How to deal with overdue credit cards and collection agencies?
I hope someone here has some insight on something I know almost nothing about - debt collection. We are friends with a couple that are having some debt issues. They got married last year, and still have separate credit cards (they are not on each others accounts). He got laid off not long after they got married. She manages to pay the household bills (her credit card balance is rising because she can't afford it all), but his credit card bills went unpaid (he paid the minimum until he ran out of savings). One of them is with a collection agency. I think the other is still with the credit card company (they weren't sure). The collection agency calls his cell and their home frequently and even called her work (her work number was put down as an "alternative contact") at one point, even though it isn't her debt. They also called his mother's home (where he lived before they got married) so much that she was afraid to answer the phone. They were drilling the woman on what she knew about her son, where was he, could they have the number, did she know he owes money, etc. (they had pretty much the same conversation with the wife). Can they disclose this information (the debt and the terms) to anyone other than the debtor/co-signor?
What is the best way for them to address this? Since I am a lawyer they assume I know something about this, but I don't, but I want to help them. A 28% interest rate is being charged on the debt, so they can't even afford to pay the interest every month. The collection agency wants them to pay 1/3 each month for three months. But they don't have the money. Even if he gets a job soon he wouldn't be able to pay that much (I'm assuming here, knowing approx. what he made in his old job).
Should he go to a credit counseling agency and do a debt management plan? I read about that on the web, but I don't know anyone who has ever done it. What type of terms can they expect? Would the interest stop or be lowered? What types of fees do the credit counseling agencies charge? Any info would be appreciated.
She wants to know if they can force her to pay this bill, even though it isn't her debt. Can it end up on her credit report? They are not in a community property state.