Expert: David - 3/17/2009

Question
Hello:

I hope you can give my wife and I some guidance.  I applied for a credit card 4 years ago and received it.  I used it and paid the bills.  I lost my job a little over a year ago and then my wife was diagnosed with Multiple Sclerosis. Things became very tight financially for us.  We were trying to keep our mortgage paid along with our utilities etc and I lapsed on the credit card.  The amount owed was $1400.00.  The bank finally sold the debt to some collection company who for some reason has my parents contact information and not mine.  So, every week my Mother gets a call from these people threatening to put her in jail etc if the bill is not paid, so my mother told them that I haven't lived with them in over 10 years and that I have my own home and own family.  She gave them my phone number and address and asked that they do not call her anymore.  I called them about a month ago and set up a one time automatic withdrawal from my wife's checking account for $250.00 and then after that we would continue to make payments depending on how much money we had available.  Well, this company went and took out $650.00 twice from my wife's checking account without our permission which put her into a negative balance.  She went to the bank and asked how they could take out money from her account when there wasn't $1200.00 to begin with.  The bank said that with "a check draft" the funds get paid to the credit card company and then we have to deal with the negative balance.  So, my wife fought it and filled out paperwork to have the account closed.  When the bank closed the account they took back the $1200.00 that the "collections company" originally took.  Today, my mother again received a call from the collections agency and they told her that they issued a warrant for my wife's arrest for closing the checking account under false pretenses.  First, how can this company keep calling my elderly parents and scaring them when the credit card was mine in the first place?  This company has my home phone number and address yet they never call here.  They only call my parents.  Now, I am not denying that I owe this credit card company or collection company $1200.00 but they want it paid in full in two installments and it is impossible for us to do that.  They will not accept anything less.  We do not have $650.00 lying around for them to take once every two weeks. We are willing to work with them, but they will not let us set up a payment plan.  Is there anything we can do?  Any advice would be greatly appreciated.

Thank again,

paul


Answer
Hi Paul,

Reading this just really fires me up.  It is horrible to have this happening and it is illegal.  Just download the Fair Debt Collection Act and you'll be able to read what they can do to collect.  At this point I would send the proper certified mail, keep records and even record calls if possible in preparation to file a law suit.  You won't get much ($1000 maybe) but they deserve it.

As far as the Debt, I would immediate send certified return receipt Cease and Desist letters acknowledging the debt and your inability to pay while demanding contact only by mail. (just google sample Debt collection cease and desist letters and you'll find some good ones)

I wouldn't pay them a dime on payment.  Just start shoving all the money you can into a safe place.  You'll get a lot more traction with a settlement if you can pay by lump sum. (such as half the debt)
Know that the damage to your credit score is already done, paying them off in full or settling for a lesser amount will have no impact, so do what keeps the most money in your pocket.

Feel free to give me a call or check out my web site to learn about raising your credit score and recovering as quick as possible from this once your back on your feet.

David McArthur
219-718-8566
www.financialscoringsolutions.com