Some Peace of Mind This December

The holidays are here, the end of the year is looming large, for many it’s time to tidy things up before 2019 rolls in and things get going again. Over the last few weeks I’ve written about Lodge 49 and the fact debt (of every kind) is so prevalent on the show, it’s another character; and I relayed happy news about settling judgments and liens for clients looking at foreclosure.

Everyone, I think, can identify with the residents of Long Beach in Lodge 49, beset at every turn by debt, plunging home prices (the area just became a superfund site), foreclosures, and more. Everyone, I think, can vicariously enjoy hearing about a judgement and/or lien being settled in the borrower’s favor.

But, in my experience, that doesn’t translate – often enough, at least –  to the many, many, people out there with the same problems I write about getting – really getting – that there are solutions for them. In many cases, several solutions.

Everyone can be LIz, the Lodge 49 character who walked into her bank and took care of her debt problem forever . . . the only thing you need to get started is to understand you have options.

Liz figured it out in the season finale.

Well, December is our season finale and the time to get some peace of mind, probably the commodity I deal in the most.

It’s simple, if you are looking a a possible foreclosure, have judgments and liens that threaten your home and/or continued financial health, are facing a crippling crumbling foundation situation, are in foreclosure and are scared … or baffled … or confused …

. . . come and talk to me.

Give yourself a consult for Christmas and give yourself some peace of mind. The one thing I can tell you sight unseen, you have no idea how many options you have.

Debt, Judgments, and Liens

Last week I wrote about debt and AMC’s Lodge 49. A show in which debt is so pervasive it’s another character. This is the flip side of that conversation – the end result of many debts.
I don’t know about you, but sometimes my idea of fun is getting judgment liens paid off.  Yep, that’s right- it’s kind of a cool challenge and can be really satisfying. Taking care of judgment liens has been a satisfying part of being a lawyer for a long time, the letter below is to Attorney Abraham Lincoln about just that.
Last month a client, who was in foreclosure due to unpaid property taxes, found a buyer for her home.  The house needed a lot of work, she was unable to keep up payments on the taxes, and decided to sell.  She had about a half dozen judgment liens that resulted from old unpaid credit card accounts that remained outstanding.  In order to close, I had to track them down and get them settled.
At least there was enough money from the equity in the property to pay them at closing.  If this were a short sale, or if there wasn’t enough equity to get them all paid and still leave her with some cash out of the deal, we probably wouldn’t have bothered. (Then my strategy for her would have been to keep her in the home as long as possible and eventually move when the time came.)
Four out of her six unpaid liens were simple to deal with.  In addition to getting the lien information from the closing attorney’s title search, the original case information is usually available on the court website– www.jud.ct.gov.  I put my client’s name into the search field and found the cases, including the names of the lawyers who initiated each suit against her.  I just had to call them up and make settlement offers.  We averaged just about 50% overall on those.  The lesson here is it is always worth trying to get a discount so that the homeowner can keep as much of the cash out of the closing as possible!
I’m still tracking down the other two liens.  Most of the cases against my client were brought by third party “debt buyers”, companies you’re probably familiar with such as Unifund, Midland, CACH, Portfolio Recovery, Velocity Investments, Cuda & Associates or Lienfactors, etc.  The problem here is that the law firms that get the judgments don’t often continue to service the judgments, especially 5 or more years after the judgment enters, which was the case with my client. I know with a little more effort I’ll find the companies currently handling the judgments and get them settled and paid.  But in the mean time, we have to set aside the full amount of the judgment for these two liens in order to close, and my client won’t get anything that is left over until we know what these companies will accept in settlement.
She had another creditor who obtained a judgment but had not filed a judgment lien.  We still settled that one out because I feared that if we did not, and sold the house, the creditor’s attorney would discover my client disposed of her only asset and it would cause a major problem later.  It hurt because it was the highest balance of any of her outstanding accounts, but the closing attorney and I decided it was the right thing to do.
I regularly recommend selling to people who have equity but cannot afford their homes in the long term.  My experience with the creditors’ bar is that they will always take a settlement offer, no matter whether the account has been reduced to judgment and no matter how old the judgment is.

The Debts of Lodge 49

The first season of Lodge 49 ended a few weeks ago (along with the latest season of Better Call Saul, I’ll write about that later). I waited to write because this piece contains a mild spoiler.

Lodge 49 is … well, it’s hard to categorize. It’s gentle, a bit melancholy, smart, sometimes very funny, very well acted and pretty much a ten-episode shaggy dog story.

There are great characters who are very real people, it occurs in Long Beach, California which is an excellent stand-in for so many things about 2018 it would be impossible to list, there’s a mystery out there somewhere, there’s some intriguing as yet undisclosed mysticism swirling around everything and everyone.

So, yeah, I liked it. I was so engrossed in it I didn’t realize until forty-five minutes or so into the last show – and I did so with a real jolt – that the entire show was about . . . debt.

The debt of the middle class in 2018, with Long Beach still feeling the effects of the Recession.

I was jolted because looking back I saw it was there all along. I’ll bet ten minutes doesn’t go by – per episode – without someone talking about debt – their own, someone else’s, the Lodge’s (it is, after all, a building with a mortgage).

Debt is everywhere and when people aren’t talking about it there are signs in the background blaring it. Foreclosure signs on boarded up buildings, empty condos, ReFi billboards, more, everywhere.

A main character is a pawn broker. The pawn broker isn’t nasty, makes almost fair offers on property, seems to have a sense of humor, is a rock-solid businessman.  He also makes payday loan, title loans, and personal loans with interest rates around the thirty-percent mark. He also tells every ‘client’ exactly how stupid they are for taking whatever loan he’s offering before they put pen to paper.

The protagonist, Dud (yes, no ‘e’) is into him for big bucks and his car. Dud’s father owned a pool servicing company, went out to surf one afternoon and never came back. The business had loans far in excess of its value. Their house was foreclosed on and auctioned off.

Dud’s twin sister Liz owes the bank $80,000 – she co-signed a business note for her father. She’s obsessive about paying it down, makes every payment on time even though it stretches her budget to the breaking point, has been paying for over a year when she is shocked to find she has only been covering the interest.

Ernie works for a company that can’t pay commissions until it gets advances, he’s into the pawn broker. The lodge itself is being foreclosed on. The mysterious rich guy who pops into Dud and Ernie’s lives (a great Bruce Campbell) is dependent of leveraging – he borrows to invest. The people who bought Dud and Liz’ childhood home at action are clearly underwater, all the land in town is about to be declared toxic, they’ll never resell.

Debt, debt, everywhere. It’s not oppressive, it certainly doesn’t put a damper on the show, but it is always there, like another character.

No one does anything about their debt, except add on more in the hope of getting by long enough to do . . . something that will maybe fix it, . . . until the very end, the tenth episode/season finale (that raised more questions than it answered but made me want more).

That debt finale: Liz walks into her bank to talk to about her loan. The ever helpful, ever cheerful, manager says “The outstanding balance is eighty-thousand, five hundred and thirteen dollars.” Liz answers, “That is outstanding,” – a line I am sure I will use one of these days.

Liz then explains that she ‘really doesn’t have a place in her life’ for the debt anymore. She slams her entire life’s savings on the table, eighteen thousand dollars or so and explains – I won’t get into the specifics because those are spoilers (I think) – this is all you’re ever going to get from me.

The shot of Liz back in her car with her ‘account closed/paid off’ paperwork is outstanding.

It, of course, doesn’t really happen that way but it’s not a bad representation of what can happen if a debt is approached correctly, (check out my book for more on this). The end result, have the debt go away, that’s just priceless. Liz’ relief is palpable and absolutely spot on.

You’re not a character in a prestige series TV show, you don’t have to live with debt.

Surviving Debt: Expert Advice

Some people just like self-help books. Some people (like someone I am related to) always have one open on their nightstand and seem to have read them all. I’ve only recently gotten into them and that is to supplement the in-person help I have been getting (specifically, on managing my business).

If you’re a self-help person, you have to check out Surviving Debt: Expert Advice for Getting Out of Financial Trouble, published by the National Consumer Law Center, now in its 11th edition. It covers almost every personal financial issue you can think of, and is only $20. CLICK HERE to purchase (I get no benefit from this other than to share with you a really valuable resource)

You can even get free content from the book by clicking here. 

Let’s say you had a car repossessed a few years ago, and you can’t figure out how to pay off the debt resulted from that. Or you want to know which of your accounts to pay first. Surviving Debt has a chapter for that. If you’re the type of person who can read instructions and advice and follow through, then the price tag on this book is more than worth it. Maybe you’re shy about talking to someone about your finances, or want to know if you really are as bad off as you think you are (if I had a nickel for everyone who was afraid to pull their credit reports!), try Surviving Debt first. Then let me know if it was helpful, and which sections were the most relevant to you. You may need some follow up help, or have questions about your options. After all, this kind of book doesn’t (and can’t) provide you advice specific to where you live as each state is different in how debt is pursued and your options are different depending on which creditor you are dealing with, whether you have been sued on the account or whether it is in collection or not. Foreclosures especially are different in every state, so maybe after reading about your particular problem you will feel better prepared to ask questions and start tackling your situation with a live professional.

This book, and the chance to read parts of it for no charge, was too good an opportunity not to share with you. Again, I get no proceeds from the sale of the book (I don’t even keep the proceeds from the sales of my own book!), I just wanted to make sure you knew about it, especially as many of you are looking forward to a new year soon and in my experience, most people have something money-related on their New Year’s resolution list.

I Call BS . . . (on everyone, myself very much included)

“I call BS”

The students of the high school in Florida who suffered that mass school shooting earlier this year adopted the battle cry “I call BS” in the face of politicians’ empty promises to stop gun violence and to stop taking money from the gun industry.  If anyone dared tell the students they would work to make a difference and acted in a way that said they did not intend to, they called out the BS.

Good for them.  Because we are too nice and we don’t call out each other’s BS enough.  And because of that many of us never get out of our own way.

We all do it—we all have some BS we are hiding behind.

“I want to lose weight.”

“I know I should exercise more.”

“I have no money.”

All true statements for many of us.

But I call BS.

If you want something, work for it. If you know exercising is good for you and you don’t do it, then start.  You say you have no money, but do you really keep track of what you spend your money on?

I don’t call you out on enough of your BS.  I hear you say you want things but you don’t do what you have to do to have those things.  Please just be honest about WHAT YOU WANT MORE than the things you say you want.

If you want to lose weight, but you love chocolate chip cookies, and you keep eating the chocolate chip cookies, then you want the cookies more than you want to lose weight.  So don’t BS me about wanting to lose weight.

If you know you should exercise more but go home at night, eat dinner and then flop down on the couch and turn on the TV, then you want to watch TV more than you want to exercise.  So don’t BS me about not having the time or not being “able” to exercise.

You say you have no money but you stop to buy a coffee every day and buy your lunch at work and go shopping for clothes a couple of times per month or lend friends and family members the money you do have.  So don’t tell me you don’t have money—that stuff adds up.

I sound really harsh here because I have been spouting my own BS for a couple of years—I say that I want to help more and more people and have a large law firm but I haven’t done the work it takes to get more clients.  I’ve been BS-ing myself, my husband, my staff and even the homeowners out there who can’t find their way to me because I haven’t done what I need to do for them to know I’m right here, ready and able to help.

That BS stops now.  No more pretending to want something but then not taking the steps to have what I want.  No more saying one thing and doing another.  I invite you to call me out if you hear BS from me.

You ready to join me in a BS-free life?

My First Solo

It was twelve years ago today, October 2, 2006, that I went solo.  I actually didn’t have much of a plan. I had obtained a position reviewing documents for large class actions which I could do from home on my computer. That was going to pay enough to pay my bills. That’s as far as I had gotten with my plan.

I had been working in consumer protection for four years, helping all kinds of people out of all kinds of bad deals, protecting them from harassing debt collectors, unwinding their complicated identity theft problems, and recovering money taken by home improvement contractors, car dealers and even dating services.  But even as fulfilling as that was, there was something missing. I didn’t know what, I just knew I needed a change. I didn’t really look around for other jobs, but I found the document review opportunity and thought it would allow me to rethink my path as an attorney.

Within a week or two, my old boss called asking if I was interested in helping all the people that called his firm looking for help defending against credit card and medical collection.  So I shifted from being the lawyer that brought suit to being the lawyer that defended clients in court. And no one else was really doing that with any regularity.

Almost exactly two years later, though, the economy dramatically shifted when the real estate bubble burst and the country went into recession.  The need for lawyers helping homeowners in foreclosure increased dramatically and as I had already handled a few foreclosures for homeowners, I was in position to take on more of these cases.  Now I have the largest foreclosure defense practice in the state.

This did not come easy.  Helping a homeowner save their home from foreclosure is labor-intensive, document and paperwork intensive and takes a lot of time and patience, both on my part and the part of the homeowner.  I have had to hire staff to handle the paperwork, answer the phones and manage the office. This was a scary process- I used to work alone in a spare bedroom, then I rented a small office, but now I need space for four employees, and then some.  This all needs to be paid for. Everyone wonders how I do it: “How do you get paid if your clients can’t pay their mortgage?”

Good question.  Probably the most important lesson I’ve learned from growing this business is to figure out what clients really want.  When you think about it, people pay for the things they want. If they REALLY want that Starbucks coffee, they will have the money to pay for it.  If they REALLY want a Lexus car, they will find a way to pay for it. And if they REALLY want help in court when their home is in foreclosure, they will make sure to pay their lawyer for that help.  

I did assume for a long time that everyone wanted to save their house, or that everyone who called me wanted to pay for legal services.  I’ve been working on how to have the conversation to figure out what people really WANT. I’ve learned it’s OK to not want to keep your house, and it’s OK if people don’t think paying for a lawyer is worth it.  I want to work with the people who REALLY want legal help from me, people who value having a lawyer by their side, a lawyer who will explain the process to them, who will walk them through each step and clarify what is going on in court so they aren’t so confused, don’t feel helpless, and aren’t spending any more sleepless nights over their foreclosure.  

Even better are the clients who know we will solve their legal problem and who want to do better in the future.  People who are motivated to manage their money so they will NEVER be in foreclosure again, and who will have savings and a retirement plan and a future to look forward to.  Because I’ve learned it was never the foreclosure that was the problem, that was just the symptom of many decisions over the years that led to an inability to pay the mortgage.  I can treat the symptoms, but the fulfilling part is working together with clients to cure the underlying problem.

When Geoffrey Owens Played a Lawyer . . .

I posted something about Geoffrey Owens and ‘job shaming’ on Facebook last week because I saw in the ‘story’ of Geoffrey’s job at Trader Joe’s something I see regularly working with people going through foreclosure: the ‘debt shaming’ I write about often. It seemed especially poignant as all this was precipitated by Owens losing his steady income source, The Cosby Show residuals that went away when the show was pulled from syndication because of the sexual abuse charges leveled at Cosby.

Just like many of my clients, an unexpected change in income had a disastrous effect.

All that reminded me of a great Geoffrey Owens role as one of my favorite TV lawyers of all time: Gerald Watkins Mayfield in HBO’s Divorce.

Divorce is the story of a successful business woman, Frances (Sarah Jessica Parker) and her not quite as successful husband, Robert (Thomas Hayden Church) living in Hastings-on-Hudson NY, a pretty, upscale town on the Hudson River an hour or so north of New York City. The town, by the way, is pretty much a character.

sarahbloghboObviously, they have marital problems. They go through all the motions of therapy and reconciliation and mediation, it’s obvious six show or so in that they need to divorce and it’s going to get ugly.

They need lawyers. Robert’s not the type to ask around or spend time on Google, or, indeed, doing anything proactive. Eventually, though, a friend introduces him to  a relative who’s an attorney right in town and ‘does everything.’ That would be Gerald Watkins Mayfield and he is everything I’ve been writing for years.

He works out of his garage and his wife pops in every few minutes to remind him to ‘watch the oven, dinner’s in’ but, all in all, it’s pretty charming. Until he starts talking. Then it’s funny and chilling – if you’re a lawyer.

The scene (easily the funniest in the show, period):

“So, you do mostly divorces?”

“Nope, mostly wills, trusts, estates.”

“You do some divorces?”

“You know what, Robert? Basically, it’s all law.”

That’s it, in a nutshell, perfectly put by a great character. ‘Basically, it’s all law.’

It’s not, of course, but clients still buy into it. As Robert does. Disastrously. I’ll leave it to you to watch the show to see just how disastrously it is.

For now, though, just understand that if you need a divorce attorney, hire a firm that does family law; need an estate plan? Hire an estate planning firm; are facing a foreclosure? Retain someone who does exactly that most of her working day.

Black Mirror, China, and Moving On

This piece is the result of a perfect confluence of a couple of scattered news articles that flitted across my news feed over the last week and a 12:30 am TV commercial.

First, the commercial: two friends hanging out when one gets a text, YOUR CREDIT SCORE HAS CHANGED! “Whoa,” the other friend exclaims, ‘why’d you get that?” “I get instant updates on all my credit reports,” replies the other, “don’t you know credit scores can change anytime?”

No, the friend didn’t know that, but he’s filled in now, credit scores can change any time, who wouldn’t want to be on top of it? It’s implied, not very subtly, that it’s the height of irresponsibility not to track one’s credit score 24/7.  Luckily, XYZ company is there for you and, get this, it’s free to start!

The news items were about China – they are expanding their efforts to bring their brand of capitalism to the world and they have begun to institute a system of ‘social credit’ scores for their citizens, a program that has just started but is slated for a nationwide roll-out in 2020.

‘Social credit.’ I first became aware of the concept like a lot of people did, through the Netflix and BBC show, Black Mirror.  The first episode of the third season, Nose Dive, was about a not so distant future where every one of our social interactions, from buying a coffee at Starbucks, to standing in line in an airport, to who you interact with in the office, are rated on a 1 to 5 scale. Your place in society is determined by your average score, the higher the average the better the car you can lease, community you can live in, job you can apply for.

It’s scary in that ‘it can easily happen’ sort of way that China seems ready to turn into reality. The whole, ‘let’s grade everyone on everything they do’ motif feeds into a ‘let me see what I’m rated today’ that can quite easily become an obsession that just gets in the way of, well, life.

But, that’s not why I’m writing about this today. What all this did was remind me, vividly, of a constant theme of this blog and my book, the effect shame and embarrassment have on potential clients. We have long been conditioned to consider a dropping credit rating, an unpaid bill, a certified letter or 1-800 call, a law suit, a foreclosure, anything about money that negatively reflects on us, mortifying.

And, indeed, there is a public shaming element to ‘social credit’, it’s implicit. But, we’re not there yet and hopefully never will be. In the meantime, despite this, I am constantly explaining to new clients that what they are going through has, indeed, happened to other people, often. That it’s not a matter of being embarrassed or shamed, it’s a matter of just taking care of the issue in the best possible way and moving on with one’s life.

No one who matters is judging you, credit scores can be repaired, the banks, lawyers, court clerks, judges, and collection companies are all on to the next case, there are no institutional memories.

Embarrassment and shame and a dozen other emotions serve only one purpose – they inhibit people from seeking help at the time professional help is most effective. This goes for foreclosure defense as well as family law issues and dealing with the IRS and a host of other matters.

Good lawyers have seen everything in their area of practice, they deal with everything, they will not judge. Most of all, they won’t be rating you on or off social media.

Dickens, Debt, and Christmas

So now, as an infallible way of making little ease great ease, I began to contract a quantity of debt.

~ Charles Dickens, Great Expectations

imageWhere would Charles Dickens have been without debt? Where would English Lit, Hollywood, and Christmas be without Dickens?

The running themes through Dickens’ long – and lucrative – career were crushing debt, workhouses, courts snarled in technicalities, poverty, sour credit, low wages, foreclosures, banks, scams, mass incarceration, sweatshops, social injustice … All very much applicable today.

If Dickens came back tomorrow, he’d be astonished by the speed of today’s communications; overwhelmed by the modern technologies used in finance; awed but probably pleased with the serialized novel on TV and Netflix, et al – I imagine him binge watching Breaking Bad and The Wire.

He’d find some things appallingly the same, others miraculous. He’d immediately recognize Pharma Bro, everyone running for President, the bankers in The Big Short. Give him a week and he’d be working on a new novel.

Dickens had an unfailing eye for all this because he lived it. He grew up in a imagemiddle class family, comfortable, good at school, apparently fairly happy. All that was destroyed when he was twelve and his father was tossed into debtor’s prison (right). Charles’ mother and younger siblings went with him – as was the custom. Charles,was forced to pawn his school books, was sent off to a workshop to help pay off his father’s debts.

An inheritance saved the family though Dickens’ mother was adamantly opposed to his leaving work and forced him to stay there for long, unhappy months before he left to resume his studies. He rewarded her for that particularly slight through dozens of novels and plays. (From Dickens to Bob Dylan and Alanis Morissette, it’s never a good idea to upset an artist with wide reach).

In his early writing career – he was pretty much a prodigy from the start – he covered the courts and, briefly, Parliament.

He saw the system from every angle and he set out to attack it in the only way he could, through his writing, within the flexibility and thin protection of the novel. He opened Victorian eyes to the seamy underbelly of British wealth, society, and empire.

imageIn 1843 he turned his wrath to Christmas. At the time, many – including his good friend Washington Irving – felt that Christmas season was ebbing away from the poor and increasingly put upon middle-class.

He didn’t like what he was seeing, feeling, and he sat down to write a scathing pamphlet about the issue. It soon occurred to him that a novel would work much better, reach more people. In six weeks he crafted his ‘ghost story’, A Christmas Carol.

He published it himself in an effort to not be ripped off by his usual publisher.A Christmas Carol in prose. - caption: 'Marley's Ghost. Ebenezer Scrooge visited by a ghost.' In today’s parlance, it went viral. Immensely popular, even his [many] critics extolled it. Thousands and thousands of copies were sold, many more – particularly in the United States were ‘bootlegged’ – and it was immediately adapted for the stage. Dickens himself did stage readings of the entire manuscript. It was everywhere.

Humanitarianism, redemption, a dead-on accurate portrayal of early-Victorian England, it hit a nerve in Great Britain and the United States. It hit, hard, the people bearing the burden of the Industrial Revolution, changed the way everyone thought of the Christmas season.

imageHow a man who, when first confronted with poverty and homelessness, says, “Are there no prisons? Are there no workhouses?” Finds empathy is inspiring regardless of religious belief. A Christmas Carol was a great story, a strong, bitter indictment of the times, and it worked. It changed things. It has never been out of print.

Again, no debt, no Dickens, no Dickens, no holiday season? The latter may be a stretch, but it’s not unthinkable.

So, sometime in the next few days I plan on catching the 1950 Alastair Sim, A Christmas Carol – a great adaptation (out of dozens, beginning with Thomas Edison’s version in the early 1900s!).

And to all my readers, I hope it’s obvious, “God Bless Us, Everyone.”

Psychology & Debt

From Got Debt, Dispatches from the Front Lines of America’s Financial Crisis

The more I work with people with debt, the more patterns I see. This has been an interesting way to observe that the psychology of having debt that can’t be repaid is almost universal no matter what the demographic.

The biggest part of having too much debt that plagues the average American, especially when someone gets to the point where they can’t repay it, is what I’ll call the “boogeyman in the closet” phenomenon.

This is the fear that something terrible will occur THE MINUTE someone can’t make a payment on their bills. The belief that missing a payment due date on a credit card is going to cause the sky to fall, it’s going to cause instant public shame, AND on top of that, the boogeyman is going to come out of the closet or out from under the bed and GET YOU.

I know that this boogeyman is real because of the questions I get and the things people tell me based on their assumptions (or on the gobbledygook they read on the internet or that they get from their brother-in-law).

The boogeyman comes in the form of:

“If I miss my credit card payment, can they take my car?”

“If I’m overdue on my credit cards will they put a lien on my house?”

“Will my boss know?”

“Will they garnish my wages?”

“Will they take all my retirement?”

And, the big one,

“Can I be arrested?”

I’m heartbroken when I hear the fear that plagues people who can no longer make credit card payments, but am hopeful and encouraged, in a weird way, by their fear response. These questions signal to me genuine concerns about personal financial stability, reputation and a moral sense of right and wrong.

It shows that the average person, the majority of people, want to pay their bills, and want to pay them on time. I find that reassuring on many levels.

The answer to all the above questions is No. Some of those things can happen after several steps occur and usually only if someone ignores those steps or does not take advantage of their right to participate in those steps.

The state of mind that comes from the fear of not being able to pay bills is like that of a child hiding under the blankets in the dark while trying to fall asleep. The hard part is getting people to understand that they have control and that the boogeyman does not exist.

One of the first steps when counseling someone about their debt is to ascertain the level to which this fear is clouding their judgment and preventing them from being able to have a conversation about the real facts about their debt.

Their fears cause them to make less educated and less desirable decisions when it comes to dealing with their debt. They usually default to doing what they think they should do to not hurt their credit score. This includes doing what they think they should do to pay everyone at least something each month. When payment becomes difficult, they start having conversations with their creditors and think that what the creditors tell them (i.e., skip a month, or just pay $10 or $20 instead of the actual minimum payment) is official and overrides the requirement under the credit card agreement to make their actual payment. They are very vulnerable in this phase and even more so if they do skip payments and an account goes to collection.

By the time an account goes unpaid for about three months, a creditor will usually assign it to another company for collection. The exception is for car payments- not paying for more than a month or two puts you at serious risk of repossession of the vehicle, even if the creditor gives you verbal permission to make a late payment or a partial payment.

The good part about when a credit card account goes to collection is that by then the average person realizes there’s no boogeyman. Their car is still in their driveway, there’s no foreclosure sign in front of their house, their name isn’t posted in front of town hall, and no one has shown up to put them in a stockade on their front lawn. But a new phase has begun.

The typical debt collector in the U.S. may not actually even be in the U.S. The collection industry has consolidated considerably in the last decade (especially since the financial crisis of 2008-09) to where large percentages of unpaid accounts are sent to just a few collection companies. These are third party companies that are assigned portfolios of accounts, and the most common tactic for attempting to squeeze a payment or two out of the consumer is with phone calls.

Although the “fear of boogeyman” phase is typically over by this point, the vulnerability and susceptibility remains. They’re out of the woods, so to speak, but a sense of “I’m a bad person” takes over which makes them susceptible to abuse and harassment from debt collectors.