Stories from clients lately are full of another round of inventive and utterly false statements about the law from the mouths of debt collectors. These lies are effective because the hearer doesn’t understand either the law or the economics of debt collecting.
Some of the most often repeated lies are:
- This debt is not dischargeable in bankruptcy
- I can continue to call you until you give me the bankruptcy number
- We’ll foreclose our HELOC regardless of senior debt or property value
Debt collectors realize that most consumers don’t understand how little legal leverage a debt collector has until they get a judgment. The consumer’s ignorance allows the debt collector to speak authoritatively without fear of contradiction. And there seem to be little constraint on their willingness to say anything that works.
The tools of the debt collector are fear, harrassment, and shame. They seek to use one emotion or the other to get the debtor to write them a check for money that they can’t get quickly or cheaply any other way.
The real harm done here is that collectors often stampede the debtor into paying the least important creditor first. Important creditors are taxing authorities, mortgage lenders, and car lenders. Unsecured credit card claims are at the bottom of the heap of priorities.
The important creditors aren’t nearly as insistant on the phone; they have collection options like bank levies and foreclosure. They don’t have the same need to harrass the non paying as the credit card collectors.
Understand the game. Don’t get your legal advice from the debt collector. Pay the important creditors first.
No related posts.
Comments on this entry are closed.