Hardship Applications with Debt Collectors - Beware Anything that Requires you to Give them Information about your Assets
Sometimes debt collectors pretend to care whether you can afford to pay them, or whether they should "give you a break." If they send you a "hardship application," you should consider very carefully whether or not to send it back. It could possibly have some value to you, but the stories we hear are not encouraging. And we're suspicious of anything that would give the debt collector information about you.
The first thing you must remember about "hardship" is that no amount of financial difficulty is a legal excuse to avoid paying a legitimate debt. And that means that the debt collectors won't be considering whether you have a RIGHT to a break. They won't even consider whether you should get one or not. No. Their question will be whether you have assets they can get to MAKE you pay. If their hardship application process leads them to bank accounts or job information, the net effect will surely be to make it easier and more likely for them to snatch your money rather than to spare you.
Debt Collectors never really worry about losing their lawsuit against you, and they sure as hell don't worry about whether suing you is compassionate or fair.Their main, and usually exclusive, concern is with getting your money. And this means that the one real thing they're worried about is finding what you have. If you tell them that, you not only make your case far more valuable in their eyes, but you subject yourself to the risk of instant seizure or garnishment if they get a judgment against you. We encourage people not to talk to debt collectors at all.
If you really have nothing - no assets beyond a monthly payment from Social Security or welfare, and no equity in your home, and no other identifiable assets - it might make sense to share that information with the debt collector. And even then I would be reluctant to identify any specific bank accounts. Even if they contain exclusively Social Security assets, you could find yourself working to keep them and in a bad spot.
I'm not aware of anyone who actually received a "hardship" break. But even this would be a Trojan Horse - more trouble than it's worth - in all likelihood. When a creditor (including in this case debt collectors) forgives (let's you out of) a debt, it can file a form 1099S, which does extinguish its right to collect, but also informs the I.R.S. that the debt is forgiven. The I.R.S. treats that as income and will come after you for tax. If you beat the debt collector in a lawsuit, on the other hand, your chances of owing taxes on the money are much smaller.
If you are being contacted by debt collectors, you need to be alert to protect your rights. These calls are often a prelude to their suing you. You might consider membership with our site, which gets you our ecourses for free, plus gives you many other benefits.Check out some of our e-courses. Or consider our prepaid legal plan to protect you from future possible litigation. With that, if you get sued, you'll get a lawyer to defend you for free.