We won!Below is an email I received from a former client last week regarding an alleged debt he had with Discover. We are posting it here with permission in the event that this information will help others in a similar predicament.


Discover filed suit against me back in March 2011 for approx. $20,000.  I called them prior to the suit and offered a flat $4000.00 to settle. They were BEYOND rude. Threatening all kinds of action – telling me I would lose my house and potentially my job if I didn’t pay in full. So – I said “sue me”.

I hired a local attorney who challenged the suit asking for the original signed application, proof of charges etc. Discover backed down and the judge dismissed the case with prejudice so no chance of them ever coming back on me.

While I am not proud of this – I have NO guilt because Discover had a chance to get $4K. In the end, they ended up with zero. It cost me $500.00 in attorney fees.

I know this is not a normal outcome (my lawyer said we had a 50/50 chance of prevailing) but I thought you might like to know.”

I would agree with my client’s attorney that this strategy doesn’t always work. But if you have no other options, you can always request that the creditor prove their claim with legitimate supporting documentation and hope (and pray) that they lost the paperwork.

Again, this strategy is not foolproof, but in this case it worked.

New York Federal Reserve Chart 2011

According to a new report released by the Federal Reserve Bank of New York, total consumer indebtedness was $11.5 trillion (as of March 31, 2011) — a reduction of $1.03 trillion (8.2%) from its peak level in September 2008.

However, consumer indebtedness was *up* $33 billion from just 3 months earlier in December 2010.

Some people feel that this recent increase is a sign that our economy is on the mend because people are now spending again and taking on more debt.

Other people argue just the opposite. Their contention is that a rise in consumer debt simply validates that the economy is *not* improving and people are taking on more debt because they don’t have sufficient funds to pay down their debt.

Who really knows what the data truly means? I’m just relaying the facts. You can interpret it however you wish.

Some other interesting trends and statistics from the report include:

  • About $1.2 trillion of consumer debt remains delinquent, with $890 billion being at least 90 days or more past due. Compared to a year ago, the percentage of consumer debt that is delinquent has fallen 15%.
  • Data for Arizona, California, Florida and Nevada continue to indicate higher than average delinquency and foreclosure rates.
  • The total number of open credit cards is 24% lower than its 2008 peak. The balances on those cards are nearly 20% less than what they were at the end of 2008.
  • In 2001, the percentage of consumers that had an account in collection was 8%. In 2011 that figure is up to 14%.

For additional analysis:
Consumer Debt Stops Declining After Nine Consecutive Quarters

Can I be your friend?Because of social media, people are now more connected than ever before.

Sure it might be nice to share your life with family and friends on sites like Facebook. But that also means debt collectors can find you on Facebook as well.

It’s a double-edged sword.

So if you’re having financial difficulties, does that mean that a debt collector can post to your Facebook wall or announce it via Twitter in an attempt to embarrass you about your current situation?

In a word, no.

Mark Schiffman of ACA International (the trade association for collection agencies) says that they caution their members to be very careful about using social media to contact people that might owe money.

“You can’t write on someone’s wall on Facebook. You can’t harass. You can’t threaten. The laws are pretty clear in that regard,” Schiffman says. “These laws are not guidelines: They are laws. And we believe firmly that any debt collector who is breaking the law or not following the rules, deserves to be held accountable for their actions.”

According the the Federal Trade Commission, debt collectors may not

  • Harass or verbally abuse you.
  • Publish your name if you’re past due on a debt.
  • Falsely claim that they are an attorney or from a government agency.
  • State that legal action will be taken if they don’t intend to actually follow through.

Even though the law is pretty clear, some debt collectors still flagrantly disregard the law.

In Florida, attorney Billy Howard is suing a collection agency that has harassed one of his clients via Facebook.

“They’re using Facebook because it adds that extra shock value. The more shocking, the more harassing, the more outrageous, the more these debt collectors get paid,” Howard says. “What makes it so dangerous is you can contact somebody’s family and friends very quickly and very easily, and you can set off a domino effect of panic that can be devastating.”

The Fair Debt Collection Practices Act (FDCPA) is the law that specifically states what debt collectors can and cannot do to collect a debt. It’s purpose is to protect consumers from abusive debt collection practices.

However, the FDCPA was enacted back in 1977 when social media, email and text messaging didn’t yet exist. Therefore, the FTC has indicated that they might want to revise the FDCPA to include guidelines for technology that didn’t exist 30+ years ago.

In summary, if you’re going through a rough patch financially because you lost your job or some other legitimate reason, that doesn’t mean you have to go into hiding. You’re still allowed to have friends.

Just be smart about whatever information you make available publicly. Because if your friends and family can read it, so can debt collectors.

For more information on this topic, please read:

Debt Collectors Trolling Facebook

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