This presentation gives basic legal information, not legal advice. The information in this...

This presentation gives basic legal

information, not legal advice. The information

in this presentation is not intended to be legal

advice. You should not rely solely on this

presentation for help with this topic. If you

have a legal problem, consult an attorney

before taking any legal action.

Credit Cards, Debt Repayment and Debt Collection

- Presented by Montana Legal Services -

Montana Legal Services gives civil legal assistance in a variety of areas:

•Legal advice and representation for clients

•Referrals to pro bono attorneys and other providers

•Self-help clinics

•Self-help Materials

•Educational brochures, classes, and workshops

Clients can reach us a number ofdifferent ways:

• MLSA HelpLine at 1-866-666-6899

• Outreach to Crow, Northern Cheyenne,Blackfeet, Rocky Boy, and Fort Belknap

• www.MontanaLawHelp.org

• www.MTLSA.org

MLSA offers a variety of services:

• Advice phone calls

• Brief services

• Self-help clinics

• Extended Representation

What are Credit Cards?

“Revolving” credit lets you make a minimum payment instead of paying off the entire balance.

Companies make money by charging interest on the balance. The interest is called APR or Annual Percentage Rate. Companies charge other fees, too.

Why Credit Cards Can Cause Problems

Interest rates can change. “Fixed rates” for credit cards only means that the card issuer has to give you 15 days notice before raising the rate. Fees. There are fees for every

transaction or mistake a consumer could make. Late fees, balance transfer fees, over-limit fees, cash advance fees. The charges are endless.

Credit Card Problems

Credit cards make it easy to buy things you can’t afford. Cards often have high limits. Also, the interest rates are sometimes not what they seem. Consumers can easily get in over their heads in debt.The key to using a credit card wisely is to use it only when you need it. You should aim to pay off your balance at the end of every month. If you can’t pay it off, always pay more than the minimum payment.

How much money does paying more than the minimum save?

Let’s say you have a credit card balance of $500--low, by most standards, and an APR of 18%. The minimum payment, as calculated at 2.5% of your balance, would be $12.50.

If you paid $12.50, it would take you 7 years and over $365 in interest to pay off your debt! If you paid $50 dollars instead, you would pay off your debt in only 11 months, with about $46 in interest charges.

Minimum Payments

$365 OR $46?

ALWAYS PAY MORE THAN THE

MINIMUM!

That seems like a no-brainer. But it’s easy to overlook when companies don’t tell you how long it takes to pay off.

Credit Card Alternatives

• Debit Cards: takes money directly out of your checking account.

• Pre-paid Credit Cards: Only allows you to spend a set amount. Once it’s gone you have to reload the account.

• Credit Union: If it’s a loan you need, try your local credit union, they are usually more flexible and willing to work with you.

What debts to pay first:

1. Family Necessities• Food• Health Insurance Premiums

2. Housing Related Expenses• Mortgage/Rental Payments• Utilities

Debt Repayment and Collection

3.Transportation• Car Payments• Vehicle Insurance Payments

4. Child Support Payments

5. Income Taxes

Debt Repayment and Collection

Lower Priority Debts

Unsecured debts, or debts that do not have collateral are lower priority. These include:

• Payday Loans

• Credit Card debt

• Doctor and hospital bills

• Debts with other professionals

Who is a debt collector?

Anyone who regularly collects debts for other people. Examples include:

CBB Collections, Inc.

NCO Financial Systems, Inc.

Nationwide Credit, Inc.

Who is a debt collector?

A company who holds an original debt doesnot have to follow the same rules ascollection agencies. Examples of originalcreditors include:

Verizon Wireless

St. Vincent’s

Montana-Dakota Utilities

What Debt Collectors Cannot Do:

• Call before 8am or after 9pm

• Keep calling to harass you

• Threaten or swear at you

• Tell you that you have committed a crime by not paying the debt

• Call you at work after you have told them not to

• Call or speak to you without telling you who they are

• Threaten to have you arrested if you don’t pay the debt

• Pretend they are attorneys or government officials

What Debt Collectors Cannot Do:

What Debt Collectors Can Do:

• Contact you until they receive a cease-contact letter

• Take you to court

• If they win, they can garnish your wages or sweep your bank accounts of available funds

1. Ask for Proof Ask for the debt collector to send you

proof, in writing, that you actually owe the debt.

2. Make a Deal If you want to keep paying on your bills, try

to work out lower monthly payments. Make sure to get this in writing.

How to Deal with Debt Collectors:

How to Deal with Debt Collectors:

3.Record Everything

• Keep copies of all letters from the collectors and payment receipts.

• Keep a journal of each time the collector calls you. Write down the date, time of day, what is said. Always ask for the caller’s name or ID# and address.

• It is illegal to record phone calls in the State of Montana. Records must be written, and it is extremely important to keep them if you are being harassed by a company collecting its own debts or a debt collector.

4. Get them to Stop Calling

• Tell them that your work does not accept personal phone calls and that they should stop calling

• Hang up. You do not have to talk to them.

• Write a cease-contact letter.

How to Deal with Debt Collectors:

Please note, these rules do not apply if the people you owe money to are the Federal, State, or Tribal Government, for instance:

• The Internal Revenue Service (IRS)

• Child Support Enforcement Division (CSED)

• Student Loans

How to Deal with Debt Collectors:

This is an example of a Cease Contact Letter written to a collection agency.

This presentation gives basic legal

information, not legal advice. The information

in this presentation is not intended to be legal

advice. You should not rely solely on this

presentation for help with this topic. If you

have a legal problem, consult an attorney

before taking any legal action.