Debt negotiation - PowerPoint Presentation

Slide1

Debt negotiation

Dealing With Debt Collectors:

Taking Control!Slide2

Your Presentor:

Adrian

Klenz

Financial Literacy Specialist

HUD Certified Housing Counselor

At Western

Dairyland

715-836-7511 ext. 1151

aklenz@westerndairyland.orgSlide3

Go from this….Slide4

To this…Slide5

First some stats…

There are roughly 4100 debt collection companies in the United States.

They employ roughly 450,000 people

Businesses placed $150 billion dollars in debt into collections in 2010

Debt collections companies recovered $40 billion

By 2016 there will be an expected 23% growth in the debt collection industry.

Source: Huffington Post 9/21/11Slide6

A Nation Of Debt

July 29, 2014 report shows 35% of Americans have debt in collections. (USA Today)

Average of $5,200 in collections.

Late payments is the biggest factor in your credit score 35%.

25% of adults have never checked credit.(FindLaw.com)

40% of people failed basic credit quiz (Consumer Federation of America)Slide7

THIS IS THE MOST IMPORTANT SLIDE IN THE PRESENTATION

DEBT COLLECTORS BUY DEBT FOR ABOUT 5 CENTS ON THE DOLLAR. So if you owe $100 to a cable company they probably sold that debt for about $5.

DEBT COLLECTION COMPANIES HAVE A RECOVERY RATE OF ABOUT 16-20%. THEY DON’T WANT YOU TO KNOW THIS!

THIS IS YOUR ULTIMATE WEAPON!!Slide8

ZOMBIE DEBT COLLECTORS

94 % of mass bought debt has little to know information.

Expired debt bought for as little as a penny on the dollar.

Collected roughly $3 billion dollars in expired debt last year.Slide9

Getting Started: Step 1

Get the facts:

www.annualcreditreport.comSlide10

SHINE A LIGHT!!

Look at all 3 credit reports: Transunion, Experian, & Equifax.

Make a list of all your debts. Make sure you know everything out there.

Roughly one-third of credit reports have errors

Check yearly

Debt collectors pray on people’s lack of knowledge

.Slide11

Statute of Limitations

Positive Credit-7 years

Late Payments-7 years

Collections-7 years

Chapter 7 Bankruptcy-10 years

Chapter 13 Bankruptcy-7 years

Foreclosure-7 years

Public Records-7 years

Tax Liens/Student Loans-until paid Slide12

Statute of Limitations cont.Slide13

Add it up

Go through the three reports and add up your total debts. Keep in mind you aren’t sure if they are accurate yet. It gives you a sense of what you will need to pay off your debts assuming they are legit. Slide14

Prioritize Debts

Secured vs. Unsecured

The loudest isn’t the most dangerous!!Slide15

Step 2: SAVE

50% for new debts (less than 1 year to 4 years)

25% for old debts 5-7 years.

Lets say you owe $2500 try to save $1250.

Remember how debt collectors buy for pennies on the dollar? Remember how they only settle roughly 16-20% of total owed?Slide16

Hardship/Explanation LetterSlide17

Cease LetterSlide18

BEWARE!!!

The $1000 rule

These letters don’t make your problems vanish. The debt doesn’t go away.

Keep notes and a file on your debts. Phone calls, letters. Dates, times, and names.

CERTIFIED MAIL

Keep copies of everything!Slide19

Court Summons

If you get a court summons NEVER

NEVER

NEVER

ignore it. Make sure you show up.Slide20

Judgment Proof?

Sometimes it’s a good idea to mention public benefits.

Mentioning bankruptcy can get their attention but you have to be careful.

Don’t lie but don’t be afraid to “spice it up.”Slide21

The Fair Debt Collection Practices Act

Debt collectors must call between 8am-9pm (your time zone).

If you ask them to stop contacting you in writing they have to honor it.

Can’t talk to 3

rd

party without identify their name but they CAN”T state you owe money.

Can’t threaten you, swear, or call repeatedly.

Can’t advertise or publish your debt.

Can’t threaten jail.

Can’t threaten legal action unless they are actually going to take it. Slide22

AVOID REPAYMENT AGREEMENTS

Debt

collectros

are sneaky. They want to get you to enter into an agreement so they can keep you on the hook for as long as possible.

The only exception is if your debt is over $1000 and there is the fear of being taken to court.

If you have to enter into a repayment agreement you must get it in writing!!Slide23

So you have saved enough money. Now what?Slide24

Step 3: Validation

This is a consumers biggest weapon in dealing with debt collectors.

Sadly it is rarely used.

You have a right to make the debt collector PROVE you owe them a debt.

Remember 94% of mass bought debt has little info.

Consumer Financial Protection Bureau #1 complaint is…Slide25

Sample Validation LetterSlide26

Validation cont…

You must make sure to send all validation letters via CERTIFIED MAIL.

Keep copies for your files.

Watch the calendar. They have 30 days to respond.

What will happen…Slide27

Step 4: Settlement LetterSlide28

Settlement Letter cont.

Once again make sure to send the letter via certified mail.

Keep a copy for yourself.

Don’t pay until you get their agreement to your offer in writing.

Always pay with money order or cashier’s check. Slide29

Remember certified mail!!!Slide30

Step 5: Follow Up

Don’t trust the debt collectors to be honest.

Write Transunion, Experian, and Equifax to ask them to update your credit reports.

Check your credit reports yearly

Roughly one-third of credit reports have errors

Keep your records

Beware the zombies!!

Be patient!Slide31

If you aren’t confident about dealing with debt collectors yourself, seek the help of a financial counselor, credit counselor, or an attorney. Community action agencies like Western Dairyland often have someone like me on staff who can help you. Slide32

Questions?

Adrian

Klenz

aklenz@westerndairyland.org

715-836-7511 ext.1151

THANK YOU!!