Are you having trouble keeping up with your bills?
Are collectors hounding you night and day?
Are you drowning in debt and living in fear of your creditors?

If you answered yes to any of the above questions and you are thinking about bankruptcy, credit counseling, debt management plans, home equity loans or debt settlement; this website was designed especially for YOU!

With the struggling economy, crashing housing market, credit crunch, record job losses, bank failures and ailing stock market; our economy is teetering on the brink of a total meltdown.  Add these problems to the never ending cycle of credit card debt and it's no wonder millions of Americans are struggling just to survive.

Scare Tactics 101 was designed to inform you about the collection process and the SCARE TACTICS used by debt collectors so that you don't have to live in FEAR.  Your biggest weapon in the battle against debt collectors is KNOWLEDGE.  Study the following information closely and you will soon realize that there is really NOTHING to fear in the collection process and you will be armed to do battle with even the best debt collector.


Common Scare Tactics Used By Debt Collectors

The main goal of most debt collectors is to create fear in their targets.  Collectors for credit card companies are often seasoned pros and the average debtor doesn’t stand a chance against them.  Collectors often wage psychological warfare on debtors and could probably scare most people into paying a credit card bill before they put food on their family's table.

Collectors typically work on a commission basis and it is their job to try to get you to make a payment so they can make a commission.  They will often manipulate, con, trick and just flat out lie to you to scare you into making a payment.  Below are some of the most common scare tactics used by debt collectors.

Telling you they are going to turn your account over to collections.
Big Deal! This is just a normal part of the collection process and a debt can flow through several collection agencies within a span of only a few months.

Telling you they are going to “charge-off” your account.
This just means they are writing your account off as a bad debt for accounting purposes.  It really means nothing as far as the collection process is concerned.

Telling you they’re going to garnish your wages or put a lien on your property.
First of all, before any type of garnishment, lien or levy can take place; a creditor must go through a lengthy legal process and then be lucky enough for a judge grant one of these.  See below for a more detailed explanation in "Threats of Lawsuits".

Acting like they’re your friend and they’re looking out for your best interests.
They may show concern and give you advice about what you should do in your situation.  We can almost guarantee you that the collector on the other end of the phone could care less about you than what’s for lunch that day.  They are in business to make money and rarely if ever do they care about you or the situation you’re in.

Treating you like a child, trying to make you feel guilty, acting like you’re in big trouble, etc. etc. etc.
Collectors are often con artists and they can be very good at playing into your emotions and making you feel like you’re the bad guy.  You’re in the same situation as millions of other Americans and there is nothing to be afraid or ashamed of.

Calling you 10, 20 or even 30 times in a day.
When you’re having financial difficulty, the last thing you need is a collector continuously calling and harassing you.  This is just another tactic used to try to wear you down mentally.

Sending official looking letters from collection agencies posing as attorney firms.
It is common to receive many different types of collection letters.  Many of them include veiled threats of lawsuits but the fine print usually says no attorney has even looked at your case.  Thousands of these letters are sent out daily and they are typically just another scare tactic used in the collection process.

Telling you “We don’t work with settlement companies” or “We don’t do settlements".
This is a common tactic used to scare people enrolled with debt settlement companies.  All major creditors and collection agencies do settlements.  They don’t want YOU to know this because they want to try to get what they can out of you through the normal collection process.  If they can convince you they won’t work with a settlement company, they have you right where they want you.  Credit card companies don’t necessarily like settlement companies because they know the “tricks of the trade” but they work with settlement companies every day, regardless of what they want you to believe.

From our experience, most collectors are notorious liars and will tell you anything they can think of to scare you into making a payment.  Be prepared for anything they throw at you and don't become a victim to their SCARE TACTICS.


Know Your Rights!  Read the Federal Trade Commission's FAQ's in the Facts For Consumers.


Threats of Lawsuits

The most lethal weapon that collectors possess in their arsenal is the threat of a lawsuit.  The average person is scared to death of being sued and the collectors know this.  Most collectors will threaten legal action but few will follow through with it.  Considering the costs involved and the outcomes of many court cases, most companies have come to the conclusion that it’s just not worth it to sue.

Many collectors would have you believe that they can waltz into court, sue you for triple what you owe, put a lien on your home, garnish your wages and you won’t have any say in the matter.

GIVE ME A BREAK!  This is America.  Judges are unbiased and rational human beings.  They understand the economy and they know that millions of people are in difficult financial situations right now.  They know that the credit card companies play a big part in the huge consumer debt problem.

Like you, the credit card companies have over-extended themselves and made some bad financial decisions.  Although they’ve made up for a lot of their mistakes by charging ridiculous fees and high interest rates to the consumers that can least afford to pay them, they definitely don’t look like innocent victims in a court of law. 

Of course, if you are sued and are found to owe the money that you are being sued for, you could get a judgment against you in court.  But even the “worst-case scenario” (a judgment against you) is typically more favorable than the terms of the original credit card agreement (lower interest rates, no ridiculous fees and a reasonable period in which to pay it off).  Debtors are often advised to "answer" a summons and show up at court to explain their financial situations to the judge.  If you ignore a summons and don't go to court to defend yourself, a default judgment can result in a levy on your bank account, a lien on your property or even a garnishment of your wages.

Once you realize that the collector’s biggest threat is really nothing to be scared of, the whole collection process becomes almost worry free.  It’s just an illusion created by the collectors to create fear.


If A Collector Does Happen To Sue, BE PREPARED!

For people unlucky enough to receive a summons for a debt, there are a few simple steps many people take in order to buy the time needed to build up funds for a settlement.  Note that these are just general examples and each state and county has it's own rules for answering a summons.

Step 1 - Answering the complaints.  Most courts will have a form to answer the complaint (often called a general denial).  The form can be filled out by yourself but don't be afraid to ask for help from your county clerk's office, a paralegal or an attorney if you don't feel comfortable answering it yourself.  It is important to file an answer within the time specified on a summons.  The answer is typically filed with the court and also served (mailed) to the law firm. You can find an example of an "answer" to a summons by clicking here.

Attorneys often recommended that at least one thing in the complaint/summons be denied (The amount the plaintiff is suing for is typically the most common thing to deny).  A debt can go through several collection agencies who can each tack on fees before it gets to court.  Just because a debt is owed, doesn’t mean that the amount claimed is correct.  Often, collectors are hoping that debtors don’t show up at court so that they can collect on these bogus fees.  If the debtors are not there to defend themselves, the judge will usually have to take the word of the collector.

If a case were to eventually get to court, the judge may ask the defendant if he owes the debt.  The defendant may say something like "I admit to owing some debt to but I do not admit to owing the total amount in question".  The judge may press the issue by asking a specific amount the defendant thinks he owes and he may reply "I don't have all the information to make that calculation right now".  This could open the door for a potential settlement down the road and buy more time to build funds.

Step 2 - Giving Affirmative Defenses (below the answers to the complaints).  One Affirmative Defense that we have seen work well in the past is to opt for arbitration.  Many credit card agreements contain an arbitration clause that allows for either party to opt for arbitration to settle disputes.  The defense may read something like "I elect to have this dispute resolved by arbitration as allowed for in my original credit card agreement".  Advantages of arbitration include: allows for a delay in the legal process, less formal than court,  less need for representation, not public record, allows for a more relaxed atmosphere to explain hardships.

Another Affirmative Defense we have seen people use effectively when arbitration is not possible is "The balance of the account claimed by the plaintiff is not accurate and the amount owed is in dispute" along with "A serious financial hardship exists that prevents payments of amounts that are not in dispute".

Step 3 - Filing Counterclaims.  Often, throughout the collection process, various collection agencies working for the plaintiff will have violated the laws associated with the Fair Debt Collection Practices Act (FDCPA).  Debt collectors are notorious for violating these laws and it is often effective to file counter claims to make them pay for violations.  It is smart for debtors to become familiar with the FDCPA and to gather evidence to use for possible future claims.

There are typically 2 types of creditors, Original Creditors and Debt Purchasers.  Sometimes during the collections process, an original creditor will "give up" on trying to collect a debt and will sell it to a third party debt purchaser.  Debt purchasers often buy blocks of debt for pennies on the dollar and typically don't get proof that a debt is owed and that the amount owed is correct.  They often use the court system to try to collect their debts, hoping that the debtor doesn't show up to court so they can get a default judgment.  Debt purchasers often use signed affidavits that say the debt is owed without having actual proof.  A typical tactic for fighting debt purchasers in court is to make them produce original signed contracts and statements (which they rarely have) as proof that the debt is owed.

No one should ever admit to owing a debt if they are unsure the amount claimed is correct and legally collectable.

If you’re in some type of debt program or if you are actively doing something to take care of your debt obligations, you are way ahead of the game when it comes to the court system.  Judges often frown on creditors tying up the court system when debtors are doing something proactive to take care of their debt.

Remember:  The worst possible outcome of any court case is usually more favorable than the original terms of your credit card agreement.


Most Common Options For Difficult Financial Situations


Credit Counseling Programs or Debt Management Programs are often funded by the credit card companies and it is easy to see the conflict of interest that can exist.  The credit card companies would probably have everyone in these programs if they had their way.  Average interest rates are usually around 10% and they are basically another form of collection agency working for the credit card companies.  A credit counseling program may make sense in a few select situations, but as a whole, we would not recommend them.  It’s hard to see how anything that a credit card company has their greedy hands in can be beneficial for the consumer.

Many attorneys will recommend Chapter 7 or Chapter 13 Bankruptcy.  Attorneys make fees when someone files for bankruptcy so it’s no wonder why they often recommend it.  Both types of bankruptcy can have a severe impact on a person’s credit for 7 to 10 years.  In a chapter 13 filing, a person can end up paying 75% or even 100% of the debt they owe and it comes with the court dictating how your finances are maintained.  A chapter 7 bankruptcy is more difficult to qualify for and can still end up costing a significant amount of money.  Bankruptcy can also have a negative impact on employment, future loans, stress levels, etc.

Another option is getting a lower interest secured loan like a home equity loan to pay off your un-secured loans.  In our opinion, it is never a good idea to trade an unsecured debt for a secured one. You could go from simply owing a credit card company to losing your house if your financial situation gets worse.

An option that is becoming more popular and a favorite of us at is debt settlement.  Debt settlement companies negotiate with creditors to come to an agreeable settlement on the balance owed.  These companies often hire professional negotiators who know the ins and outs of the collections process.  They are typically skilled at making the right offers at the right times to creditors.  Their programs typically last between 18 to 40 months and can usually have someone out of debt from 50% to 80% of their original balances.

We believe debt settlement is a great option that makes the best sense in many situations because both the creditor and the debtor are at fault in any troubled financial situations.  The debtor is at fault for overextending debt and the creditor is at fault for overextending credit, regardless of the circumstances.  In most situations, an agreeable settlement can be reached that can benefit both parties.


Things To Know About Debt Settlement


Patience is necessary during the settlement process.  Settlement companies usually have experienced negotiators who know the right times to make the right offers to the right creditors.

Many variables are inherent in the settlement process and each debt situation is unique.  An account can travel through several departments within a credit card company and through several collection agencies before it is "ripe" to settle.  Trust that your debt settlement company has your best interests in mind and that they are working to get you the best possible settlements.

Credit card companies may wait 4 to 6 months before they will consider settling an account because they want to see what they can collect from a debtor in their "normal" collection process.  It can sometimes take up to a year or more before any accounts are settled.

It is smart to have as much money available for settlement purposes as early as possible.  The typical settlement program can last from 12 to 40 months but the sooner your accounts can be settled, the less chance there is for legal action and the less creditor harassment you will have to endure.

Average settlements typically range from 30% to 60%.  It is often harder to get low percentage settlements on lower balance cards ($2,000 and below).  This is because it is usually not worth it for a credit card company or a debt settlement company to spend a lot of time negotiating (Example:  A 25% settlement on a $1,000 card would save a debtor $750 but a 25% settlement on a $10,000 card would result in a savings of $7,500.  With higher balances, more money is at stake and more time will usually be spent trying to get a good settlement).

If a creditor does happen to file a lawsuit, you should try to get as much money together as possible so your settlement company can try to settle the account before it gets to court.  Debt settlement companies are typically not attorney firms and are not able to give legal advice.  If you are sued, make sure you know the laws and your rights or contact a qualified attorney in your state.


Some companies are promoting “Do it Yourself” settlement programs but we recommend against these.  They often charge hundreds of dollars for their programs but don’t give nearly the information needed.

The settlement process can change from day to day with each creditor and debt situation being different.  With thousands of creditors each having different policies, it can take several years of experience to really know the collections process and even longer to become a great negotiator.

The money you can save and the headaches you can avoid by joining a settlement company can greatly outweigh any benefits of trying to "do it yourself".  Many people experienced in the debt settlement business would compare trying to settle your own debts to attempting to perform surgery on yourself.  Leave debt settlement to the pros and spend your time on things you enjoy.


Choosing A Debt Settlement Company

As with any business, there are good and bad debt settlement companies.  Do your research and find one you're comfortable with.

Before you sign up, make sure to read the company's contract thoroughly and make sure you know the fees that you will be charged.

Try to find a company with a cap or maximum on the fees they will charge you.  Some companies can charge monthly fees, set-up fees, settlement fees, etc. and you can end up saving little money or even owing more than you started with.

Some debt settlement companies provide guarantees such as not paying any more than the debt you entered into their program with including all credit card interest, fees, charges and the debt settlement company's fees.  We recommend going with a company that will provide you with a guarantee of this type.

We are not here to promote any particular debt settlement company but if you need a recommendation, send us an email and we can give you a few of our favorites.

Ways To Deal With Collectors


Do not answer creditor or collection calls!

alking to your creditors can only harm the negotiation process and can make things more difficult for your settlement company.  Other than a quick phone call to your creditors, after they start calling you, to inform them of your situation (usually a month or two after you stop paying your bills) and possibly a short monthly follow up call, there is really no reason to talk to them.

Any communication should be initiated by YOU.  Use a call script like:

"I realize your company has been trying to get in contact with me.  I am in a tough financial situation right now because I lost my job and I am struggling just to keep food on my family's table.  I am not able to make ANY financial commitments right now but I will be back in touch with you in a few weeks to update you on my situation".

The credit card company will note your account and proceed with their normal collection process.  This may not stop them from harassing you and trying to get you to make a payment but it can definitely help.  Call back about once a month to update them on your situation.

Get a "pay per use" cell phone. Change the number your creditors have on file to the new cell phone number. This will enable you to call your creditors from the number they have on file and you will be able to turn off your phone so you are not bothered by their harassing calls.  You will usually be able to call your new cell phone to retrieve your messages from another phone so you don't incur any unnecessary charges.

Keep a call log and record collector's calls.  If you get harassing phone calls and you feel like a collector is breaking the rules, you should record your calls and keep a log.  You can easily file a counter claim in court and receive a $1000 judgment even if you can't prove actual damages.  If you can prove that you have been damaged, you can file a claim in the amount of the debt you owe or more and can end up winning in court.  Make sure to check into the laws in your state to see if you need to inform the party you are recording.  If you are just looking to stop the harassment, inform the collector you are recording the call and keeping a call log (this should stop most of the harassment). 

Change your number or screen your calls by using an answering machine or Caller ID.  Do not call your creditors from any number that you don't want them to have.  They have systems that are capable of detecting the number you call from and disabling call screening.

Hang up when they call.  If a collector catches you off guard and gets you on the phone, don't be afraid to just hang up.  If they already know your situation, there is no reason to talk to them.   It's not rude for you to hang up on them, it's rude of them to continue calling you when they already know your financial situation.  Don't waste your time talking to them or trying to explain anything.  Hang up, don't give into their high pressure tactics and let them move on to their next victim.

If creditors call you at work, use a script like the following:

“I am not allowed to receive personal calls at work.  Your calls are interfering with my ability to do my job.  Please do not call me here anymore or I will file a formal complaint with the State Attorney General and the Federal Trade Commission.”

If calls continue, follow up and file complaints with these agencies.

There are rules and regulations prescribed by the federal government that collectors are supposed to follow but many collectors completely disregard them.  Make sure you know your rights.  Become familiar with the Fair Debt Collection Practices Act (FDCPA) and learn what these collectors can and can't do.  If they break the rules, report them or turn the table and file a lawsuit against them.

It is not always a good idea to tell your creditors that you have joined a settlement program right away.  Different credit card companies have different policies and is usually best to let your settlement company inform them when they decide the time is right.


Common Questions

Am I morally obligated to keep up with my credit card debts?

Paying your credit card debts should be strictly a financial decision based on your ability to pay.  The credit card companies made a financial decision when they decided to give you a credit card.  They considered interest rates, income, credit worthiness, late fees, over limit fees etc. and made a business decision based upon risk with regard to your acceptance and your credit limit.  As far as we're concerned, if the credit card companies extended credit to you that surpassed your ability to pay, that was a business decision and has been calculated into their profit predictions. 

If the credit card companies were concerned about morals and ethics, they wouldn't charge crazy fees and higher interest rates as soon as someone falls behind on their payments.  If anyone's morals are in question, it should be those of the credit card companies who charge customers more at the times they can least afford it. 

Ask your credit card company to refund you all the interest and fees you've paid to them over the years because you've lost your job and need the extra money to put food on the table and see how morally obligated they are to helping you.  (You can bet that the CEO's of most credit card companies will still make millions of dollars this year and continue living in their multi-million dollar mansions while many Americans will struggle just to survive).

Should I be concerned about my credit score?

If you fall behind on your bills, your credit score will suffer.  Banks and credit card companies have brainwashed us into thinking that a credit score is one of the most important things in life.  If you're drowning in debt, what is a good credit score going to do for you?  Give you the ability to borrow more money and get further in debt?  The emphasis should be on becoming debt free and not living like a slave to the never ending cycle of credit card debt.  The credit card companies perfect world would have us all worried about our credit scores and making minimum payments on our credit cards.  Credit scores can easily be repaired once your debt situation improves.

Can I go to jail for not paying my credit card debt?  OF COURSE NOT!


Disclaimer:  This website is for informational purposes only and is not intended to substitute for legal advice.  We do not advocate that you avoid paying legitimate debts if you are capable of it.  If you need legal advice, it is recommended that you consult a qualified attorney.  This website is focused mainly on unsecured debt and does not apply to debt with security attached.

If you have any questions or comments, Please send us an email to

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