Be calm, take it easy.

Do not get crazy just because a debt collector calls you. Crazy doesn’t help. Just calm down. It’s two people talking on the phone. Remember, you’re being recorded. Don’t become yet another YouTube fail.

Be your usual placid, easy-going self. Don’t let a debt collector ramp you up. Take it easy and remain calm.

No matter how quickly the agent talks, you don’t have to speak quickly. The collection agent can lose his marbles if he wants. You should keep your cool.

Tell them your story.

The reason that you’re not paying them is not simply because you don’t want to. The reason that you’re not paying them is because you can’t.

You don’t have the money, and you have no one to borrow the money from. You have no other sources of income. The creditor is not getting paid today.

The problem with telling one agent your story is that tomorrow you’ll have a new agent. It can be fun, sure, to try to find new ways to say the same thing, day in and day out. But eventually it becomes frustrating. Remembering to remain calm can become a struggle.

Tell them to go away.

Debt collectors are required by law to validate your debt in writing. Have them do that first.

They also can’t call you at work if they know your employer doesn’t approve. In fact, debt collectors can’t continue to call you at all, if you request, in writing, that they only communicate with you by mail.

The problem with telling a debt collector to stop contacting you is this: that doesn’t make the debt go away. Debt collectors can and will still attempt to collect on the debt. That includes litigation, garnishment, liens and forfeiture.

How to handle a call from a debt collector? Talk to an attorney.

If you’re getting call from a single, harassing debt collector, talk to an attorney. You may be able to turn the tables and sue the creditor for FDCPA violations. Debt collectors can’t call you before 8AM or after 9PM. They can’t use foul language or threaten you. There are lots of other prohibitions on debt collection activities.

If you’re getting calls from multiple debt collectors, talk to an attorney. You should consider addressing your debts through debt settlement or bankruptcy.

Stay calm, explain your story, or just tell them to go away. But don’t let a debt collector throw you off your game. Get your entire financial outlook straight despite their effort to collect on a single debt.

QuarterSpot loans also require small business owners to personally guarantee their loans. So when Titan Asset Purchasing sues a business, it also sues the business owner, personally.

Choice of venue: Arlington Circuit Court

Both QuarterSpot and Titan Asset Purchasing obtains hundreds of judgments annually against defendants all over the country. The location of the business is irrelevant. If a business defaults on its loan, then the litigation will take place in the Circuit Court of Arlington, Virginia. QuarterSpot requires this as part of its loan agreement. “Choice of venue” contract provisions predetermine where legal proceedings will take place. QuarterSpot also applies its choice of venue clause to arbitration.

Once Titan Asset Purchasing obtains a judgment in Virginia, it hires local counsel in the jurisdiction near the defendant, domesticates the judgment, and attempts collection directly against the owner. Often, the business has already gone under; the business owner remains the only entity against which to enforce its judgment.

Typically, business owners are not liable for the debts of their businesses. QuarterSpot, however, checks the business owner’s personal credit rating before it decides to extend credit, and they require a personal guarantee on every loan they make. Titan Asset Purchasing subsequently names individual business owners as defendants in every lawsuit it files. The business owner’s personal liability on that loan gives rise to concurrent liability for business and business owner alike.

Titan Asset Purchasing is able to obtain a very high percentage of default judgments in the lawsuits it files because the business owners do not live near enough to Arlington, Virginia to mount a defense themselves. That’s where we come in.

Titan Asset Purchasing Lawsuits in Arlington Circuit Court

Lawsuits in Arlington Circuit Court are initiated by the filing of a warrant in debt. Once served, you must take action to avoid a default judgment. Virginia general district court have very short timelines.

Do not simply ignore a creditor because your business has closed, especially if you have personally guaranteed a business loan. You must mount a defense. Do not allow a default judgment to be entered simply because the business is going under or because you live far away from the choice of venue. Creditors like QuarterSpot and Titan Asset Purchasing will use a default judgment against you personally.

Do not file anything with the court or talk to opposing counsel before you talk to an attorney. Lee Legal provides debt defense to clients facing lawsuits in Arlington General District Court, Arlington Circuit Court, Alexandria General District Court, and Alexandria Circuit Court.

Some debt collectors are pretty good at their jobs. The more adept debt collection companies will try to force you into making bad decisions. But you don’t have to let that happen. You have to take control of the situation.

Creditors can cancel your cards. They can report negative information to the credit bureaus. And they can file lawsuits to collect on their debts. They can also email you, text you, and direct message you on social media. And they can call you — a lot, every day, multiple times a day. Obviously, that can be very distracting.

We will make the calls stop. Once you retain our office, debt collectors must go through us. If they contact you at that point, it’s an FDCPA violation. If necessary, we will verify and dispute the debt. We will also investigate the collector to make sure they’re in compliance. We will keep you informed of your rights at every step in the process.

Finally, if the debt is valid, we will negotiate a work-out agreement with the collector on your behalf. Usually, a negotiated settlement can save you a lot of money in the long run.

You don’t have to deal with debt collectors on your own. Call (202) 448-5136 for a free consultation and we will start taking your debt collection calls.

Shady debt collector calls

Most of the calls I get are just fine. But some calls are misleading and even shamelessly deceptive. Just listen to this downright shady voicemail I got the other day.

Hi. This is Brian Moore, compliance officer calling with “the state.” I have a legal notice here that I will be bringing out in the next 72 business hours. Now I have been retained to come out between the hours of 4 and 6 p.m. to the address or place of employment. Now a valid state ID will be assigned to us. If you have any questions or concerns, or to be rescheduled, you will have to contact the filing party. The district office number, as showing here, 833-470-0485. Thank you for your time. You have officially been notified.

Note the casual use of pseudo-legal terms: compliance officer, retained, the filing party. Note the ominous references to “the state” and “valid state ID” and “the district office.” The voicemail also contains a thinly-veiled threat: the possibility of in-person confrontation with this person in the next “72 business hours,” whatever that is intended to convey. And the threat mentions a place of employment, too. For those not already scared enough to return the call, there’s a final menacing kicker: You have been officially notified.

Generally speaking, I’m not a big fan of scammers. But I truly detest it when someone tries to scam my clients. So I called the number.

I reached a company called S&S Check Services, supposedly based in Amherst, New York. The representative (who refused to identify himself) disclaimed any knowledge of a Brian Moore, or why their phone number was linked to this voicemail. But S&S is a debt collector. And they had one of my client’s accounts. It’s not a coincidence. It’s just plain shady.

We will take your shady debt collection calls

When you retain us, Lee Legal will take your debt collection calls. We do this for two reasons. First, debt collection calls are really, really annoying, and you need to focus on getting your bankruptcy filed. And second, as stated above, I hate it when creditors try to mess with my clients. We’ll take your creditor calls up to two weeks before filing.

Once we file your bankruptcy case, the calls stop. That’s because the automatic stay takes effect, and attempts at collection once a bankruptcy is filed can subject the creditor to heavy penalties and attorney’s fees.

The psychological costs of servicing debt

Chronic indebtedness afflicts rich and poor nations alike. One in four families in the lowest income quintile in the United States spend more than 40 percent of household income on servicing their debts.

The mental costs are debilitating. The psychological costs of (or “debt mental-accounting costs”) exacerbate financial hardship because the repayment burdens divert resources from more productive uses.

In other words, the more time you spend thinking about debt reduces the amount of time you can think about other things, like saving, getting a better job, or budgeting more effectively.

The impact of chronic debt . . . is psychological, not just financial . . . [and] impairs psychological functioning and decision-making . . . This is because debt is . . . is viewed as costly mental accounts that consume cognitive bandwidth.

Reducing debt improves psychological functioning,
Qiyan Ong, Walter Theseira, Irene Ng

Servicing debt impairs your ability to make deliberative, economically rational choices. Previous studies have looked at this relationship, too. One study looked at the psychological effects of farmers before and after harvest. Another study examined urban poor people before and after payday.

Getting out of debt allows you to escape a debt trap

The longer you stay in debt, the more it may affect your financial choices. Over a long period of time, even full debt relief may not eliminate chronic stress because “debt scarring” may permanently alter your decision-making abilities. It’s better to act sooner, rather than later, once you fall behind. It’s better to declare bankruptcy, even, than to simply spin your wheels, going nowhere.

Getting out of debt could have a positive effect on future budgeting choices because it motivates people to alter behaviors.

We help people with debt problems

Since 2008, Lee Legal has assisted thousands of people seeking debt relief. If you are suffering psychological effects of debt, call our office and schedule a free consultation. We may be able to help you, too. Bankruptcy may be the best choice you can make for your mental health.

What is third party debt collection?

Third party debt collectors attempt to collect on debts owned by creditors. These types of debt collectors include agencies, companies, and lawyers. Typical creditors who use third party debt collectors are hospitals, vehicle lenders, utilities, and banks. Often, these creditors outsource their collections to allow them to focus on their core business. Almost as often, creditors employ third party collectors to avoid the dirty business of debt collection.

Debt collectors have vast (and growing) resources

More than 70 million Americans have at least one debt collection item on their credit reports. And debt collectors are currently chasing over $211 billion in overdue debt.

Debt collectors have an expanding set of resources available to them:

• 80 percent of debt collectors use skip tracing

• Debt collectors also widely use other techniques like call recording, predictive dialing, and automated speech analysis
• 21 percent of debt collectors attempt collection on debts that are past the statute of limitations

“Call bombardment” is common method employed by debt collectors. Only 49 percent of collectors limit the number of contacts per week. And just 53 percent of collectors limit the number of contacts per day. Most of these calls involve, of course, threatening to penalize the consumer for not engaging with the collector.

Moreover, debt collectors are looking to new technology to amplify their efforts. 61 percent of debt collectors currently use email, yet another 22 percent are considering adding email to their procedures. No fewer than 69 percent of debt collectors either use or are considering using SMS text messages to contact consumers. And 30 percent of debt collectors are currently using or exploring the use of social media to reach debtors.

Hire your own lawyer for debt defense

Some creditors rarely resort to litigation, while other creditors invariably sue. If you are sued by a debt collector, it should be clear that they intend to collect on your debt. The next step after judgment is garnishment, attachment, lien, and yet more collection efforts.

Many consumer debtors often face an imbalance of power, but that need not be the case for you. Hire your own lawyer for debt defense.

In July 2019, the Consumer Financial Protections Bureau (CFPB) released a report on Third Party Debt Collections Tradeline Reporting, based on the latest data available, from Q2 2018. A “tradeline” is another name for an entry on your credit report. Tradelines are considered negative credit items and can remain on a credit report for seven years.

The debt buyer and debt collection industry

The CFPB estimates there are 9,330 debt collectors and debt buyers in the United States. The top four largest debt buyers reported 90 percent of all reported buyer tradelines on credit reports. Debt collectors often become debt buyers, as the CFPB notes:

Debt collectors usually work traditional,
non-buyer accounts
on a contingency fee basis
while they work buyer accounts
by purchasing portfolios of accounts
and keeping all of what they collect.

Market Snapshot,
CFPB (July 2019)

Debt in collection on your credit report? It’s likely a medical debt.

Two-thirds of creditor-collector credit report entries were for medical debts. And medical debts accounted for 58 percent of all third-party collections (debt buyers and debt collectors) as of Q2 2018. But debt collectors frequently report derogatory information for utilities and telecommunications, as well.

These types of credit entries particularly damage credit because they represent nonfinancial debts. Moreover, hospitals and cell phone companies do not report positive payment information to credit bureaus, so the only time these types of debts show up on a credit report are when the information is negative.

Medical debts are dischargeable in bankruptcy

If you have a bunch of medical debts on your credit report, you should consider filing bankruptcy to discharge them. Focus on your recovery — not on the debt. Call an experienced bankruptcy attorney to discuss your options.

Debt collectors don’t give up. They’re very motivated to hound you until the debt is collected. Why? Because collecting your debt is their source of income. Actually, they make money only if you pay the debt. Collection agencies get paid based on the amount they collect from you. Ignoring debt has many downsides.

Ignoring debt collectors won’t make them go away

Under new proposed rules, debt collectors could soon be able to send texts, emails and private-messages to collect on their debts — on an unlimited basis. Creditors will also continue to report nonpayment to the credit bureaus.

Verifying the debt is legitimate

You have the right to request validation of the debt under the Fair Debt Collection Practices Act. You should definitely find out if what they’re saying you owe as a debt is actually legitimate and whether the amount is correct. If you learn that it’s not legitimate, contact the collection agency right away to dispute the debt.

Missed opportunities to settle the debt

Interest, collection costs, and legal fees will be added and, of course, will increase with time. Seize the opportunity to make a payment arrangement with the debt collector. You may even be able to settle the debt for less than the original amount. But you must communicate with the collector to accomplish this.

Don’t get sued

A debt collector may file a lawsuit against you to collect on the debt. In most cases, this is just a matter of time. If you ignore the lawsuit, the creditor will obtain a default judgment against you. Wage garnishment is likely to follow. Any money in your bank account can also be garnished.

Debt doesn’t just disappear

Ignoring debt is like having a false safety net. It’s a progressively slippery slope. Obtain your credit report so you can make a comprehensive debt assessment. Prioritize your debt and make a realistic payment plan. You must contact the collectors and negotiate.

If you’re not able to reach an agreement or repayment isn’t feasible, then it may be time to contact a bankruptcy attorney. A legal professional can inform you of all of your options and help you obtain a new financial start.

You may have legitimate defenses, in which case you should strenuously exert them. If you do not dispute that you owe the debt, however, then you should attempt to settle the debt. Debt settlement almost always saves time and money.

Watch your timeline

Never simply accept a default judgment. If you do not timely respond to a complaint or warrant in debt, the court will grant judgment for the plaintiff. The creditor will then attempt to use that judgment to garnish wages or seize bank accounts. At that point, your only options are to pay the debt in full or file bankruptcy.

Responding to the complaint by filing an Answer is your better move. Timelines in the D.C. area are short.

In Washington, D.C. you must file your Answer and serve the plaintiff within 20 days. In Virginia, you have just 21 days to file and serve an Answer. In Maryland, you must file either an Answer or a notice of intention to defend within 15 days after service of the complaint. Out-of-state defendants in Maryland lawsuits get 30 days to respond.

Verify the debt

Once your Answer has been filed and you have served the Plaintiff, verify the debt. Search your personal records and/or credit report to verify whether you actually owe the creditor. Then cross-check your records against the complaint or warrant. If you are unable to locate the debt amongst your records, reach out to opposing counsel and request verification of the debt. If the lawsuit is based on mistaken identity, then resolution should be quick.

Some creditors ignore inquiries until after the initial hearing. These creditors hope that you will not show up and that they will be granted a default against you. You have the legal right to request that the creditor validate their alleged debt. Creditors, as plaintiffs, must legally prove that a debt is indeed your debt. But they are required to do so only within the parameters of the court’s civil procedures and local rules.

Assess your chances

Not all creditors are the same. Some act in good faith, while others will use every advantage they can to extract from you as much as they can. Being right isn’t enough. You must be able to prove that you are right.

Not all defendants are the same, either. If the creditor believes you have the resources to pay the debt in full, in a lump sum, then negotiations with the creditor may prove difficult. Oftentimes creditors do not file lawsuits against defendants they assess as not having the ability to pay.

You must assess your chances not only of prevailing at trial, but of succeeding in negotiations. Knowing which creditors are more likely to settle is helpful. Knowing how to represent your overall financial picture in the most accurate way will also go a long way toward obtaining favorable settlement terms.

Hire an experienced attorney to settle a debt

Your chances of successfully settling a debt improve immensely if you hire an attorney to represent you. Using the court’s procedural rules to your advantage, we may be able to negotiate an affordable installment payment schedule with your debt collector. And we can likely reduce the amount you owe to a percentage. Hiring an attorney to settle a debt almost always saves you time and money. If you get sued on a debt in the D.C. area, call Lee Legal at (202) 448-5136.

Each man’s life
touches so many other lives.
When he isn’t around,
he leaves an awful hole, doesn’t he?

It’s A Wonderful Life

What Happens to My Debts When I Die?

Here are some common types of debt and how each can affect your loved ones:

Mortgages. If a home is jointly owned or inherited by a loved one, they are responsible to continue paying the mortgage. Federal law prohibits lenders from requiring that the mortgage be paid off immediately in the event of death. If there is money in your remaining estate, it can be used to take over these payments until a decision is made about whether to keep or sell your home.

Auto loans. If your car payments stop, the lender can repossess the vehicle. However, whoever inherits the car can continue to making payments if they choose to keep it. Remember to officially transfer title of the vehicle, also, to avoid any potential penalties.

Student loans. Federal student loans are forgiven upon death. Private school loans, however, can take money from your estate. But if there are no remaining funds, private loans will also be forgiven. In the event of a co-signer or if you received the loans while married, he/she will be responsible for the remaining debt.

Credit cards and medical bills. These types of debts are considered “unsecured.” So if your estate runs out of money after paying mortgage and car loans these creditors will not get their money back. But if you have a credit card with a joint account, that person remains on the hook to pay off the debt. This general rule does not apply to authorized users, but it is advised for them to no longer use that card.

Taxes. If a deceased spouse owes back taxes and the couple filed jointly, both spouses are liable for the entire amount of the taxes. The IRS may attempt to collect back taxes from the deceased spouse’s estate, however, even if the couple files separately. The IRS allows for an exemption from spousal tax liability called Innocent Spouse Relief. This exemption can provide relief if your spouse failed to report income, reported income improperly, or claimed improper deductions or credits.

How can you avoid leaving a legacy of debt?

Get help now. Seek counsel from a bankruptcy lawyer or financial adviser to discuss your debt. Eliminating your debt through bankruptcy before you die may be the right option for you.

Prepare your estate so there are no surprises. Establish your will with an attorney in advance to avoid leaving loved ones in a lurch.

Alert your loved ones to the status of your debt. Debt collectors are permitted to contact your heirs to collect on debts. However the Fair Debt Collection Practices Act prohibits creditors from misleading your family about what they’re responsible for paying. Be sure to discuss what is and is not part of your debt with a trusted family member or friend.

Pro se litigants lose (and lose big) more often than litigants with a lawyer

When a litigant defends oneself in a lawsuit, that’s called pro se, which is Latin for “in one’s own behalf.” In debt collection lawsuits, trying to be your own lawyer can prove very damaging to your case.

Take a look at a recent study on Virginia self-represented litigants by Blue Ridge Legal Services, the Legal Aid Society for Shenandoah and Roanoke Valleys. The study examined Virginia General District Court cases from April 1, 2015 through March 31, 2016.

The Blue Ridge study found that the vast majority of civil cases in Virginia include at least one unrepresented party. And those unrepresented parties do not fare well.

As the graph above shows, success rates for unrepresented parties are much, much worse than for those litigants who hire a lawyer. The study’s results would likely replicate across jurisdictions.

Both plaintiffs and defendants have
substantially higher success rates
when represented
than when they are unrepresented.
The representation status of
the parties, and the resulting potential
for imbalance of power when only one
is represented, is significant.

Virginia Self-Represented Litigant Study,
John E. Whitfield (April 4, 2018)

Perhaps not every case calls for a lawyer. But if a creditor goes through the trouble of suing you, the amount sought is likely substantial enough to justify hiring an attorney. Do not delude yourself into believing that being right is enough. You must vigorously preserve your options in litigation to ensure a favorable outcome.

Defend yourself in a debt collection lawsuit? No.

If the damages are small enough, who cares? Simply pay the debt and get ride of the lawsuit. But if the numbers are big time, do not defend yourself. Hire a debt defense attorney to exert your affirmative defenses and attempt settlement of the debt on your behalf.

Credit card lawsuit

If you stop paying American Express, they will sue you. If a credit card company believes you are penniless, they will ignore you for the time being. But if they think you have the ability to repay them, they will sue you.

We routinely settle credit card lawsuits with Discover, AmEx, and Credit One. Oftentimes, you can save big by spending a little. Hiring a lawyer will help you to find the plaintiff’s bottom line. You can save thousands by hiring an experienced lawyer to negotiate settlement on your behalf.

Personal loan lawsuits

If you default on a loan repayment schedule with On Deck Capital, they will sue you. Choice of jurisdiction for On Deck is the General District Court of Arlington. If you receive a warrant in debt in Arlington or Alexandria, you have two choices.

You can represent yourself and try to settle the debt. Or you can hire counsel to mount your defense and negotiate a favorable settlement on your behalf. Doing nothing is not an option.

Companies now routinely use the courts
to pursue millions of people
over even small consumer debts.

The Color of Debt: How Collection Suits
Squeeze Black Neighborhoods, ProPublica

Navy Federal, Chase, and Citibank have lawyers working for them. So should you. You should strongly consider hiring an attorney if you are sued for a personal loan, signature loan, or line of credit in Washington, DC. Being right isn’t enough. You have to craft an argument convincing to the finder of fact, whether judge or jury.

Debt lawsuits in the Washington DC region

DC area residents also frequently face lawsuits for promissory notes, repossession debt, or lease balances on former rentals. You may not think you owe anything. Don’t let a creditor bully you into paying a debt you don’t owe. You have the right to tell your side of the story.

Or maybe you do owe the debt, but you can’t afford to pay it. Talk it over with an experienced consumer debt litigator to determine what your best options may be.

File bankruptcy to stop a lawsuit

When you file bankruptcy the “automatic stay” takes immediate effect. The automatic stay is a nifty feature of the Bankruptcy Code that orders your creditors to cease all collection attempts. That includes lawsuits. The bankruptcy court will find liable for damages litigants who violate the automatic stay.

In one scenario, a plaintiff may sue you for a large sum. If you have no affirmative defenses or cannot afford to mount a defense in the litigation, then you should consider filing bankruptcy to stop the lawsuit.

In another scenario, an aggressive creditor (Midland Funding, American Express, On Deck Capital) may sue you in order to lien against your home or to garnish you bank accounts or wages. You can not only file bankruptcy to stop the lawsuit, but the bankruptcy will also discharge the underlying debt.

Bankruptcy does not stop every type of lawsuit

Bankruptcy does not halt lawsuits for divorce, or for the establishment of paternity, child custody, or child visitation.

In addition, where a creditor alleges that a debt may be nondischargeable, bankruptcy may delay but not stop the lawsuit. For instance, bankruptcy may only temporarily stay the lawsuit if you are being sued for fraud or for an intentional injury. In those cases, the bankruptcy court will likely allow the lawsuit to move forward to determine whether the debt is dischargeable in your bankruptcy.

Talk to an attorney if you get sued

In many cases, but not in every case, it can be a smart choice to file bankruptcy to stop a lawsuit. If you get sued, talk to an experienced bankruptcy lawyer to discuss your options.

Bankruptcy stops collection efforts

At the start of every bankruptcy case, an order for relief is issued by the bankruptcy court. The order for relief informs your creditors that the automatic stay is in place. Your creditors must stop contacting you or pursuing any collection efforts whatsoever.

Creditors usually stop collecting when they know that your case has been filed. The sooner they find out, the sooner the phone calls and letters stop.

But until you file a bankruptcy, your creditors can continue to contact you. That’s where we come in.

Lee Legal will take your collection calls before you file bankruptcy

There are several situations where it makes sense to delay a bankruptcy filing. Sometimes, you just need to save up for the attorneys fees and filing fees. But generally speaking, if you know you have to file bankruptcy, start the process immediately.

If you have retained counsel and your filing is imminent, a good bankruptcy lawyer will take your creditor calls for you. Lee Legal will take your collection calls up to two weeks before your bankruptcy filing. That “breathing room” allows you to focus on your bankruptcy and get on with your life.

In those cases where there are many creditors, often there is at least one particularly collection agent. Don’t let aggressive debt collectors disrupt your life. We will reach out to them on your behalf to inform them of their rights in your bankruptcy. Most creditors back off at that point.

First off, don’t panic. You may have been expecting the call, or maybe you weren’t. Collect your wits quickly or ask the agent to call you later. Do not admit to anything on their recorded line. Instead, give yourself time to prepare for the conversation. If you can focus on the debt and your ability to repay, the more smoothly your interaction with the collection agent will go. Don’t give them any initial negotiating advantages. Most collection agencies take extensive notes on their conversations.

The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act sets forth what debt collection companies are allowed to do and what they are not allowed to do. The FDCPA prohibits many types of abusive debt collection activities and behavior. You can protect yourself by knowing what a debt collector is not allowed to say to you on the phone.

Debt collectors can’t use any profanity. They can not threaten to harm you, or make any threats whatsoever, for that matter. They cannot claim that a criminal action will be filed against you. And they cannot lie to you or make false representations regarding the debt.

They are also not allowed to call you at inconvenient times. Nor can they call you repeatedly. And if you request it in writing, they must not contact you at work.

The debt collector must validate the debt. You are entitled to request accurate accounting for the debt. Many times collection agencies attempt collection using incorrect or outdated information. The FDCPA prohibits debt collectors from trying collect interest, fees, or other charges unless provided for in the contact giving rise to the debt.

When You Get a Call from a Debt Collector

Log the call. Note the number and the call time. Keep these records in case they become relevant to an FDCPA violation complaint.

Be friendly. The agent on the other end of the phone has a job to do, too. If you owe the debt, and can afford to pay it, do not avoid the creditor. If you owe the debt but cannot afford to pay it, consider hiring an attorney either to settle the debt or examine your bankruptcy options. But if you do not owe the debt, cooperate with the creditor until they are satisfied that the debt is not, or is no longer, yours. Attempt at all times to maintain a professional, pleasant demeanor, even if the debt collector makes that difficult.

When you receive a call from a debt collector, know your rights, but don’t flaunt them. Do not panic and do not get stressed. Take your time, validate the debt, set some ground rules with the creditor, and try to work out a deal. Debt problems, generally speaking, do not simply resolve themselves, so if you owe a debt, you cannot avoid collection attempts forever. If you can afford it, pay it. If you can’t, call Lee Legal at (202) 448-5136 to explore your other options.

Form a Plan to Address Your Debt

You can simply pay a debt, if you have the ability and do not dispute the amount. Otherwise, you can address the debt by settling it, filing bankruptcy, or litigating on the debt. Lee Legal can help you explore which option is best for you.

Negotiation and settlement. Consider hiring an attorney to settle your debt if you have just one or two creditors. If you are facing litigation, hiring an attorney before you are sued can save you thousands of dollars. If the debt is older, but still affecting your credit, we may be able to settle your debt at a significant discount. Don’t wait until the last minute to preserve your legal rights.

Bankruptcy. Individuals with more than just a few creditors should also consider bankruptcy. In either liquidation (Chapter 7) or reorganization (Chapter 13) bankruptcy, we can address your debts all at the same time. Restructuring (Chapter 11) is also available for more complex cases. Lee Legal has filed bankruptcy for hundreds of individuals and businesses in the Washington, D.C. area.

Litigation. If the debt is not yours, or if the amount is overstated, you may need to litigate the debt. Should settlement negotiations prove unsuccessful, Lee Legal will vigorously enforce your legal rights in court. Up front, we will candidly inform you of your probability of success in court. We avail our clients of every opportunity to advance our litigation objectives.

Call Lee Legal to Discuss Your Case

Nearly everyone experiences some kind of financial crisis during his or her lifetime. Sometimes the solution is as simple as an adjustment in budget behavior. Other cases require sophisticated planning and tough decisions. If the debt cannot be settled or discharged, then you may need to litigate the debt. Debt matters can be overwhelming, but you should not allow yourself to become paralyzed by fear or indecision.

Lee Legal provides solutions. We make referrals to other attorneys on some matters, and we help the clients who we can help. If you are facing a debt situation and think you may need an attorney, don’t face your debt alone.

The Cash Cost of Debt Settlement Companies

Debt settlement companies charge steep fees. These companies make their money by charging you a hefty percentage of the monthly fees that you pay to them once you enroll. Those fees are nonrefundable, regardless of whether they settle a single debt for you. I find their business model predatory.

Once you realize that debt settlement is not going to work, call the company and tell them you want your money back. You may be able to get refunded some of what you paid them. Find out what the company has kept in trust to make settlement offers on your behalf. You may be surprised how little has accrued in your account over time. Review your agreement carefully before you call.

Debt Settlement’s Hidden Cost #1: Taxes

When (or if) your debt settlement company actually settles a debt for you, you will owe taxes on any amount that was forgiven. The forgiven amount must be included in your gross income on your tax return. The creditor will send you an IRS Form 1099-C for Cancellation of Debt.

Unlike debts settled on your behalf by a debt settlement company, debts discharged in bankruptcy are not taxable. That’s right: debts discharged in bankruptcy are tax-free. For this reason alone, many people should strongly consider bankruptcy when contemplating debt settlement.

Debt Settlement’s Hidden Cost #2: Your Credit

The first thing any debt settlement company will tell you is to stop paying your debts. If you’re struggling to make payments, that may sound appealing, but it won’t solve your problems.

A debt settlement company won’t be able to settle a debt on your behalf unless you stop paying. If you haven’t paid the debt in years, no problem. But if you have been paying all along, or you have paid recently and just can’t afford it anymore, debt settlement will trash your credit.

Payment history makes up the highest percentage of your credit score. Debt settlement doesn’t work unless you are six or more months delinquent. Every month of nonpayment will stay on your credit report for seven years.

Debt Settlement Companies Just Don’t Work

The Government Accountability Office (GAO) concluded in 2010 that debt-settlement companies significantly overstate their success rates. In fact, the GAO found that debt settlement companies’ success rate was “in the single digits.” And over 65 percent of debt settlement clients had absolutely no debts settled on their behalf at all. That’s pathetic. Personally, I believe that debt settlement is a rip-off. And Washington, D.C. actually leads the nation in complaints about debt settlement companies.

If you have one or two large debts to settle, hire an attorney to settle them for you. Don’t waste your money and trash your credit with a debt settlement company.

On the other hand, if you are facing multiple debts, you should consider a Chapter 13 bankruptcy instead. Under court scrutiny, creditors must prove their claims. And you will only need to pay what you can afford. Bankruptcy attorneys and bankruptcy trustees must have their fees approved by the court. But debt settlement companies charge whatever they want. Spoiler alert: their fees are very high.

Don’t put your hope in a debt settlement company that claims to be able to solve all of your problems. Hard evidence suggests otherwise.

1. Keeping Secrets

According to a recent survey, as many as 12 million Americans have accounts and credit cards that they keep secret from their spouses. That’s a lot of secrecy. Communication is the key to any successful relationship. Keeping a secret account or lying about spending is the quickest and most sure-fire way to wreck your marriage. If you have debt that your spouse doesn’t know about, have that discussion today. Don’t put it off.

2. Making Bad Investments

A mortgage on an underwater home. A stock that tanks as soon as you buy it. A business opportunity that doesn’t pan out. Whether one spouse is behind the investment or you decide to invest together, bad investments can quickly sour your marriage. In many cases, one spouse has an idea and pushes it on his or her spouse. If the investment goes bad, resentment builds. Don’t let this happen. before you invest, come to some agreement. See the next item.

3. Disagreeing on Goals

Setting financial expectations early establishes the ground rules for spouses. Knowing what you’re working for is the best motivator to work and to save. Getting closer to goals, and achieving them, strengthens relationships. When spouses have different goals, disagreements emerge and cooperation turns to counterproductivity. Set goals early, but don’t be afraid to change them. The important thing to remember is to agree on those goals.

4. Disregarding Debts

If you ignore your debt, it will only grow.  Disregarding the impact of debt on your future doesn’t make today better; it makes tomorrow worse. If you have debts, address them in a timely manner. Arrange for repayment or discharge them in bankruptcy. Don’t ignore your debts. Allowing relatively smaller debts to snowball into large ones can wreck your finances and your marriage.

5. Spending without a Budget

Budgets aren’t sexy. Living on a budget is even less sexy. A recent Gallup poll revealed that just one in three Americans has a detailed household budget. Be one of those few that do. Create, in advance, some basic ground rules (and upper limits) for spending and discretionary expenses to avoid arguments later. A major reason why couples fall into debt is a lack of budgeting. While it may seem tedious, a written budget can help a couple avoid confusion and defuse arguments before they happen.

Debt Can Wreck Your Marriage — But It Doesn’t Have To

Finding someone you want to spend the rest of your life with is the hard part. Don’t let debt come between you and your partner for life. Avoid these five mistakes that couples commonly make when it comes to debt.

You Still Owe Charged Off Debt

A debt that has been charged off is usually over 180 days past due. When a debt on your credit report appears as charged off, that means the creditor has given up on you. They no longer consider your debt to be profitably collectible. Unfortunately, you still owe the debt.

Most often, the original creditor has sold your debt to a debt buyer, factoring company, or collection agency. Make no mistake. You still owe the debt. “Charged off” debt is not forgiven debt, and you are still liable on the debt. Instead of paying a charged off debt to the original creditor, you will be paying the company that bought the debt.

Now, instead of one creditor, your credit report shows two different creditors. Both items on your report are listed as negative. For this reason, charged off debt hurts your credit much more a than delinquency on a single debt.

Settling a Charged Off Debt is Complicated

The Best Case Scenario. The creditor may charge off your debt then sell it immediately to a debt buyer. And that debt buyer may then immediately report it to the credit bureaus. At that point, you know who you owe the debt to, and you know that they paid less for the debt than you actually owe. You may actually be able to quickly and easily settle the debt for pennies on the dollar.

The Worst Case Scenario. Unfortunately, life rarely follows the best case scenario. In most cases, the creditor charges off the debt then does nothing. For a while, the new creditor does not report the debt to the credit bureaus. In fact, you have no idea who owns the charged off debt. In those cases, you must first contact the original creditor to find out to whom they sold the debt. But by the time you do this, the company that bought the debt from the original creditor may have sold the debt to another creditor. And so on.

Sometimes paying off a charged off debt is quick and painless. More often, however, trying to pay off a charged off debt can feel like a wild goose chase. Debt buyers rarely immediately report to credit bureaus when a debt is charged off.

The Statute of Limitations on Charged Off Debt

The statute of limitations for contracts sets the time period within which a charge-off creditor can sue you for a debt. Statutes of limitations differ from jurisdiction to jurisdiction. The statute of limitations for most debts in the District of Columbia is three years. The statute of limitations for most debts in Virginia is five years. Like in D.C., the statute of limitations for most debts in Maryland is three years. The statute starts running from the date of the last default.

If a creditor attempts to collect on a charged-off debt prior to the statute of limitations, you should consult with an attorney quickly. In those situations, the creditor can extend (or “toll”) the statute of limitations if you take certain actions.

If the statute of limitations has already expired, then the creditor can attempt collection on the debt forever, but they cannot sue you. The debt will continue to affect your credit. But they will never be able to sue you.

What to Do When a Debt is Charged Off

Having good credit is so important. As with most debts, paying sooner will save you money and improve your credit score more quickly. Find out who owns the charged off debt and satisfy it. In the meantime, the charge-off creditor may be simply holding your debt until your ability to repay improves. At that point, you won’t get as good a settlement.

In many cases, when a debt is charged off there are several other negative items in need of addressing. You may even owe several different charged-off items. If a single, specific charged off debt is not your only credit problem, you may want to consider filing bankruptcy to discharge your debts.

A charged-off debt affects your credit report for seven years, while filing bankruptcy will remain for seven to ten years. Sometimes, protecting your credit requires choosing between two evils.

I Can’t Afford to Pay

Judges just don’t want to hear it. Your inability to pay a debt does not mean that you do not owe the debt. Insufficient income only becomes relevant during subsequent garnishment or attachment proceedings. In a debt collection lawsuit, the court wants to hear evidence relevant only to two things only: the existence of the debt and your legal liability to pay for it.

The Creditor Has No Legal Standing

Only in very specific (and usually obvious) cases does this defense work. While a debt buyer must prove that it legally owns your debt, in my experience, the plaintiff can do this in over 99% of cases. In the small percentage of cases where fraud may exist, payment of the debt to a third party may constitute a complete bar to collection by the true owner.

I Didn’t Receive Notice

The judge will ask you, point-blank, “Then how did you know to respond?” Insufficient service is an excellent defense tactic to gain some time to respond to pleadings. But actual notice is legal notice, and this defense will not end the lawsuit. Do not accept a default judgment while telling yourself that you can claim later that you did not receive sufficient service.

My Cosigner Said He (or She) Would Pay

Be wary of verbal agreements with friends or members of your family to pay on cosigned debts. If the creditor has gone through the trouble of obtaining your signature on a loan, you owe that debt. If your cosigner vanishes, or simply isn’t able to pay, the creditor will pursue you. Your verbal agreement (or even a written agreement) with the primary borrower does not impact at all your relationship as a cosigner to the creditor.

My Divorce Decree Says I Don’t Have to Pay

A divorce decree legally changes the relationship between two married persons. But it does not change the relationship between those two individual people and their creditors. It is for this very reason that the negotiation of secured and unsecured debts are handled very differently in a divorce. A debt collector can still sue you despite what your divorce decree says.