Don’t answer your cell phone! New bill would allow collectors of goverment debt to robocall you!

In a move that is not typical of Democrats, the Obama administration is pushing a bill that would make it easier for the private collection industry to robocall your cell phone when you owe a debt to the government.  Robocalling is when a collector calls your phone number endlessly, excessively, and ceaselessly, until you tear your hair out or throw your phone away.

This proposal is tucked into the deficit reduction bill that is in Congress now according to an AP article and it is intended as a means to collect more money for the government.  This law applies to debts owed to government agencies. These debts are primarily student loans but I suppose the law could apply to any government debt like back taxes, tickets, fines, fees or penalties.

These debts may have been owed originally to the government but the government will transfer them to private debt collection companies who want to robocall your cell.  The department of education apparently has the largest share of these debts at $28 billion that they have passed out to 22 private collection companies.

A a Boston-based consumer law center spokesman says in the article that this “is just going to lead to more harassment and abuse, and it’s not going to help the government collect any more money.”  The spokesperson goes on to say that people aren’t paying their student loans because they have not been harassed enough but they are not paying these debts because they can’t find a job.  The administration as of yet has no estimate of how much money they expect to collect from this practice.

I agree that it is likely that very little money will actually be collected by allowing robocalling of cell phones.  This new practice will just result in more stressed out people who cannot answer their cell phones for fear of getting one of these collectors on the line.  My bankruptcy clients which I interview every day typically are broke and out of work and they want very much to pay their bills but they cannot.  They universally have the desire to pay the bills but not the means.

I believe in the old saying that you can’t get blood from a turnip.  If people have no money and no job then no amount of phone calls will change reality.  If you mistakenly pick up a call and talk to one of these collectors then you will get no sympathy and just demands to pay.  If you say you have no money they won’t believe you and tell you to borrow the money.  These collectors are incentive driven and they don’t appear to care what you have to say as they get paid as much as 17% of what they collect from you.

The FTC (Federal Trade Commission) regulates the collection industry.  The FTC receives more than 100,000 complaints a year from the collection industry alleging harassment, demands for ridiculously large and unaffordable payments, and threats of jail time (which is illegal under the Fair Debt Collections Practices Act).  Apparently the collection industry receives more complaints than any other industry in America.

This move by the Obama administration perplexes consumer groups and Democrats alike.  The article points out that this bill aligns the administration more closely with the collection industry.  Democrats normally are more friendly to those in debt and generally Democrats protect consumers from additional potential harassment.  Many Democrats opposed the creditor friendly bankruptcy reform bill of 2005. (Joe Biden supported the law as he was from Delaware where many credit card companies are incorporated).  Many Democrats are now indicating that they can’t support this bill.

Hillary Clinton sponsored a bill a few years ago to make student loans dischargeable in bankruptcy.  That bill went nowhere though and these student loans are still non-dischargeable in bankruptcy.  So are the other government fines, fees, penalties, and most tax debt.  But the point is that they are not going unpaid because people are not being robocalled enough.  People have no jobs and no money and that is why payment is not forthcoming.

Robocalling by private collectors is currently allowed under Federal law on landlines but only individually dialed calls are allowed to on cell phones.  Since more and more people have only cell phones now the collection industry has been lobbying the administration for this change in the law according to a spokesperson quoted in the article.  Apparently the lobbying has worked as the Obama administration has heard the call and pushed for this law.  The spokesperson says that robocalling is the most “efficient” way of collecting debts.  If you have ever been on the other end of the line that is receiving these robocalls you may have a different view as I have.

This is a terrible idea that will collect little money and result in the increased harassment of people with no means to pay these debts.  My clients come into my office already tapped out and they have no extra income even when we get their credit card debts discharged in bankruptcy.  If these people are not paying on these loans it is probably because they have either no job and no income or they are working at a reduced rate and barely affording their current bills.

If you are in this situation or you know someone who is, send them to myself of another bankruptcy attorney in your area.  We can help them discharge the credit card and other private debts so that more money is freed up to pay the non-dischargeable government debts like the student loans.  You can work out a payment plan for the student loans if you can afford one.

If this law is passed then debt collection will become that much more invasive, annoying and bothersome.  My advice will then be: don’t answer your cell!

I am a San Diego bankruptcy attorney.  For more information please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  For a free consultation on bankruptcy or debt please call (619) 702-5015.  Call now for free credit report and analysis! 

If you or someone you know may need to file a bankruptcy get my FREE E-BOOK: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING by e-mailing me at: farquharesq@yahoo.com.

Are credit card companies unleashing the dogs of war? Their calls appear to be increasing in frequency.

You may have experienced that it doesn’t take long for the credit card company vultures to call you if you are late.  One blog I found called them the “collection police”.  The blogger was shocked that he got a call after being 1 day late.  Someone from the collection police called him one day after his payment due date and asked for a payment right away.  He was floored as he had never been late on a payment in his life and the last thing he expected was a call from his creditors.

I certainly have been late on my payments to these credit card companies and I have talked to India many times.  I often ask about the weather in Mumbai when I get on the phone with one of these people who speaks english with a funny british accent.  But it does seem like there has been a lessening lately in the time that credit card companies give you to pay your bill.

It used to be that these companies (in the good old days) allowed you to be 30 days late before you heard from them.  Then it seemed to advance to 2 weeks and then one week and now my clients report getting calls from credit card companies when they are one day late.  The collectors call and ask for an immediate payment and they don’t seem to care if you have been on time for 6 months or 60 years.  They couldn’t care less and they just ask for the money.  They are starting to act like loan sharks from mob movies when they say “just pay me”!  They truly seem to be unleashing the dogs of war after only one day.

The blogger who got the call was shocked by this but I would advise him to get used to it.  I noticed that these guys from these credit card companies are calling me quickly if I’m late on a payment and they don’t wait long.  I theorize that they have stepped up their enforcement of their debt collections.  Someone has reasoned that if they could just get the calls out quicker and the money in faster than they could collect more.

It is the time value of money.  If the money is in their bank earning interest then they get the interest and not you.  Now remember that they have millions of accounts and even one day quicker on payment could net them millions more dollars so they get the calls out to demand you pay them more and more quickly.  In the future I expect that they will come up with some hour in the day when your payment is due and then they will call you at one minute after that hour has elapsed.

So get used to it as this is the way it will undoubtably be for some time.  For now expect calls to come even if you are one day late and even if you have been on time with your payments for your whole life.  The company and the guy in India don’t care about your payment history or how good of a person you are.  They just want your money now.

One sure-fire way to rid yourself of this headache is to file bankruptcy.  That will stop the calls and end your liability for the debt.

I am a bankruptcy attorney practicing bankruptcy law in San Diego California.  Please visit my website at www.farquharlaw.com.

What’s in your wallet? These huge credit card companies are plenty rich- it’s okay to file for bankruptcy!

Bank of America, Chase, Wells Fargo, Capital One, Citibank, Discover, American Express.  Recognize these guys?  You probably owe them money right now and I’m not talking about for your mortgage, car, or for some other secured asset.  I’m talking about credit cards.  What’s in your wallet?  Probably there is some credit card in there right now with one of these names on it and you are in debt.

If you check you will see that these are very large companies.  They have billions of dollars in assets and if you think about it is a very easy business to run.  Think of them like Joe Pesci in the movie “Casino”.  They get a little money and they “put it on the street”.  But you are the street.  They borrow money at a low-interest rate and lend it to you at a higher rate.  If you default or are just late on the payments then they will jack your interest rates and charge you all sorts of penalties.  They make a tremendous profit on you when you cannot pay them.

Remember they don’t have a plant with machinery where they make things or even an office where they give advice.  They just need a little small space where there is a phone with which they can call you twenty times a day when you don’t pay them.  Are you getting those calls now?  Most of us do and they call now not just when you are a month late or even a few weeks late but if you are a day late.  They seemed to have recently decreased the time they allow you to not pay them.

According to Wikipedia Bank of America is the largest financial services company in America and also the largest bank holding company.  It is the second largest bank in the country by market capitalization.  As of 2010 B of A is the fifth largest company in the U.S. by total revenue and the second largest non-oil company in the U.S. after Wal-Mart!

Wells Fargo is the fourth largest bank in the U.S. by assets but the second largest by market capitalization.  JP Morgan Chase has assets of $2 trillion.  Citigroup has the largest financial services network in the country and it has over 200 million customers.  Get the picture?  They are huge and they won’t miss your debts if you get them discharged in bankruptcy.  Most of the big banks received federal bailouts financed by your tax dollars when they ran into financial difficulty.

Where is your bailout?  Do you get a break when you get into financial difficulty?  These companies are the largest and richest companies in the world and they are deemed “too big to fail” and when they get into trouble they run to the federal government (that’s you) and they ask for and get a bailout so they can make more money.  Did you get a break?  A bailout?  Where can you go when you run into financial trouble?  How about they only call you ten times a day when you owe them money?

Forget about it.  It’s not going to happen.  You will get no breaks from these companies.  They only move one way and that is forward in collecting money from you.  They will call you, hound you, and harass you into paying them.  Your only way out is to file bankruptcy.

Bankruptcy stops the calls, the harassment, and relieves you of the liabilities for those debts.  It makes sense and is the only break you are going to get.

So don’t feel bad for these banks who are too big to fail.  They are the largest and richest entities in the world and they won’t miss your little debts when you file bankruptcy.  They will write it off as a loss on their corporate taxes.  Remember that most people have paid back all of the money they borrowed on their credit cards with interest before they file bankruptcy.  It’s just that the interest rates are so large that they have to keep paying indefinitely.

How long does it take to pay off a card if you make the minimum payment?  I don’t even know anymore but it used to be 30 or 40 years.  That is debt slavery.  Don’t let yourself be a slave!  File for bankruptcy if you have debts you cannot pay!

I am a San Diego bankruptcy attorney.  Please visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation on any bankruptcy or debt related issue at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.