12-step plan to deal with collectors and keep your sanity!

[dman]

This post is geared for those who are just about to default on some debts; while the steps may be helpful for someone in any stage of collections...it's probably most beneficial early-on.

#1. Get a Google Voice number. Don't tie this to your primary email (gmail or not), this will be a throw-away number. Give this new Google Voice number to ALL your creditors.

#2. While you're updating your accounts with this new GV (Google Voice) number, take off ANY other numbers that are on your account (i.e. work, cell, etc.). If a creditor absolutely refuses to take off a number (i.e. your work number), sign up for another throw-away GV number and ask to "update" your work number to the new GV number.

#3. Open a new checking account with a non-local bank (bonus points if they don't have a branch in your state). Make sure they pull your ChexSystems report instead of your credit report (unless you have negative items on your ChexSystems report). A debt collector is more likely to check your credit report than your ChexSystems report, so this can help keep your new account under the radar (note that we're only making it harder for creditors to find your new bank account...if a court orders you to list your assets, or you file for bankruptcy, you MUST disclose it). Think twice before using Wells Fargo, they like to freeze accounts if they find out you filed for bankruptcy. If you're married, and you're the only one who'll be hounded by collectors, consider opening a checking account solely in your spouse's name, but with you as an authorized user (but NOT a joint account). These funds will be considered solely your spouse's, and if you were to have your assets garnished, this account SHOULD be safe (I'm not sure how this may be different in a community property state).

#4. Cancel all autopays that come from your current bank account(s). Do NOT pay anyone who could be a creditor from your new account, and ESPECIALLY don't give your creditor your checking account number (this includes mailing a check). Using a check card is ok, but be prepared to "lose" it and get a new one re-issued if you expect trouble.

#5. Zero-out all your old bank accounts, and keep a record of where all the money went to (i.e. if you take out $1,000 in cash, it might be a good idea to dump it in a new account in the next few days...you may need a good paper trail if you file bankruptcy). Now, get a record of the last 6-12 months while your account is still open (if you have online access, save every single statement available to you, plus print out a page showing the current balance which should be at or near $0). Keep the final statement mailed to you.

#6. Close ALL previous bank accounts, ESPECIALLY any that you EVER paid a creditor from. If you really, really must keep an account at your local bank, just open a new account first and close the old one. And do NOT keep an account open with anyone who is also a creditor.

#7. Setup a Google Voice number that you'll actually use as your main number. If a collector somehow gets hold of it...it's easy to block them. Give this number out to your family, friends, work, etc. Tell them to NOT give it out to anyone else, even to other family/friends; explain that anyone who you want to have the number, already has it. If you can't trust someone to keep your number private, don't give them the new number (Google will hate me, but you could setup yet ANOTHER GV number to give those people, perhaps have it setup to only forward calls from people you know, and dump all others to voicemail).

#8. Change all your existing numbers (landline, cell, etc.). Have your new Google Voice number (the one you setup in #6) forward to those lines.

#9. While you still have online access to your accounts, download every statement you're able to. Keep all statements that are mailed to you from now on. You may need them, and it can be a pain to get once you've defaulted and are shut-out from your account.

#10. When you're about to default (if you haven't already), then change the voicemail greeting on the GV number you setup in step #1 to say something like this: "Hello, you have reached John Doe at 1515 Main St, Anytown, PA. Again, this is John Doe at 1515 Main St, Anytown, PA. This is the only number you may call me at. You may leave a message."

#11. Anyone who you think a creditor may call (family members, people you used as a reference on a credit application, etc.), you may want to give them a heads-up. Explain that all they should say is "You have the wrong number" or "John Doe does not live here" and hang up. If they acknowledge that they know you, then the creditor will keep hounding them, because they are a verified connection to you.

#12. Take a deep breath. Actually, I just needed an extra step to say this was a twelve-step program.

What "should" happen is all your creditors will have a new number to reach you at. Once they start calling you, they'll be greeted with a message confirming that they have indeed called the correct number. Hopefully they will not call around trying to find you (because they have definitely found you). If they try to call any old numbers that used to be on your account, they'll get a not-in-service message. Now, a debt collector's attempts SHOULD stop there; they're not allowed to call friends/family/neighbors in an attempt to find out your current number and address, if you have already confirmed your current number and address with them. A few will still call around, and the FDCPA does not apply to the original creditor (it's perfectly legal for them to call your mom's number, even if they know the correct number for you). Anyone who does call your friends/family looking for you, should be told "nope, not here, wrong number" and they will probably (but not definitely) stop trying those dead-end numbers.

Also, you shouldn't call any creditors unless absolutely necessary. If you absolutely have to, then call them using your GV number setup in #1 (whether through an associated Gmail account, or using the call-back feature) or a pay phone (I think there's still one or two left). And if the number you're calling is a toll-free number, your number will show up even if you have your CID blocked (toll-free numbers are unique this way...they always know the number calling them, even if blocked, because they're being billed for the call). So don't call them from your new number, from work, or a friend's, etc. Assume that any number you call them from, they're going to call back trying to find you.

Any creditor who has your previous checking information may try to debit your old checking account for any amount due (just search Google for directv etf checking account). You've closed all your old accounts, so hopefully this will be a non-issue (it is possible to have a new account debited for such a withdrawal if it's at the same bank as the old account...another reason I suggest severing all ties with your old bank, at least for a while).

So...you've fended off virtually all the calls, and your friends/family only get a few odd calls here and there, but that's it. You don't have to worry about your new checking account(s) just yet. You finally have some breathing room. Now what?

Well, the scope of this post is simply what to do BEFORE collections (though if you're already in collections and just want to do some damage control, the steps here will certainly still be useful). However, here's some basic info of what comes next:

A creditor may sue you in order to garnish your wages and/or bank accounts. This is not something you have to worry too much about the first day you're late. You should have plenty of time to react. A creditor would need to sue you first, get a judgement, then enforce that judgement (i.e. take it to your place of work to garnish wages, or your bank to garnish your bank account). Once they file a suit, you will probably have about 30 days before the court date; if they get a judgement in their favor it will probably take another week or so before they garnish your wages/accounts (but don't count on it...you're on borrowed time). If they can't find anything to take (or even if they do), they can take you to court yet again in order to compel you to disclose your assets, place of work, etc. Now, the first step is to sue you, and you should receive service to make it legal (key word, SHOULD). If you're paranoid, you can search pacer, but don't go overboard (a search on your name once every week or so is more than plenty).

If you have no non-exempt assets and have no job (or your state doesn't allow wages to be garnished, or your wages are already garnished at the max for back taxes/child support, whatever) then you're essentially collection proof. Many may call you judgment proof; while a creditor is less likely to go through the hassle of getting a judgment against someone with nothing to take, it's not unheard of. But, with nothing to take, there's not much they can do to enforce the judgment. Do note that even if your house and car are completely paid for...a creditor with a judgment can put a lien on it. This means that while they won't actually take it and sell it...if you try to sell it you'll have to satisfy the lien first.

Also, if you're behind on bills and are dodging creditors, you should at least talk to a bankruptcy attorney. Preferably talk to several. You may decide not to file, or to wait a while longer, but you do need to know what all your options are.

[IamOld]

VERY useful - (worth of being a sticky in my very humble opinion).

Also - had I known this :-) ... I would have opened an account out of state...probably not a possibility any more :-(

Could you confirm whether it is indeed true that DE state law prohibits levies of DE STATE chartered (that is small) banks? I've seen several atty websites that stated the same...

[treehugger1]

Great post, DMAN!

And is the case with any good twelve-step program, take it one day at a time (one creditor/CA at a time.)

[AngelinaCat]

Hi dman:

Thank you for your excellent list. I have made it a 'sticky' as per IamOld's suggestion. I also saw your wish to edit, and have append your two additional paragraphs onto the end of the original list. I hope that is okay with you.

Thanks again.

[dman]

There's so much info on this subject I could write a book. I'll leave the first post alone for now (after the edit I just requested, sorry about that). Here's some random things that couldn't fit in the huge post, but are still important:

You can have up to two different GV numbers associated to one landline number (only one GV number can forward to a mobile number). If you only need one GV number for step #7, then I would also associate your landline number with the GV number setup in step #1, but do NOT set it to forward (simple...just uncheck the number in the forwarding screen). This way, if you really, really need to call a creditor, you can login to the GV account you setup in step #1, call the creditor, and have it ring your landline (your landline phone will ring, you pick up, and GV will connect the call to the creditor). That way your GV number is what shows up on caller-id on the creditor's side (toll-free number or not), and you can still use your regular phone. If this won't work for you, then associate the GV number with a gmail account (a throwaway account...you don't want to be logged into your main gmail account and get creditor calls on your computer!), and make the call through gmail (you'll need a microphone and speakers...many laptops have this already, you can use a headset, etc.).

Once you've setup a primary GV number (step #7), you should try to make ALL calls using that number (so that shows up on the other end's caller-id, instead of the "real" number of the phone you're calling from). It's easy as pie to block a collector who calls a GV number (click more, block caller, confirm, you're done!), but not so easy if they call your "real" number (the one the phone company assigns to you). You don't want to call your Aunt Margaret from your real number, have that show on her CID, and have her give that number to your friend "Bill" who has a really convincing reason to get hold of you right now.

Another GV tip...I won't go into the nitty-gritty, but it's not difficult to add all the numbers who call your throw-away number (they're all creditors, collectors, or plain wrong numbers) to your primary GV number, and pre-emptively block them. So even if a creditor somehow got hold of your new GV number, you'd never know it.

If you can't, or don't want to, open a new bank account, check into prepaid debit cards. Many will accept direct deposits, have low monthly fees, and even offer bill-pay (it should be safe to use bill-pay...the cards I've seen will allow ACH DEPOSITS, but not WITHDRAWALS, but do your research regardless!). Many here like the Wal-Mart MoneyCard.

[dman]

Another thing that should be done ASAP, is to remove all AUs (Authorized Users) from your credit cards. Once you're late, negative information may start appearing on their credit reports (even if you're currently late...go ahead and remove them...it's better for them to deal with a card with a 30-day late, than a 30, 60, 90, etc.). If you wait too long, eventually you will not be able to get them removed.

Now, generally speaking the authorized user would not be liable for any charges. HOWEVER, some companies (*cough* Amex *cough*) have been known to go after AUs for any charges they personally made to the card. So, it's best to remove the AU while you are able, just in case.

[Jf24]

What is the time frame for being sued. How many months can go by without payent?

[shark66]

What is the time frame for being sued. How many months can go by without payent?

That depends on a zillion factors, many of which are luck of the draw.

Having a good job and property could lend you in the court faster (especially in a creditor-friendly state like NY) than you would if you didn't have these...

Personally, we went well over two and a half years between stopping payments to all creditors to the point where we were getting sued. That being said, our particular position would make it very difficult for a creditor to collect anything in the near future...yet three JDBs sued. We never got sued for the largest amount ($35K or thereabouts with BOA) which is now past SOL.

Do bear in mind another thing: we NEVER spoke to any of them at this stage of the game.

I would be *extremely* surprised if anyone sued you prior to 6-8 months passing from the last payment.

My experiences only.

Good luck to us all.

[GoingDown]

I really like this thread. There is so much useful information in it! Two thumbs up!

[Jf24]

"Hello, you have reached John Doe at 1515 Main St, Anytown, PA. Again, this is John Doe at 1515 Main St, Anytown, PA. This is the only number you may call me at. You may leave a message.".

I set up the GV but get mail at a po box. Will saying "My mailing address is po box ***" Is this ok or is a street address better.

[Bell30656]

While this is a great way to avoid all the collection calls, I personally call the Ostrich Method. When you stick your head in the sand the issues are still there, you just don't know about them. Hiding from collectors is a sure way to really piss them off. Often when a collector figures out you are hiding from them they will move ahead with filing suit. If a JDB has your debt all bets are off. These bottom-feeders won't hesitate to call your neighbors. They'll just run a couple computer checks and start doing attempt to locate calls. If the calling the neighbors doesn't get you to call them back, then they'll resort to calling others in your town with the same last name. If you live in a small enough town.

It was enjoyable having my ex-wife tell me about a collection call from a JDB looking for me. JDB's will also call your work, attempting to locate you. I had one that dialed random extensions leaving voice mails asking me to call him. Very effective in getting me to call him back.

I subscribe to another method. I call it the Grow a Backbone Method. When the debt collector calls, answer the call. Generally the more answer the less calls you get. After I confirm my identity with the collection agent, I then tell the debt collector that I do not discuss financial matters over the telephone. NO matter what they say, I stick to my mantra. My calls are short and sweet. As soon as the id verification is out of the way, I am quick. I tell them I don't discuss these matters over the phone, bid them a good day and hang up before they can protest. Collection agents want to be in control. They cannot stand you seizing their control.

Ostrich will work fine if you are not employed, you don't care if neighbors or relatives find out and you are lucky enough to not get served with a few lawsuits.

[dman]

Ostrich will work fine if you are not employed, you don't care if neighbors or relatives find out and you are lucky enough to not get served with a few lawsuits.

Full disclosure, that pretty much sums me up.

HOWEVER, only about half of what I wrote pertains to avoiding creditor calls. Also, it's pretty easy to combine the "Ostrich" method and your "Grow a Backbone" method. I even go into detail about how to handle any calls you make to them (i.e. call using a special GV number you set up just for creditors or from a payphone...but NOT from your real number, work number, friend's number, etc.). It's simple. Go through your call history once a week. Call each company once, tell them you still exist, confirm name/address/phone number, tell them your situation has not changed, and hang up (don't let them keep you on the phone). Don't say anything else (i.e., do NOT say "well yeah, I know I owe you money, but..."). If you really want to talk to them, I think that's the way to do it. No need to have the phone ringing off the hook, dozens of calls a day (or more), scared to answer the phone, stressed out of your mind, etc.

[Bell30656]

Dman, I took it even farther to make certain that I received their calls. I have Vonage for home phone service and I forwarded my calls to my cell phone just so that I'd never miss their calls giving them an excuse to start "Attempt to locate" calls.

[dman]

Argh, my long reply was eaten by the forum! Short version:

Just because you have a separate GV for creditors, doesn't mean you HAVE to hide from them. You can have calls to this GV number forwarded to your landline too. And while you can only have one GV number forwarding to a mobile number, you can simply tell GV that your mobile number is actually a home (or landline) number. You'll lose some nifty features like text forwarding, but calls will still be forwarded.

My way, you get to CHOOSE if and when you answer a collector's call. What if you answer every call, but they don't like the answer and decide to call every 5 minutes? If you have GV, you can block their calls. But what if they keep calling from a different number?

A neat trick with GV, is you can choose to have the caller's number show on your forwarded phone's caller-id, or your GV number. So let's say your GV number is 212-555-1212. You can have it set so that anytime anyone calls it, the number that shows up on your real phone (landline or mobile) is always 212-555-1212. Now, you won't know exactly who is calling, but you'd know which number they called. So have your "real" (i.e. the one you give friends/family/work) GV number pass through the caller's number (so when your mom calls, your mom's number shows on your caller-id), and have the "collections" GV number pass itself as the caller-id (so any time someone called 212-555-1212, whether it's capital one or hsbc or citi or WHOEVER, on your forwarded phone the caller-id will always read 212-555-1212). This is great if you HAVE to take calls from work (say, you're on call for a shift or whatever). If a local number pops up that you don't recognize...well you know they called your real GV number (or perhaps the phone's true number) and you always answer. If a collector calls, it'll show up 212-555-1212, so you can ignore it or answer, whichever you choose.

My way just gives you extra control. You can ignore the calls, answer every single one, answer some of them when you feel like it, whatever. It's all up to you. Someone could start out ignoring every collector call, later change their mind, and then answer every collector call. Or they can start out answering every call, change their mind, and with a few clicks they can ignore every single collector call.

[GoingDown]

I agree with dman on this.

GV gives you control over whether or not you choose to answer the phone. It gives you a clue as to who may be calling you upon which you can base your decision to either answer the phone or let it go to voicemail.

In my experience, once the debt collector calls you even just once on GV and gets you on the phone, they will keep calling that same number over and over again, without trying to call neighbors or relatives. Especially if you have your voicemail set up to clearly say your name, so they know they have the right phone number to reach you. From time to time you can go ahead and answer it to let them know that they have reached you at the right phone number, and then hang up on them. But being a slave to the phone, by thinking you always have to answer every call from a debt collector would be torture. Like dman said, sometimes they will call over and over, many times during the same day. I don't suggest answering the phone over and over for them. And in any case, NEVER give them any information, if you do choose to answer the phone. Just let them know they have the right person, tell them to stop calling you on the phone, and then hang up on them. And don't answer if they call right back.

Another option is to tape record their phone calls (if it is legal in your state) and tell them you are tape recording them to try to catch any violations of the Fair Debt Collection Practices Act, and then play back a little bit of the tape for them, so they get to hear themselves on the tape recorder, so they know you aren't bluffing, and that tends to get them off the phone in a hurry, and many times it gets them to stop calling you. They don't want to be tape recorded by you. They know they are probably going to violate the FDCPA during the call, and they don't want you to get it on tape. With Google Voice, you can record all inbound calls from debt collectors by simply pressing 4 on your phone. So you can get an mp3 recording of the entire conversation. It is a great feature of GV. That way you don't even need a tape recorder to record their calls, but if you want to play it back for them on the spot and still record their call to get their reaction to you playing back the recording you will need both a tape recorder and the record option on Google Voice. Remember, this only works on inbound calls, so they have to call your Google Voice number to activate this option.



For those debt collectors who do go on to call neighbors, relatives, or call you at work, then I would suggest sending them a cease and desist communications letter in the mail to get them to stop calling. In the many, many times I have sent one of these in the mail to debt collectors, I have only had one of them ignore it and keep calling me. I finally got them to stop calling me by filing a complaint with my local attorney general's office, which sent them an official letter in the mail.