The Los Angles Times recently ran a feature story about payday loans – those short term, high interest loans that service customers who need a cash advance in advance of their regular paychecks to cover emergency expenses. According to the story, Cleveland is where W. Allan Jones founded Check Into Cash, the granddaddy of modern payday lenders, which cater to millions of financially strapped working people with short-term loans — at annualized interest rates of 459%.
As attorneys and financial counselors, we at Clark and Washington encourage our clients to avoid payday loans. If you find yourself turning to this lender of last resort, it should serve as a signal that you need to consider significant changes to how you handle your finances.
A Chapter 7 or Chapter 13 bankruptcy may be one of those changes that you should consider. While bankruptcy is a last resort, it can eliminate credit card debt, allow you to walk away from a house or a car with no penalty and it can provide a structure to pay back “permanent” debts like taxes and student loans.
If you find yourself turning to payday loan lenders, we encourage you to stop, step back and considr calling our office for a free debt evaluation. Bankruptcy may not be the right answer for you, but there is simply no reason not to learn if the bankruptcy option can improve your quality of life.
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USA Today reported in today’s edition that complaints against debt collectors have reached an all-time high. The Better Business Bureau reports at 26% increase in complaints in 2007, and attorneys general in many States are pursuing actions against collection agencies for false and misleading activities.
In discussing debt collection tactics with our bankruptcy clients, it appears that there are some debt collectors that will do or say anything to intimidate a debtor into paying an overdue bill. Some of the misleading collection activities we hear about include:
- suggestions that your failure to pay a credit card debt can land you in jail
- threats by credit card collectors that they can seize your bank account without filing a lawsuit
- threats by collectors that they will contact your employer
- claims by collectors that they are lawyers and are prepared to file suit immediately
With Tennessee leading the nation in the rate of bankruptcy filings, it is not surprising that bill collectors are very active here and that they are aggressive in their dunning activities. If you are the recipient of collection phone calls – even those that do not cross the line into illegal threats – you probably have questions about your options. Feel free to contact our law firm – we have offices in Knoxville, Nashville and Chattanooga – we’ll be happy to answer your questions without any obligations.
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We received this email from Brenda:
i have been harass, threathen, verbally abuse by bill collector, true, i got behind in a bill, and really they refuse to set up any thype of payment plan because i am too far behind, and they want all the money, it has increase due to finance charge they keep adding, i am on ss diability, and they threaten to get by money out of the money what do i do.
Brenda, thank you for your email. First, the good news here is that bill collectors may not garnish money from your bank account if it came from Social Security. You do need to make sure that your bank knows that the money in your account came from Social Security and you should no co-mingle your Social Security funds with any other money.
Second, you should write a letter to the collector advising the collection agency that (1) you are judgment proof, and that you have no assets and your only source of income is Social Security; (2) that pursuant to the Fair Debt Collection Practices Act you want them to leave you alone and (3) that you request that this debt be written off as bad debt.
I would not offer these folks any money as they have no leverage against you at all. If they are verbally abusing and threatening you, they are violating the law and you could sue them for damages.
This might be a situation where you may want to contact a lawyer to write one or more letters on your behalf.
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