Fair Debt Collection Practices & Ending Unwanted Collector Contact

If you are being harassed by collectors you will be happy to know that there is protection provided for you under the federal Fair Debt Collection Act, and many states provide additional protections for their residents (not discussed here). If your debt is for household, family or personal spending this act protects you from harassment by third party collectors.

Collectors are allowed to contact you between the hours of 8am and 9pm (your time). Also, if you inform them that they are calling at a time that is not convenient for you they must stop calling at that time. If a collector contacts you at work you may inform them that you are not allowed to take calls at work. They must stop contacting you. If they call you on your cell phone, you may inform them that they are calling on a cell phone, it is costing you money to receive these calls and they must stop calling that number.

When trying to locate you, your collectors can contact friends, family members or neighbors to inquire about your location. They cannot, unless expressly asked, disclose that they are from a collection agency, additionally, they can't call the same person twice without that individuals permission or reasonable probability that the individual has more necessary information. Without your permission the collector cannot try to collect through anybody but you, your spouse or your co-debtors.

When a collector calls, they cannot misrepresent themselves as being affiliated with a different agency or the government. They must inform you if the call is being recorded or monitored (it almost always is). They cannot exaggerate the debt or its legal status. They cannot threaten legal action they have no intention of taking or mislead you about the legal nature of any forms. They cannot threaten to sell the debt to induce payment. They cannot threaten violence or other criminal action against you (this includes harm to your reputation or property), nor can they use abusive language or call repetitiously.

In most cases it is necessary to request that a collector cease communication with you in writing (we will soon have a link to a sample letter). Alternatively, you can hire an attorney. After contact has been made with the collector you will likely continue to receive a statement of account and or updates as to the legal status of your account. These are for information only and are permitted under the law; they cannot send further collection letters. The debt will most likely be sold to a new collector at some point who will send new collection letters, making it necessary to repeat the procedure.

In our experience at HELPS Nonprofit Law Firm, letters sent by individuals are often ignored. Letters from an attorney are usually taken more seriously and calls stop after they receive our letter.

HELPS provides a service: sending out cease and desist letters and dealing with the probing calls from collectors. As long as we are kept up to date with information about any new collectors who contact you, we will continue to send letters to your creditors for you. This is a multiple year process that quickly becomes tiresome for most people. For those who find it confusing, exhausting, or overwhelming; we are happy to help restore peace to their lives, stopping collector harassment and seniors well informed about their rights are in regards to their creditors.

I Owe Taxes I Can't Afford to Pay

Sometimes, seniors owe taxes they cannot pay. Often these taxes are old and from prior years when they were working. Some are paying these taxes and going without the basics of life. Although it is rare, some HELPS clients are being garnished 15% of their Social Security. You should know that there is a way to stop harassment and garnishment by the IRS. You can take steps to stop paying past taxes you can’t afford to pay.

The IRS can declare a taxpayer "currently not collectible," after the IRS receives evidence that a taxpayer has no ability to pay. This can be an enormous relief to seniors with a tax liability who are hounded by the IRS to pay their back tax debt. In order to receive Currently Not Collectible status from the IRS, you must prove that you do not have any assets that would enable you to pay the back tax debt you owe (this includes almost all HELPS clients). You must prove that you have enough money to pay for the very basic necessities of life and nothing else. The necessities of life would include: rent, mortgage, food and clothing, health insurance, car payments, auto maintenance, secured loans, utilities, etc. These are called allowable expenses.

Congress has set up an independent department in the IRS called the Taxpayer Advocate Service. It is their job to help persons, including poor elderly, obtain uncollectable status and stop garnishments. This can be done over the phone and it can be done fast! You can find the number for your location here. The Taxpayer Advocate Service is very helpful. We have found them to be kind and patient, after all that is their job.

For HELPS clients:  If you would prefer, we at HELPS will assist you with one of our
volunteers. You will call the IRS together with us on the phone, provide the information they require and in a very short time you can be placed on uncollectable status. No more letters, no more phone calls, no garnishment. 
This all costs you nothing! If you are paying taxes you cannot afford to pay, please pick up the phone and call HELPS.

To learn more about HELPS visit us at our website: http://www.helpsishere.org/

By Attorney Eric Olsen

Online Payday Loans

An online payday loan is similar to one you would receive from a lending store: a short-term, unsecured loan that you pay off your next payday. Lenders profit from trapping you in a cycle of debt. You may pay the loan, but then need to renew it to deal with your other financial obligations.These loans provide quick money, but their high interest rate (we've dealt with some near 500%) makes them difficult or impossible to pay back. 

The Debt Cycle

Online payday loans present their own unique problems because it’s difficult to locate and regulate online lenders. Companies can anonymously create websites, and locate themselves where there are limited regulations on lenders. Some of these companies are located overseas, and often have no physical address making it challenging to contact them, resolve complaints, and enforce consumer rights. We have had some HELPS clients come to us with payday loans. Even when we have a physical address and can send notices to the payday loan lender they often ignore our contacts and harass the HELPS client. They do this because they know they cannot be sued because they move around too fast and are based overseas (even though it may appear they are in the U.S.).

Lenders hide not only their personal information, but facts about the loan, including the annual percentage rate (APR). It’s important to consider the APR instead of just the fee on the loan, because the creditor will attempt to force it to roll over. In fact many lenders will require you to decline to refinance or your loan renews automatically. They utilize the banks system of direct deposit/ withdrawal; the automatic renewing can go unhandled resulting in more debt.

There are ways to defend against predatory online lenders. The easiest is to find other borrowing options: legitimate overdraft protection, borrowing from credit unions who offer safer alternatives, or from friends, family, or a religious institution. If you are going to take out a payday loan find one without an interest rate in the triple digits, avoid very short term loans (e.g. two weeks). Avoid sharing personal information with unfamiliar companies; above all, do not give your banking information to internet lenders. If you do, it is possible you will have to change banks to stop them from withdrawing from your account.

We strongly advise everyone to avoid or discontinue any use of payday loans.

For our clients:
If you continue to be harassed by a payday loan company, please advise us. We will take every step available to stop them. Resist the temptation to answer their calls or engage them in conversation. They often make false threats that scare people; including arrest and jail. It is best not to even speak with them.

To learn more about HELPS visit our website: http://www.helpsishere.org/

By Reese Tozier

What Happens to my Assets When I Pass On if I Have Debt?

As a general rule, when you pass on, property that is owned jointly with a surviving spouse will become his or her property. What about when you are the survivor of the marriage or are single, what happens to your property when you pass?

When a person dies, their assets or "estate" first pays for the cost of their passing, funeral expenses and the like. Next, any outstanding debts are paid, and finally (if there is anything left) it will be distributed to the heirs. Often the person passing leaves little, if any, assets and nothing needs to be done. Family heirlooms and keepsakes have been gifted long before. For those that leave property, many states have a small estate proceeding to distribute property of minimal value. This process is simple and inexpensive, normally without attorney involvement.

Sometimes people will put their children on their bank account or add names to a car title so when they pass on, the property automatically goes to the survivor. If someone is buying a home and there is no equity, the home can simply go back to the bank. The heirs will not be responsible for that debt – only assets of the deceased will be used to pay the debt.

If there is equity in a home, there might be a reason to file bankruptcy- to eliminate the debt so when the person passes, the equity can go to the heirs. Sometimes people will add children to the deed so it automatically goes to the children upon death. Others deed the property to their children reserving what is called a life estate, which allows them to live in the home while they are alive. Then when they pass, the property goes automatically to the children. There is no probate or estate.

For our clients:
HELPS does not engage in estate planning. However, if you don't know who to speak with, you can talk with us and we can try to help you find an expert for you in your local area, with whom you can speak with for no charge.

To learn more about HELPS visit our website: http://www.helpsishere.org/

What is Debt Consolidation and is it Worth it?

Last week I spoke with someone who told me something surprising. She had hired a debt consolidation company to settle her debts and it had actually settled one. But was it actually worth it for her to hire the debt consolidation company? Keep reading to find out. 

Debt consolidation companies use many tactics to snare their customers, most of which disregard the truth and target those most in need. An ad currently playing on the radio asserts that Congress has passed a stimulus bill which allows people to settle their credit card debt for pennies on the dollar. This is absolutely false. Congress passed no such bill. (Of course, people have always been free to try and negotiate with their credit card companies, so that is true.) 

The way the debt consolidation companies work is as follows:

 You sign a long contract with small print agreeing to have a certain amount of money drawn directly out of your checking account each month. The company takes this money. It also writes letters to your creditors telling them that they are interested in settling the debts. This causes the creditors to send future letters to the company, not you, giving you the sense that your debts are being handled.

However, these companies do NOT send any money to your creditors. After 6 months or so, the creditors have not been paid, your credit is ruined and creditors stop dealing with the consolidation company and again - look to you for payment.

These companies routinely get shut down by various state attorney general offices, but the same people behind the companies simply start new ones – doing the same rotten things, with a different name. They are not really interested in settling your debts but in collecting the money you pay them. Countless Americans have paid millions of dollars to these companies. It's unfortunate because these people have the best of intentions. 

The FTC is finally taking some action to help people avoid these companies. Hopefully, someday, laws will be passed to completely put them out of business. They are one of the most prevalent scams of our times and prey on people trying to survive in a tough economy.

 

Additionally, don't confuse debt consolidation companies with local consumer credit counseling or other nonprofit entities that help with debt issues. These entities can genuinely help people in need. 

Then there is HELPS nonprofit which is designed for seniors and disabled persons on Social Security, disability and protected pensions who do not have sufficient income to pay their debts. HELPS gives these persons peace from harassment and the freedom to use their income for their needs. 

By Rex Daines

HELPS is Here

Many seniors today are in debt. We, at HELPS Nonprofit Law Firm, have learned from years of experience that many people don't know about their financial rights.  This can put them at a significant disadvantage when dealing with collectors. We have found that people don't know what resources exist to help them; the goal of this blog is to share resources and information that can help make life easier and a little bit more bearable for seniors and disabled people who may be experiencing harassment from creditors. We would like to help peace to return to their lives!

What Is HELPS (and what does it mean?)

HELPS is an acronym that stands for Help Eliminate Legal Problems for Seniors and disabled. We were founded by attorney Eric Olsen, president of OlsenDaines; the largest bankruptcy firm in the Pacific Northwest. HELPS was created to assist a significant number of OlsenDaines clients who didn't need to file bankruptcy.

Why didn't they need to file bankruptcy?                       

Most seniors receive income which is exempt from collection by bill collectors. The most common example of protected income is Social Security. Other retirement income is usually protected as well. Seniors may also wish to have a part time job, if the income is small enough (the amount depends on your state), it is not garnishable by creditors either.

Why would seniors be tempted to file bankruptcy?

Simple answer: collectors. Just because a senior’s income was not collectable (new information to many) didn't mean that the bill collectors would stop contacting them, often calling multiple times each day causing large amounts of stress. Often bill collectors will tell people that they will garnish their pension or Social Security, even when they know it is not true.

HELPS was created to stop the harassment of seniors by collectors.

Once a collector receives a letter from an attorney representing the senior the collectors are no longer allowed to contact them. All contact must be made through the attorney. HELPS represents seniors from all across the country, allowing our clients peace of mind. We always encourage questions, and do not feel that we have done our job unless our client can sleep at night. We are always happy to have a trusted friend or family member you may want to invite sit in on any conversation and can arrange for conference calls as needed.

We are dedicated to helping seniors and disabled persons who are unable to pay old debt that is weighing them down, often making it difficult to pay for housing, food and medicine. As scary as it can be to consider, these situations can happen to anybody!  We are hoping to share a variety of resources and answer some frequently asked questions here. Almost everyone knows someone who could use this information, and everybody should be informed on their legal rights. Please feel free to share with your friends and family members who may be in need of some help. Our motto is “Sharing the Burden.”