improve their chances of making you pay against your will. So unless you have your own purpose for communicating, you shouldn’t do it.

Sometimes it Makes Sense to Talk to Collectors

What might be a good reason for you to communicate? Well, because you want something tangible from the debt collector to whom you are speaking. You could want them to reduce interest rates, waive penalties, agree not to give information on your debt to the credit reporting agencies, or any number of actual, materially beneficial things. If you’re hoping to get a friendly voice or understanding, a debt collector is the wrong person to talk to: they already understand everything they want to know about your situation. Talk to someone else for that.

Negotiate—And Get It in Writing

Don’t be afraid to negotiate. You can ask for anything from them, and in most cases the debt collector could give you anything you might request. So be bold. If you want to settle for ten cents on the dollar, you can ask. They may laugh—but laughter is just a part of the negotiation and doesn’t mean they won’t do it. And if they agree to do anything, you must get the agreement in writing. In a practical sense, it doesn’t count if you don’t get it in writing. You won’t be able to prove it, and in some cases an oral “modification” would not even be legally recognizable even if you could prove it. It must be in writing.

They’ll want something in return. An immediate payment, an agreement to pay by a certain date, something. You can agree to this if you can do it, but you’re spinning your wheels if you cannot, so it makes sense to limit your promises to things you’re sure you can perform. Don’t over-commit, as this may negate the agreement you reach and will almost certainly increase the number and hostility of the phone calls you are receiving. Remember that the debt collector is keeping records of everything you say (so don’t tell them where you work or bank).

Stop Talking to Collectors When You’ve Said What You Need to Say

And when you run out of reasons to keep talking to the debt collector, make sure that you actually stop talking to them. There is always a price for anything you say – you’re giving them free information that they will use to decide to sue you. Sometimes talking to them is worth that price, but if that changes, you should feel no obligation to keep talking.

What about Partial Payments?

We think partial payments are bad unless you know exactly how you will pay the whole debt and unless you understand what making the payment will do to you. To read more on this issue – and you really should if you’re even thinking about making a partial payment, click here: Never Make Partial Payments.

Don’t Talk to Debt Collectors

When should you talk to a debt collector? And why shouldn’t you talk with them otherwise?

You Should Only Talk to them If you Have a Good, and Immediate, Reason to Do so

As a recent commenter pointed out, debt collectors are often “not nice.” But whether they are nice or not, their job is to take your money away and give it to their company. That means that, personality aside, their interests are against yours, and you should never mistake politeness with being on the same side. Likewise, you shouldn’t polite discourtesy for power or anything other than what it is. In this video we review the basic rule of communications with debt collectors: it is rarely a good idea.

Hang up when you’ve said what you need to say

Once you have said what you need to say to the debt collector, if anything, you should hang up.

There are too many bad things that can happen for you to stay on without a good reason. You could make admissions that damage your case (if they get around to suing you), you could give them information they could use to take your money if they sue you and win.

Remember that what lawyers usually hate more than anything is a lack of definite information. Every time you open your mouth and speak to a debt collector, you’re giving some lawyer what he or she needs to decide to sue you. And even telling them you don’t have any money may not be helpful because that could tell them it would be easy to beat you in court.

Less is definitely more when it comes to talking with debt collectors.

Reviving Expired Debt through Trickery

Reviving Expired Debt through Trickery

The banks are always trying to revive debt, through fair means or foul. Here’s a trick you need to be alert for: issuing you a new card with an old balance on it.

The Scam

Here’s how the scam works. I’m sure you know all about statutes of limitations and the way they eventually operate to make old debts uncollectable through lawsuits. But this legal inability does not stretch to a practical prohibition. In other words, just because the debt collectors (or banks, in this case) can’t sue you, they can keep trying to get you to pay the debt back “voluntarily.” And they know that people who have had trouble paying off their debts in the past also have trouble getting credit now – after all, they do their best to make that so.

So here’s what they do: they send credit card offers to the people they can no longer sue, offering them credit cards with reasonable rates and no annual fees – but the only problem is that the cards carry the balance of the old debt. Accepting and applying for the card simply requires accepting responsibility for the debt. http://finance.yahoo.com/news/bringing-expired-debt-back-to-life.html.

What they Don’t Tell You

What the banks don’t tell you is that once you accept renewed responsibility for the debt, you have created an entirely new obligation to the old debt with an entirely new statute of limitations. If anything happens to prevent you from paying the whole amount – at any time – they’ll be free to sue you for the whole amount – at any time within the next several years.

Is it Really a Scam?

There are certainly deceptive features of the program – and a lot of opportunism. People are not generally told or reminded that the debt that is being revived is out of the statute of limitations and couldn’t be collected by lawsuit. And in my opinion, that essential deception suggests that the bankers regard their actions as a scam. Why hide the information if they’re offering such a good deal? Still, it does offer people with troubled debt history access to some credit, and it may be the only opportunity they have. Whether the bank will continue to extend credit after the credit balance is restored to zero (paid off) is a question I have, although it would seem to be in their interest to do so.

Warning

If you get one of these offers, think very carefully before you accept. Doing so will revive a potentially crippling debt that you had escaped and will probably not have any impact on your actual credit score, but it might bring you access to credit that would be otherwise unavailable. Before accepting such an offer, you should certainly make sure you do not, in fact, have other access to credit. Would your credit union, for example, lend you money if you kept a balance with them? How large would the payments on the new card be? How many such payments would it take to equal the amount of credit the card would extend? (i.e., suppose they offer you a card carrying a balance of $5,000, giving you minimum payments of $250 per month, and offering you a credit limit of $300 over that. After a little over a month, if you just saved the money, you would have more money than you would be able to borrow on the card.)

Conclusion

There might be better ways to restore your prosperity than paying a lot of money to someone you don’t owe anything.

Novation Reaging and Reviving Old Debts

Novation, Re-aging and Reviving Debt

This article is a companion article to Reviving Expired Debt through Trickery. Together they discuss a major hazard to pro se litigants and other persons dealing with debt collectors and banks without legal representation, namely the revival of debts that have (or would) expire due to statutes of limitations.

If you are troubled by debts – and specially if you are being troubled by debt collectors, you no doubt are aware that law and the passage of time eventually will put an end to most of those troubles. The debts themselves have statutes of limitations regarding collection, and there are other legal mechanisms that limit the time liability exists. Bankruptcy can also instantly expire a debt, of course, under certain circumstances. In addition, the FDCPA and Credit Reporting Act limits the length of time, and the circumstances under which, bad news can be reported to the public. If you sit tight long enough, then, and do not do anything regarding specific unpaid debts – while at the same time taking certain other, beneficial actions, you will eventually restore your credit rating.

Debt collectors hate all that. They do a lot to try to patch things together to keep it from happening.The result is a Frankenstein for the consumer.

Small Payments

Have you ever wondered why debt collectors are often willing to accept small, token payments from you in response to a collection call? There are at least three good reasons for this willingness. First, they know that if you accept responsibility for the debt and make a payment, however small, you will be much more likely to pay more at a later time. In his book, Influence, Robert Cialdini calls this the pressure of “consistency,” and its power to affect you should not be underestimated. Second, they know that if you accept responsibility for the debt and pay it, you are making a legal admission, of a sort, that the debt is yours. They will argue – likely with considerable effect – that you would not have made this payment if the debt was not yours, and some courts have admitted this as evidence of a debt’s legitimacy. And third, sometimes the payments can be used to extend the statute of limitations of the debt.

The FCRA prohibits deliquent accounts that are charged off or place for collection from being reported to the credit bureaus beyond 7 years plus 180 days from the date of first delinquency. Of course, if this delinquency is erased, it will start the clock running again. Under certain circumstances, your agreement to make a payment to a bill collector can restart the clock again in probably every jurisdiction. That is, if you and the bill collector agree that your payment will be accepted in lieu of any other penaties or payments for a certain time, this arrangement probably amounts to a “novation.”

Novations

Novations are agreements that supercede and replace previous agreements. They can refer to an agreement that transfers a debt to someone else and eliminates the original party’s liability (as in certain subleasing arrangements, for example), or they can refer to an agreement that substitutes on form (or amount) of debt for another one (as in court settlements, for example). If you agree with the debt collector that your payment will somehow wipe out or satisfy other debts, you may have worked a novation by the terms of any state’s laws. Notice that there should at least be some conscious give and take between debt collector and consumer under this approach – the agreed payments have to wipe out the delinquency.

Other forms of novation are a little more questionable or state-specific. Debt collectors will always argue that any payment made changed the nature of a delinquency and resulted in a period of “working things out.” They argue from this that – at least for some period of time — the statute of limitations is or should be “tolled” (put on hold) while the parties see whether they will be able to work things out. The law generally favors parties being able to settle their differences, and so this interpretation of the law, which takes some of the time pressure off the debt collector and allows it to be more flexible in negotiating, can be persuasive. Statutes of limitations are frequently tolled under various “equitable” conditions (meaning the courts have some ability to create and enforce these conditions). See, Estoppel, Claim and Issue Preclusion, for a more detailed discussion of this power and its uses.

And there is another, very questionable type of novation that has been accepted by many courts – the “account stated” theory of liability. In this theory, persons with an account to a creditor where they regularly receive statements are considered to be agreeing to the statements and accepting them as accurate unless they actively disagree with them. Failure to pay this amount then breaches a “new” agreement and has a statute of limitations independent of the charges that may have gone into that amount. In California, among other places, this can extend the statute of limitations considerably as well as reducing the burden of proof. (As an aside, I have developed a product that helps people being sued under this theory of account stated, which I consider an unjust and unwarranted misreading of the law). It is, in other words, a form of novation.

Re-Aging Debt

In addition to re-aging debt through novation or various equitable principles as discussed above, there is also a more devious, and blatantly illegal, method of changing the debt to extend the time for collection. That is simply to rewrite the date of first delinquency of the debt using a later date. This allows collection efforts to continue longer than legally allowed, and it also allows reporting to the credit bureaus to continue beyond the allowed seven years. This practice is apparently wide-spread, and it may be more effective than one would expect because consumers are sometimes not aware of statutes of limitations and reporting cut-off dates, and they are frequently not aware of their “first delinquency” dates.

Reviving Debt

After a debt has been discharged in bankruptcy or expired by a statute of limitations, it cannot be collected through the legal process. At least some courts have held, however, that a “moral” duty to pay remains and allows debt collectors to continue to pursue the debt (through extra-legal methods) presumably till doomsday. As anyone who has read my materials should know, I do not believe there is any “moral” duty to pay a debt collector – the duty is purely legal, and when this duty expires, so should the right of the debt collectors to pursue it. But at least some courts don’t see it that way, and this supposed “moral” duty is allowed to empower the debt collectors to make new agreements that revive old debts. Any attempt to make new deals that extend the life of a debt should be looked at with a dim view.

Giving Debt Collectors Money

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Four Sneaky Tricks to Get You to Default

Four Sneaky Tricks by Debt Collectors to Get You to Default

Debt collectors make their money by scaring, or tricking, people into forfeiting their rights to defend themselves. Often they will let you think you have come to some sort of agreement with them to avoid court (and judgment), they won’t work with you to accommodate your schedule, and general try to intimidate and scare you into staying away from court. Here are some of their more common tricks. Check out the Debt Defense System and materials for things you can do if debt collectors try these on you.

 

 

Four Dirty Tricks and What to Do about Them

Debt collectors use many dirty tricks to try to scam, threaten, trick, or intimidate you into paying. This video goes into a few of those, and what you can do about them.

In this video, we discuss four tricks and point you to the sections of the Fair Debt Collections Practices Act that makes them illegal.

It is illegal for the debt collector to threaten to take legal actions that it cannot legally do. This would include threats of imprisonment, public humiliation, or garnishment or seizure of your wages.

It is also illegal for them to communicate untrue information or, where you have disputed the debt, to report the debt without mentioning that you did dispute.

Sometimes debt collectors will pretend to be various types of authority figures – and sometimes they will send a collection letter that looks either like a lawsuit or a judgment or other information from a court. Any form of deception about who is sending the letter to you, whether that deception takes the form of an actual lie or simply deceptive looking information, would also violate the Fair Debt Collection Practices Act.

If you think the debt collector has violated the law, or if you need to defend yourself from a lawsuit, be sure to check out our Debt Defense System – it will give you what you need to understand what you are facing and the help you need to defend yourself effectively from the debt collectors.

Check out our Guide to Legal Research and Analysis

If You Are Already Being Sued

 

If you are already being sued, you probably should not sign up for the course and wait for anything. You need action now. You should be doing things to protect yourself NOW. You can beat them – it’s mostly a question of knowing what you need to do and doing that thing throughout the lawsuit, while at the same time not doing the things you should not do, until you either make them go away or win at trial. It sounds simple, and it is – if you know what you’re doing.  You can no those things with the Debt Defense System and get help doing the right things while avoiding the worng ones.

I have had a great deal of experience both as a litigator and web master and have realized that almost every person representing himself or herself in a debt case would do much better if (1) they have an opportunity, preferably on a regular basis, to talk to other people who can help them with insights and information; and (2) a lot of the work done for them. The Debt Defense System does that. When you buy the Debt Defense System, you will also get a membership which both allows you to use the full resources of Your Legal Leg Up’s website and participate in our weekly teleconferences where members speak to each other and Your Legal Leg Up’s staff.

Just think about how it will be, first when you walk away from the debt collectors who have been making your life miserable, and then as you move towards a life of greater freedom and happiness – free from debt, and free to build your future.

The Debt Defense System is a service designed to give you all the materials and support you will need to defend yourself from either the debt collectors or original creditors without having to hire a lawyer.

If You Are Not Already Being Sued

If you are not already being sued, and want to try to negotiate with the debt collectors or creditors to clear up your credit report or make sure they do not sue you, then you will want our Debt Negotiation System.

Not all negotiation and settlement happens in court, you know. It is possible to contact many creditors and debt collectors to work things out without a law suit. But – whether there is a lawsuit or not, all negotiations occur “within the shadow of the law.” That is, in order to negotiate effectively, you need to know what their rights are, and what your rights are, in the law. What can they do to you if you do not settle? And what can you do to them? Knowing the answers to these questions helps you handle the fear and uncertainty that haunts so many people as they try to get a grip on their financial lives. You can find the answers you need.

And after you find the answers that lie behind the debts, you still need to know what to say and how to say it. You’ll find plenty of help with that, too. You see, it makes a large difference who you’re talking to and where in the debt collection process you are. We do not offer empty formulas, but rather solid understanding of what they are after, what you might want or get… and a few suggestions about how to say things so you’ll get them.

Should you settle or fight with debt collectors

If you’re being sued by a debt collector and just received the “summons” (your notice to appear in court), you may be tempted to call the company and make a deal or not to go to court at all. People do this because they’re afraid, feel guilty, or think they can protect their money or credit reports if they are “reasonable” with the debt collector. It’s usually a mistake.

Let’s take these “reasons” one at a time.

FEAR

As you will see, there is little to fear if you stand up for yourself.

The Good

With a little help, you have a good chance to win the lawsuit even if it goes to trial. But whether or not you could actually win the suit, you may be able to raise the debt-collector’s cost of suing you to the point where it gives up long before the case goes to trial anyway. As one person put it:

Today I received in the mail an offer of “Stipulation for dismissal with prejudice,” which basically states the plaintiff will dismiss their complaint if I dismiss my counterclaim. It’s a done deal. Your litigation materials were clear, vital, and necessary tools for me to win…

Frank

And if your fear is that the debt collector will suddenly take your bank accounts or garnish your wages, then you should know that they cannot do that without a judgment, which they can only get by formally winning the lawsuit against you and getting a judgment.

The Bad

If you look at the “Petition” (the suit itself), you will see either that it does not seek attorney’s fees at all, or that it seeks about 15% of the overall amount for fees. The debt collector is seeking this amount whether or not you fight, and if you do fight, the amount will hardly ever go up. That’s true with all the other amounts being sought, too. Chances are, the suit is already asking for the most you could lose. Therefore you have little or nothing to lose by fighting.

And since you won’t have to pay the debt collector anything if you win, and you have a good chance of winning if you fight-if you know what you’re doing- then you have everything to win.

The Ugly

The debt collectors love to get people to sign “consent judgments.” That judgment means they could take the money in your bank accounts and start garnishing your wages if you miss a single payment. If you fight and win, there will be no judgment against you, and even if you lose or settle, chances are it won’t happen for many months. And usually the debt collectors will make a better deal with you later on than they will at the beginning. Again, you have little to lose, and much to gain, by fighting.

GUILT

Many people feel guilty about not paying the bill they’re being sued for if it looks anything like a bill they know they didn’t pay. Most people want to pay their bills. They want to do the “right thing.”

Remember that you never borrowed anything from the company that’s actually suing you, and they never did anything for you. The company you borrowed from sold the debt to debt collectors, usually for a very small fraction of the face amount. Therefore, giving the debt collector money does not help the people you actually borrowed from. And the people you’d be giving your money may or may not actually own the debt. Lots of people have been sued by people who didn’t even own the debt.

Debt collectors are scavengers who feed off the troubles of people having hard times. If you have some extra money, couldn’t you think of a better way to spend it?

CREDIT HISTORY

You may think that making a deal with the credit card company will help your credit score or make another creditor look on you more kindly. Unfortunately, this is probably not true. By the time the debt goes to the debt collector, most of the damage has already been done to your credit report. Just about the only bad thing left that could happen is a judgment. And most people who settle with the debt collector give it a judgment.

CONCLUSION

In reality settling is usually the worst thing you could do to your credit history. We think you should fight. But even if you do want to settle, the Debt Defense System will tell you how to do so without harming your credit history more than necessary.

Silence is Golden – Do not talk to debt collectors – part 1

Debt collectors ask a lot of questions. How much information should you “share” with debt collectors? How many questions should you answer? It all depends on what you’re trying to do and where in the process you are. This video should help you figure out what you need to say, when, and to whom.

Should I talk to a Debt Collector? What Should I Say

If you are being called or harassed by a debt collector, one of the purposes of that debt collector is to get you to talk. Should you? This is going to depend on whether you have anything to say.

Debt Collectors Target Struggling People

As I have mentioned before, the debt collection business is targeted at distressed people. The debt collectors already know you don’t have much money, and they know you probably have other people trying to get money from you. Their job is not to force you to pay somebody—it’s to force you to pay them. Another way to put that is that they are not competing with you—they’re competing with other debt collectors. You are the football in a game between the debt collectors, the string in a game of tug of war. Does that make sense?

Silence Can Be Golden when Dealing with Collections

The job of the debt collector is to get you to pay them instead of someone else. They can do this either by annoying you so much that you pay them to get them off the phone or by establishing a sympathetic connection to you so you gladly do it for the voice on the other end of the line. Both of these methods involve keeping you on the phone and the connection open, and neither of these methods is directed at your well-being. Also, if they can get you to reveal information about your job or bank, or any kind of assets you have, they can improve their chances of making you pay against your will. So unless you have your own purpose for communicating, you shouldn’t do it.

Sometimes it Makes Sense to Talk to Collectors

What might be a good reason for you to communicate? Well, because you want something tangible from the debt collector to whom you are speaking. You could want them to reduce interest rates, waive penalties, agree not to give information on your debt to the credit reporting agencies, or any number of actual, materially beneficial things. If you’re hoping to get a friendly voice or understanding, a debt collector is the wrong person to talk to: they already understand everything they want to know about your situation. Talk to someone else for that.

Negotiate—And Get It in Writing

Don’t be afraid to negotiate. You can ask for anything from them, and in most cases the debt collector could give you anything you might request. So be bold. If you want to settle for ten cents on the dollar, you can ask. They may laugh—but laughter is just a part of the negotiation and doesn’t mean they won’t do it. And if they agree to do anything, you must get the agreement in writing. In a practical sense, it doesn’t count if you don’t get it in writing. You won’t be able to prove it, and in some cases an oral “modification” would not even be legally recognizable even if you could prove it. It must be in writing.

They’ll want something in return. An immediate payment, an agreement to pay by a certain date, something. You can agree to this if you can do it, but you’re spinning your wheels if you cannot, so it makes sense to limit your promises to things you’re sure you can perform. Don’t over-commit, as this may negate the agreement you reach and will almost certainly increase the number and hostility of the phone calls you are receiving. Remember that the debt collector is keeping records of everything you say (so don’t tell them where you work or bank).

Stop Talking to Collectors When You’ve Said What You Need to Say

And when you run out of reasons to keep talking to the debt collector, make sure that you actually stop talking to them. There is always a price for anything you say – you’re giving them free information that they will use to decide to sue you. Sometimes talking to them is worth that price, but if that changes, you should feel no obligation to keep talking.

This is part 1 of this article. Click here for part 2.

Silence is Golden – Part 2

I mentioned the mini-Miranda right in Part 1 of this article, and I have already spoken several times about the importance of silence. Why do I keep mentioning this? That’s right – because people forget it so often. Debt trouble erodes our confidence and makes us self-conscious. Debt collectors like to use your sense that you are failing in some important, moral way, when you don’t pay, to push you around. And people like to “tell their story” and make themselves understood.

Save it for the jury

Nothing you can say to the debt collector will help you in any way. You won’t persuade them you are good, that your debts are unreasonable or unmanageable, you can’t hurt their feelings in any way that helps you. You can’t cause them to delay or decide against taking any significant action.

And almost everything you do can, by contrast, be used against you one way or another. Asking for a little extra time to pay the debt? That’s an admission the debt is yours to pay. Asking them to reduce the interest rates? That’s a form of negotiation which may eliminate their need to prove any specifics of the debt and may extend the statute of limitations significantly. Say something to try to hurt the feelings of the debt collector who has been calling you several times per day? That’ll be something you hear back at trial.

If your debt troubles are going to persist in any significant way, you need to close your mouth.

Don’t Talk to the Debt Collection Lawyer

And you need to keep it closed if they sue you. Talking to the debt collector’s lawyer only magnifies the chance that you’ll say something that hurts you. In that situation, not only can you say something that damages your case, you can make an admission that kills it. I can’t tell you how many people have told me that they “told the lawyer the debt was there’s but…”

If you admit the debt to the lawyer – or to anyone on the debt collection team – you may be letting them off the hook of proving they own the debt or that you owe it. Once that happens, you will find their willingness to reduce the amount they want you to pay much harder. That’s because until they prove that you owe them the money, they must consider the risk that they cannot prove these things and, further, consider the cost it would take to prove them. These are major risks for debt collectors who do not have any original records and only the sketchiest information on the supposed debt. Solve these problems for them and you triple the value of the debt. Now they only have to worry about the expense and delay of forcing you to pay.

And you must also keep your mouth shut to the judge

In many ways, this is the toughest. Judges are stern, and they’re accustomed to having almost complete control over the people in their courts. This makes it extremely difficult and even risky to refuse to answer a judge’s question. Instead, you must be a master of double speak. If the judge asks you if this was your account you’re being sued for, you have to say something like, you’re not sure, but you don’t think the plaintiff has or can prove it. And then you say you’re not sure they can prove they own the debt or how it was accumulated. If the judge asks whether you dispute the amount of the debt, again you point to the debt collector’s duty to prove it. “I’m not sure what the debt, if any, was,” you say. “But it’s the debt collector’s job to prove it, and they can’t use hearsay…” It is your right to dispute the debt and require the debt collector to prove its case. Don’t let the judge’s desire for an early lunch hour keep you from insisting on that right.