Seven Big Lies Collection Agencies Tell

The seven BIGGEST LIES collection agencies tell to unsuspecting borrowers.

In meeting with clients, I am always amazed at some of the lies they have been told by collection agencies, in order to induce them to make a payment. While the lies are obvious violations of the Fair Debt Collection Practices Act, the collection agencies play the odds that the individual debtor will not be able to prove any allegations, nor are they in a position to spend the time or money in pursuing a claim. Unfortunately, these tactics are successful in many instances, especially with the elderly.

I was recently listening to the radio and heard a commercial in which the debt settlement company was making a blatant misrepresentation. This got my blood boiling and made me decide to write this article on the seven BIGGEST LIES collection agencies tell to unsuspecting borrowers. While there are many more lies, these are the seven most common, big lies that I hear from my clients.

1. You will have bad credit for 10 years.

This is simply NOT TRUE. Many people are under the misconception that a bad debt or a bankruptcy will appear on your credit report for 10 years. The fact of the matter is that any credit transaction that you have been involved with, whether it was a credit card or even a speeding ticket at age 20, is still on your credit record.

The issue is: “How far back is a creditor looking on your credit report and what are they looking at?” Once someone files for bankruptcy and receives their Discharge, they are now a good credit risk, because they have no more unsecured debt and they cannot file bankruptcy again for anywhere from 4 to 8 years.

Additionally, once they receive their Discharge, they will begin to receive opportunities to rebuild their credit by opening up a secured credit card account, and then ultimately they will receive applications to open an unsecured credit card account. Therefore, I can assure you that your credit is NOT ruined for 10 years.

2. You are going to be served with a Complaint by the sheriff TOMORROW!

This is another lie used by collection agencies to induce somebody to agree to send a payment. If the account is still in the hands of the collection agency, they are certainly not referring it to an attorney, since they may not receive any funds.

Additionally, there is no way that a collection agency, or almost any party, can know when you are going to be served, as they do not control the schedules of a sheriff or a process server.

3. You will be arrested if you don’t pay this bill.

Again, this is a blatant lie that is told to debtors, especially the elderly. Debtors’ prisons were abolished over 100 years ago. However, these devious collectors skirt the truth since, in theory, you could be arrested if you fail to comply with a judge’s order to provide your financial information AFTER A JUDGMENT IS ENTERED AGAINST YOU. However, any arrest would be related to your failure to follow a judge’s Order and not because you owe money.

4. You could lose your home.

This is an absolute falsehood if you live in Florida and have declared your home as your homestead. Under the Florida Constitution, your homestead is protected from a judgment creditor. There are only three exceptions where you home is not protected and where a lien can be enforced: (i) a mortgage on your home; (ii) property taxes; or (iii) a lien for improvements made to the home. Other than these three exceptions, no credit card company can take your home in Florida.

5. You will never be able to buy a home again.

I addressed this issue in great detail in my article that appeared in my August, 2013 Martella Memos Newsletter. If you missed the article and would like to read it, you can see it on my website at http://martellalaw.com/buying-home-after-bankruptcy/ .

The bottom line is, depending on the circumstance, you could quality for a mortgage in as little as 12 months after receiving your bankruptcy Discharge.

6. You will never be able to buy a car again.

Again, this is another falsehood. Once someone has filed for bankruptcy and has had their creditor’s meeting, there are numerous car dealers who are willing to allow you to purchase a new or used car. While your interest rate may be slightly higher, you will be able to have a vehicle to allow you to continue your life, get to work and take your children to school.

7. Unless you pay off this credit card, you will never get another credit card again.

While most of my clients facing bankruptcy say that they never want to have a credit card again, the reality is that in today’s economy, you need to have credit in order to conduct your life. Generally, if you do the right things after you receive your bankruptcy Discharge, you will receive offers for credit cards in about 12 months.

I hope you will share the foregoing with family and friends who may be struggling, so that they won’t be duped or taken advantage of by collection agencies. If you have a friend or relative who is being harassed by creditors, I am happy to provide them with a complimentary and confidential consultation to answer all of their questions.

Contact a Bankruptcy Attorney

If you have a situation as we described in this article and have questions or concerns, please don’t hesitate to contact us to answer your bankruptcy legal questions.
Martella Law Firm
18501 Murdock Circle, Suite 304
Port Charlotte, FL 33948
Phone:941-206-3700
Fax:941-206-3701