A Slow, Friendly Beginning
An impatient creditor is easy to handle when there is just one or two. You tend to know exactly which debt was not paid, and when it was not paid. Perhaps the creditor is a local business, a medical office, or service provider. You may have felt guilty because there was a personal relationship. Besides, the original purchase may be staring you in the face almost every day. The mattress, furniture, or blender may be staring you in the face. You may remember buying the product or service from someone you liked and trusted. Your impatient creditor may have a name and they may be reasonably polite when they call. As long as there is just one or two, impatient creditors can be taken in stride and do not bump the stress meter more than a small increment.
The Creditors Multiply
But multiply those first few creditors. Many people have at least a dozen. Allow a couple of years to go by. With each year that goes by the creditors multiply. A dozen becomes twenty, and eventually twenty become thirty. The names constantly change, constantly multiply, and become more annoying. The letters from attorneys increase and are for debts you barely recognize. Your phone rings more and more. There quarters of the calls are from a computer-voice asking you to stay on the line. The increasingly urgent phone calls are less friendly, more intimidating, and have the effect of making you afraid to touch your phone. The only thing that has not happened is to have an angry mob of creditors at the door, all holding torches. But your gut feeling is that the angry mob is close by.
The situation described is reality for many people. Delinquent debt tends to get worse over time. And because there is a lucrative, busy industry of “selling debt” to debt buyers, the number of creditors, calls, and letters tend to increase over time. Bankruptcy is a good option – but you have not looked into that yet. Debt consolidation is another possibility – but again, it is something on your to do list.
Meanwhile, if an angry mob of creditors is at your door, follow these simple steps for some immediate peace of mind:
1. First, you need to realize that owing money is not a crime. At one time there was actually such a thing as a debtor’s prison. Back in the 1800s, you could be locked up for owing and not paying money. But that is not the case anymore. Today, owing money is never a crime. You may be charged with passing worthless checks for bouncing a check at a retailer. But merely failing to pay a bill you owe on credit is not a crime. And in most states, you cannot even be prosecuted for a bad check to a payday lender. Many states have a statute that says payday loan repayment checks are not a crime if they bounce. So overall, owing money cannot land you in criminal trouble.
2. Many states have something called a “statute of limitations.” If a debt is past a certain age, creditors are prevented from ever suing you. They can still repeatedly ask for the money. And they can send you threatening letters. But they cannot sue you. Do an Internet lookup on the statute of limitations in your particular state to find out the applicable number of years.
3. You never get “gold stars” for being nice to creditors on the phone. They have one goal – and only one goal: to get money out of you. Hang up the phone if a creditor calls you. Your explanations mean nothing to them. And it is possible to accidently give them information that hurts your situation.
4. If you have money in the bank, place it in a spouse’s or friends account. It is not illegal to protect assets from seizure. You never know when the bank will freeze your money. At that point it is often too late to get it back.
5. Always take the time to make a plan of action for the immediate future. The stress of avoiding creditors will take its toll on your life. And while you are in a holding pattern, your credit score will never get better.
It is perfectly ok to owe money, and walk around town with your face held high. The best of us sometimes end up without the means to pay bills. But with a bit of a cast iron stomach, a bit of intelligence, and a bit of planning you can make the best of it. Meanwhile, the angry mob of creditors can stay outside the door – just where they belong.
Howard Iken helps bankruptcy clients in the Tampa, Florida area. While telling clients that they cannot be sent to jail, Mr. Iken enjoys discussing bankruptcy alternatives.