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Understand the Debt Relief Tools Available To You

Posted by attorney Stewart Crawford

What Is Debt Relief? We’ve all seen the television commercials and internet advertisements promising to slash your credit card debt or medical bills in half or even repair your credit rating. You might be wondering if this is really possible? Well, it is indeed possible but it should be understood that not everybody can have their debt “settled" or their credit instantly repaired. While some people do benefit from such forms of immediate debt relief, others must engage in a slower more deliberate process that might take some time to achieve. Each person’s circumstances are unique and should be reviewed in detail before any proposed remedies can be identified. In that spirit, debt settlement services who promise quick savings without ever speaking to your creditors or without reviewing your financial situation should be avoided. See FTC Caution (Debt Settlement Services). Likewise, credit repair companies who make bold promises to remove negative credit reporting should also be avoided; only inaccurate or unsubstantiated information can be removed immediately from your credit report. See FTC Caution (Credit Repair Services). For those who don’t qualify for such forms of immediate relief don’t fret, credit repair and debt elimination can still be achieved through a variety of debt relief tools including credit counseling, debt management plans, debt validation, loan consolidation, refinancing, or bankruptcy. Before embarking upon any of these debt relief options you should consult with an attorney or educate yourself about your legal rights. Similarly, you should be aware that certain debt relief practices can be risky lead to late fees, higher interest rates, negative credit ratings, taxes, arbitrations, repossessions, foreclosures, or lawsuits.

Stop Debt Collectors! One form of immediate relief available to every consumer is the right to stop collection calls and letters, regardless of how much money you owe or how many payments you are behind. § 805(c) of the Federal Fair Debt Collection Practices Act. Indeed the Federal Government enacted the Fair Debt Collection Practices Act ("FDCPA") to protect people from harassment and abuse by creditors and collection agents. The Federal government recognizes that abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy. To combat unfair and deceptive collection practices, the government makes it illegal for debt collectors to do certain things. Essentially, a debt collector may not engage in any conduct which harasses, oppresses, or abuses any person in connection with the collection of a debt. Examples of such illegal conduct include the following and carry a potential $1,000 penalty:

· Informing others that you owe a debt

· Communicating by post card

· Indicating on an envelope that mail is from a debt collector

· Communicating directly with a person known to be represented by an attorney

· Telephoning you at inconvenient times (e.g. before 8am or after 9pm)

· Calling your workplace if you had instructed them not to call you there

· Contacting you if you had already stated that you refuse to pay the debt

· Contacting you if you had asked the debt collector to no longer contact you

· Threatening violence, physical harm, harm to reputation, or harm to property

· Using obscene or profane language

· Causing a telephone to ring or engaging any person in telephone conversation repeatedly

· Failing to identify the callers identity

· Making false representations concerning the amount of debt

· Making false representations concerning the legal status of the debt

· Implying that the debt collector is an attorney when they are not

· Implying that the debt collector is with the government when they are not

· Suggesting that you could be arrested or sent to prison

How Do You Stop Debt Collectors From Contacting You? Many people wrongfully assume that collection calls and letters are a necessary part of the debt process. Some people may even believe that they deserve to be harassed by debt collectors simply because they are behind in their payments. Nobody should be subjected to unwanted calls and letters nor do they need to be. Federal Laws exist to stop unwanted communications by debt collectors, regardless of how much money you owe or how many payments you’ve missed. If you notify a debt collector (in writing) that either: 1) you refuse to pay a debt or 2) you want the debt collector to cease further communication attempts; that debt collector is required by law to stop all communications with you except to notify inform you if they plan to take any further action (e.g., file a lawsuit or arbitration). § 805(c) of the Fair Debt Collection Practices Act. Essentially, the FDCPA does not allow debt collectors to bother you if you ask them in writing to leave you alone. Another layer of protection from debt collectors can be achieved by hiring an attorney. Once a debt collector is notified that you have hired an attorney, that debt collector is forbidden from communicating directly with you again; instead they must now speak with your attorney. § 805(a)(2) of the Fair Debt Collection Practices Act. On that same note, if you advise a debt collector that your employer does not allow you to receive collections communications at your place of work, the debt collector is prohibited from contacting you there. § 805(a)(3) of the Fair Debt Collection Practices Act. If a debt collector ignores any of these privacy laws and continues to call you or send you letters, they can held responsible for any damages caused to you (including your attorney’s fees) plus they can be fined up to $1,000 per infraction. Some Courts have even punished violators by eliminating the entire balance of the debt they were trying to recover. It is important to note, stopping debt collectors from contacting you will not by itself eliminate your debt nor improve your credit, it does however provide you with privacy and peace of mind at home and work so that your financial problems do not overtake your life.

Can I Go to Prison for Not Paying a Payday loan Back? Payday loan companies are notorious for not following the proper collection procedures. Instead they rely upon threats of arbitration, predatory lending practices, high interest rates, and harassing collection tactics. For example, they often threaten criminal action contrary to state and Federal collection practice laws. Note, there are no debtor prisons in the United States; you cannot be imprisoned for not paying a debt. If you are being harassed by a payday loan debt collector, you should begin the process of protecting yourself by sending a certified mailing to the payday loan company asking for validation of that debt which includes a request for a copy of any contract. The letter should also ask for an accounting of all charges and payments to date on the account. Demand that they cease and desist from any further collection communications. Finally, if you dispute any portion of their debt (or their interest rates), inform them that you also dispute that debt. You can find sample debt validation/dispute letters on the internet. Keep a journal and record any and all communications efforts that come after receipt of that letter as they might be in violation of the law; which could be used to argue that they have waived their right to collect the debt. This includes phone calls, emails, missed calls, letters, etc. A word of caution, these efforts won’t eliminate any debt obligation (it might even incur further penalties and interest) but, in theory, it should stop the debt collector from harassing you and will serve as a basis of possibly identifying future violations in collection practice laws. Note, however, payday loan companies rely upon a belief that they have immunity from collection laws due to their status as sovereign nations (i.e. many are owned by tribal nations). It is this belief that empowers them to violate these collection laws. In order to take any action against you, they would essentially need to step off the reservation or hire a locally licensed collection company or law firm to go to Court. It is those persons (i.e. the local debt collectors) who might become liable for the unfair collection practice violations.

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