On Social Security, with debt collectors calling

Know your rights and see a credit counselor, says Klayman

Maturing Loans
Maturing Loans, Alan Klayman
Alan Klayman is CEO of Klayman Financial LLC. He served as a vice president at Fidelity Investments, worked as a financial planner for American Express, and built fixed income strategies on Wall Street at The First Boston Corporation. At CreditCards.com, he wrote Maturing Loans, a weekly feature in which he answers readers' questions about retirement and debt issues.

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Question for the CreditCards.com expert

Dear Maturing Loans,
I got laid off in 2003. Up until then, I was on time with my credit card payments, but I couldn't find a job. I was 57, and it seemed no one wanted to hire me. I never had a problem before. I am a divorced widow. When I turned 60, I started collecting widow's Social Security. I live on that, which isn't a whole lot. I did try to pay on the credit card, but they weren't happy with the amount I paid. Now they are threatening to take me to court. With food, electric and gas so high, I'm just barely making it on Social Security now. What can I do? I feel backed into a corner. There isn't anyone I can borrow from. The bank turned down a loan to pay my debts. My health isn't the greatest, either. I have arthritis in my hands. I can't afford a doctor or medicine. -- Joanne

Answer for the CreditCards.com expert

Dear Joanne,
I am sorry to hear of your situation. Let's see what we can do to get you on course. In most cities across the country, there are organizations that provide free or low-cost credit counseling, legal help and health care for various sectors of the community. I cannot comment on the validity of these sites or organizations, but with a little bit of investigation, a few phone calls and some follow up, I am sure you can find out all you might need to know about them.

A quick note about your health: There are many hospitals and clinics that offer services to people in your situation. Many websites list a number of health care organizations where you can get free medical help. Some are for low income people, some only serve community residents. Do some research on the Web or in the Yellow Pages.

Now, back to your credit card problem. It sounds like you need a good credit counselor and maybe some legal help as well. You can find an accredited credit counseling service nearby through the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. Consumer credit counselors help you figure out exactly how much you owe to whom, and will contact the credit card companies or debt collection agencies to try to negotiate your debt and come up with a payment plan.

While everyone's situation is different, you do have certain rights under the law as a consumer, and you should not be harassed by debt collectors. CreditCards.com Senior Writer Connie Prater wrote several articles recently on debt collection and summarizes the situation this way: "Debt collectors are limited in what they can do and say by the Fair Debt Collections Practices Act. Often, people in debt can restrict how and when debt collectors can contact them, but to be heard, debtors should assert their rights in writing."

Under the Fair Debt Collections Act, you have rights that you may not be aware of. You have the right not to be harassed. You have the right not to receive phone calls at all hours of the night. You have the right to keep your debt private and out of the hands of those not authorized to have this knowledge. 

To put your rights into action, you must put any disputes or claims in writing. You can download some sample letters that may help you get started with the process. Once a collection agency receives a letter asking for a cease-and-desist of harassment, you should not receive any more threatening calls. Plus, once you are working with a credit counselor, your creditors will typically contact the credit counselor instead of you.

After tackling your health, legal and consumer rights issues, you need to take a hard look at your budget and make a promise to yourself not to get into debt again.

Reading up on consolidating debt and credit counseling should also be helpful. Again, please schedule some time with a credit counselor.

To recap, Joanne, regardless of where you live in the country:

1) Seek medical help.Free and inexpensive services are available.
2) Seek legal help. Free and inexpensive services are available.
3) Assert your rights as a consumer.
4) Address your budget.
5) Seek credit counseling when in trouble.

Thanks for the question. See you here next week.

See related: 11 tips for dealing with debt collection, collectorsKnow your rights: Fair Debt Collections Practices Act, Credit counselor urges consumer education, Card issuers become less generous in negotiations with debtors 

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Updated: 11-21-2017