Debt negotiation

1. Debt negotiation Dealing With Debt Collectors: Taking Control!

2. Your Presentor: Adrian Klenz Financial Literacy Specialist HUD Certified Housing Counselor At Western Dairyland 715-836-7511 ext. 1151 aklenz@westerndairyland.org

3. Go from this….

4. To this…

5. 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 9/21/11

6. 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)

7. 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!!

8. 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.

9. Getting Started: Step 1 • Get the facts: www.annualcreditreport.com

10. 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.

11. 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

12. Statute of Limitations cont.

13. 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.

14. Prioritize Debts Secured vs. Unsecured The loudest isn’t the most dangerous!!

15. 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?

16. Hardship/Explanation Letter

17. Cease Letter

18. 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!

19. Court Summons • If you get a court summons NEVER NEVERNEVER ignore it. Make sure you show up.

20. 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.”

21. 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 3rd 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.

22. 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!!

23. So you have saved enough money. Now what?

24. 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…

25. Sample Validation Letter

26. 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…

27. Step 4: Settlement Letter

28. 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.

29. Remember certified mail!!!

30. 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!

31. 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.

32. Questions? Adrian Klenz aklenz@westerndairyland.org 715-836-7511 ext.1151 THANK YOU!!