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Surviving spouses, debt burdens, and nasty debt collectors

The government doesn’t have the ability to stop this yet, but it does offer suggestions on what you can do

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Losing a loved one is tough, and dealing with their medical bills on top of that can feel overwhelming. In many cases, surviving spouses are left facing a mountain of debt, dealing with a complicated legal system, and only a fourth of them are still earning a paycheck. 

But wouldn’t you know it, debt collectors have no mercy and no regard for someone in a fix like this and the Consumer Financial Protection Bureau (CFPB) has found itself buried in complaints from survivin...

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    How to deal with an aggressive debt collector

    Legal eagles explain what pushback consumers can use against debt collectors

    Consumers are taking on an increasing amount of debt, and in some cases it's more than they can handle. The total consumer debt balance increased to $16.38 trillion in 2022, up from $15.31 trillion in 2021, according to credit reporting company Experian.

    And as we recently found out, there are debt collection agencies that are more than happy to make sure consumers pay -- sometimes even if the debt has been discharged.

    Because debt collectors can buy “bad debt” for pennies on the dollar, every dollar they can collect in return is pure gravy. 

    “We’ll hunt you down and make you pay…”

    Out of the more than three million complaints the Consumer Financial Protection Bureau (CFPB) has received in the last five years, nearly 150,000 were about attempts to collect debt not owed either because the consumer didn’t owe anyone anything or the debt had been resolved by the court or paid off

    When ConsumerAffairs lifted the rug on those grievances, there was some nasty stuff going on – being screamed at, leaving intimiating messages/robocalls threatening to sue someone, and calling the children of one consumer asking for banking information while she was in the hospital.

    That’s some pretty heavy-handed stuff no matter who you are. The federal government’s Fair Debt Collection Practices Act and several states protect consumers from being harassed, but debt collectors sometimes don't mind their manners. 

    A debt collection pro shares their magic

    ConsumerAffairs wanted to know if there’s anything someone in a debt collection situation could do, especially if they aren’t in default on a debt or they’re not even the exact person who owes the money.

    We reached out to someone who has studied and dealt with unpleasant debt collectors on those two fronts. Megan Hanna, DBA, CFE, who’s worn hats as a finance expert, professor, and a former banker, gave us her best advice for consumers caught in those traps.

    Offer proof. “You can start by talking to the debt collector about the situation and sharing details about when and how the debt was paid (or any other details about why it's not owed). You should follow up on this conversation by sending a written notification to the debt collector to formally dispute the debt,” Hanna said. 

    “Restate what you discussed in the phone conversation and include factual details, including such things as proof of payment or any correspondence you received from the original creditor or other parties about the debt.”

    Go back to the original creditor and see if they can help. Another tact you can take is to contact the original creditor to talk about the situation. “Sometimes, the original creditor might not want to speak with you if they sold your debt to a debt collector. However, if you can provide proof that it was sold to the debt collector in error (e.g., a copy of a canceled check you sent to the original creditor, a payoff statement, or confirmation numbers from prior phone calls), they may realize they made an error and help you resolve the situation.”

    She said that if you’re still not getting anywhere, you can ask to have your call escalated to a supervisor or manager or send a written dispute to the original creditor, just like you did with the debt collector. But, she warns that manners count. “Be calm and present factual information while being persistent when discussing the situation with the debt collector or creditor.”

    If all else fails… “If you cannot resolve the situation with the debt collector or creditor, you can also file a complaint with the credit reporting agencies (if it's on your credit report), the CFPB, or both,” she suggested. When filing a complaint with those agencies, she said you should make sure you have all your facts – including supporting documentation – ready to present. “The more thorough you are in presenting your case, the easier it will be for everyone to look into the situation and, hopefully, help you resolve it.”

    If you want to dig deeper into all the options you need to outsmart a sinister debt collector, just visit this special CFPB website. It lays out everything you need to know--  plus the agency offers a toll-free helpline if you want to speak to a real person.

    Consumers are taking on an increasing amount of debt, and in some cases it's more than they can handle. The total consumer debt balance increased to $16.38...

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    More than half of Americans have owed medical debt in last five years, study finds

    Sixty-one percent of insured adults said they received a surprise medical bill

    With inflation on the rise, any kind of debt may prove to be a hardship. Medical debt appears to be especially burdensome, as the National Consumer Law Center reported last year that health-related debt was the leading cause of bankruptcy.

    A recent study from the Kaiser Family Foundation (KFF) found that 57% of adults reported owing medical debt during the last five years. Even people with health insurance often discovered that they owed large amounts of money for an uncovered expense.

    Among insured adults under age 65, 61% were reportedly hit with a large, surprise medical bill. Among that group, 53% said they received a medical or dental bill they thought contained an error.

    Some two-thirds of these patients said the error involved something that should have been covered by their health insurance. Other provider errors were also reported, including being billed for services never received or for bills that had already been paid.

    The KFF study found that just over half – 51% – of people who were wrongly billed for medical services could not resolve the matter to their satisfaction.

    Erroneous bills often end up in collections

    Making matters worse, 32% of people with disputed health care debt have had that bill sent to collections, damaging their credit score and limiting their future access to credit, loans, and financing.

    The KFF researchers say state Consumer Assistance Programs (CAPs), established in 2010, have helped patients resolve disputed medical bills. Under the establishing law, CAPs not only help consumers file appeals and resolve billing disputes, but they also report data to regulators on consumer experiences to inform oversight.  

    “However, Congress has not provided funding for CAPs since the initial appropriation of $30 million in 2010,” the researcher wrote. “As a result, a few programs have since closed their doors.”

    With inflation on the rise, any kind of debt may prove to be a hardship. Medical debt appears to be especially burdensome, as the National Consumer Law Cen...

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    Consumers with holiday debt have many options for help

    From debt consolidation to credit counseling, there’s assistance for every budget

    A trip to the mailbox this month may not be so pleasant since there is a greater chance of finding a big credit card bill from the holidays.

    CNBC recently reported that the average U.S. consumer spent $1,249 on the holidays, using credit cards for many of those purchases. With the holiday decorations now put away, consumers have to find ways to pay off that debt, a task made harder by rising inflation.

    "If your credit card debt has grown out of control, the key to paying this credit card debt off as quickly as possible in this economy may be to consolidate your debt which can reduce your monthly payments as well as your interest rates," said Gary Herman, president of Consolidated Credit. "Higher prices may be leaving little room in consumers' budgets to pay off credit card debt. So, people need to find a solution to reduce their payments."

    Herman’s firm offers a debt consolidation service, which some consumers may find helpful. In fact, there are a number of companies that promote different ways to pay down debt. For example, Sergio, of Mesquite, Texas, worked with JG Wentworth to get his finances on track and credits the help he received in the company’s program with helping him qualify for a credit card.

    “I’m really satisfied with the program, and hopefully, I can finish soon,” Sergio wrote in a ConsumerAffairs review. “If only they can decrease the bi-weekly payment, depending on my overall balance, because it’s going down. Nonetheless, they have good customer service and they communicate.”

    Bess, of Franklin, Tenn., turned to Freedom Debt Relief to get on a plan. She tells us the advisers she worked with were helpful.

    “I have had several questions that involve projections and they have the tools to make good advice,” Bess told ConsumerAffairs. “It has been a huge relief to know I am making headway on getting rid of debt.”

    Credit counseling

    Annette, of Annapolis, Md., worked with Cambridge Credit Counseling, which she says helped her budget her money.

    “Anytime I call them about a concern about a bill or a payment, they're very helpful,” Annette wrote in a ConsumerAffairs review. “I can keep track of what's been paid and how much my balance is.”

    Non-profit credit counselors may provide a low-cost way to get a handle on money. The National Foundation for Credit Counseling is made up of non-profit credit counselors around the country. The foundation’s website can help consumers find help in their local area.

    Consumers with good credit may also consider applying for a balance transfer credit card that offers a lengthy introductory period of 0% interest. That way the entire monthly payment goes to paying off the balance and none goes to interest.

    ConsumerAffairs reviews some of the best credit cards, including the best balance transfer cards.

    A trip to the mailbox this month may not be so pleasant since there is a greater chance of finding a big credit card bill from the holidays.CNBC recent...

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    Senate raises debt ceiling again to help U.S. economy escape another disaster

    If the government ever fails to prevent a default, the impact on the consumer could be incredible

    The U.S. economy got another 11th-hour reprieve late Thursday. The U.S. Senate voted to raise the debt ceiling limit by $48 billion, avoiding the fate predicted by Treasury Secretary Janet Yellen that the U.S. would likely face a financial crisis if lawmakers did nothing. Yellen previously said not raising the debt ceiling could cause interest rates to rise quickly, leading to millions of lost jobs and a possible recession.

    The Treasury Secretary wasn’t alone in her fears. The nation’s largest lender -- JPMorgan Chase -- had reportedly been working on plans for weeks that would have gone into effect if the U.S. economy fell into default mode. According to an exclusive report by Reuters, the bank was preparing to address everything possible -- the repo and money markets, client contracts, its capital ratios, and how ratings agencies would react.

    "This is like the third time we've had to do this, it is a potentially catastrophic event," Chief Executive Jamie Dimon told Reuters. "Every single time this comes up, it gets fixed, but we should never even get this close. I just think this whole thing is mistaken and one day we should just have a bipartisan bill and get rid of the debt ceiling. It's all politics.”

    Everything could fall apart if a default happens for real

    The Senate has had to keep the economy from going into freefall mode twice in the last month. But if it ever fails to catch another default in the nick of time, consumers need to hold on tight.

    “This economic scenario is cataclysmic,” warned Moody’s Analytics in a new report. If it does happen, the firm stated that it could be comparable to the loss consumers suffered during the 2008 financial crisis.

    At the top of that snowball effect would be the potential loss of nearly 6 million jobs, causing the unemployment rate to surge to close to 9%. The White House says even the possibility of a default is scary and would impact both markets and consumers. 

    “Just the threat of one—would have a devastating impact on our economy,” White House advisors wrote in a blog post on Wednesday. They noted that if a default happens, one thing consumers could feel the sting of is mortgage rates. In the run-up to and aftermath of the 2011 debt ceiling crisis, mortgage rates rose by between 0.7 and 0.8 percentage points, causing a family who took out a $250,000 30-year fixed-rate mortgage to be on the hook for more than $30,000 in additional interest payments over the life of the loan. 

    Rates for auto loans, personal loans, and other consumer financial products also rose in the wake of the 2011 crisis, and these increases often lasted for months. If another default acts anything like the Great Recession of 2008, it could take years for consumers to regain their financial footing. Nearly half of consumers who were adults in 2007 say their financial condition failed to improve for at least 10 years afterward. 

    “That recession was marked by the collapse of the housing market, a wave of home foreclosures, and a financial crisis that nearly brought down the world economy,” said Investopedia’s Caleb Silver.

    The U.S. economy got another 11th-hour reprieve late Thursday. The U.S. Senate voted to raise the debt ceiling limit by $48 billion, avoiding the fate pred...