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How do I deal with a past-due credit card bill?*

I'm a little less than $5,000 in credit card debt. I am unemployed (looking for a job) and have not been able to make any payments for about six months. The harassing phone calls are getting to be too much. Yesterday, I received a letter saying I have to pay about $200 by Wednesday or else the whole amount will be due on that day. Of course, I can't afford to pay either amount. I'm running out of options. I have three questions: 1) Was this an empty threat/intimidation? Is there anything the creditors can really do to me, like sue me? 2) Is there anything I can do to stop the calls? 3) Do I qualify for any type of debt consolidation program?

Answers:

1) 1) Collection agencies always make threats but bottom line, they can sue you and if they get a judgement, they can place garnishments against your wages or future wages in some states and in other states, can garnish bank accounts. If you are sued, make sure you show up in court. You can show you are unemployed and unemployment compensation cannot be garnished. Again, however, if you put your UE into a bank account, that CAN be garnished in some (not all) states. 2) Contact the collection agencies via certified mail, return receipt requested and tell them they can only contact you via US mail. After that time, the calls must stop or the collector is in violation of the FDCPA. You can sue for $1000 per violation in small claims court. Keep the green card you will receive from the post office proving the letter was received as well as a copy of the letter you sent. NOTE: Not all collection entities are regulated by the FDCPA depending on where you live. In some states, only third party collection agencies (companies that purchase debts from the original creditor) must comply. In other states, all collection efforts are covered. 3) Be careful of debt consolidation. There are lots of scams out there, and more springing up with the economy in the toilet. Best to option for consumer credit counseling. More info here: http://www.nfcc.org/ You may find that you can negotiate with your creditors to defer payments since you lost your job. Of course, deferment isn't forever, but may help you avoid additional penalties and interest while you look for a job.

2) you're in a tough spot. the demand letter is in an effort to get you to pay the bill. i really don't know if they can sue you. i've had things go to collections but never been sued. what i did was call the place where money was owed & told them our situation & offered to pay a small amount each month until we were stable again. it was the best i could do. i had a new job & my husband had a critical medical emergency that had him in ICU for a month & out of work for 2 months beyond that. his medical bills even with insurance were outrageous. on a new job, there was no way i could keep up. so i made phone calls & every company i talked to was willing to wait, as long as i did what i said i would & work on the bills. as soon as husband was back at work, i went back to making the proper payments. i also worked about 15 hrs a day to increase my income. i didn't try for consolidation program. i didn't think that would be our best option. i've heard both good and bad about them. i'd much rather be in control of our debt myself & not depend on another company to handle it for me. while you're waiting for a job, see if there's something you own that you can sell in order to get some cash for paying bills. put notes on grocery store billboards, find an auction & sell things that way. i sold tons of our stuff at an auction every week while hubby was sick. he used to be a mechanic but won't ever do that again, so was able to sell his tools. got some bills paid off that way. also sold books, DVDs, jewelry, anything we didn't need to keep was sold. we even moved to a cheaper place & stopped running as much electricity which helped all the monthly bills go down.

3) If you haven't paid for 6 months, it's too late for credit counseling. But you can try here: http://www.nfcc.org/. These are legit, non-profit companies that offer debt management programs for a noniminal fee. Is the original creditor calling or has the account gone to a collection agency? If it isn't with a collection agency already, the account is about to be charge off and sent there. The original credit can sue. If the debt is sold to a collection agency, they can sue. In recent years both credit card companies and collection agencies are likely to sue, even for relatively small amounts. There isn't much you can do to stop the original creditor from calling. You can send a third party collection agency a certified, return receipt letter telling them to cease all contact. The FDCPA gives you the right to stop ALL contact. It does not give you the right to limit contact to mail only. You can ask for mail only contact, but legally they do not have to comply. If you send a cease and desist letter, they will probably immediately sue or sell the debt to another collection agency. Best thing is get an answering machine and monitor your incoming calls.

4) First, you *need* to make a budget, and set your financial priorities on paper, because their entire purpose in calling you is to upset your priorities. Sane people pay for absolute necessities first, then "secured debt" like mortgages where they can come and take your house if you stop paying, and *then* unsecured debt. Their sole purpose is to get you emotional so that you forget your priorities, and then lock you into a payment arrangement by getting postdated checks or access to your bank account. You owe them money, and it's reasonable for them to want to call and check up on you, but as long as you're making some payments, even if it's not even the minimum payments, you'll almost never get flagged in their system to be sued, so don't worry too much about their threats. You have the option to send them a cease & desist letter, but if you do, it will most likely IMMEDIATELY SET THE BALL ROLLING FOR A LAW SUIT, so you almost never want to do that! Be polite, tell them you'll talk to them as long as they're polite and only call once every 2 weeks, and if they're rude or call too much, hang up on them and they can't do anything, or record the conversation and you can get them in huge trouble for violating FDCRA regulations. If you did get sued (and you'd pretty much have to be asking for it), they'd serve you a written warrant and you'd know you were going to court beforehand. They can't just take money from your bank account unless you give them your account information.

5) 1. Yes, they can sue you. 2. You can send any collection agency a letter requiring that collection agency to stop calling on the telephone and instead communicate only by mail.

6) 1: Yes, creditors can sue you 2: You can send them a letter or tell them to stop calling you, and they will have to...but, expect this to speed up the process of suing you 3: No. Without a job, you do not qualify for a debt consolidation or any type of loan

7) If you have not made any payments for about six months, it's possible that your debts have reached "charge off" status. In which case, you won't qualify for a debt consolidation program. Creditors normally charge off an unpaid debt after it has reached 180-days of non-payment. This allows them to write off the debt as a business loss. However, you're not off the hook. Chances are your debt will be sold off to a debt buyer for pennies on the dollar. And they will come after you for the full amount. Plus debt collection will also become more intense. A good resource to help you get rid of your charge off collection accounts is a debt settlement company. The problem is that most accept a minimum debt of $10,000. Being that you owe less than $5,000 in credit card debt, a great source is the National Debt Relief Stimulus Plan provided by Debt Free League, which accepts a minimum debt of $2,500. You can also receive a free financial consultation by calling them at 800-213-9968 or visiting http://www.debtfreeleague.com. As far as your questions on collection threats, if you have a delinquent account, a creditor can sue you for even a one dollar. However, creditor lawsuits are rare in the collection of unsecured debt. In your case, creditors also realize there's a greater risk of collecting on a charge off account. So at best, there best weapon is continuing the onslaught of verbal threats. If the collection calls are very bothersome, change your phone number, or simply don't answer the phone. Instead, screen your calls by letting them go into voice mail. Another good thing about the National Debt Relief Stimulus Plan is that it is a great ally in the fight against creditor harassment. If the source collecting on your debt is a third party debt collector, they can help you exercise your right under the Fair Debt Collection Practices Act (FDCPA) to prepare a cease and desist letter for you to send to the third party debt collector. This letter will legally require them to cease calling you.

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