Expert: Creditwrench - 7/21/2008

Question
QUESTION: Hi

I am not sure if this is the right place for this concern but I'll try anyhow. I am currently a graduate student in IL and have accumulated a great deal of credit card debt ($20,000) over the past 7 years. Prior to this year I was getting lots of assistance in paying my debts from my parents but now I have taken responsibility for it. I have attempted credit counseling, but still been unable to dig myself out of debt. I rent an apt and do not have any income other than from Federal student loans.

My last payment to creditors was about 4 months ago and I am receiving calls everyday. I am wondering what my best route of action will be. I spoke with a credit counselor who advised me that I should not be in any hurry to claim bankruptcy  since I am not a very sueable client and the collection agencies may not even take me to court. Instead I was told that I should perhaps wait until I'm done with school (Dec 2009) and then attempt to negotiate debt settlement on these accts which will likely be charged off by then and affect my credit for 7 years as opposed to 10 if I chose Bankruptcy. However I am not sure it is worth it to continue dealing with collectors and anticipate possibly going to court (a place I have never been in my 25 years)

I do plan on sending a letter to the collection agencies saying that I do not want to receive calls anymore and that I can only be contacted via mail due to the Fair debt collection practices act. I don't know If I should also let them know that I am a student and that I have no assets or wages which can be garnished?

Any feedback and direction would be greatly appreciated

Thanks so much for your time

Brad

ANSWER: You say you have no income other than your student loans? You say you have no assets or wages that can be garnished?

If you have a bank account and you deposit any of your money in that account it can be garnished.

You are actually in a pretty good position but simply are not aware of just how good your position really is. You are just now starting to get hounded by collection agencies. That is the time to start getting proactive and put a total stop to their monkey business.

Let's take me for an example. I got into a car accident in November of last year and was found to be at fault by the police. They didn't give me a ticket however because here in Oklahoma City most car accidents are never issued any citations. In order for that to happen someone must be injured or some other cause must be present other than the accident itself. At the time I did not realize that my insurance had lapsed that very day or I would have paid it up.

The only damage to either car was minor bumper damage. The other vehicle could have been fixed in about 10 minutes with a hair dryer. I took pictures of the other vehicle and mine at the scene of the accident. The other vehicle was only occupied by a young lady who was driving but the passenger side of the windshield was broken and shattered by someone's head having hit it at a pretty good velocity. The passenger had to have suffered a severe head trauma as the imprint of a human head was clearly visible yet the driver stated at the scene that she was not injured in any way.

I got a call from the insurance company demanding that I pay $2600 which is as much or more than the old car she was driving was worth. If that much damage had actually been sustained the vehicle should have been totalled.

Today I got a demand letter from a debt collector the insurance company had turned it over to for collection. When I got the letter today I nearly whistled a sigh of relief.

I prepared a demand for validation of the debt and demanded proof in the form of an itemized statement of repairs made to the vehicle by a repair shop. Now they cannot move forward with any collection activity until they provide the demanded validation which they are unlikely to do. Most likely they will simply send another demand for payment or will start calling me and trying to jawbone me into paying. I sincerely hope they put it on my credit reports too because they have no permissable purpose to do that absent proof of the debt.
Being on my credit report with out having proof of the alleged debt in my hands leaves them with no permissible purpose to be on my credit reports and if they are on all three that is $1,000 per each bureau times however many months they end up being there before I get them to federal court.

I also hope they turn it over to an attorney to file suit on me without having provided that demanded proof of the claim. That would give me another cause of action.

Then I would immediately take them to federal court and start in on their lawyer and do the same thing to the lawyer. If it turns out that they demand money for damaged parts that were not attributable to the accident such as replacing that windshied then I'm going to demand that somebody spend some time incarcerated for insurance fraud.

No matter how it goes they will end up paying me handsomely for my time and trouble.

Now then, you say you are not sure if it is worth it to continue to deal with these debt collectors and you might be better off filing bankruptcy? I say that is being foolish and I'm ready, willing and able to prove to you that it is more than worth your time and touble to deal with them. How about worth enough to pay off a huge chunk of your student loans if not all of them?

Would that be worth it to you if you could actually make that happen? That's for you to decide.

Bill Bauer
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405-227-9423

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---------- FOLLOW-UP ----------

QUESTION: I appreciate your assistance. I guess I really am confused on how my position is good. I would love to be able to pay off my student loans and you're right that would definitely be worth my time and trouble. But until then I have not a clue on how I can do that. It sounds like you're saying to keep a careful eye on their slip ups  so that I can go after them. Unfortunately I am ignorant to the law and my rights in this situation and this lack of knowledge can get me into huge trouble I'm sure. What exactly do you recommend I do at this point?

Answer
What do I recommend that you do at this point? Just what you do each school day. Study and learn. Yes, I know that you probably already have a huge load of study to do as a result of your college courses and probably figure you don't have the time to do any more but learning this stuff isn't anywhere near as tedious as the learning you are doing every day right now. A couple of hours here and there will do it nicely.

This stuff isn't rocket science. You can pick it up pretty fast. It won't take long before you will be so familiar with it that you can easily prepare a whole federal court case in an hour or two and in spare time. Maybe a few hours a month. Get started now and by the time you really need to be deep into it you will already have it all down pat.

Right now keeping careful records of everything that happens, each phone call, each letter you get will do the job so long as you get those validation letters out in time. You always have nearly 30 days to get each one out and they are nothing but a form letter you keep on your hard drive so you can pull it up and print it out and off it goes and the whole thing only took about 10 or 15 minutes max.

How hard can that be? You don't have to worry about doing court cases or research for at least 6 months to a year and by that time you will be out of school. Start now while the going is easy.