Dear Debt Adviser,
I have been ill, which prevents me from working full time and is also one of the reasons I have fallen so far behind in my debts. As I am sure you have heard before, I am afraid to answer my phone. How can the court take what I do not have?
I'm sorry to hear that you have been ill. Unfortunately, an illness does not mean you are no longer responsible for your debts. Because your illness has caused you to miss work, you may qualify for some type of repayment deferral or other assistance from your creditors, but not a get-out-of-paying-your-debts-free card.
I know you are not ignoring the problem, but by not answering your phone or otherwise failing to communicate with your creditors, you will not make the situation better and will likely make it worse. Instead, I want you to overcome your fear and embarrassment and answer the phone. Or better yet, take the initiative and call your creditors to explain your situation and how you would like to resolve what you owe.
To build your confidence and increase your chance of success, you need a plan before you call your creditors. I also suggest that you become familiar with the Fair Debt Collection Practices Act, a law that protects you from harassment by collectors. It also says what a collector may and may not do. You can find information on this law at the Federal Trade Commission Web site. Once you know that collectors can't put you in jail or take your home, you will be ready for the next step -- devising your plan.
First, determine if and when you believe you will be able to return to work full time. Next, decide what you can realistically afford to pay on your debt with each creditor per month. Based on the amount you can pay, your creditors may be willing to work with you, particularly if you will be able to pay more after returning to work full time in the near future.
When you call, here are some suggestions to help keep you in control of the situation:
- Get the person's name and contact information.
- Use the collector's name in your conversation.
- Ask for proof of the debt.
- Explain your situation.
- Make an offer you can afford.
- Don't agree to a commitment you can't keep.
- Get any agreement in writing.
Some "don'ts" you should avoid include: Don't raise your voice, don't make threats, don't say you are getting a lawyer if you're not and don't say you're going to file for bankruptcy if you don't plan to. Above all, don't lie for sympathy. For example, don't say your mother is in the hospital when she's kicking up her heels in Boca Raton, Fla. Once you are caught in a falsehood, a creditor may never believe you again. On the positive side, don't be afraid to ask to speak to a manager if you can't get what you need.
To answer your question about the courts, always open any correspondence that appears to come from an attorney or court. If things progress far enough in the collection process, your creditor or collector may decide to take you to court to collect. The court must inform you of the date and time that your case will be heard. One of my basic rules of thumb is to always go to court if summoned. If you're not there to defend your side of the story, the creditor will obtain a judgment from the court for the amount owed. The judgment can be used to garnish wages, which would likely not immediately affect you if you're out of work, or place a lien against any real property you may have.
In my experience, collection accounts rarely are forgotten. They resurface once you have something for collectors to collect, even if it takes years. Once you have a job, they will go after your wages. If you are a homeowner, they may put a lien on your home. Keep in mind that a statute of limitations for collecting a debt may not apply once a lien has been placed on your property.
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