Ask Stacy: Help! They’re Wrecking My Credit!

Photo (cc) by Rhys A.

It’s easier to get into trouble than it is to get out. That’s why it’s so important to get guidance before you act, not after. Check out the following unrelated emails…

Detail briefly: Bought car in ’06. Tried to return to dealer next day. Dealer refused. After 3 months, finance company repo’d, sold car, and charged not only difference between purchase price of car and sale, but entire finance cost – with interest accruing at 16.5 percent on unpaid balance. Garnishment pending, I signed agreement with finance company. Thought I signed agreement for total of $18,000. Wrong! Signed agreement to pay $400 a month with interest still accruing.

I am 65 years old, still working full time (50-plus hours a week) out of necessity. No savings, no 401K, nada. I will probably die before I get this loan paid off. Any help here?

Here’s one from another reader…

Apex contacted us and in 2006, we began paying on a $13,000 debt. We have paid this collection agency every month for over six years now – at $100 a month, which they automatically took out of our bank account.

In October 2011, my husband got laid off his job, and I am self-employed. I contacted them immediately, and for a couple months, Equable Ascent (Apex) lowered our monthly payment to $25 a month due to my husband’s unemployment status.

Last week, they contacted us by phone and sent a letter asking us to settle for 50 percent of the outstanding $6,700 in a lump sum, or 60 percent in several extremely large payments, or 70 percent in large payments for a longer time.

They are now calling us between 6-10 times a day. I have not answered my phone all week because we can’t afford any of their options, and I can’t bear to sign up to pay $100 a month for an additional six years. At this point, we’re trying to renegotiate our mortgage so we don’t end up homeless.

Get help before the trial, not after sentencing

I get notes like this with alarming frequency. They’re often written by people attempting to get help after being bullied into an agreement they can’t afford. This is the same as someone sitting silently in a courtroom, beginning their protest after being sentenced.

Don’t let this happen to you.

When you get into trouble with debt, you’re dealing with people who have interests opposed to yours. They want you to pay, you want a break. Any agreement they ask you to enter into will be drafted to benefit them, not you. They’ll act as if they’re trying to help you. They’re not.

There are many laws on the books that give you rights as a consumer. But when you act without expert assistance and agree to terms provided by a collection agency, you’ve probably signed them away.

Law and disorder

Imagine you were accused of a capital crime. The district attorney plops a 20-page plea agreement in front of you and assures you that it’s in your best interests to sign it. You try reading it, but it’s full of legalese and makes no sense.

Would you blindly sign their agreement and hope for the best?

The DA wants to see you behind bars. You want the opposite outcome. So unless you’re crazy, you’d employ a lawyer for expert advice. And even if you can’t afford it, our Constitution guarantees you’ll have one assigned to you. That’s how important our forefathers thought it was for you to have help when your freedom is at stake.

While signing a bad agreement with a collection agency won’t result in a life behind bars, it could easily lead to lopsided terms that impact your financial freedom. And while our Constitution doesn’t guarantee you free representation in civil matters, you should still seek representation. I cringe when I see sentences like, “Thought I signed agreement for total of $18,000. Wrong, signed agreement to pay $400 a month with interest still accruing.”

This reader obviously needed someone on his side of the table before signing that agreement. Instead, he trusted his adversary to protect his rights. Now there’s very little that he, I, or anyone else can do.

How to find help

Two years ago, we did a story called Abused by a Debt Collector? Get a Free Lawyer. It details how you can sometimes get free legal assistance when dealing with collection agencies. The lawyers aren’t actually working gratis: They’re getting paid by settling with collection agencies that violate the Fair Debt Collection Practices Act and are required to pay damages, including attorney fees.

While not all collection agencies break the law, many do. The FTC details a litany of potential violations, from “misrepresenting the amount you owe” (thought I signed an agreement for a total of 18,000) to “repeatedly using the phone to annoy someone.” (They are now calling us between 6-10 times a day.)

What these readers need to do now is find a consumer lawyer. They should lay out their case and ask for advice. If the collection agencies violated the law, they may get it free. But even if it costs some money, they need someone on their side who understands the law.

Bottom line? When either your freedom or your money is at stake, if you need help, get it. Whether it’s buying a house, leasing a car, or dealing with debt, if you’re out of your depth, find someone who isn’t. Because once you’ve signed on the dotted line, more often than not, it’s too late.

Got more money questions? Browse lots more Ask Stacy answers here.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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