4 Nonpayment Steps to Take if You Have Credit Card Debt You Cannot Afford to Pay

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2 4 Nonpayment Steps to Take if You Have Credit Card Debt You Cannot Afford to Pay 1 Understand That Seniors Are Easy Targets for Debt Collectors Unaffordable credit card debt, debt collector threats, collection attorney letters, debt lawsuits, court judgments, bankruptcies; too many senior citizens on a fixed income find their security threatened by or perhaps even already lost to debt they cannot afford to pay. Reading through a senior debt discussion forum recently I found many posts from retired people living on a low fixed income with credit card debt they could not afford to pay. Senior citizens on low fixed incomes are more vulnerable to debt collector lies and threats to their financial security. Several people with few or no assets and only a monthly Social Security check for income were contemplating bankruptcy for relatively small amounts of credit card debt because debt collectors were hounding them for that debt. 1

3 Several people with few or no assets and only a monthly Social Security check for income were contemplating bankruptcy for relatively small amounts of credit card debt because debt collectors were hounding them for that debt. One was being chased by a debt collector for credit card debt from 2005, another for debt from (Both apparently unaware of the protection their states statute of limitations on debt collection and filing debt lawsuits afforded them.) Another living on a fixed income of $1600/month was actually paying $250 a month to a debt collector on a settled credit card arrangement until a part-time job was lost. A few were being sued for old credit card debt with Social Security as their only source of income. There were people being harassed by debt collectors for credit card debt their recently deceased spouse had incurred. 2

4 2 Understand That the Banks Are Not Hurt by Your Credit Card Bad Debt When we first acquired a credit card in the 1970s, we needed a good credit rating to get one. And, the deal was, if you did not pay this unsecured debt, your credit rating would suffer. Back then, there were not enough debt collectors to chase down delinquent accounts. Besides, banks charged a high interest rate to protect against any losses. Unfortunately credit cards became very popular; unfortunate because as credit card operations grew, the amount of bad consumer debt grew and opportunities for the debt collection and debt relief businesses grew. According to creditcards.com, today only about three percent of credit card accounts go into default. The banks plan and budget for those bad debts ahead of time. In addition they are sometimes insured against those inevitable losses. So any money recouped from consumer credit card bad debt is found money. 30 to 50 percent of that money goes to debt collectors and collections attorneys as their payment or commission. Credit card banks 3

5 3 frequently sell large blocks of defaulted consumer credit card accounts to junk debt buyers for no more than ten cents for every dollar owed. So, if a junk debt buyer collects half of that debt, they will make a 400 percent gross profit. What you should do, if you have credit card debt you cannot afford to pay. You need to selectively stop paying that unsecured debt and focus on meeting the expenses of your monthly essentials; food, housing, utilities, medical care, transportation and taxes. It simply comes down to, Don t pay if you can t. But, what about debt collectors, collection attorneys, and an eventual lawsuit? This is the biggest fear of anyone who owes credit card debt. The truth is banks have a great deal of difficulty documenting credit card debt to court standards. Signed contracts for credit card accounts do not exist. An unsigned contract of adhesion will arrive in the mail a few weeks after the first time you use a new credit card; neither you nor the bank has signed it. Banks have difficulty accounting for the alleged amount owed. What are all the individual charges, 4

6 payments, interest additions, fees and penalties that went into the calculation of that alleged amount owed? Are they and how are they all accounted for? Any bank documents presented to the court need to be accompanied with a signed, sworn, notarized affidavit from an employee of the bank who has personal knowledge of the account in question. No employee has personal knowledge of your account because bank credit card operations are so automated that there are millions of accounts for only hundreds of employees. Last year Chase bank paid over $200 million in penalties and compensation for issuing phony affidavits to document consumer credit card debt lawsuits. (You can Google this fact for yourself!... or use the link.) In addition because over 90 percent of consumers who are sued for credit card debt do not respond, according to the New York Times, to a court summons and receive a default judgment against them because they owe the debt, most collection attorneys do not include any debt documents in their credit card debt summonses. This is especially true for junk debt buyer lawsuits. All they buy is your name, address, 5

7 Social Security number, account number and alleged amount owed. There is no file on each consumer. A few years ago the Wall Street Journal reported one of the largest junk debt buyers in the nation, Encore Capital Group, had a simple business plan. They would sue each consumer in their database and not pursue anyone who responded, knowing that over 90 percent would not respond. Also, there are consumer rights attorneys who get these half-baked lawsuits dismissed all the time for reasonable fees. Credit card debt collection law firms are set up to process summonses and file for default judgments. They do not want to actually go to court and litigate. They want the easy money in default judgments. 4 Start fighting for your rights long before a court summons arrives. Debt collectors and collection attorneys do not make any money if they do not collect any money. In addition, they go after the easy targets, like senior citizens who might lack the will, the energy, or the knowledge to fight them off. 6

8 The Fair Debt Collection Practices Act (FDCPA) exists to protect consumers like you from debt collectors making claims they cannot back up. When a debt collector calls you can tell them you do not discuss your personal financial affairs over the telephone with strangers. The only power debt collectors have is to you tell scary lies about court summonses over the telephone. Because they are not attorneys, they cannot possibly send you a debt summons. Some do send phony summonses that make them liable under the FDCPA. If you receive a collection notice in the mail, you should respond to it by denying and disputing the debt, by demanding the debt collector validate the debt, by instructing the debt collector to cease all collection activity. The Fair Debt Collection Practices Act gives you the right to do all of that. If a collection attorney sends you a collection notice you should do the same thing. You should not call the number on the notice to work out a reasonable payment plan. A token payment has you admitting to that debt in writing and eliminates the need to legally document why and how you owe the debt. 7

9 Your letters will create legal responsibilities for the debt collectors and collection attorneys you send them to. They will also differentiate you from the many other consumers these entities are trying to collect from, creating the perception that you are going to be hard to collect from and are therefore not worth pursuing to make this week s collection quota. 5 Achieve security and peace of mind by educating yourself about credit card debt. By reading this you have begun (or are continuing) that process. But you need to read and understand more to be confident that you can achieve the outcome you want to achieve. I spent many months doing this kind research because I did not know who or what to believe. There is too much false information about credit card debt on the Web. In addition, debt relief scammers selling debt settlement, debt management, debt consolidation and debt negotiation services drown out valuable sources ofinformation, like me. My name is Mel Thompson. When I was 55 years old I had $63,000 in credit card debt I 8

10 could not afford to pay. I was in business for myself, and business was not good. I came to realize that the only way I could survive was to stop paying my unsecured credit card debt and to focus onpaying my monthly essentials. I did a lot of online reading and research on credit card debt, credit card banks, debt collectors and junk debt buyers. As a result I learned how to defeat the banks, debt collectors, collection attorneys and junk debt buyers; how to stop their harassment; and how to prevent or defeat a credit card debt lawsuit. I am not proud of avoiding $63,000 in credit card debt, but I am proud of learning how to avoid being victimized by the consumer debt business. In addition I am proud of the simple, effective program I have developed based on my research, and I am proud that I have been able to help many other people put their credit card debt behind them without suffering needlessly. I put everything I learned about credit card debt into a series of ebooks totaling about 100 pages. They include the letter I developed to send to debt collectors and collection attorneys. There is a lot of supporting information about why my approach works, which I back up it with links to original source material in major mainstream publications and websites. 9

11 10 Steps to Not Paying Your Unaffordable Credit Card Debt 5 Ways to Defeat Debt Collectors in 90 Days and Prevent a Lawsuit How to Confidently Handle a Credit Card Lawsuit When the Debt Is Yours These books and the letter have worked well for the many people who have already taken advantage of them. In addition, I protect everyone with a 60-day, noquestions-asked, money-back guarantee on any money paid. I am not an attorney and this content is not intended to be legal advice. Anyone with unaffordable credit card debt should find the right local consumer rights attorney because they make most of their money suing debt collectors on behalf of consumers who owe debt. I encourage you to do this because a good consumer rights attorney will confirm what I am telling you. He or she will give you further peace of mind that not paying if you cannot pay is the best approach. In addition, they will be good to have in your address list should you ever receive a credit card debt summons. The typical person I help is over 50 years old, who 10

12 usually through no fault of their own, has become responsible for an amount of credit card debt they can no longer afford to pay. Get control of your happiness and take advantage of my resources. Keep educating yourself, what do you have to lose? If you need help now, you can access my ebooks here. You can also read the related credit card debt blog posts onmy website creditsabre.com. 11