What Seniors Should Know
If you are a senior citizen who is having a difficult time repaying unsecured debt, it is vital that you understand what can – and cannot – happen to you if you do not have the means to pay. Knowing how creditors may behave when trying to collect on a debt will give you the confidence to communicate and negotiate with them effectively.
Original Creditors versus Collection Agencies
Original creditors must comply with state law when collecting a debt. While most states’ laws closely mirror federal law, each state has slight legal variances. Contact your state Attorney General’s office to learn the exact law for where you live.
The collection practices of original creditors are often less confrontational than those of collection agencies. This makes sense, since it is in the company’s best interest to maintain a positive business relationship with you, particularly if you are a long-time customer. If you are unhappy with their collection practices and believe they have overstepped their legal boundaries, speak up! Contact them and explain why you are displeased and that you want the action to stop. If they continue to break the law, however, report them to the Better Business Bureau and your state’s Attorney General, who will investigate the matter.
Many seniors – and consumers in general – are intimidated by collectors. Unlike original creditors who want to keep you as a happy customer, these businesses are only interested in one thing: collecting what is owed. However, as scary as they can sound, they really are strictly regulated. Among other things, they are not allowed to:
You are under no obligation to speak with a collector, particularly if he is making you uncomfortable or frightened. Do not be afraid to excuse yourself and hang up the phone.
Some disreputable collectors may make false threats with the hopes of scaring you into sending some money. However, no matter what he says, rest assured that you cannot be sent to jail for unsecured debts. No one can take money from your accounts or sell your property either, unless you’ve lost a lawsuit first. Making these empty threats is illegal too – and the collector may be fined for such behavior. Report conduct violations to the FTC.
If you really want the calls and letters to stop, the FDCPA gives you the right to send a letter to the collection agency stating that you want all communication to end. This is called a “cease and desist” letter, and should be used only if you are very sure you won’t be sued or you want your day in court. Upon receipt of the letter, the collector has only two choices: end all communication for good, or begin legal action.
If you are concerned about getting sued, know that even if you have a job, a portion of your income is protected from garnishment, as is Social Security income and most retirement plan distributions. And if you don’t own any expensive property or have a substantial amount of cash tucked away, then liens and levies are irrelevant. If you are worried about losing your home in a lawsuit, you can probably relax – forced home sales are very rare.
Many seniors who are in a financial bind are what is considered “judgment proof.” That is, if you have no income or assets to take, then a lawsuit is not going to help them recoup what is owed. This does not mean you can’t or won’t be sued. It means that if you do not have anything, nor will ever have anything, you should make that perfectly clear to the creditor as soon as you can. They may decide against legal action, consider the debt uncollectible, and drop the matter for good.
While creditors are not obligated by law to accept anything less than what they are asking, they very well may consent to a reasonable payment plan, or possibly even settle for less than the amount owed. Understanding your legal rights and the consequences of not paying will help you effectively work with all types of creditors.
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