How to deal with Debt Collection Agencies

And Why You Should Never Respond to Letters or Phone Calls from Debt Collectors

Disclaimer - This is not legal advice. We are not lawyers. If you have serious concerns consult a Consumer Protection lawyer.

#1. Never answer someone calling from a 1-877 number. They are usually scammers or debt collectors (or both). If you do answer and they identify themselves as a debt collector, immediately accuse them of running a scam and hang up the phone. If you have the option, immediately block all calls from that phone number.

#2. Avoid confirming your identity. If they ask if you are "John Smith", deny it and say they have the wrong number. Then hang up immediately.

#3. Never give anyone your date of birth or your social insurance number over the phone. They will try to trick you out of that by asking you to confirm your identity. Refuse. Say you don't give out that information over the phone due to privacy reasons. Even if they pretend to be from the government, accuse them of running a scam and hang up the phone.

#4. Debt collectors will often even try to collect on fake debt - debt that isn't even real and they are just making up. It is a scam they do.

#5. Debt collectors will also try to collect on old zombie debt - debt that has already passed the statute of limitations and is not real debt any more.

#6. If they try serve you with (bogus) legal papers, you should avoid service. You are under no legal requirement to answer the door or receive it.

#7. Do not sign any registered mail from an unknown source. If they try to serve you via registered mail or courier, refuse to sign and the mail will be returned to the sender.

#8. Even if they do manage to serve you, do not respond to any of their requests for you to mail them back and acknowledge the debt. You are under no legal requirement to answer their mail.

#9. If you do end up in court with a lawsuit somehow, demand proof that the debt is real. Repeatedly accuse them of trying to sue you using FAKE DEBT. Demand proof that the debt is real, that the person suing you actually owns the debt, the amount of the debt, the date of the debt, and when the statute of limitations wears off. And demand that they prove that you are the person they are looking for. If they are suing John Smith, how do we know they are not suing the wrong John Smith?

It all comes down to the following issues...

When debt collectors buy a debt all they are really buying is a spreadsheet document with the names, addresses, phone numbers, and amounts owed by hundreds or even thousands of people. They know very little about the actual person. They probably don't even have your social insurance number unless you make the mistake of giving it to them. Or the date of the debt. Or your birthday. Chances are they likely they don't even know your middle name.

And even if they do have your social insurance number, that doesn't matter. Because it still doesn't prove that the debt is real. If you demand full documentation and proof that the debt is real, they cannot do it because they don't any such documents.

All they have is a spreadsheet with your name and number on it.

They don't have a signed contract from you. Only the credit card company has that. Your contract was with the bank or credit card company. The debt collector is simply some hoser who buys and sells debt. They probably are not even Canadian. They are probably American.

Debt collectors will also try to threaten you with a lawsuit, but that is all it is. Empty threats. They will even go to lengths to make up fake lawyers who don't exist, fake law firm websites, try to serve you with bogus legal documents that aren't even filled out correctly / are not real, etc.

And you are under no legal obligation to answer any of it.

And even if you do end up in court, demand proof that the debt is real and refer to it as fake debt.

Because frankly they cannot prove the debt is real. Especially if they just made it up.

Below is a lovely video on this topic worth watching.

PayPal Credit Card Not Available in Canada

I really hate credit cards.

I admit they are handy to have, but they're also very annoying when they get out of control.

Let me explain...

Let's pretend you make the average amount an American makes per year, which is $50,000 per year, but you max out your credit card and it has a really high spending limit of say $60,000. And you only pay the minimum each month which is 2% of the total.

Note: The average American has $15,185 in credit card debt (2011 stat). Some have no credit card debt at all, some have a lot more so the number of people out there who have $60,000 or more in credit card debt is a fair amount.

2% of $60,000 is $1,200 per month.

Now when you are only making $50,000 per year, $14,400 is a lot to be spending just on your credit card.

And then there is the interest. 19% on $60,000 is $11,400 annually (in reality it is compounded monthly so it ends up being a bit more than that).

So $14,400 minus $11,400 = $3,000 paid off the total amount. The rest is all interest.

It really makes you realize what a huge ripoff credit cards are.

Try doing the math on your own credit cards sometime. They're just a huge waste of money.

Lets pretend for a moment you have the same credit card debt as the Average American, which is $15,185. So you are paying minimum payments of $303.70 every month or $3,644.40 per year. And paying $2,885.15 in interest per year. So in reality you are only paying off the total by $759.25 per year and the rest is all interest. (Which means you only need to use your credit card for $63.27 each month and you are right back where you started from.)

Credit cards are basically a huge scam designed to entrap people and make them slaves-for-credit for the rest of their lives. Even elderly people have sometimes huge credit card debts!

Now if you pay an annual fee you can get a lower interest rate of 10% - which will save you thousands per year in interest.

However you are better off just consolidating your debt, and getting a line-of-credit at a much lower interest rate of 3 to 5%, depending on what your bank is offering. And you are better off doing it sooner than later, because if it grows out of control you may be looking at a 2nd mortgage, losing your home, or bankruptcy.

And then once you have cut up all your credit cards, pay off that debt and become credit card free (and DEBT FREE!) so you can go on with your life and use cash regularly.

I made the switch to cash years ago and I am loving it. Cash is so easy to use and there is a feeling of security with knowing I have lots of cash on me. (And live in a city with a really low crime rate.)

However I still sometimes purchase things online, using PayPal - which I love because it means the cash is already in your PayPal account and it is not credit, it is more like a bank debit card.

Which is why I LOVE the idea of a PayPal credit card, which allows you to buy things either online of offline and the amount comes straight out of your PayPal account in the same way a normal bank debit card works.

However in trying to apply for the PayPal credit card I learned a disappointing fact...

The PayPal Credit Card is Not Available in Canada.

Very disappointing PayPal. Why is it not available in Canada? I would seriously like to know.

Bell Mobility overcharges you, only refunds 3 months

I came across the following info mentioning in a newspaper article complaining about companies overcharging people to their credit card:

"Dhun Noria, for example, disconnected his Bell cellphone in 2006 and didn’t know he was billed for it until 2012, when he’d paid more than $3,000 in erroneous charges."

But when he complained he only got reimbursed for three months’ service ($160).

Same thing happened to me over a year ago. Bell Mobility overcharged me for 9 months. So I left Bell and switched to a different company.

And Bell Mobility is not alone. Many other companies do this. Rogers, AT&T, Fido, Telus... all the big companies. If you sign up for automatic billing with your credit car that is basically like waving a white flag and surrendering your credit card to whatever fraudulent methods that they can get away with.

And because they will only refund mistakes within the last 90 days most people don't even notice they're being defrauded until months and months later.

HOT TIP: Don't agree to auto-billing on your credit card. ALWAYS, ALWAYS pay via online banking instead when you FEEL it. It forces you to look at your bills. When you notice a bill that is unusual then you can investigate and complain.

Referenced article:
http://www.moneyville.ca/article/1162193--billing-mistake-horror-stories-readers-offer-advice