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Two Hidden “Legal” Risks of Debt Consolidation Loans

Debt consolidation is combining outstanding loans (debt) into a single package (consolidation). The debts therefore become one “new” loan, and instead of making several small payments on the loans you used to have, you make one larger payment on the new loan.

Occasionally people ask whether debt consolidation is a good, economically constructive solution to credit card problems. Usually, the answer is that it is not. Certainly not as a solution all by itself. This article discusses some of the drawbacks of debt consolidation.

Debt Consolidation Loans

Ideally and typically—and what has made debt consolidation loans popular—the new, consolidated, loan is secured by some asset, often your home. This allows you to obtain lower interest rates. Thus consolidation, in the  final analysis, is the conversion of unsecured debt into secured debt in exchange for lower interest rates. It can reduce your monthly payments considerably, and of course that could be very helpful.

It also converts “old” loans into new loans, giving them a new statute of limitations (new life for loans that could be at or near their time of expiring). Consolidating debts you haven’t paid for quite a while is probably a bad idea for this reason.

Consolidation can even turn loans with short statutes of limitations into loans with long ones. This isn’t necessarily bad, but it does increase your general level of legal risk.

Why Doesn’t Debt Consolidation “Work?”

Debt collection is seldom the solution people hope it will be. If you hare having trouble paying your bills, it won’t necessarily make your life any easier. Why?

It’s a question of risk.


As a pure financial transaction, exchanging a lower interest rate for a security arrangement can be a very reasonable decision. Why then has it been such a disaster for so many people?

Most people entering into complex financing are not able to assess risk and account for it. This is particularly true when they are under economic pressure—which they usually are when they consider debt consolidation loans. Thus people systematically underestimate the risk that they won’t be able to make the payments on the new debt.

Additionally, since most people do not really want to go far into debt in the first place, large credit card debt suggests other problems, either too little money or a tendency to overspend. These issues are more likely to be made worse by the sudden reduction of economic pressure and the sudden, apparently greater amount of money or credit available to be spent. Loan consolidation, like winning the lottery, encourages reckless spending.

The Hidden Legal Risks of Debt Consolidation

In addition to these “systemic” issues, there are two other main hidden costs of consolidation you should consider: loss of flexibility, and the nature of secured debt versus unsecured debt.

Consolidated Loans are Less Flexible

When you have ten loans for different things, from automobiles to credit cards, you have flexibility if hard times strike. If you simply cannot make your payments, you can give up some, but not all, of the things you have purchased. You can let some, but not all of the credit cards go into default.

This is certainly not a happy thing, of course, but it raises the possibility of individualized debt negotiations, debt forgiveness, or even missed statutes of limitation. Again, these are not the choices and hopes of someone in flush economic conditions, but they are real options facing many people right now.

In order for a debt collector to start garnishing your wages, it must find and sue you, must win, and then find your assets. It is an expensive and risky process for the debt collector if you fight. They sometimes drop the ball, and there are limits to how much of your wages they can garnish.

If everything else fails for you, you can declare bankruptcy, where homestead exemptions are likely to allow you to remain in your home.

The Nature of Secured Debt

The risk of debt consolidation loans is the nature of secured, versus unsecured, debt. Remember that what powers the lower payments for consolidation is the existence of security—usually your home. Your home secures the debt, and that means that if you do not make your payments on the new debt, the lender can foreclose on your home and take it away.

Foreclosures are generally “expedited” proceedings, meaning that your defenses are limited and the time for asserting them is restricted. In many states foreclosure is not even a judicial proceeding, although you have some legal rights you could assert in certain circumstances.

And what all that means is that instead of facing the prospect of years of battling over high-risk debts and questionable payoffs that could be trumped by bankruptcy, the banks can waltz into court and emerge in a very short time with your house. Put a little differently, your debt consolidation loan could make you homeless almost before you know it. And bankruptcy often, if not usually, will do nothing to protect you from it.

Anyone considering debt consolidation should think about these risks very carefully.

Garnishment of Assets by Debt Collectors

debt collectors garnish your wages? What about bank accounts? Here are some things you need to know about garnishment.

If you have assets, and this includes either a job or money in the bank, you must be concerned about the possibility of the debt collector finding and garnishing your money. The risk exists if a debt collector (or anybody else) has a judgment against you.

Governments can levy even without a judgment. Our discussion here focuses on private debt collectors, however.

Bank Accounts

Debt collectors can seize and garnish bank accounts and, when they do, it is almost always comes as a surprise to the debtor. What typically happens is collectors obtain money judgments (usually by default) and then use the judgment to freeze the funds in your bank account.

No Notice of Bank Garnishment

State law and banking rules govern how the bank must handle the garnishment process. Collectors always notify the bank first and then notify the debtor. This way your funds are frozen before you can take any action such as withdrawing all your funds.

Their notifying the bank first is perfectly legal. You typically receive the notice (including your rights) a few days after your funds have been frozen. In most states, the garnishment can only freeze funds already in your account at the time of service on the financial institution. During the time the garnishment is in effect, the financial institution cannot honor checks or other orders for the payment of money drawn against your account.

This means any outstanding checks will more than likely bounce or be returned for NSF (non-sufficient funds). In other words, your checks will bounce. The exception to this rule is if your account has more on deposit than the amount of the garnishment. In this case, the bank can honor checks up to the amount that will reduce your funds below the amount of the garnishment. When the amount being garnished is paid, the freeze on your account must be terminated.


Debt collectors can also garnish your wages. Again, your first notice that they are garnishing you is likely to be when you receive a check that is less than you thought it would be. Federal law limits the maximum amount they can take to 25 percent of your disposable earnings for that week, or the amount by which disposable earnings for that week exceed thirty times the Federal minimum hourly wage, whichever is less. In simple terms, “disposable income” is whatever money you have left after paying all required taxes and national insurances!

Disposable income is after-tax income that is  the difference between personal income and personal tax and nontax payments. In general terms, personal tax and nontax payments are about 15% of personal income. That makes disposable personal income about 85% of personal income. IMPORTANT: In order for wages to be garnished, disposable earnings per week must exceed thirty times the federal minimum hourly wage.  (That’s $154.50 at the time of this writing.)

Put another way, if you make $154.50 or less per week your wages are immune from garnishment – for now and as long as you don’t make any more than that. Also – most debt collectors can never garnish Social Security and some other types of disability or retirement income.

But You Should Not Let them Get a Judgment if Possible

Even if you have nothing for the debt collectors to garnish, you will almost always be much better off it you don’t let them get a judgment against you. Things could get better for you in any number of ways. So they might eventually be able to garnish you when that happens if you let them have a judgment. Remember that just because things may seem bleak now doesn’t mean that the sun won’t eventually shine. When it does, you don’t want debt collectors to take your good luck away from you.

And it isn’t all that hard to keep them from getting a judgment if you know what you’re doing.


Requiring Verification of the Debt – Secret Weapon against Debt Collectors

Verification is not difficult for debt collectors, but it can be a key right for people with debt problems.

When a debt collector first contacts you, it should notify you of your right to “dispute and request verification.” That right is provided by the Fair Debt Collection Practices Act (FDCPA). This video explains why you should dispute the debt and require the debt collector to verify it.

In other words, always seek verification  Often a debt collector will either disappear completely once you seek verification or will fail to provide verification but still harass you – a violation of the FDCPA.

But remember this does not apply if they file suit against you – if you don’t answer a lawsuit when it is filed, you will lose the case. See Bogus Right to Verification on Petition – Dirty Trick! If you have already sought verification but not received it, you might file a motion to dismiss based on their failure to verify.

Your Right to Dispute a Debt

If a debt collector contacts you in an attempt to collect a debt, you have a right to dispute the debt. To be precise, you should receive written notice of that right within five days of the first communication. And the notice should tell you that you have a right to demand verification within thirty days. That is, you must make your request to them within thirty days.

If you do, they must verify the debt before taking any further actions to collect it from you. They don’t have to do anything within thirty days – they never have to verify the debt if they don’t want to . It’s just that until they do so, it’s illegal to try to get you to pay it.

If you have disputed the debt.

What IS Verification?

What constitutes verification is a gray area in the law. The FDCPA does not specify what it is.  The courts have taken a pretty non-demanding view of verification. It is intended mostly to prevent clerical-type errors leading to suing or harassing the wrong person. So in reality it takes very little to verify the debt. Debt collectors often offer nothing more than copies of old statements. Absent some sort of more specific challenge to the debt, that seems to be enough.

What could be a more specific challenge? Suppose you wrote and disputed a debt to you, Tom Jones. You say, “my middle name is Jim, and I never sigh without including my middle name.” In that case, sending you statements with the name “Tom Jones” on them might not be enough. They probably would not be. Likewise, a challenge to address or some other specific would probably need to be addressed by the verification. Does that make sense?

What Good Does Demanding Verification Do?

There are three good reasons to demand verification. Sometimes they go away. Sometimes they give you helpful information. And sometimes they ignore the law.

Sometimes they Go Away

Surprisingly, giving how easy it is to verify a debt, demanding verification often causes debt collectors to go away.  Perhaps it is only because you have signaled a willingness to assert your rights. Possibly in some transactions the debt collector lacks even this much evidence. Or more likely the debt collector is playing a simple numbers game and any friction whatever causes it to punt. For whatever reason, though, it seems to happen often enough to justify making the demand every time.

Sometimes they Give you Helpful Information

Rarely, a debt collector will simply give you everything it has in response to a verification demand. This allows you to think carefully about whether they could prove the debt. Usually you will see that they cannot. In any event, in some cases you can get what they have without a fight, whereas when you seek discovery in a lawsuit you will have to fight for everything. So it can be easy discovery.

Sometimes they Ignore the Law

Debt collectors used to ignore verification demands quite often. It seems that they don’t do that as much anymore, but this could simply be my limited observation. In any event, if they ignore the law and continue to harass you, you have the right to sue them under the FDCPA.

If they are suing you, you have a right to counterclaim against them under the FDCPA. This is the same right you have to sue them, only it happens differently because they have sued you first.

You probably have a right to move to dismiss the case as well. The point of verification is to prevent wasteful and harmful lawsuits. If they ignore the law and bring suit without verifying, a court should be willing to dismiss the suit until they obey the law.


If a debt collector is bugging you, you should demand verification. It costs little effort and might gain you something.


Should You Give a Debt Collector Money? And What Happens if You Do?

Debt collectors are trained to to intimidate or manipulate the people they call. Should you ever give a debt collector money? and what are the legal effects if you do so?

Giving them money can be a big mistake.

Giving them Money Encourages Debt Collectors

Many people have a natural impulse to bargain with debt collectors. They hope if they give a collector money they’ll go away. This does not work.

The person calling you is a low-level employee. Usually the caller will have no power at all to make any kind of deal with you. Or they will have some limited power to accept delays or offer a small discount. On the other hand, the caller’s salary will depend to some extent on getting you to pay. If you offer anything – a promise or a payment – you guarantee that they’ll call you many more times. You are sending a clear signal that they can push you over.

Of course, it costs practically nothing to call you, so any encouragement whatsoever means endless calls in the future. Giving them nothing does not mean they’ll stop calling, however.

Legal Effects of Payments

If you give a debt collector money the legal impact is even worse than just calling them. if the debt is so old that the statute of limitations does or might soon protect you, your payment can restart the clock. If you were disputing the debt, the court might take your payment as an admission that you owe it.

And if the debt collector lacks any means of proving the debt in any way, your payment will help them past any problem.

You Can Still Fight

That isn’t to say that you have lost everything if you made a payment. You still have a chance to win if they sue you. But every payment makes the road harder.


Can They Garnish My Social Security?

People on Social Security–either disability or retirement benefits–are uniquely vulnerable to debt collectors. They aren’t supposed to be able to garnish your Social Security, but you need to watch this video if debt collectors are after you and you are dependent on Social Security benefits.

Can They Garnish My Social Security?

If you are dependent on Social Security, you may fear that debt collectors could seize or garnish your income. The debt collectors may have suggested they would do so if you don’t pay them. Can they do it?

Read the Whole Answer! The real answer is somewhat different than the short answer.

The Short Answer

The short answer as to whether debt collectors can garnish Social Security is that, “No, they cannot.”  There are some exceptions relating to child support and money you owe the federal government. These obviously do not apply to credit card or consumer debt.

Section 207 of the Social Security Act provides that: “none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.”

However! As with so many things in the law, the simple answer is only the beginning of the question.

The Real Answer

The “Real” answer is a little different than the short answer.

Let’s consider the way bank accounts are seized or “garnished.”

What happens is that someone obtains a judgment against another person. As I have pointed out before, these judgments often come as a result of default judgments—all too often against people who never owed anybody any money. But once there is a judgment, it is “collectible.” The collectors have a right to, and often do, go to the supposed debtor’s bank and serve a garnishment notice on the bank. They can do this without warning or any notice to the debtor, and they usually do not provide notice.

The garnishment takes effect immediately and “freezes” the account. (The bank will not honor any outstanding checks (unless the account balance is larger than the debt owed) until the account becomes “unfrozen.”)

The bank then prepares and sends notice to the debtor. As far as I can tell, the bank is rarely if ever in a hurry to do this. They will be charging overdraft or NSF fees for every check that bounces. It is a tremendous windfall for the bank. A few days or a week later, the horrified debtor learns that his or her checks have been bouncing and huge fees accumulating.

Frozen Accounts Mean No Money Even If the Money Cannot Be Legally Garnished

In most states, the banks hold the assets they seize for a period of time before turning them over to the debt collector. During this time, the debtor can—if they have the resources and emotional presence of mind—challenge and stop the garnishment. But this takes time, at best. And during that time a person of limited income could be evicted, be unable to purchase medicine, or other essentials. And the banks are charging fees which they may, or may not, ever return.

Unholy Alliance

There have been a number of news accounts of collection activities in New York City and elsewhere. Debt collectors were garnishing the bank accounts of the elderly largely—and often exclusively–made up of Social Security payments. During the time it took to figure things out, the elderly suffered homelessness and other deprivations. Some of them died, and hundreds of thousands or millions were subjected to extreme hardship and crisis. Many never got their money back, and many more never got their bank fees back.

For a little more of this tragic and horrifying story, read “Unholy Alliance of Bank and Collection Agency Fleeces Social Security Recipients,” Rowley, Nov 07 .

The Cooperative Were Victimized

In New York, all the dispossessed had one thing  in common. They were all trying to work with the debt collectors. The elderly were trying to pay, and were paying. Of course this is the way the debt collectors knew where their bank accounts were. Do not make that mistake. Never allow debt collectors to know where your money is.

In New York City, landmark legislation is now protecting the elderly. See, SSI Disability-Rights. However, these protections do not extend beyond New York. Thus you may be at risk if your city or state has not passed similar laws. I am not aware of any that have. And of course the New York laws come too late to help those who died as a result of the debt collectors’ actions.

A Possible Solution You Should Try

If the debt collectors know about your bank accounts, you face a similar risk. One possible solution is to have two bank accounts. One should be exclusively funded by Social Security or other exempt payments, and the other should have no exempt money in it.

Separate the Accounts

Notify the bank receiving Social Security payments that the account consists exclusively of Social Security payments. I also suggest that the accounts should be in different banks. And information regarding the non-exempt account should never be given to the debt collectors. That means that if you are going to use money from the non-exempt account to pay a debt collector or troubled account, you should pay with a postal money order rather than by check. A still safer approach is to make all payments on difficult accounts with money orders.

I realize this is difficult for people who are proud of paying their bills, but debt collectors do not play fair. If you are having difficulty making payments, or are disputing a bill, you should take precautions. You can still pay the bills when you have the money.

These actions will not completely eliminate the risk. But they go a long way towards protecting you from some of the worst consequences of debt collector damage.

If they still manage to find and garnish your social security, remember they don’t have the right. Find a lawyer and fight it.

Guide to Legal Research

If you are defending yourself pro se from the debt collectors, you will need to do legal research along the way. This product guides you through the most important and easiest ways to do that. There are important how-to’s. And warnings along the way to make sure you don’t lose anything while looking for a shortcut.

You’ll learn about the most powerful type of research that you can do. You can even find your own judge’s previous responses to the arguments – right at your own court.

You will hear about law library research – its advantages and disadvantages.

And you will see how to do legal research on the computer wherever there is an internet connection. How to do it and what to look for, but also some warnings about using this seemingly convenient and obvious.choice.

Or get a membership with us – and the research guide materials will be your for free.

Should I talk to a Debt Collector? What Should I Say if Collectors Call?

If a debt collector is calling or harassing you, one of his goals  is to get you to talk. Should you? This is going to depend on whether you have anything to say. And usually the answer is that you should never talk to a debt collector.

Debt Collectors Target Struggling People

As I have mentioned before, the debt collection business is targeted at distressed people. The debt collectors already know you don’t have much money, and they know you probably have other people trying to get money from you.

Their job is not to force you to pay somebody—it’s to force you to pay them. Another way to put that is that they are not competing with you—they’re competing with other debt collectors. You are the football in a game between the debt collectors, the rope in a game of tug of war. Does that make sense?

Silence Can Be Golden when Dealing with Collections

The job of the debt collector is to get you to pay them instead of someone else. They can do this by annoying or scaring you so much that you pay them to get them off the phone. Or they can try to establish a sympathetic connection to you so you gladly do it for the voice on the other end of the line. Also, if they can get you to reveal information about your job or bank, or any kind of assets you have, they can improve their chances of making you pay against your will.

All of these purposes involve keeping you on the phone and the connection open, and none of them are intended for your well-being. So unless you have your own purpose for communicating with a debt collector, you shouldn’t do it.

The way to refuse to talk is very simple: hang up. There is no need to threaten or abuse the collector. Likewise, there’s no need to be polite or attempt to explain yourself. Just hang up.

Sometimes it Makes Sense to Talk to Collectors

It can make sense to talk. What might be a good reason for you to communicate? Well, because you want something tangible from the debt collector to whom you are speaking. You could want them to reduce interest rates, waive penalties, agree not to give information on your debt to the credit reporting agencies, or any number of actual, materially beneficial things. That is, you might want to pay them and need them to help in some way. That is a good reason to talk with them. (But never admit owing them the money, all the same.)

If you’re just hoping to get a friendly voice or understanding, a debt collector is the wrong person to talk to.They already understand everything they want to know about your situation. Talk to someone else for that. A debt collector’s only goal is to get your money.

Negotiate—And Get It in Writing

If you want to talk to the collector, don’t be afraid to negotiate. You can ask for anything from them, and in most cases the debt collector could give you anything you might request. So be bold.

If you want to settle for ten cents on the dollar, you can ask. They may laugh—but laughter is just a part of the negotiation and doesn’t mean they won’t do it. And if they agree to do anything, you must get the agreement in writing. In a practical sense, it doesn’t count if you don’t get it in writing. You won’t be able to prove it, and in some cases an oral “modification” would not even be legally recognizable even if you could prove it. It must be in writing.

They’ll want something in return for anything they offer you. It could be an immediate payment, an agreement to pay by a certain date, something. Be careful. You can agree to something if you can do it, but you’re spinning your wheels if you cannot, so it makes sense to limit your promises to things you’re sure you can perform. Don’t over-commit, as this may negate the agreement you reach and will almost certainly increase the number and hostility of the phone calls you are receiving. Remember that the debt collector is keeping records of everything you say (so don’t tell them where you work or bank).

Stop Talking to Collectors When You’ve Said What You Need to Say

And when you run out of reasons to keep talking to the debt collector, make sure that you actually stop talking to them. There is always a price for anything you say – you’re giving them free information that they will use to decide to sue you. Sometimes talking to them is worth that price, but if that changes, you should feel no obligation to keep talking.

What about Partial Payments?

We think partial payments are always bad unless you know exactly how you will pay the whole debt and unless you understand what making the payment will do to you. To read more on this issue – and you really should if you’re even thinking about making a partial payment, click here: Never Make Partial Payments.

Threatening People who Owe Money Can be Illegal

Threatening people is one of the more notorious collection techniques debt collectors sometimes use. Thus the Fair Debt Collection Practices Act (FDCPA) makes many forms of threats  illegal for debt collectors to make.

Some of these are obvious, and some are a little more subtle.

Actions They Don’t Intend to Take

Even if a debt collector could legally do something, they cannot threaten to do so unless they intend to do it. For example, collectors are notorious for threatening legal action if you don’t pay a certain debt by a certain time. Or they threaten to turn a bill over to their “legal department” under certain circumstances. If they legally cannot bring suit or do not have a legal department, these threats would violate the FDCPA.

They cannot threaten to “garnish your wages”if they do not have the legal power to do so – and that requires a judgment against you.

Threats of Violence

Debt collectors may not use violence or the threat of violence towards a consumer or any other person in the collection of a debt. And this includes violence or harm to property. 1692d(A)(1).

Threatening Something they Cannot Do


Collectors may not threaten to sell the debt elsewhere and imply that doing so would deprive the consumer of any rights or remedies.

A Biggie

One thing I frequently hear from consumers is a fear that non-payment is some sort of crime and that they will be reported to the police. Owing money and not paying is not a crime (except in very limited circumstances), however. For a debt collector to  threaten to report or otherwise act in a way to disgrace the consumer violates the FDCPA. 1692e(7).


These types of threats or actions can also sometimes be criminal violations or might break state law rights. Or might not –  what courts have let debt collectors get away with in the past has been pretty shocking. That is part of the reason the FDCPA was enacted – to control the courts.

The FDCPA makes more threats illegal, makes it easier to prove and includes a right to attorneys fees if you win. On the other hand, the penalties are lower under the FDCPA than under state laws.

Combining Remedies

Because the FDCPA is easier to prove but offers lower penalties, you would usually sue under the FDCPA and the other laws, too. FDCPA claims do not preempt other claims: they are in addition

Protect Your Rights

If debt collectors are calling you, you need to be alert to protect your rights. These calls are often a prelude to their suing you. You might consider membership with our site, which gets you our ecourses for free, plus gives you many other benefits.Check out some of our e-courses. Or consider our prepaid legal plan to protect you from future possible litigation. With that, if you debt collectors decide to sue you, you get a lawyer to defend you for free.

Hardship Applications and Debt Collectors

Hardship Applications with Debt Collectors – Beware Anything that Requires you to Give them Information about your Assets


 Debt Collector Hardship Applications

Sometimes debt collectors pretend to care whether you can afford to pay them, or whether they should “give you a break.” If they send you a “hardship application,” you should consider very carefully whether or not to send it back. It could possibly have some value to you, but the stories we hear are not encouraging. And we’re suspicious of anything that would give the debt collector information about you.

Inability to Pay is not a Defense in Debt Law

The first thing you must remember about “hardship” is this. No amount of financial difficulty (for a debtor) is a legal excuse to avoid paying a legitimate debt. And that means that the debt collectors won’t be considering whether you have a RIGHT to a break. They won’t even consider whether you should get one or not in some more esoteric question of fairness or rightness. No.

The question the debt collector will be asking is simply whether you have assets they can get to MAKE you pay. As we have often written, uncertainty is a great concern of the debt collectors and their lawyers. Perhaps THE great concern. Thus we have always suggested that you not respond to them in any way or provide them any information at all. If their hardship application process leads them to your bank accounts or job information, the net effect will be to make it easier and more likely for them to snatch your money rather than to spare you.

Information in Litigation

Debt Collectors never really worry about losing their lawsuit against you. And they sure as heck don’t worry about whether suing you is compassionate or fair. Their main, and usually only, concern is with getting your money. And this means that the one real thing they’re worried about is whether you have anything to take from you and figuring out how to do that.

If you tell them about assets, you not only make your case far more valuable in their eyes, but you subject yourself to the risk of instant seizure or garnishment if they get a judgment against you. We encourage people not to talk to debt collectors at all.

If You Really Have Nothing

If you really have nothing – no assets beyond a monthly payment from Social Security or welfare, and no equity in your home, and no other identifiable assets or expectations – it might make sense to share that information with the debt collector. And even then I would be reluctant to identify any specific bank accounts. Even if they contain exclusively Social Security assets, you could find yourself working to keep them and in a bad spot.

I’m not aware of anyone who actually received a “hardship” break. But even this would be a Trojan Horse – more trouble than it’s worth – in all likelihood. When a creditor (including in this case debt collectors) “forgives” a debt (let’s you out of it), it can file a form 1099S. This does extinguish the debt collector’s right to collect, but also informs the I.R.S. that the debt is forgiven. The I.R.S. treats that forgiven debt as income and will come after you for tax. If you beat the debt collector in a lawsuit, on the other hand, your chances of owing taxes on the money are much smaller.

Protect Your Rights

If you are being contacted by debt collectors, you need to be alert to protect your rights. These calls are often a prelude to their suing you. You might consider membership with our site, which gets you our ecourses for free, plus gives you many other benefits.Check out some of our e-courses. Or consider our prepaid legal plan to protect you from future possible litigation. With that, if you get sued, you’ll get a lawyer to defend you for free.


Pro se Debt Defense – Easier than you Think

Pro se (Self-Representation) in Debt Litigation – Easier than you Think and Sometimes Even Fun


 Should You Represent Yourself in Debt Law?

Pro se defense (representing yourself) in debt cases is not as hard as many people fear. You can do it – and you may need to do it.

Although hiring a lawyer might be the “gold standard” of defense, lawyers are always expensive. If a debt collector is suing you, and you can’t afford a lawyer, you still have a chance. You CAN represent yourself. This is not complicated law, debt collectors are not innovative or particularly energetic, and the debt collection system is a “factory” approach. It isn’t designed to work against people who defend themselves intelligently. You can do it and win.

Okay – maybe debt defense isn’t always very fun. In fact, most of the time it isn’t exactly fun, but it is easier than you expect, and winning is great. Going from the threat of having to pay (somehow) $1,000 to $50,000 to some debt collector, to having them drop the case – or to settling with you for pennies on the dollar… that’s fun.

And it changes the way you look at debt and debt law forever.

Pro se legal representation means representing yourself rather than hiring a lawyer to do it for you. You have the right to do that in essentially any court proceeding, whether as defendant or plaintiff. And it doesn’t matter whether the matter is civil (for money) or criminal.

Some Think It’s Scary

Although many people fear the thought of representing themselves in court, pro se representation is not rare. According to National Center on State Courts in 1991-92, 71% of domestic relations (family law) cases had at least one unrepresented party, and in 18% of the cases both parties were pro se.  It is a growing trend in debt collection law as well as family law and other matters.

The right of self-representation has long been established in the United States. It predates even the ratification of the Constitution, as Section 35 of the Judiciary Act of 1789—enacted by the first Congress and signed by President Washington, states that, “in all the courts of the United States, the parties may plead and manage their own causes personally or by the assistance of counsel.” Most states have a similar constitution provision.

Will the Courts Protect You from Mistakes?

The California rules of Civil Procedure explicitly express a preference for resolution of every case on the merits, even if resolution requires excusing inadvertence by a pro se litigant that would otherwise result in a dismissal. The Judicial Council justifies this rule with the argument that “Judges are charged with ascertaining the truth, not just playing referee.” And the Council suggests “the court should take whatever measures may be reasonable and necessary to insure a fair trial.”

Although most states and the federal courts share this bias in favor of hearing courts on “their merits,” (based on what is actually fair), pro se litigants cannot rely on any special treatment. Some courts explicitly will not extend favorable treatment to non-professional litigants.

Pro Se Litigants Often Do Very Well

They may not need any extra help. According to Erica J. Hashimoto, an assistant professor at the Georgia School of Law, criminal defendants are “not necessarily ill-served” by the decision to represent themselves. In state court, pro se defendants charged with felonies probably fared much better than represented defendants. Of the 234 pro se defendants studied by Ms. Hashimoto, “just under 50 percent of them were convicted on any charge….for represented state court defendants, by contrast, a total of 75 percent were convicted of some charge.” And just 26 percent of the pro se defendants ended up with felony convictions, whereas 63 percent of represented defendants in Ms. Hashimoto’s study did. In federal court…the acquittal rate for pro se defendants is virtually identical to the acquittal rate for represented defendants.

Of course there could well be other important variables that the Hashimoto study did not include. It seems clear, however, that there is nothing like an “automatic penalty” for daring to represent yourself. And as I have pointed out many times elsewhere, there are certain types of cases and situations where pro se representation may actually be an advantage.

In debt collection cases, for example, the economic factors often outweigh legal issues, and a vigorous pro se defendant can gain a significant advantage by being able to take energetic steps in his or her favor that a lawyer—always on the clock—would pragmatically be unable to take.

Courts are not always favorable to self-represented people for various reasons. You face a headwind when it comes to the court taking what you say seriously, for example. But even with that bias, pro se plaintiffs have recorded some significant victories in civil courts.

Most members of Your Legal Leg Up, for example, either win their cases outright or reach very satisfying agreements.

Pro Se Representation in Debt Collection Cases

As pointed out above, defendants in debt collection cases have some significant economic advantages in conducting their cases. They also have fewer of the disadvantages that many other types of cases have. This may simply be because debt collection cases tend to be document-intensive rather than witness-intensive. In the somewhat unusual case which actually goes to trial, the evidentiary questions are pretty basic: can the debt collector produce enough evidence? And is their evidence  “admissible” under the rules? That is, do the rules let the court consider it?

You almost never need to call a witness in debt cases.

This basic legal simplicity, the fact that debt defendants obviously did not seek out and initiate the suit, and the general economic difference between typical debt defendants and plaintiffs often seem to create a favorable impression on the judges.

Protect Your Rights

If debt collectors are contacting you, you need to be alert to protect your rights. These calls are often a prelude to their suing you. You might consider membership with our site, which gets you our ecourses for free, plus gives you many other benefits.Check out some of our e-courses. Or consider our prepaid legal plan to protect you from future possible litigation. With that, if a debt collector sues you, you’ll get a lawyer to defend you for free.


What if I Really (Think) I Owe the Money?

What If I Really Do Owe the Money?

Or Think I Do?

Think you owe

What if a debt collector sues you for a debt and think you really owe the money? Should you defend yourself from the suit?

Debt collectors often sue the wrong people and usually overcharge. If you don’t defend, you run the risk of having to pay twice. And if you do defend yourself, you probably won’t have to pay at all. If that bothers you, give the money to somebody who really needs it.

Most People Debt Collectors Sue May Actually Owe Someone Some Money


If a debt collector is suing you, you probably think you owe them the money. Or think you owe someone the money, although it’s surprising how often people who do NOT owe anybody any money get sued. If that’s you – you still need to fight the case, it won’t go away by itself. But if you actually do owe somebody the money for which you are being sued, you still need to be careful.

And you should still defend yourself as well as you can.

You must make the debt collector prove every part of its case. This includes not only that you owe the money, but that you owe it to them. And exactly how much you supposedly owe. That’s because old debts get sold – often more than once – and if you don’t make the debt collector prove it owns the debt, you may pay the wrong person. And then you might have to pay again if the person that actually owns the debt sues you.

In addition, most people do not owe what the debt collectors are trying to collect. They routinely add fees and interest they should not, and consumer protections agencies and organizations say that almost all debt collection suits include extra charges. Many of them are for far more than is owed.

The Good News

The good news about debt collectors is that they usually CANNOT prove their cases if you make put them to the test. The whole process by which they get these debts is so sloppy and careless that they usually cannot find or obtain the proof that they need to win their case. IF you defend yourself.

Get Help

If you would like us to take a look at your case and give you a sort of roadmap to what you need to do and how, take a look at our Personalized Evaluation product. If a debt collector is suing you and you know you want to defend yourself without spending a lot of money on lawyers, then get out Debt Defense System.

Protect Your Rights

If debt collectors are harassing you, you need to be alert to protect your rights. These calls are often a prelude to their suing you. You might consider membership with our site, which gets you our ecourses for free, plus gives you many other benefits.Check out some of our e-courses. Or consider our prepaid legal plan to protect you from future possible litigation. With that, if they do sue you, you’ll get a lawyer to defend you for free.


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