I always paid all my bills on time and had excellent credit. I had a modest mortgage and a home equity loan, a car payment (leased) and unfortunately some credit card debt, mostly because of my self employment at the time, debt I inherited and incurred during my divorce and some unexpected home repairs and car repair expenses and a few medical bills, but in total, not an outrageous amount but still enough, too much but very manageable while I was working – less than 15k in total, excluding the 30 year conventional mortgage after 20k down of 140k at 5 ¼%, for a house appraise for 180k, but I had an excellent job and a rather high income so at the time so it didn’t seem a problem.
But when I lost my job in 2009 and being that I was technically an “independent contractor” for my last employer, I was really screwed as I didn’t even qualify for unemployment benefits.
So I went from 70k per year to zero income in a heartbeat.
As the economy really sucked and my job prospects were very poor in my industry, I prioritized my bills – mortgage, utilities including my cell phone which was my only phone, basic groceries (and I’m talking a beans and rice and raman noodles subsistence), car lease payment and car insurance. I had enough in reserve in savings including cashing out my roll over 401k to float me on these for about 12 months. And of course there were the funds in savings that I put aside for the IRS to make my quarterly self employment taxes and the tax penalties on the early withdrawal from my 401k. Everyone else went to the bottom of the list – that being credit card debt and medical bills. It wasn’t that I didn’t want to pay -I just didn’t have the funds it to pay them.
I reached out to all my creditors to apprise them of my situation and to work whatever terms I could. Mostly what I got was “I’m so sorry but you still need to make the minimum payment” or “We will make a note on your account regarding your call”. Even after I contacted these companies, they still called me, some every single day or at least once a week. One debt collector who I called back to explain my situation was incredibly rude and nasty and said to me, “Well, you’re calling me from a cell phone so you can’t be all that bad off if you still have a phone – and if you can afford a cell phone and you obviously haven’t starved to death yet, then you should be able to pay me and if not, just where are you getting your money from? I want to know who is supporting you – I want to know who they are and how I can contact them. Somebody is obviously supporting you and your “life style” that allows you to eat and have a cell phone and since you obviously must have family and or friends with money who support you, you can just borrow more money from them since they have it. You just really need to borrow more from them so you can pay your debt to XYZ Company”. ;(,
I wish I was joking or making this up but this is what this scum bag actually said to me and why I think and at least in my experience, some if not many debt collectors are the most bottom feeders of the lowest bottom feeders.
At that point, in tears and incredibly angry and upset, I just hung up on him and I stopped answering any more phone calls from creditors all together. All the collection letters I got were opened, read and then dutifully put into a file. This was not the only creditor BTW who “suggested” that I hit up my family and friends for a loan in order to pay my bill – I didn’t think that was legal, nor calling before 8:00 AM or after 9:00 PM or on weekends or holidays, but in my experience some collection companies do that anyway.
After a year of being unemployed, I eventually got a part time minimum wage retail job, sold my house in a short sale (I was just barely under water (less than 2k) but only because of the very depressed market) and I moved in with my niece while I struggled to get myself and my finances back in order, eventually getting a full time job but at less than half the income I previously made.
For a time after getting back to work, I sent some money to my creditors but since it was much less than the minimum they expected, it only increased the level of harassment that not extended to calling me and my place of work but also calling and harassing my relatives and friends and former employers – again, some things that were probably illegal but some of they did it anyway.
Then one day I received via certified mail a court notice that I was being served in court seeking a judgment against me by one of my creditors. The very next thing I did was contact a lawyer; he answered the judgment on my behalf and then we (I) file bankruptcy. Next I received a certified letter from the IRS saying they were going to levy my wages because when I filed my taxes and remitted a payment, the payment didn‘t fully cover my liability. The next thing I did was make an appointment at the local IRS office.
Bankruptcy was the very last thing I ever wanted to do and I still feel rather sick about it today as it was my intention, after getting back on my feet, to pay off all my debt. And bankruptcy wasn’t something I could really afford to do at the time; it cost me about $ 1,200. I used the small amount of money I had put aside to buy a used car and a move into a modest apartment and out of my niece’s house in order to pay for the bankruptcy and court costs.
But the bottom line is that while you may ignore harassing phone calls and letters from creditors; and I certainly got to the point where it was completely futile explaining over and over again that I didn’t have the money to pay what they wanted me to pay and was tired of hearing the verbal abuse that some resorted to; you just don’t ignore official court orders or official notices from the IRS. The bankruptcy gave me a clean start; one I hope and never intend to have to go through again, and I worked out a payment plan with the IRS to avoid a payroll garnishment- and I diligently make payments every month – something I will do for several more years. Surprisingly the IRS was and has been so far, pretty good and fair to deal with once I negotiated with them.
If you can reasonably work something out with a creditor, you should; if you can’t and they are completely unreasonable, I can understand ignoring them, but when you get an official court summons, that’s something you just don’t ignore - ever – even if you think the debt is not yours or is an illegitimate claim.
Not paying a debt to a creditor, legitimate or not, will not land you in jail. Not answering a court summons to appear in court or answer the summons however will.
One truth that I want to share with you is that life is often daunting and circumstances get pretty wicked at times. But nothing is as daunting as major health issues. I have been battling health problems since 2002 and my health issues are more complex today than ever before. I believe people battling cancer should not ever be harassed unmercifully by debt collectors. As long as you have your health you have much to be grateful for and that fact alone goes a long way to helping you triumph as a billing harassment survivor. Thanks again.
My experience is yours, regards the IRS. Even when i screwed up my payment agreement, they worked with me to reinstate. They are not quite as evil as expected. Nice, even.