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Chapter 1: The Short Story about Surviving Credit Card Debt

Credit Card Debt Collection after an Account Charge-off and Sale

Once your account is sold to a junk debt buyer, the junk debt buyer will notify you of their ownership and demand payment. They are usually not licensed to collect consumer debts in your state because they are junk debt buyers not debt collectors. So, in addition to disputing the debt, requesting validation and instructing them to cease collection activities, you can warn them about their violation of the law with their lack of a collector’s license. (You will need to check you state’s database of debt collector licenses, usually found on a state’s web site.)

The debt validation letter (DV) is your number one defense against junk debt buyers, collection agencies, and collection attorneys. It is a defense that, fortunately for the debt collection industry, not many people use. The FDCPA requires anyone attempting to collect a debt from you to notify you in writing with a “mini-Miranda” statement that you have the right to dispute the debt and request validation of it. You then respond to this with a debt validation letter (DV) disputing and requesting validation AND instructing the collector to cease collection activities. Junk debt buyers and their collection agencies usually disappear after a good debt validation letter. (There are sample debt validation letters in the Debt Collection chapter as well as hyperlinks to many more.)

After the DV letter, the only thing debt collectors can legally do is pursue you in court, and why shouldn’t they save that for someone who is easier to intimidate? If they make further collection attempts, and you can document them, they can be sued for $1000 per violation under the Fair Debt Collection Practices Act. You can find attorneys who will do that for you on a contingency basis.

At this point the junk debt buyer could:
1) Give the account to another collection agency. That collection agency may call out of the blue before they send you a mini-Miranda telling you that you will be receiving a court summons from their attorney suing you over this debt. And, that NOW is your last chance to pay without court action. This is a classic, lying, scare tactic. Do not believe it and DO NOT give you bank account information to make a payment.
2) Give the account to a collection attorney. If this happens the attorney, hoping to scare you with their letterhead, will send you another mini-Miranda, which you can reply to as you have the others. Attorneys acting as debt collectors are considered debt collectors by the FDCPA and are liable for violations in the same way.
3) Sell the debt to another junk debt buyer.

During this process it is imperative that you –

1) Always dispute and never admit that the debt is yours.

2) Do not “re-contract” with anyone attempting to collect a debt from you. Remember that the collection agency, junk debt buyer, or collection attorney is trying to re-contract with you by getting you to admit to the debt; by getting you to do their job for them. Their job is to prove you owe the debt, or, getting you to make a minimum payment.

3) Stay off the phone. Do not try to handle things solely by phone. There is no record of a phone call and no reason why the collecting party should hold up their end of the deal. Do not talk to debt collectors on the phone unless you are attempting to negotiate a settlement that will be followed up in writing.
4) Never settle with collection agencies and junk debt buyers. It will hurt your credit even more. “Doing the right thing” is NOT paying a dime. The way the debt collection industry is set up, you will do a disproportionate amount of damage to yourself trying to repay an old debt.

5) Always respond to written debt collection communications. People, who DV, are much less likely to be sued. People who do not DV are showing weakness and opportunity. The profitable collection numbers principle applies to them.

6) Always, always document your communications. Keep copies of all letters to collection agencies, junk debt buyers and attorneys. Send everything certified mail return receipt requested (CRRR) U.S. mail.

7) Never, ever give your bank account information over the phone. Remember, 100 percent of debt collectors will lie to you 100 percent of the time. There is no real urgency that requires you to share that information, just the lies about court action that the collectors spin to get you to submit to them.

8) In the unlikely event of a court action, always answer a court summons within the time required and stating the appropriate legal defenses as determined by your local rules of civil procedure. A few pages are sufficient to avoid an immediate default judgment against you and give enough to give high you time to prepare your case against the typical opportunistic collection attorney. Many debt collection attorneys send out summonses by the dozens fishing for defaulters. If you do not reply, they can get a default judgment against you; if you do reply, they disappear moving on to the next potential defaulter.

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