Are you having trouble
keeping up with your bills?
Are collectors hounding you night and day?
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.
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
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
Telling you they are
“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.
they’re going to garnish your wages or put a lien on your
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.
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.
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
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.
LIES! LIES! LIES!
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.
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.
- 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
You can find an example of an
"answer" to a summons by
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
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.
- 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
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
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
- Filing Counterclaims.
Often, throughout the collection
process, various collection agencies
working for the plaintiff will have
violated the laws associated with
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
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
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
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 scaretactics101.com is debt settlement. Debt
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
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
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.
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
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
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.
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
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
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.
A Debt Settlement
any business, there are good and bad debt settlement companies.
Do your research and find one you're comfortable with.
you sign up, make sure to read the
company's contract thoroughly and
make sure you know the fees that you
will be charged.
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.
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.
To Deal With
Do not answer creditor or
to your creditors can only
harm the negotiation process
and can make things more
difficult for your
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
The credit card company will
note your account and
proceed with their normal
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
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
call log and record
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
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
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
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
If creditors call you at
work, use a script like the
“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
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.
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?
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.
have any questions or
comments, Please send us
an email to