Do I tell the debt collection firm I have nothing?

August 31, 2012 11:05 AM

Question about debt collections. Do I tell them I have no assets?

I just got my first letter from a debt collector for medical debt. In addition, they called yesterday but I didn't make it to the phone in time and no message was left. (I Googled the phone number and found out it was them.) I am sending them a cease & desist letter using this template because I don't want the phone calls.

An attorney friend (whom I no longer see due to our busy lives) advised me about 6 months ago that since I have no assets, and bankruptcy is intended to protect your assets, that there is not really a point to filing bankruptcy, and furthermore I couldn't afford to file bankruptcy anyways.

My question is, should I include with the C&D letter, a statement that I am unemployed, have no savings, insurance, property, or any assets, or should I simply send the C&D and not make any other statements?

posted by anonymous to work & money (7 answers total)

It won't stop them. First, they won't believe you. Second, they'll just start harassing you about finding someone else to pay it for you. Third, it takes a little wind out of your threatening to take action against them, since, if they believe you, they will know you have no money to take legal action. Just send the letter as is.
posted by ubiquity at 11:28 AM on August 31, 2012 [2 favorites]

I have to say I disagree with your "attorney friend's" assessment of what bankruptcy is for. It is partly to protect assets, sure. It's also to protect current and future income, and to get those damned debt collectors off your back. It's also a pretty effective way of short-circuiting tort lawsuits if you don't have insurance.

Regardless, I can't see that it would matter much. The company is either going to comply with your letter or it isn't. Saying that you have no money isn't going to affect their decision. That's what everyone says. If they don't comply, you can file your own action in small claims court.
posted by valkyryn at 11:29 AM on August 31, 2012 [2 favorites]

Send the C&D as your first step, as ubiquity says. Gerri Detweiler's blog at Credit.com has a number of useful entries that go into the process of facing debts you can't pay.
posted by Sidhedevil at 11:33 AM on August 31, 2012

IAALBNYL and a fair amount of my creditor's rights practice is defending debt collection claims.

I do not see the point in disclosing your destitute status in the C&D letter. It does not make the C&D letter any more effective, and they will use anything you say in furtherance of debt collection. They've already heard every sob story, anyway. Also, please bear in mind that sending the C&D letter does not make the debt go away. The creditor can still proceed with filing suit, for example.

I disagree with your attorney friend that the purpose of bankruptcy is to protect your assets. That is incidental. The purpose of bankruptcy is to evaporate your dischargeable debts and give a "fresh start". Of course, bankruptcy is a last resort. I do not recommend it to avoid a minor bill or two.
posted by Tanizaki at 11:37 AM on August 31, 2012 [1 favorite]

A couple of things. First of all, medical debt is the easiest debt to deal with. It is magnitudes easier than credit card or mortgage debt. Without knowing what you owe, it is impossible to advise you but you can generally pay against even very large medical debt in very small amounts. Perhaps other mefites can provide examples.

Second of all, you may be judgement proof. However, before you proceed down the road of having either a debt or a bankruptcy entered against you, you MUST know the pitfalls. This stuff shows up when you apply for housing, need to finance a car, want to buy a house, want to charge something at Sears, even in some places when you need utilities. If the medical debt is not the tip of an iceberg of unsecured debt and/or your debt isn't more than 50K, you can probably enter a payment agreement that is MUCH better for you over the medium and long term.
posted by DarlingBri at 12:17 PM on August 31, 2012

You can be broke and if your creditors get a judgment against you what wages you do get will be garnished. You really do need to look into bankruptcy.

See if you can see someone at Legal Aid to help you with this.
posted by Ruthless Bunny at 12:22 PM on August 31, 2012

You do need legal advice. You say you have no assets, but do you have an income? Creditors can take some of that, if they follow the proper steps.

Do you have a computer? a cell phone? Those are assets. Depending on where you live, a creditor may be able to take that (if...). Not very likely, but it may.
posted by megatherium at 4:18 PM on August 31, 2012