When consumers are first approached by debt collectors, the consumers have limited options: avoid
the letters and calls; try to negotiate a settlement or payment plan; or go on the offensive and attack the collections agencies. Each has its strengths and weaknesses depending on the type of debt, who the creditor is, who the collections agency is and the financial viability of the consumer.
Let’s take the most common situation – a financially struggling consumer receiving letters and calls from a collection agency attempting to collect a debt for a credit card debt buyer. (As background, when credit card companies write off their debts, and each credit company has its own internal standards, processes and procedures to decide how and when this is handled, the credit card companies sell the debts in large batches to new companies.)
First off, these debtors should not avoid or hide from the collections calls and letters. When you do that, the collections agency is left with one choice to make – file a lawsuit or drop the case entirely. This is a big risk to take when there may be other options available to the consumer.
In this situation, the consumer cannot afford to pay the debt in full. But should they? First, every one of these debt buyers is willing to settle the debt for substantially less than owed. Second, they will all also accept payment plans in lieu of lump sum payments.
Third, you must remember that most collections agencies are just bullies. And like the schoolyard bully of years ago, all bullies are really just acting tough to mask their weaknesses. For collections agencies, these weaknesses relate to their fear of being sued for wrongful collections tactics. Take your case to a consumer rights attorney. Most work on a contingency and can get the debt resolved without you paying a single cent.
Finally, realistically, in California, the debt buyers’ legal options are very limited. If the consumer refuses to pay, and the collections agency decides to file suit, in almost all situations, if the consumer actually fights the lawsuit, the debt collector cannot produce sufficient evidence to prevail at trial. This means, if the consumer hires an attorney (and lots of consumer attorneys are very reasonable and/or work on a contingency), the consumer can owe the creditor nothing at all.
So that is what it comes down to most situations. But there are different cases and these facts do not cover all potential problems. Remember, every case depends on the type of debt, who the creditor is, who the collections agency is and the financial viability of the consumer. Always consult an attorney before embarking on any of the options detailed above.
Joshua P. Friedman is a California licensed attorney who has been practicing collections and judgement enforcement for more than a decade. He has collected millions of dollars for his clients throughout the country. Mr. Friedman currently serves on the board for the California Creditors Bar Association and President Emeritus of the California Association of Judgment Professionals.
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