Creditor insists payment over phone
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Question:
I sent in my final two payments totaling $400 to pay off my car. I had gotten behind, and they had been calling me about the debt. They continued calling even after I’d sent in the payments, and a guy finally told me they had changed their mailing address and I’d sent the money to the wrong place. Then, he got nasty and started demanding that I make the payment over the phone. He wouldn’t even give me the correct address. What can I do?
Jean
Answer:
Never, ever make any kind of transaction like that over the phone with a creditor. Call the bank right now, and put a stop payment on the check you sent to the wrong address.
Next, you need to call these people back and flat out ask for the correct address to send your payment. Chances are you won’t get the same guy, but if you do just hang up on him and call again. You’re trying to make things right, and all you need at this point is information. You don’t have to put up with being verbally abused by this jerk.
Take charge of the situation, Jean. If the phone jockeys continue to harass you, demand to speak to a supervisor and let him or her know that you’re willing to overnight a check to them, but there’s no way you’re giving someone whose been rude, obnoxious and unprofessional electronic access to your checking account!
- Dave
Creditors harassing parents!
Dear Dave,
My older sister has run up some pretty large debts, and there’s one creditor in particular that’s giving her a bad time. She only owes them about $500, but they somehow got our parent’s phone number. They called and made my mom feel so bad that she paid part of the bill. Now this company is calling my parents four or five times a day, thinking that if they’re pushy enough she’ll pay them more money. What can they do?
Donna
Answer
First, your mom and dad should get an answering machine – one that has a memo button that allows them to record conversations. The next time these bozos call, your dad should get on the phone and explain to them that the conversation is being recorded and that they are not liable for your sister’s debt. Let them know, too, that if they ever contact them again about this matter that they will sue!
Your dad also needs to tell them that if they call them again he will file a complaint with the Federal Trade Commission. What this company is doing is a violation of federal law and the Federal Fair Debt Collections Act. If the caller can’t understand that, make them put a supervisor on the line and repeat it. Your dad needs to crawl all over these people, because what they’re doing is illegal, immoral and just plain mean!
Even if he did owe the bill, calling that many times a day is still a violation of federal law. He’s not going to get rid of these people by being nice!
- Dave
Mortgage company won’t let us sell the house!
Dear Dave,
My wife and I recently moved, but we still own our old house out of state and owe about $122,000 on that mortgage. We took out a 125% mortgage to allow us to do debt consolidation and give us extra cash. We owe about $34,000 on that second mortgage, so now we owe $156,000 on the house and it’s only worth $150,000. We’ve been trying to sell it for six months with no luck. We’re still paying the mortgages on that house plus we have a mortgage on our house here in Michigan. We can’t do this much longer. What should we do?
From Chad
Dear Chad,
You’re now a living example of why you should NEVER take out a 125% mortgage under any circumstances!
Call the company that holds the second mortgage on your original house and tell them where you are. Let them know that you’re ready to hand them the keys unless they’re willing to work with you. Remind them that at the moment they have a partially-secured second mortgage for $34,000, of which around $10,000 or more is unsecured. You can make payments on a $34,000 loan, but you can’t make the payments of a $156,000 loan, which is the total of your two mortgages on that house.
Then, get them to admit that you don’t have a collateralized loan. They already know this, but it needs to come out of their mouth. Suggest that they allow you to sell this property for less than $156,000 and you will sign a note for the difference. For instance, if it sells for $136,000, the mortgage companies get all of the proceeds and you sign a note with them for $20,000. See if you can get them to sign a partial release under those circumstances.
If they’ll do that, you can reduce the price of the house and put an “Owner Desperate” sign in the yard to get that thing sold. You’ve got about a 50-50 chance of them accepting this kind of arrangement.
If your credit is still clean, another idea is going to a local credit union and borrowing $15,000 or $20,000 on a signature loan to pay down this second mortgage to the point where you can sell the house for enough to pay it all off. If you go that route, I wouldn’t send the money from the signature loan until you’re ready to pay off the house off altogether. That way you aren’t stuck with yet another payment until the house sells!
- Dave
Worried about bankruptcy…
Question:
My wife and I are both 30, and we’re afraid we may have to file bankruptcy. We make $70,000 a year, credit card debt of $23,000, a home with a $143,000 balance, $10,000 in student loans and $5000 in medical expenses. We’ve cut up the cards, but things look pretty bad and we’re thinking about selling the house. Are we bankrupt, Dave?
Answer:
First of all, you’re not bankrupt. But I’m afraid you will be if don’t makes some changes and fast!
If you guys aren’t living off a monthly budget, get busy today and put one into place. Turn off the television tonight, sit down together and give every dollar a name on paper. Making a budget really is that simple. It’s just telling your money where to go ahead of time instead of looking back and wondering where it went. You guys have a pretty good income, and if you’ll follow a plan you can be out from under all this mess in less than two years.
This is obviously starting to matter to you guys. Otherwise, you wouldn’t have taken the time to write about it all. The great motivator Les Brown once said that people change their lives when they come to a place where they say, “I’ve had it!” So, if you’re sick of this mess and determined to clean it up, then you WILL get out of debt. It won’t matter if it means giving up a few luxuries or delivering pizza at night. You won’t care what anybody else thinks. You’ll just do it!
After you get your budget in place, put $1,000 for your emergency fund in the bank as soon as possible. Don’t touch it for anything except legitimate emergencies, and this doesn’t mean debt! Then, let’s start rolling the debt snowball, paying off your debts from smallest to largest. First, make minimum payments on all but the medical expenses, and scrape together as much as you can to knock that one out fast.
Next, take the money you were paying toward the medical expenses and bundle it with whatever else you can pull together and go after the student loans. Then do the same thing with the credit card debt. After that you can fully fund your emergency fund with three to six months of expenses, begin investing 15 percent of your household income into Roth IRAs and other pre-tax retirement vehicles, and look toward college funding if any kiddos come along and paying off your home early.
You guys can win if you just have a plan. Get focused, get intense and knock out this debt!
- Dave
