Infamous Black Tuesday

Today is Thursday, but in 1929 the 29th of October fell on a Tuesday…so did the Stock Market.  In more recent history, we have encountered the Great Recession.  While we continue the recovery, sometimes old credit card debt comes back to haunt, making consumers victims of Zombie Debt. Zombie Debt is debt that has been dead for a while, but does not know it is dead, and walks the streets looking for a victim.  The problem with Zombie Debt is that the debt is matured when the consumer fails to make payments.  Once the debt is matured, then the Statute of Limitations clock begins to tick, and runs for five to seven years (depending on which state the credit card is initiated). Another problem with Zombie Debt is that Zombie Debt collectors will say anything to get you to reanimate the debt; they whisper sweet nothings like, “Send us five dollars.” Beware, even a penny can resurrect the dead debt. Even if you already have a Judgment against you for this debt, you could be faced with a second Judgment for the same debt. The business model for collecting on Zombie Debt is based on numbers—debt-buyers purchase debt in bulk […] Read More

Steps to Better Credit

Are you receiving calls from creditors and collection agencies?  Working overtime to try to keep up with your bills?  Using your savings to cover daily expenses?  These can be signs of bad credit.  While bad credit is a problem—it makes getting a new loan more expensive or impossible—there are steps you can take to improve your credit score. The basics are basics include pay your bills on time, pay down outstanding balances, and stay away from new debt.  Florida Attorney General Pam Bondi offers these further tips to personally manage your debt: Set up a household budget to guide your spending patterns. The budget should detail your monthly income, as well as your monthly expenses. Your budget should outline a spending plan which insures that your income will exceed your expenses each month. Don’t go any deeper in debt! Put your credit cards away and make a concerted effort to refrain from accumulating any more debt in the coming months. Pay cash or use a debit card. If you must charge something in an emergency, use the card with the lowest interest rate. Use daily money-saving strategies to free up more money. Cut out needless expenses and save money where […] Read More

What Is Good in 20 Years?

You can get a 20-year warranty on a mattress, roof shingles, and vinyl flooring.  You know what else is still good in 20 years?  That debt judgment against you. So you got sued in Small Claims Court.  If you had nothing for a creditor or debt servicer to collect, then they still did not get paid and all they got was a judgment against you.  The thing is, that judgment is good for 20 years.  Your creditor or debt servicer can collect at any time during those 20 years.  That is a good deal for creditors and debt servicers…not so much for you. The other thing is, once you have a money judgment against you, the collection can happen with fewer symptoms than a heart attack.  You wake up one morning and the money in your bank account got disappeared.  They can garnish everything in your account up to the amount owed without prior notice.  Again, a good deal for creditors and debt servicers…not so much for you, especially if you were trying to pay rent that day. Everyone should pay their bills, but you have to be able to stay in your home, feed yourself, and put gas in […] Read More

Credit Repair Scams – Warning Signs

What is scarier than debt itself?  Credit repair scams. If you are in debt, you are in a lot of company.  About 40% of Floridians have debt in collections as of this summer’s reports, and that debt drives the credit repair business.  Unfortunately, that demand also drives credit repair scams.  The following is a list of common warning signs of a credit repair scam, as given by the Florida Attorney General’s website: A company that guarantees it can remove your unsecured debt or promises that unsecured debts can be paid off with pennies on the dollar A company that claims using its system will let you avoid bankruptcy A company that requires upfront fees in excess of $50 A company that requires you to pay monthly fees in excess of $40 per month A company that tells you to stop communicating with your creditors A debt management company that does not provide you with a monthly accounting showing payments made to your creditors A company that tells you creditors never sue consumers for non-payment of unsecured debt A company that promises using its system will have no negative impact on your credit report or that it can remove accurate negative […] Read More

No Defense? No Problem

Debt collectors are standing by to take up to 25% of your paycheck.  Did you have trouble paying your credit card bill?  Maybe you did not notice the Small Claims Court suit filed against you (or you did not know what to do about it)?  No problem.  If you did not show up to your court date the debt collector has a simple remedy:  Get a default judgment against you that allows him to take 25% of your paycheck every payday. That is no big deal, right?  After all, what is a quarter of your earnings?  What would you use that money for anyway—Rent?  Groceries?  Gas to get to work?  Everybody can give up 25% of their net income, right? Everybody should pay their bills; however, you should not have to decide whether to pay your credit card bill or put food on the table.  There are exemptions you can file to protect certain incomes so that you can pay for basic needs.  Exempt incomes include: Income of head of household at a certain level Social Security benefits Pension Disability The key to an exemption is you have to claim it.  Even if you have an eligible exemption, you do […] Read More

Payback is Heck with Consumer Debt

Being in debt is bad.  Having up to 25% of your wages garnished, or having your bank account swept clean without advance notice can be a life-affirming experience…not in a good way. In Florida, debt collectors can take up to 25% of your net pay for things like old credit card debt, medical bills, and/or student loans.  Or they can sweep your bank account for the amount that you owe without prior notice—you wake up one day and whatever you owe them, that money got disappeared.  Later when you receive that notice of garnishment, you also get a form to file for exemption.  Everyone should pay their bills, but you have to be able to stay in your home, feed yourself, and put gas in your car—that is why certain incomes are eligible for exemption, like head-of-household at a certain level, pension income, Social Security benefits, or disability. The key to that exemption is that you have to claim it.  Just because you are eligible does not mean you automatically get it. Seek competent legal advice to learn more about exemptions from judgment.  (You do not need an appointment to pick up a pamphlet at Legal Aid about collection exemptions […] Read More

Debt-Buyer Business Model

Buying delinquent consumer accounts has bloomed into an industry unto itself with its own business model, which thrives on certain practices, such as the following: * Purchase thousands of delinquent accounts for pennies on the dollar.  This gives debt-buyers a spreadsheet of data, which they do not verify; they purchase without representations or warranties as to the accuracy of the information.  They do not know if the balance stated is correct, or if anything is owed at all. * Contact the consumer.  Contact the consumer a lot!  While there are regulations on fair debt collection practices, not all debt collectors are interested in fair debt collection.  The debt-buyer calls and writes to settle the account…and if that does not work: * File a Small Claims lawsuit.  A Small Claims Court notice can get lost in the paperwork shuffle, and the consumer does not show up for court (or does not defend) and the debt-buyer wins by default. * If the consumer does take time off work to launch a defense, ask for a continuance.  Repeat delay tactics until the consumer stops coming to court. * Have a judgment entered against the consumer.  That judgment is good for 20 years, so […] Read More

What’s In Your Wallet?

Whether it is your paycheck or bank account, debt-buyers are standing by.  While garnishment used to be the purview of child support, it has begun to share the spotlight with debt-buyers, and in Florida, they can take up to 25% of your net income, or sweep your bank account for everything in it. Debt-buyers purchase delinquent accounts in bulk for pennies on the dollar.  Their business model is a numbers game:  they know they will not collect on every account, but they have so many of these accounts that they will make a profit, despite their losses.  Furthermore, if they can get a money judgment against you, they can wait up to twenty years to collect. Often these are delinquent accounts that wind up in Small Claims court for amounts less than $5,000—old credit card debts and medical bills.  The claim may not start as a large amount, but the interest piles up. Just because you owe money does not mean you lack rights. Consumer debt comes with a lot of paperwork.  A Small Claims Court notice can get lost in the shuffle, the consumer does not show up in court (or does not defend) and the debt-buyer wins by […] Read More

Dr. Wolf’s Phantom Bill

Once upon a time a debt collector telephoned Little Red Riding Hood’s grandmother about a medical bill.  “But I paid that bill two years ago,” Grandma Riding Hood told the caller.  Still, the caller insisted there was an outstanding balance and started asking for personal information, saying, “I have to be sure I am talking to the right person, so could you give me your date of birth, address, Social Security number, and account number you used to pay the bill?” Little Red Riding Hood happened to be visiting her grandmother that day and overhearing the conversation.  “Grandma, ask for something in writing,” she told her. “But I do not want to be rude,” said the Grandmother.  “After all, this was for Dr. Wolf who made that house call when I was sick.” “He locked you in the closet!” Little Red exclaimed. “He said it was good for my rheumatism,” Grandma Riding Hood replied. “He was going to eat me!” Little Red protested further. “Well, he was on a special diet, dear.” “Grandma, these debt collectors are required to send you something within 5 days in writing, and then you have 30 days to dispute the debt.  That will give […] Read More