Dealing with disability & collection agencies in the U.S.
October 15, 2022 11:31 AM Subscribe
I was diagnosed with kidney failure this year and am on dialysis. I haven't worked since July. I'm on long-term disability through my former employer's insurance and expect to be approved for Social Security disability soon. I had to negotiate a payment plan with a credit card company. If I fail to make payments, it will go to a collection agency. Besides the constant phone calls, what will happen then? What is the most an agency can do?
Best answer: They can file suit and garnish your wages, but they cannot generally garnish SSDI payments. If you have a judgement against you, they may be able to freeze your bank accounts as well.
posted by soelo at 11:48 AM on October 15, 2022 [2 favorites]
posted by soelo at 11:48 AM on October 15, 2022 [2 favorites]
You can tell them not to call you. Can’t stop the letters and any potential court action, but you sound like an unlikely case to aggressively pursue (talk to a lawyer though.)
posted by michaelh at 12:24 PM on October 15, 2022 [2 favorites]
posted by michaelh at 12:24 PM on October 15, 2022 [2 favorites]
Best answer: The Fair Debt Collection Practices Act is a good thing to read through, too. Especially sections 805-7
posted by soelo at 12:33 PM on October 15, 2022 [1 favorite]
posted by soelo at 12:33 PM on October 15, 2022 [1 favorite]
Best answer: DarlingBri, that is incorrect in the United States. If a debtor owes a creditor money, the creditor can file a lawsuit. If they win (which they will if the debt is valid), the creditor will get a judgement. Then, the creditor can use the judgement to garnish wages, remove money from a bank account, etc.
However, soelo is correct that SSDI generally cannot be garnished (sometimes it can if you owe the government money, but that’s probably not relevant here). SSDI, if kept in a separate bank account from any other money, also should not be able to be taken by a creditor.
posted by maleficent at 12:45 PM on October 15, 2022 [2 favorites]
However, soelo is correct that SSDI generally cannot be garnished (sometimes it can if you owe the government money, but that’s probably not relevant here). SSDI, if kept in a separate bank account from any other money, also should not be able to be taken by a creditor.
posted by maleficent at 12:45 PM on October 15, 2022 [2 favorites]
I am not a legal expert so really just offering solidarity and the data point that I did have a hospital bill go to collection way back in 2005 (NY state). After a few months of calling the debt collection agency threatened a lawsuit and I was like 18 and very scared and so I found a way to pay.
Much later I read this which provided some context, seems the lawsuit threats are usually a feint.
posted by athirstforsalt at 1:31 PM on October 15, 2022
Much later I read this which provided some context, seems the lawsuit threats are usually a feint.
posted by athirstforsalt at 1:31 PM on October 15, 2022
Best answer: If you don't want to read the statutory text of the Fair Debt Collection Practices Act, the FTC also has an FAQ written in plain language that discusses stopping debt collectors from contacting you, old debts, garnishments, and other topics.
posted by hhc5 at 3:03 PM on October 15, 2022
posted by hhc5 at 3:03 PM on October 15, 2022
Response by poster: Thank you everyone!
posted by manageyourexpectations at 3:20 PM on October 15, 2022
posted by manageyourexpectations at 3:20 PM on October 15, 2022
Best answer: In the years after my divorce, I struggled financially, and I let my credit card bills go. In my experience, the more prestigious cards did nothing- Amex and Citibank tried to collect initially, and then stopped. Discover filled in a local court against me, and they won. I still did nothing because I had no money to pay. When my finances got better, and I refinanced my mortgage, before it went through they made me pay the judgement. But then the judgment money was returned to me by the creditor. I am not sure why or how, and it might have something to do with the state I live in (Massachusetts.) My credit reports were very bad, but after 7 years, I started over, and have been in a much better place financially since then. Good luck with everything.
posted by momochan at 4:27 PM on October 15, 2022
posted by momochan at 4:27 PM on October 15, 2022
Best answer: This, from the FTC website, is key if you will never be able to pay off the debt:
under the laws of some states, if you make a payment or even acknowledge in writing that you owe the debt, the clock resets and a new statute of limitations period begins
People will make intermittent payments in an attempt to get creditors off their back or out of a sense of guilt or obligation. In some states this resets the statute of limitations. In many cases, the person has made no headway into paying off the debt but they did extend the time the creditor has to sue them.
posted by Mavri at 8:48 AM on October 16, 2022
under the laws of some states, if you make a payment or even acknowledge in writing that you owe the debt, the clock resets and a new statute of limitations period begins
People will make intermittent payments in an attempt to get creditors off their back or out of a sense of guilt or obligation. In some states this resets the statute of limitations. In many cases, the person has made no headway into paying off the debt but they did extend the time the creditor has to sue them.
posted by Mavri at 8:48 AM on October 16, 2022
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posted by DarlingBri at 11:47 AM on October 15, 2022 [1 favorite]