Wiping Out Your Debts
Conventional and Unconventional Techniques
by
John Paul Jones for P/HARM
[ Introduction ]
It seems that in today’s society, one lives by being in debt in
today’s credit-oriented
society. As a matter of fact, there is
nothing wrong with owing money to someone. The majority
of
businesses get started by borrowing money. It becomes wrong when
you get into debt
over your head and when creditors begin to call
and harass you. Well, now it is time to DO
something about it
and not have your debts worry you all the time.
[
Conventional Techniques ]
Probably the most obvious answer to solving your debt
situation
is by getting a loan to consolidate your debts. Many banks and
financial
institutions offer this kind of service. Personally,
my favorite conventional method of
dealing with creditors is by
writing them a letter. A letter has a better advantage because
that is it IS in writing
and that it can become legally binding.
Therefore you should be as vague as possible when
making any sort
of promises. Here is a sample letter that you can use:
Gentlemen:
I just received your letter informing me that my account No.
12345, is past
due.
I have made every effort to meet this payment.
Unfortunately, due to difficult
times which my family is
currently seeing its way through, I am at the present time unable
to.
However, I feel
certain that my financial situations will
improve in the near future, and that I will at that
time be able
to resume payments according to the agreed schedule.
In the meantime, I am
enclosing a token payment of $______
to show my good intentions.
Sincerely
yours,
[ Unconventional Techniques ]
This is my favorite techniques
in getting your creditors to stop
harassing you. Federal and State laws now prohibit such
tactics
of collections such as telephoning a debtor(you) and harassing.
The laws also
prohibit a creditor to send letters to a debtor
threatening to profane their credit or
threatens that certain
legal actions will be taken. THE THREAT OF CRIMINAL ACTION IS
ILLEGAL!
A creditor or collection agency may NOT use a name that can
mislead
someone into thinking that they are some government
agency, or represent themself as a
government agency. Nor may
they falsely represent themself as a lawyer, law enforcement
agency, or private detective.
Collection agencies are prohibited from calling on, or
otherwise
contacting a third party such as a neighbor or employer to
discuss your
debt.
Furthermore, the Federal Communication Commission has ruled in
favor of
debtors, that it is illegal to use the telephone by a
creditor or collection agency to harass
abuse , or otherwise
frighten a debtor, or to call at his home to discuss the matter
with a family member.
All of the above mentioned tactics are covered by the Fair
Debt
Collection Practices Act, passed in March, 1978, a copy of which
is available from
the Federal Trade Commission regional offices
whose address follows. All these restrictions
apply to
collection agencies. Restrictions on business such as retail
stores, banks, and
small loan companies, are more lenient.
Any complaint against a collection agency,
finance company,
retail store , or other creditor, should be addressed to the
Bureau of
Consumer Protection, Federal Trade Commission, at one
of the following regional offices:
25 Federal Plaza New York NY 10007
John F. Kennedy Fed Bld Boston Mass.02203
2120
L Street, N.W. Washington D.C. 20037
730 Peachtree St. Atlanta GA 30308
1240 E. Ninth
St. Cleveland OH 44199
55 E. Monroe St. Chicago Ill 60603
911 Walnut St. Kansas Cty MO
64206
500 S. Ervay St. Dallas TX 75201
450 Golden Gate Ave San Francisco CA 94102
11000 Wilshire Blvd. Los Angeles CA 90024
1511 Third Ave. Seattle WA 98101
Remember, if you feel that the creditor violated your rights by
the use of the telephone then
notify your telephone company and
the Federal Communications Commission. The FCC’s address
is:
1919 M Street, N.W. Washington, D.C. 20554
Send a copy of a letter along
these lines to the creditor and/or
agency if one is involved:
Gentlemen:
On June 26, a representative of your firm acting on your
behalf, telephoned
my home and discussed an alleged debt with a
member of my family. Furthermore, on July 1, I
received a letter
from you stating your intentions of profaning my credit if I did
not
make a certain payment that claim is now past due.
Your practice was in invasion of my
privacy, and was a
defamation to my character.
I will NOT permit my family nor myself to
be subjected to
your illegal tactics. I have reported your firm to the Bureau of
Consumer Protection, Federal Trade Commission. Continued
harassment will result in my
immediately filing suit against your
firm for damages.
Sincerely yours,
Letters such as the above will give the creditor the impression
that you know your
rights and are not easily frightened. This
will also give the impression that if he were to
file suit in
court, he would be met with strong opposition. He must now weigh
and
justify the high cost of further action against you, against
the amount of money he may
recover if and when he should win. By
common sense, no creditor likes to tie themselves up
with law
suits especially when the have the impression that they are in
for a tough time
and IF there is a collection agency involved
they will get 50% on any money collected anyway.
Also, no
agency can afford the expense and bother of going to court when
the chance of
winning has already been challenged. So unless the
amount of money involved is real large, you
stand a good chance
that the creditor will write off your account as
"UNCOLLECTIBLE"
and forget it. They are not in business to lose more money than
your threat of suing can be a
real one and they stand to lose too
much to take any chances.
If the creditor
writes your debt off as uncollectible, they can
not report it to the credit-reporting bureaus.
They have no
claim against you! All you did was challenge their business
practices and
it was THEIR decision to cancel your debt.
Here’s another tactic that can be
used quite effectively. Make a
list of all your creditors and the amounts owed. This should
not
include anyone you have a secured loan with (home mortgage, car
payments, etc.).
Lets say the total amount you owe is $5000 and
you can raise $500. Of course the higher the
dollar amount, the
more likely they are to accept.
If you can get the help of a
friend, lawyer, or legal aid society
so much the better.
Have a separate letter
typed to each individual creditor along
these lines:
Gentlemen:
I have been
retained by (or, represent) Mr._________ for the
purpose of settling as many accounts as
possible before filing a
petition in bankruptcy.
Mr. ___________ total debts at the
present is $5000.00, with
assets on only negligible value.
In an effort to settle
honorable with his creditors, Mr.
________ has managed to raise $500.00 for this purpose.
This
money will be distributed on an equal percentage bases only among
the creditors who
accept this offer.
Of course your percentage my be as little as ten percent,
and may be
much more (may be large enough to repay the debt),
dependent on the number of creditors
accepting this offer.
The funds in settlement of debts due will be mailed on
_________.
(write in the date of 10 days from the time you mail
this to the creditor.) Your response must
be received prior to
this date.
To accept this offer, all you need to do is sign the
enclosed self-addressed
envelope.
Pursuant to the provisions stated above, we hereby agree to
accept a minimum
of $________, or a greater amount pursuant to
the number of creditors accepting this offer, as
full payment and
settlement on account number _______________.
Name of Creditor
_______________
Authorized signature ___________
Date ___________________________
A letter like this is very effective. None of the other
creditors will want to
be the fall-guy. Sure they only have the
chance of receiving only 10%, but by the same token
there’s a
chance of receiving alot more and by nature, creditors love a
gamble. They’ll
jump at your offer, knowing that this is one
play the stand to win at least something, and
cannot lose more
than what has already been lost.
[ Conclusion ]
to wipe out your debts,
some at even a fraction of the cost that
you owe in total. If the laws say you can do it, why
buck it?
You probably couldn’t repay the entire total of debts with todays
high
interest rates. As always, you should consult a lawyer or
legal aid society just to be on the
safe side. I will be writing
more files on the subject and other successful stalling
techniques in the future. If you have any comments or
suggestions please feel free to contact
me through any of the
P/HARM members or nodes. You can also reach me on The City of
Boldhome
(714)831-2860.
{SPECIAL GREETS go out to:}
Master, Dopey, P/HARM,
and the Oracle.
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