How to deal with overdue credit cards and collection agencies?

sue36November 19, 2006

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.

Thanks.

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myfask

First the most important thing is they can not discuss or try to collect the debt from anyone other than the name on the card. Some states how ever can discuss it with the spouse but they can't collect or force the spouse to pay. If they have disclosed the debt to his mom they have violated FDCPA regulations. He can actually sue them for doing this.
This can not show up on the wifes credit report unless she is on the account as an authorized user. If o, she need to call and remove herself.
She also need to stress "Do not call me at work" they have to of once again they will violate FDCPA regs.
The only other way it can affect the wife is if they own a home and the credit card company decides to litigate if they are successful they can have a lien put against the house.
Consumer Credit Counseling Services is a great place to start, but beware of the "gazillion" companies out there they "pretend" to be CCCS. They need to give them a call. With the wife increasing her debt they may soon find that she is in the same shape.
If he hasn't worked since last year he needs to go out and get some kind of job to bring something in. In my 30 years in the "credit" industry you can't believe the number of times I have heard "if I can't make what I was making I am not going to take the job". I don't know their situation but something is better than nothing.
Hope this helps.
Karla
p.s. Sue I have a friend who is also an attorney and goes through the same thing. about once a month I get a call from him that starts with "I have this client....." lol he is getting pretty good at the credit thing :)

    Bookmark   November 19, 2006 at 3:05PM
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mariend

You might do some research on what the collections agencies can do/or not legally. One thing I would suggest is to document every phone call made. Give out no informaion, but as who am I talking to--full name--your company--your phone number--your extenstion, your supervisor's name --full name--the time called--the date and insist they do not record the call. Again, give out no information--make no promises etc. Document any threats made, other people they have call. Then I would say Thanks, I'll see what I can do and hang up. Get caller ID, unlisted phone # and phone blocking.
The collection agencies have strict rules to follow, but rarely do so. Don't yell, scream, or threaten. Just hang up. She should tell the person, that that is NOT my problem/bill and you must contact that person--HANG UP
I went thru this several years ago, and finally had to contact the attorney general of the state I lived in.
The wife's work cannot be contacted, nor can his mom UNLESS she co-signed. Tell them all threats will be reported to law enforcement and do it. Most of these collectors ARE NOT using their real names. Ask for their REAL name. Good luck and look for a Consumer Credit Counsleor licensed by your state and if necessary contacy your County/State Attorney General's office.

    Bookmark   November 19, 2006 at 5:33PM
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kudzu9

Take a look at the link below, which gives you the text of the Federal "Fair Debt Collection Practices Act." It's pretty readable and has valuable info, like how to legally get them to stop calling and how to prevent harassment.

Here is a link that might be useful: Fair Debt Collection Practices Act

    Bookmark   November 20, 2006 at 12:22AM
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davidandkasie

goto greditboards.com and read up on the newbies section. they should send a limited cease and desists letter REQUIRING all communicatino to be by mail. teh letter should be sent certified with return receipt.

    Bookmark   November 20, 2006 at 1:57PM
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onlygirlsmom

About 6 years ago, my DH and I ended up going through a credit counseling company. They were wonderful! They took over our payments and negotiated our interest rates down. They charged us a very minimal fee each month - like around $10 I think. I realize that there are a bunch more out there now, and that there are scam ones. We used Christian Credit Counselors - they were out of California, but I think they may have moved offices. Using them did not affect our credit at all.
It used to be that if you made at least an attempt (say paid $5) on paying a debt, then you could not be referred to a collection agency but I don't think its like that anymore. I know that we sent less than our minimum payment once back then (before the CC) and the stinkin' institution - a credit union even! - sent us back our check and refused it b/c it was not the full minimum payment-so then we were 2 mos behind - that was brutal to our record but luckily it comes off of our record totally some time next year.
I also never give out a work number for any credit cards, or other financial transaction - there is no reason for them to have it. Collection agency people can be absolutely brutal.

    Bookmark   November 30, 2006 at 6:22PM
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