RPF0503-Tools_for_Fighting_With

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00:00:16.320 | Today's episode of Radical Personal Finance is sponsored by HelloFresh.

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00:00:27.080 | Today on the show we tackle the subject of debt collectors and bill collectors.

00:00:35.720 | I want to focus on giving you some tactics and some techniques that I think will help

00:00:41.000 | you and will serve you as you fight your way from deeply in debt to financially free.

00:00:52.080 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge,

00:01:08.840 | skills, insight, and encouragement you need to live a rich and meaningful life now while

00:01:13.280 | building and fighting for your plan for financial freedom in 10 years or less.

00:01:17.440 | My name is Joshua, I am your friendly financial philosopher and fellow financial freedom fighter.

00:01:25.280 | And today I want to share with you some tactics and techniques that I hope may help you in

00:01:30.120 | this difficult time of your life.

00:01:37.960 | I have a real desire to help people who are struggling with money.

00:01:42.200 | And I'll tell you what, if you want to talk about one of the most difficult times in somebody's

00:01:46.440 | life, just go to the time when they're deeply in debt and trying to figure out how to work

00:01:51.280 | their way out.

00:01:52.960 | And for the context of today's show, I want you to go beyond just somebody who owes a

00:01:57.920 | lot of money to – and focus on somebody who is deeply in debt and can't even make

00:02:04.520 | payments, is weeks behind, months behind, in some cases even years behind on their bills.

00:02:10.400 | One of the most difficult places to be financially.

00:02:13.280 | There's a weight of all kinds of practical problems.

00:02:17.680 | Obviously somebody who's deeply in debt and behind on their bills is experiencing

00:02:21.660 | brokenness, the state of not having any money, not having enough money coming in.

00:02:26.760 | There is intense stress that faces a person in this situation from all angles, getting

00:02:32.600 | phone calls from angry, nasty bill collectors, getting threatening letters from legal offices

00:02:40.280 | and from debt collections companies.

00:02:42.160 | There's an intense embarrassment from being in this situation that somebody may face where

00:02:49.440 | my friends find out I'm behind on my debts and how do I deal with these things.

00:02:53.200 | There's just intense stress on all sides.

00:02:55.640 | If you want to make a bad situation worse, just throw in a bunch of unpaid debts.

00:03:01.740 | For example, if you want to make a bad marriage worse, just go through financial stress and

00:03:06.600 | turmoil and have a bunch of unpaid debts and it will make a bad marriage worse.

00:03:10.480 | You want to make a bad business arrangement worse, just go ahead and have the phones light

00:03:15.260 | up with creditors calling all the time.

00:03:17.360 | You want to make a bad job worse, just walk into Human Resources and find out that your

00:03:22.520 | wages are being garnished because you lost a court case wherein you were ordered to pay

00:03:28.840 | debts and now your boss has to send your wages to your creditor.

00:03:35.960 | You want to make a bad car worse, a bad car decision worse, just look out the front window

00:03:40.880 | and see the repo man coming and hooking it up and dragging it away.

00:03:44.840 | You want to make a bad day worse, just try swiping your debit card and all of a sudden

00:03:50.560 | finding out that it won't go through because your creditors have just wiped out the entire

00:03:55.960 | balance of money that's in your bank.

00:03:59.160 | This is the reality that a lot of people face.

00:04:04.000 | What I find really frustrating about this is that I really hate when people are bullies.

00:04:10.160 | I really hate bullying.

00:04:12.200 | So I want to help you if you're in this situation to protect yourself so that you can stand

00:04:17.400 | up against the debt collection bullies or if you're helping somebody else in this situation,

00:04:24.120 | I want to help you because paying bills and paying money is important.

00:04:29.240 | But sometimes there are things that are more important and I want to help give you some

00:04:33.240 | tools and ideas that will help you to stand up to the bullies because people who owe money,

00:04:39.200 | a lot of money, have been bullied right into suicide.

00:04:43.520 | They just felt that there was nothing else they could do and they put the – as the

00:04:48.720 | country song says, they put the bottle to their head and pulled the trigger.

00:04:54.400 | I want to help you avoid that and I think I can help you avoid that by telling you how

00:04:58.460 | to take on some of these bullies and buy yourself a little bit of stress.

00:05:01.200 | I also want to help you because for me, one of the biggest things I hate to see is marriages

00:05:06.440 | and families ripped apart by facing financial stress.

00:05:10.640 | As far as I'm concerned, a marriage and a family is much more important than paying

00:05:16.040 | bills on time.

00:05:18.240 | So if I can do something to help lower the stress that your family may be experiencing

00:05:22.080 | right now, I want to do that because I want to help you fight against the bullies.

00:05:27.840 | Many of the most aggressive credit collectors, especially credit card collections companies

00:05:32.520 | and debt collectors, many of these people are downright bullies and I find their behavior

00:05:38.280 | completely and utterly offensive.

00:05:42.160 | Now the great challenge that I face of course is to recognize that sometimes there are many

00:05:49.000 | bill collectors and credit collectors who are not bullies, that are fair and who are

00:05:54.760 | in a situation where they're owed money and somebody has stolen their property.

00:06:00.080 | That's effectively what it means when you don't pay your bills on time, when you

00:06:05.520 | don't pay your bills as agreed.

00:06:07.800 | Effectively you're a thief and so I don't want to help somebody.

00:06:12.280 | I don't want to enable somebody who's a thief.

00:06:14.680 | I don't want to enable somebody who is fighting against their creditors and not paying their

00:06:19.560 | bills as they should.

00:06:21.320 | I don't want to enable that behavior.

00:06:23.480 | I want to stand against it.

00:06:25.440 | So I find this a challenging subject to just talk about because of course I could go through

00:06:30.600 | and lay out some of these ideas and techniques and I could teach you very elegantly how to

00:06:35.120 | walk through the legal code, how to borrow a bunch of money from your creditors and how

00:06:40.380 | to structure your circumstances in a way that your creditors can't find you and that they

00:06:45.240 | don't know where you are and they don't know where your property is and I could teach

00:06:48.040 | you how to walk right through the bankruptcy court.

00:06:50.960 | As long as you never admitted to what you're doing, I think we could figure out some schemes

00:06:54.140 | that would allow you to walk out and not have to pay the money back.

00:06:58.080 | There are ways to do that.

00:07:00.400 | And so I don't want to enable bad behavior but I want to protect people who are in a

00:07:06.880 | difficult circumstance so that you can stand up for yourself and so that you can effectively

00:07:13.240 | pay back your debts.

00:07:15.640 | And I think most normal people will be able to identify the difference between these two

00:07:21.400 | things.

00:07:22.400 | There's a respect that we can see and we can usually see the difference between somebody

00:07:26.600 | who's struggling, who's got their back up against the wall for whatever reason versus

00:07:31.320 | somebody who's scamming and is trying to take advantage of the situation.

00:07:36.580 | So if you are struggling, I want you to know that I want to share with you some ideas here

00:07:40.520 | that I think will help you as you work to stand good for your word and to work your

00:07:46.200 | way back.

00:07:47.200 | And I consider this to be very, very important.

00:07:49.920 | I consider it a personal obligation to do anything I can to help the poor and the needy

00:07:55.440 | and the destitute in any circumstance that I can find.

00:07:58.720 | And especially in the area of debt collection, I believe that's something that is very important.

00:08:04.920 | In the Bible, in the book of Deuteronomy, as part of the law that's being given through

00:08:08.840 | Moses, there's some instructions about debt collectors and the rules that were placed

00:08:13.680 | on creditors and debt collectors in order to protect the poor.

00:08:18.720 | Deuteronomy 24, verse 10, we find these instructions.

00:08:23.000 | If you lend anything to your neighbor, do not enter his house to pick up the item he

00:08:26.760 | is giving as security.

00:08:28.980 | You must wait outside while he goes in and brings it out to you.

00:08:32.700 | And here, of course, we see the foundation of some of the respect for private property.

00:08:38.760 | The modern concept that we have of the respect for private property is built upon this idea

00:08:42.680 | of not stealing and protection.

00:08:45.200 | So of course, thankfully, in the modern US-American context, we enjoy some level of Fourth Amendment

00:08:51.680 | privilege.

00:08:52.680 | It's built upon this concept here of there being certain rights and certain parts of

00:08:56.320 | your life and your house that are sacred and that are protected.

00:09:01.660 | And so if somebody is trying to come and invade your house and you owe them money, there's

00:09:05.960 | a level of respect that needs to be afforded there.

00:09:08.320 | And then the next – very next verse says this, "If your neighbor is poor and gives

00:09:12.640 | you his cloak as security for a loan, do not keep the cloak overnight.

00:09:17.640 | Return the cloak to its owner by sunset so he can stay warm through the night and bless

00:09:21.560 | you and the Lord your God will count you as righteous."

00:09:24.360 | And I find this just to be a good principle to see that when somebody is very poor, we

00:09:28.840 | want to make sure that they're protected and that the basic needs are protected.

00:09:35.280 | Poverty in this day – where I draw this inspiration from, poverty in this day was

00:09:39.680 | somebody who was giving their coat, their cloak, their coat as security for a loan.

00:09:45.760 | They were so poor that the only thing of value they could offer was their coat and it would

00:09:49.680 | be wrong and immoral to keep somebody's last possessions, their coat, as security

00:09:54.880 | and force them to be cold overnight just so that you can have a debt being paid back.

00:09:59.680 | So if you're poor and you're in a situation, I want to give you some ideas to help you

00:10:03.640 | protect yourself.

00:10:05.260 | And thankfully, of course, you have a lot of protections in the US-American context.

00:10:09.240 | The legal system gives you a lot of protections and I want to share some of those with you

00:10:12.560 | so that you'll feel confident in them.

00:10:14.760 | On the flip side, if you're a scammer and you're trying to just scam the system, I

00:10:18.080 | want to really challenge you on that as well.

00:10:19.800 | Before I get to any tactics and principles that you can apply here, I just want to recognize

00:10:27.560 | the gravity of the situation.

00:10:30.500 | So often I feel like we minimize – and I'm going to take just a brief excursus into just

00:10:35.500 | a discussion of this just for a moment here.

00:10:38.120 | Because I feel like we minimize the important things in our modern era.

00:10:43.120 | We have a tendency to trivialize and collectivize things that are very, very serious.

00:10:48.640 | For example, we often do this with say warfare.

00:10:52.840 | If the particular nation state that we're a part of decides to go off to war, we absolve

00:10:57.520 | ourselves of personal responsibility in that decision or in that involvement because of

00:11:02.680 | a sense of collectivism.

00:11:04.760 | Whether we're participating in a military context and we say, "Well, this is what

00:11:08.080 | our orders were," or we're just saying, "Well, I support such and such that the

00:11:12.080 | country is doing," or "I'm not going to get involved with it."

00:11:15.520 | Great injustices are committed because of the collectivization of the action.

00:11:21.520 | When in reality, we need to take personal responsibility for those things.

00:11:24.720 | We must stand and take personal responsibility.

00:11:27.480 | We have a similar approach when it comes to money.

00:11:30.360 | We'll often say, "Well, so-and-so, these big companies or these big banks did such

00:11:35.160 | and such a thing and yes, it was wrong of them but we can't hold the individuals responsible."

00:11:41.160 | Or we look and say, "Well, it's OK" – and here's where I want to get to individuals.

00:11:44.400 | We say, "It's OK for me to stand against the – this big company and I wouldn't

00:11:53.400 | go to my neighbor and take their money away from them.

00:11:57.280 | But because it's a big credit card company, because it's Chase or Capital One or Bank

00:12:02.280 | of America, well, they've got all the money and so I can just go ahead and take the money

00:12:05.680 | from them."

00:12:06.680 | No, it's not OK.

00:12:07.680 | It's not OK.

00:12:09.440 | I feel like this is important to start out with, to get us on the right foundation because

00:12:14.520 | if you get the big things right, then the little tactics and the techniques are relatively

00:12:19.720 | simple.

00:12:20.720 | Oftentimes in analysis, I look at analysis in almost three levels.

00:12:26.600 | There's the practical which is just the day-to-day practical.

00:12:30.160 | There's the legal and then often there's the moral or the ethics involved, the moral

00:12:37.120 | discussion.

00:12:38.120 | It's nice when all three of these things line up.

00:12:40.720 | Thankfully, much of the time, the legal considerations line up with what's moral and the practical

00:12:46.960 | considerations can line up with the legal.

00:12:49.160 | Sometimes though all three of these are at odds and that makes circumstances very, very

00:12:52.440 | difficult.

00:12:53.440 | There are many circumstances that aren't neat, that aren't neatly tied up.

00:12:58.840 | But please, I beg you, if you're in a situation where you owe somebody money and you've fallen

00:13:03.000 | behind in your payments, face it for what it is.

00:13:07.080 | I personally believe that it's – if you're not paying your debts as agreed, that is a

00:13:11.880 | form of theft and you need to take responsibility for that, full responsibility for that.

00:13:19.120 | Now, why do I say that?

00:13:22.480 | Well, consider the situation.

00:13:24.920 | If you come to me and you borrow $100 from me and you say, "Josh, I'd like to borrow

00:13:30.560 | $100 from you," and I say, "OK, here's $100.

00:13:34.040 | When can you pay it back?"

00:13:35.040 | And you say, "I'll pay it back to you next Friday."

00:13:37.000 | I give you $100 and you go and you do whatever you need to do with it.

00:13:40.120 | Maybe you wanted to go out to dinner and just waited for your next paycheck or maybe you

00:13:43.640 | needed to do some – whatever.

00:13:44.640 | It doesn't matter.

00:13:45.640 | But next Friday, you come back and you give me the $100.

00:13:48.000 | We're all OK.

00:13:49.000 | I might charge you an interest payment.

00:13:51.160 | You might agree to pay for that.

00:13:52.640 | Everything is good and that's fine.

00:13:54.920 | It's fine for us to engage in these transactions and that's what we do every day when we

00:13:59.220 | use the financial system.

00:14:00.960 | We engage in a contract and both people go into that contract freely and they engage

00:14:05.080 | and they buy and they sell and we're good to go.

00:14:08.120 | But now let's say that you come to me and you ask me for $100 and I lend it to you with

00:14:12.280 | the agreement that you'll pay it back to me on Friday.

00:14:15.000 | Then on Friday, you come back and you say, "I don't have your $100."

00:14:21.320 | You say, "Well," and I say, "Where is it?"

00:14:25.240 | You say, "Well, it's gone."

00:14:26.240 | Well, here's the question that I'd like to ask you.

00:14:29.800 | Whose $100 was it if you're in that situation?

00:14:35.600 | See the $100 didn't belong to you.

00:14:37.520 | The $100 belonged to me.

00:14:40.360 | Now you've taken the $100 and you've sent it somewhere else.

00:14:45.320 | In an effect, you've stolen my property.

00:14:49.760 | That's the situation and the circumstance that we find up in when we're in this.

00:14:54.480 | I think it's important to get clear on it because if you get clear on the fact that

00:14:58.080 | you have a moral duty and an obligation to pay your bills, then all of the actions that

00:15:03.360 | will come from that will be – they'll flow easily.

00:15:12.120 | But if you're not clear on the fact that you have a moral obligation to pay your bills,

00:15:15.640 | I think you'll wind up oftentimes pursuing the wrong thing and your life will be very,

00:15:24.160 | very difficult and you'll wind up in the legal system and your life will be very, very

00:15:28.240 | difficult as I'll describe to you in the course of the show.

00:15:32.120 | Most of the show is going to be dedicated to the tactics and the techniques and the

00:15:35.640 | legal discussion.

00:15:36.640 | We've got to build it on the right foundation which is you standing good for what you owe

00:15:42.520 | and you not being a thief.

00:15:44.960 | Of course, we would acknowledge that there are different levels of theft.

00:15:48.320 | Thankfully, our legal code would acknowledge this as well.

00:15:51.720 | There are circumstances that are different than others.

00:15:55.240 | It's one thing for you to go and to intentionally steal my property and never planning to pay

00:16:02.640 | it back.

00:16:03.640 | It's another thing if you take my property and you plan to pay it back but something

00:16:06.960 | happens.

00:16:08.000 | But there's still an obligation here and I think that we need to talk more about this

00:16:13.800 | because we often don't – we're not clear on this.

00:16:17.760 | Because we're not clear on it, we justify a lot of things on different levels in our

00:16:21.640 | society that really bring on dramatic harm.

00:16:27.200 | Theft can take many forms and each form is wrong.

00:16:31.600 | It is immoral and wrong for you to go and to steal your neighbor's car from their

00:16:36.040 | driveway by hot wiring the ignition in the middle of the night.

00:16:40.080 | It's also immoral and wrong for you to steal the car that your bank owns that you stopped

00:16:45.920 | making payments on because you fell behind and for you to hide it in your neighbor's

00:16:49.760 | garage because they're looking for their property.

00:16:52.600 | Both of those are wrong.

00:16:54.320 | Yes, the intentionality of your actions matters, but they're both wrong.

00:17:00.080 | It's wrong and immoral for you to steal cash out of your company's petty cash strongbox

00:17:05.880 | that's behind the desk while the secretary is out to lunch.

00:17:09.760 | But it's also wrong for you to steal cash from a credit card issuer by using their money

00:17:14.800 | to go out and buy things that you use to fill up your house and then not pay the credit

00:17:19.280 | card company back as you originally agreed on the schedule of payments that you agreed

00:17:24.960 | in the credit card agreement.

00:17:26.560 | Yes, it's wrong for you to break into somebody's apartment while they're away on vacation

00:17:31.000 | and eat their food and sleep in their bed and then to load all their furniture up in

00:17:35.280 | a truck when you leave and they're on their way home.

00:17:38.120 | But it's also wrong for you to live in your landlord's apartment while not making the

00:17:42.120 | agreed upon rent payments with them.

00:17:46.080 | It's wrong for you to walk into your local pharmacy with a gun in your hand and clean

00:17:49.840 | the safe out of the pills in order for you to support your drug addiction.

00:17:54.100 | But it's also wrong for you to go down to the local hospital for medical treatment where

00:17:59.600 | they patch you up and drug you up and send you out the door healthy and healed and then

00:18:04.560 | never go bother to go back and try to settle your bill and pay for the goods and services

00:18:08.660 | that made you well.

00:18:11.880 | Now there are differences in intention, yes, but take responsibility for these things.

00:18:23.360 | It's wrong to steal.

00:18:26.760 | It's wrong to steal.

00:18:29.440 | Thou shalt not steal.

00:18:32.320 | The book of Psalms in the Bible says the wicked borrows but does not pay back.

00:18:35.680 | If you're one who borrowing and not paying back, that is a wicked thing to do.

00:18:39.680 | But the solution is to pay back the things that you owe.

00:18:44.120 | And if you have that intention, if you have that clear intention, if you have that firm

00:18:48.800 | conviction, then we can go back and start to arrange these things so that you can start

00:18:53.120 | to pay back your creditors.

00:18:54.520 | And that's what I want to help you do.

00:18:56.200 | I want to help you protect you along the way.

00:18:59.080 | I want to protect your family.

00:19:02.680 | But we want to make these situations right.

00:19:07.800 | How do you make the situation right?

00:19:09.840 | Well, the answer for theft, the right thing to do in case of theft is to make restitution

00:19:17.680 | and to pay back the things that you've stolen.

00:19:21.360 | If my son goes into a local grocery store and steals something, let's just say he

00:19:28.000 | steals a toy.

00:19:29.000 | When I was a kid, I stole magazines from the grocery store.

00:19:31.800 | I would go and I would read truck magazines and I would slide them in my pants and I would

00:19:36.600 | steal them and walk out.

00:19:38.400 | And I think I was caught at some point.

00:19:39.680 | I think the details are hazy at this point.

00:19:41.760 | But I just – I know I did that when I was a kid.

00:19:43.680 | So if my son does that, he follows in my footsteps and he goes into the grocery store and he's

00:19:50.320 | reading magazines and he steals a truck magazine from the grocery store, then what do I – as

00:19:58.560 | a good parent, what do I need to do for him?

00:20:01.360 | 1.

00:20:02.360 | I need to help him to face his action square on and to take responsibility for his sin.

00:20:12.560 | There needs to be a reckoning and an exposure of that behavior.

00:20:18.680 | So the way that you make a wrong situation right is you face it squarely and you confess

00:20:26.400 | it.

00:20:27.400 | So of course confession of course is first to God and then to others around you, to somebody

00:20:31.880 | that's involved, a trusted friend.

00:20:34.160 | But sin needs to be acknowledged.

00:20:36.880 | And then there's a confession back to the person that's been wronged in the situation.

00:20:41.260 | So if my son were to follow in what I did and I believe this is what my parents did

00:20:47.680 | but I don't remember it at this point.

00:20:49.120 | But I remember one time I stole money out of my mom's purse a lot and that was a very

00:20:54.000 | – that one I do remember the painful circumstances of getting that situation right.

00:21:01.360 | But the first thing we do is we confront with the wrongness which is what I'm doing to

00:21:05.700 | you today.

00:21:06.700 | If you're in a situation where you're not paying your debts, this is what I'm

00:21:08.800 | doing.

00:21:09.800 | I'm confronting you and I'm bringing your actions and saying you need to acknowledge

00:21:12.060 | what you've done.

00:21:13.060 | So if my son stole magazines from the grocery store, then it's my responsibility to confront

00:21:19.020 | him with that and to get him to confess to his theft.

00:21:25.520 | Then we would confess that sin on our knees together before the Lord, ask for forgiveness.

00:21:30.600 | Then we would take that, it would be a confession in this case to a responsible party which

00:21:33.840 | would be us or his parents.

00:21:36.040 | And then we would go back and I would take him to the grocery store and he would go and

00:21:39.460 | he would confess his sin to the managers or the people involved in that grocery store.

00:21:46.360 | That would be the important action to go and make that confession to the person that's

00:21:51.880 | been wronged.

00:21:53.840 | And then he needs to take responsibility for that crime.

00:21:59.420 | Now in some circumstances, that's going to involve taking legal responsibility.

00:22:03.120 | Of course, it's different if my son steals a $5 magazine.

00:22:09.240 | You wouldn't necessarily expect him to send a six-year-old to jail.

00:22:13.200 | But in some circumstances, that does involve getting involved with the legal system and

00:22:16.700 | taking legal responsibility.

00:22:18.840 | But there's the taking of responsibility and then he would need to make restitution.

00:22:23.800 | He would need to pay back the thing that was stolen and make the situation right.

00:22:29.060 | Usually this would involve paying back what was stolen with extra, with some amount of

00:22:33.320 | extra.

00:22:34.960 | And then however long that takes, however much he has to work, whatever has to be done,

00:22:40.440 | there is – that's how he takes responsibility.

00:22:43.760 | And so with you, let me challenge you.

00:22:45.040 | If you're in a situation here where you're behind on your bills and you're not paying

00:22:49.440 | your creditors as agreed, I humbly ask you to consider why have you stolen from your

00:22:56.080 | creditors?

00:22:57.080 | And then I humbly ask you to consider how you can make things right with them.

00:23:07.560 | And the way to make things right is to acknowledge the wrong and to make confession for it and

00:23:13.520 | then to go back and to write the situation and make restitution for your error, for your

00:23:20.000 | sin, for your behavior.

00:23:21.000 | Now there are a few errors that we commit when assessing the subject.

00:23:23.720 | The first thing is we always look and try to justify motive first and foremost.

00:23:27.840 | And I think this is probably the biggest thing when it comes to debt.

00:23:32.320 | You say, "Well, it's simple if my son steals a magazine because that's just pleasure.

00:23:38.240 | It's not a matter of life or death.

00:23:40.240 | But what about if he steals a loaf of bread to feed his dying sibling?"

00:23:44.680 | Well, yes, motive matters to an extent but we still got to deal with the rightness and

00:23:49.120 | wrongness of the situation.

00:23:50.440 | So don't start with justifying yourself.

00:23:53.520 | Rather, take responsibility and take responsibility and take it quickly.

00:24:00.000 | I think this for most of us is our biggest challenge.

00:24:02.520 | This is my personal Achilles heel.

00:24:04.560 | My instinct is usually to run from problems but that makes them worse.

00:24:07.680 | It always does.

00:24:09.000 | And I often don't want to take responsibility but that always makes it worse.

00:24:13.240 | And so I seek to continue to encourage myself and I encourage you.

00:24:17.280 | Take responsibility as quickly as you can in these circumstances.

00:24:21.240 | And if you haven't taken responsibility thus far, I'm going to share with you some things

00:24:25.180 | here to do so.

00:24:27.720 | So what do we start with?

00:24:30.200 | Well, let's start by figuring out where you are.

00:24:31.960 | Let me give you an action plan.

00:24:33.760 | You got to start by figuring out where you are.

00:24:35.680 | We want to face the circumstances clearly.

00:24:39.960 | So that begins with making a listing of your debts.

00:24:45.040 | As far as the tools that you need, let's start with a notebook.

00:24:47.720 | The fundamental tool that you need to work your way out of this mess is a notebook.

00:24:52.560 | You need a physical paper notebook and I recommend that you use an attached pen to that notebook.

00:24:59.560 | What I do when I'm using a notebook like this is I get a pen, I take a string, a piece of

00:25:03.800 | duct tape, I wrap duct tape with a string at one end of the pen and I duct tape the

00:25:08.240 | other end of the string to the back of the notebook.

00:25:11.200 | That way I always have a pen.

00:25:12.200 | I got a pen and a notebook to organize my information.

00:25:15.840 | This organization, if you pursue it, will start to build a habit in you that will help

00:25:20.000 | you throughout all of your financial life.

00:25:23.080 | Most people who get deeply into financial problems usually get there from a lack of

00:25:30.160 | organization and a lack of forethought.

00:25:34.200 | There are many circumstances with regard to financial distress and somebody who's behind

00:25:39.580 | on their bills.

00:25:40.580 | We need to look at the actual circumstances.

00:25:43.080 | Unfortunately, I can't do that but I want to acknowledge there's a big difference between

00:25:47.960 | you owe nobody any money and all of a sudden you wind up with a million-dollar bill at

00:25:51.000 | the local hospital for cancer treatment.

00:25:54.400 | There's a big difference between that versus somebody who has 40 credit cards that are

00:25:58.760 | all behind and are five years behind.

00:26:01.860 | But much of the time, it comes down to lack of disorganization.

00:26:05.760 | I'm tending here towards the things that are – I'm tending in this analysis towards

00:26:11.540 | somebody who's in a circumstance where they have a lot of credit cards, car payments,

00:26:16.560 | student loans, behind on bills just through disorganization.

00:26:20.800 | Usually this happens because you get overwhelmed with life.

00:26:24.880 | You get overwhelmed with not knowing how to run your money.

00:26:27.760 | It's hard to get connected to it.

00:26:29.560 | Don't pay much attention to what's in the checking account.

00:26:31.720 | Don't have a monthly budget.

00:26:33.040 | Don't know how much money is coming in and how much money is going out.

00:26:35.920 | Well, if that's what caused the financial distress in the first place, you got to solve

00:26:41.360 | that problem.

00:26:43.960 | And so you're going to have to develop new skills.

00:26:46.320 | One of those skills is organization.

00:26:48.080 | So you begin with a notebook with an attached pen so you have a place to record all your

00:26:52.040 | information in one place.

00:26:55.320 | And in a moment, we'll talk about communication.

00:26:58.560 | You start by making a list of everything that you owe to anybody that you owe.

00:27:04.280 | So ways to do this, start with pulling a copy of your credit report.

00:27:07.640 | Go to annualcreditreport.com.

00:27:10.440 | Again annualcreditreport.com, that's the official website that you can use to download

00:27:15.560 | a current copy of your credit report.

00:27:17.280 | You can do that for free once every 12 months.

00:27:20.720 | Start with that.

00:27:21.720 | Download your credit report.

00:27:22.720 | Do the same for your spouse or have them do it.

00:27:25.200 | And then make a listing of everything that's listed there, all of the debts that are listed

00:27:28.480 | on your credit report.

00:27:30.280 | For most people, this will be a pretty good list.

00:27:33.400 | You may have some debts that are outside of it.

00:27:35.320 | But for most of us who are involved in the modern financial system, this will be a pretty

00:27:38.680 | good starting point.

00:27:39.680 | It will be a long list of credit cards, of student loans, et cetera, mortgages, car payments,

00:27:46.560 | et cetera.

00:27:47.560 | Now you may have things that are outside of it.

00:27:49.160 | Maybe you have a private loan with a friend or family member.

00:27:52.120 | Maybe you had a business loan that wasn't reflected on your credit report.

00:27:55.920 | Also add those things down.

00:27:58.480 | And rank a complete list of those on a piece of paper.

00:28:02.280 | Find out who you owe, collect all the bills and find out how much you owe.

00:28:07.360 | And then search your memory to make sure that everything is reflected on that paper.

00:28:13.520 | Don't forget any of it.

00:28:15.960 | Then face that list square on.

00:28:18.280 | Of course, here's where we have to deal with things as they are.

00:28:22.120 | Start with facing the list and taking responsibility for your actions.

00:28:26.480 | If there's a place of confession for your actions, do that.

00:28:31.240 | If there's a place of reaching out and acknowledging to somebody that you've borrowed money from,

00:28:35.600 | do that.

00:28:36.600 | This is much easier done, of course, when there's a person.

00:28:39.480 | For example, if you have a landlord, it might be a good idea to call – you're two months

00:28:44.480 | behind on your rent or you walked out on a previous agreement and you owed your landlord

00:28:51.720 | back rent.

00:28:53.220 | That would be the type of person that you can personally contact.

00:28:56.240 | And if you take responsibility with these types of things, you'll find I think your

00:28:59.600 | whole situation changes.

00:29:02.240 | Taking responsibility for your actions is the opposite of what most people do.

00:29:06.000 | Contact any landlord, someone who owns a handful of rental houses or apartments and start asking

00:29:10.480 | about the stories people give them when they don't want to pay their rent.

00:29:14.320 | If you'll just take responsibility, you'll magically find yourself in a new relationship

00:29:18.200 | with them.

00:29:19.640 | So I would try something like this.

00:29:20.960 | If I had a landlord, I would call them and I would say, "Dear landlord, I know you're

00:29:24.640 | surprised to hear from me.

00:29:26.120 | I haven't been very communicative recently and I'm sorry.

00:29:29.160 | I was really overwhelmed by my circumstances.

00:29:31.440 | I lost my job.

00:29:32.440 | My wife was sick.

00:29:33.780 | We just didn't know what to do and I've fallen behind on my rent.

00:29:35.960 | And I'm sorry.

00:29:36.960 | But I'm ready to try again and I want you to know that I take full responsibility for

00:29:41.360 | the money that I owe you.

00:29:43.720 | I don't know yet how I'm going to pay you back, but I'm working on it.

00:29:46.640 | And I want to let you know that I won't be avoiding your phone calls anymore.

00:29:49.480 | I won't be avoiding you, but I'll be available and communicating with you frequently as we

00:29:54.160 | figure out a plan.

00:29:55.160 | And I'm sorry.

00:29:56.160 | I'm going to make things right."

00:29:57.480 | That's a very freeing conversation.

00:30:02.320 | And your relationship with the landlord will change night and day because they don't hear

00:30:05.400 | that.

00:30:08.480 | So if they're personal creditors, that would be a good place to start.

00:30:10.880 | Little harder to do that with a big faceless entity of a bill collection agency with a

00:30:17.400 | debt that's been sold five times over and you're dealing with a debt collector that

00:30:21.600 | bought the debt, again, five times – five layers deep.

00:30:25.360 | But still, do what you can to take responsibility with those.

00:30:29.360 | So make a list of what you owe.

00:30:31.720 | Now additionally in this notebook, you need to log your communication with your creditors.

00:30:39.480 | What I would do is I would devote a page in the notebook, a separate page or a section

00:30:45.480 | depending on how many creditors, the type of creditor and the layout of your notebook.

00:30:48.980 | But I would devote a page of that notebook to each of my creditors and I would start

00:30:53.480 | a log, a record of each and every one of my communications with them, each and every one

00:30:59.740 | of my phone calls with them.

00:31:01.640 | I would record all letters, all interaction, emails, texts, anything.

00:31:06.640 | I would start to record those things very, very carefully to make sure that I'm not

00:31:12.240 | forgetting anybody and also to make sure that I'm communicating with them.

00:31:15.920 | One of the principles that you want to apply in this process of getting out of debt is

00:31:19.320 | good consistent communication.

00:31:21.640 | Again, most people run from their debts.

00:31:24.040 | Most people run from their responsibilities and this is very frustrating when you're

00:31:28.480 | owed money.

00:31:29.840 | If you've ever been in a situation where you've lent somebody money, you know how

00:31:34.880 | frustrating this is.

00:31:37.400 | Oftentimes as a lender, you know you're taking a risk.

00:31:39.920 | You know that the person might face hard times and they may not be able to pay you in a certain

00:31:47.240 | way.

00:31:48.240 | You know they're facing hard times.

00:31:49.240 | But all you want is a conversation and an honest discussion so you can make a plan.

00:31:54.000 | Frequently as a lender, you may be willing to work with somebody.

00:31:56.200 | You may be willing to – landlords are often willing to lower the rent for a period of

00:31:59.960 | time or to help in some way if they can.

00:32:05.080 | But they can't do those things if there's no communication.

00:32:07.600 | So you want to firmly place yourself in the world of communicating frequently with my

00:32:14.280 | creditors.

00:32:15.280 | Now even if you're dealing with people like credit card collectors, debt collectors, if

00:32:19.720 | you'll simply communicate, communicate honestly and forthrightly with people, you'll find

00:32:25.480 | that you can stay out of the legal system.

00:32:27.680 | And in debt collection, you want to stay out of the legal system.

00:32:31.360 | It's very painful when you wind up in court losing your lawsuit, which you will because

00:32:40.800 | you owe the money.

00:32:42.320 | And now all of a sudden, your creditor has a judgment taken out against you and they're

00:32:47.360 | able to come and to wipe out your bank account.

00:32:50.160 | It's a problem.

00:32:53.600 | So you want to stay out of that situation.

00:32:55.560 | But the way you stay out of that situation is by taking responsibility, communicating

00:33:00.240 | frequently with your creditors and then working on making plans that will make things right.

00:33:06.400 | Your creditors don't actually want to sue you because it costs them a lot of money and

00:33:09.680 | they're going to wind up with less money and they know you probably don't have a

00:33:11.920 | lot of money anyway.

00:33:13.440 | So they don't want to sue you.

00:33:15.420 | But if you don't communicate, you're going to force them to sue you quicker than they

00:33:18.640 | might otherwise do it.

00:33:20.040 | So you want to log your communication with your creditors in your notebook and you want

00:33:23.960 | to make sure that you're frequently speaking with your creditors.

00:33:28.040 | The next tool you need to be prepared for this process of getting out of debt, paying

00:33:33.240 | all your creditors back is a filing system.

00:33:35.880 | You need a simple filing system.

00:33:38.880 | And this is often hard for people who are in debt.

00:33:42.160 | Again, you're going to have to learn new skills.

00:33:45.440 | If you were organized with your money, you probably wouldn't be in this situation.

00:33:51.480 | But you're in the situation because you're not organized with your money.

00:33:54.720 | So let me explain it just a very simple filing system what I would implement if I woke up

00:33:59.240 | deeply in debt, owing a lot of money.

00:34:01.920 | I would go to the local office supply store or Walmart or wherever and I would buy what's

00:34:07.040 | called an expanding file pocket.

00:34:09.920 | There's one of these cardboard, I would say other than pockets, but they have a number

00:34:15.240 | of pockets in them and they kind of expand and contract depending on how much paper is

00:34:21.640 | in them.

00:34:22.640 | And I would buy one that has enough room for the number of creditors that I have.

00:34:28.840 | If I owe five credit cards, then I would buy one like that.

00:34:31.600 | If I owe 30, I might have to get one that has more pockets or maybe a couple of them.

00:34:35.880 | And then I would label those and devote one file pocket to each creditor.

00:34:41.860 | So I have a very simple place to keep all of my papers that I'm going to have.

00:34:46.720 | And I'm going to be a lot of papers.

00:34:49.240 | When you're dealing with debt collectors, one of the things that's very important that

00:34:53.040 | you do now and that you continue to do forever is to communicate with them on paper.

00:35:00.280 | Paper is proof of what you're doing.

00:35:01.840 | So you want to consistently communicate on paper.

00:35:05.000 | You never take phone conversations as gold.

00:35:10.560 | You only deal with things in written paper and you save all of those so that you're prepared

00:35:15.500 | to show what you're doing with regard to your personal circumstances and correspondence.

00:35:22.420 | As you put these papers in place, you're going to organize them by date.

00:35:25.620 | So again, they're organized by creditor in each pocket and then just simply keep things

00:35:29.000 | in order of date.

00:35:30.240 | Put the oldest communication on the bottom of the stack and the newest communication

00:35:34.500 | on the top and organize things by date.

00:35:36.940 | What I frequently do when I'm organizing lots of legal papers is I'll just highlight the

00:35:40.760 | date on the paper.

00:35:42.520 | Frequently with legal documents, things like that, it's hard to find the date in all of

00:35:45.720 | the clutter.

00:35:46.720 | So when I receive a piece of communication or I'm organizing things, just take a little

00:35:49.620 | highlighter and highlight the date.

00:35:51.180 | That allows me to quickly and easily collate them and stack them by date.

00:35:54.880 | And all of your correspondence is going to be filed and kept in this one place.

00:35:59.020 | So you're building a record, a file of your communication with this particular creditor.

00:36:04.440 | Now final tool, this is not mandatory, but for many people this would be helpful, is

00:36:09.840 | in the coming months, you're going to have a lot of communication.

00:36:12.780 | And so you need to have a printer, if at all possible, and a copy machine, if at all possible

00:36:18.080 | as well.

00:36:19.300 | If you are very poor and you have a transient living situation, this may be out of your

00:36:24.620 | reach.

00:36:25.680 | But today you can buy, $50 or $60 can get you a small, cheap copier, scanner, and printer

00:36:33.480 | online on Amazon.

00:36:34.480 | I checked it out.

00:36:35.480 | $50, $60 can get you a small, cheap copier, scanner, printer.

00:36:37.720 | You just need black and white.

00:36:39.360 | But you're going to be doing a lot of copies.

00:36:40.520 | You need copies of everything.

00:36:42.100 | Copies of canceled checks, copies of payment, copies of letters that you're sending.

00:36:46.160 | And you're going to be doing some printing as well.

00:36:48.160 | You can write these things physically if you don't have a printer.

00:36:50.520 | So if you don't have a printer, that's fine.

00:36:51.520 | If you don't have a computer, you can write letters by hand, but still you need copies

00:36:55.160 | of them.

00:36:56.160 | And so it would be worth considering getting a copy machine.

00:36:59.440 | If not, you may be able to use one at work or you may be able to rent one at the local

00:37:04.060 | library or at an office supply store like a FedEx Kinko or something like that.

00:37:08.420 | But a copy machine would be a helpful piece of tool for you to have if you don't have

00:37:13.260 | one.

00:37:14.260 | Now in a moment, we'll continue with the tools and I'll give you some strategies.

00:37:16.960 | But first, let me share with you about HelloFresh.

00:37:20.800 | HelloFresh, I've been doing these ads for what, four or five months now?

00:37:24.720 | HelloFresh is awesome.

00:37:25.720 | They're a meal delivery service where they will send you, you sign up and they send you,

00:37:31.560 | you choose what kind of recipes you want.

00:37:34.280 | You choose what type of food you like and how big your family is.

00:37:38.280 | And then they send you a box and you choose what day works best for you to receive the

00:37:42.320 | box.

00:37:44.000 | And they send you a box of groceries.

00:37:46.440 | All of the groceries come with ingredients.

00:37:48.720 | They're pre-measured and coordinated, organized meal kits.

00:37:53.040 | So you know which ingredients go with which recipe.

00:37:55.400 | It's delivered right to your door.

00:37:57.280 | It's insulated for the things that are cold.

00:37:59.240 | They're insulated.

00:38:00.240 | You take them out, run them right in the fridge and you're ready to go.

00:38:02.560 | When they send you the box and then it comes to dinner time, all you do is you look through

00:38:05.080 | the recipe cards and say, "Well, which of these recipes do I want to make?"

00:38:08.440 | You grab that recipe, you grab that box out of the fridge and in, for me, 20, 30 minutes,

00:38:12.720 | 20 meals, 20 minutes or so, you're in there and you've got that thing put together and

00:38:16.840 | you've got fresh, delicious food.

00:38:19.740 | At this time of year where it just seems so busy with the holidays and all of us, I think,

00:38:24.680 | have more demands put on us during the holiday season, that convenience is really, really

00:38:29.480 | valuable.

00:38:31.600 | Where somebody else is doing all the shopping and the recipe planning and they're delivering

00:38:35.660 | it right to you and all you do is just put it together and make it.

00:38:39.000 | HelloFresh is really great, great food.

00:38:41.140 | It's not as cheap as doing everything yourself.

00:38:42.720 | Of course not.

00:38:44.280 | You could do the planning.

00:38:46.060 | You could do all the shopping as well.

00:38:48.520 | But it's cheaper than going out to eat by a good margin and it's fun.

00:38:52.400 | It's fun and it's better quality food.

00:38:54.840 | If you've never tried HelloFresh, give it a shot.

00:38:56.720 | Go to HelloFresh.com, sign up, use coupon code RPF30.

00:39:00.920 | HelloFresh.com, use coupon code RPF30.

00:39:03.780 | That coupon code saves you 30 bucks off your first week of deliveries and use it as a way

00:39:10.300 | even to learn to cook.

00:39:12.000 | When all the recipes are there, most of them they have careful instructions and they have

00:39:19.920 | detailed listings of how to do it.

00:39:22.040 | You can use it as a pretty great way to learn how to cook food from scratch as well.

00:39:25.280 | So visit HelloFresh.com, use a coupon code RPF30.

00:39:29.680 | Now back to the tools.

00:39:32.320 | Next three tools we're going to talk about, phone, email and mail.

00:39:35.040 | I'm going to give you a couple of ideas that I've never really heard anyone else talk about

00:39:39.020 | but I think will be helpful to you.

00:39:42.560 | If at all possible, what I would recommend is that you separate your phone system so

00:39:47.600 | that you have a separate phone number on which to take all of your creditor discussions.

00:39:55.920 | Most people just have one phone number, a cell phone number that they use, but this

00:39:58.920 | is really stressful.

00:40:00.780 | One of the things that people face when they're behind on their bills is constant calls from

00:40:05.640 | debt collectors and they want to reach you at all times.

00:40:09.120 | Most people just get to the point where they run from the phone and they only pick up – they

00:40:13.400 | use the phone completely to screen with caller ID and they only pick up the phone when it's

00:40:17.000 | a known contact, which okay, that's fine.

00:40:20.680 | But I think there are better ways.

00:40:22.560 | What I want to do is I want to make sure that in my communication strategy, I'm setting

00:40:26.220 | aside time consistently, probably weekly, biweekly to communicate with my creditors

00:40:31.260 | but I'm not going to let them run my life.

00:40:34.040 | After all, the way that I'm going to get out of debt is to increase my income, which

00:40:37.240 | means do a good job at work.

00:40:38.760 | If I have a job, build a good business.

00:40:40.440 | If I need to build a business, I need to control my expenses.

00:40:43.200 | I've got things to do other than talking to bill collectors all the time and I don't

00:40:47.520 | need that stress.

00:40:48.960 | So I would want to separate my phone number and just have all creditors in one place.

00:40:53.800 | I think probably the simplest way and the best way to do this technologically for most

00:40:59.120 | people would be for you to move your phone number that you use.

00:41:02.880 | Move your existing phone number to Google Voice and then go ahead and get yourself a

00:41:07.000 | new phone number for your personal contacts and your personal discussions.

00:41:12.840 | Google Voice, I of course hate to recommend any Google product but in this case, you're

00:41:17.120 | broke so we'll take advantage of what they've got and when you're rich, we'll work on

00:41:22.040 | better solutions that are going to be a little bit better than doing business with Google.

00:41:26.240 | But you can port your number from your phone to Google Voice.

00:41:30.280 | Google Voice charges you 20 bucks one time for you to do that, to establish a phone number

00:41:34.760 | with them.

00:41:35.840 | And then from then on, there's no additional charge for that.

00:41:39.440 | Now what do you get with Google Voice?

00:41:41.000 | Google Voice is basically a phone and text management system but it allows you to place

00:41:48.680 | calls from your number, from your Google Voice number and it allows you to receive and to

00:41:53.240 | organize all of your voicemails, your text messages as well.

00:41:57.040 | And you can forward your number from Google Voice to other phones for you to pick up in

00:42:01.040 | time.

00:42:02.320 | So as an example, if I moved my phone number to Google Voice, now all my creditors are

00:42:07.840 | going to have that number.

00:42:09.520 | And I would then get a new number and forward that number from Google Voice to my other

00:42:14.080 | number so they're going to answer.

00:42:15.760 | Google Voice allows you to do things like forward calls during a certain time.

00:42:20.520 | So as an example, your creditors, you're allowed to under the Fair Debt Collections

00:42:26.000 | Practices Act, you're allowed to instruct your creditors about when they can call you

00:42:29.640 | and when they can't call you.

00:42:30.640 | You can forbid your creditors from calling you at work.

00:42:33.640 | But what I would do is I would set it up and I would say to them, "Listen, I'll speak

00:42:36.400 | to you on these days between these hours from 7 o'clock to 9 o'clock at night, Monday through

00:42:42.200 | Friday.

00:42:43.200 | But the rest of the time, I can set that Google Voice number up so the calls don't even go

00:42:46.680 | through.

00:42:47.960 | So they don't even get passed through to my telephone."

00:42:51.200 | And that's really, really helpful.

00:42:53.260 | Other things that are helpful about Google Voice is you'll have an easy record of all

00:42:57.760 | of your voicemails.

00:42:58.760 | And that record is on the computer where you can save those voicemails.

00:43:03.280 | You are not allowed to be abused by a debt collector.

00:43:06.080 | And so in order for you to keep yourself from being abused, it's valuable for you to collect

00:43:10.280 | the information and to keep your debt collectors on edge so they know they're on the record.

00:43:16.820 | So voicemails that are being recorded is helpful.

00:43:19.860 | So they can't, for example, a debt collector is not allowed to swear at you.

00:43:22.760 | They're not allowed to leave you angry voicemails swearing at you in a voicemail.

00:43:26.440 | So having those in Google Voice is very, very helpful to you.

00:43:29.880 | Additionally, by using Google Voice, you'll have a record of all of the calls, all of

00:43:33.960 | the any text messages because you can use Google to communicate with that as well.

00:43:38.460 | And it's all in one place.

00:43:40.440 | Additional benefits to Google Voice, you can use Google Voice to record phone calls easily.

00:43:44.880 | For an incoming call, you can use Google Voice just by you press 4 on your keypad and it'll

00:43:49.080 | automatically start call recording.

00:43:51.240 | And I would when negotiating with creditors, I would record every single call.

00:43:56.160 | So check out Google Voice and see if that might be a good solution for you.

00:43:59.440 | And go ahead and get a new phone number and make sure that you don't ever give that phone

00:44:02.700 | number out to anybody except personal friends.

00:44:05.240 | So that way you're only communicating with people.

00:44:08.400 | You don't have to be scared of your phone.

00:44:11.680 | When you're in war mode to deal with your bill collectors, then you get yourself in

00:44:15.840 | that mode and you go into that war room, that Google Voice identity or whatever it is, and

00:44:21.720 | you deal with it there.

00:44:23.760 | And if you're not in war mode, you don't need to worry about them invading your life.

00:44:27.560 | That's one simple thing that I would do.

00:44:29.080 | Now, if you don't want to go the Google Voice route, I would consider going ahead and getting

00:44:33.660 | a new phone and then either just taking my number if the current number is what all the

00:44:37.360 | bill collectors have.

00:44:38.360 | I would port that to just a separate burner phone, just to get a get a self a move it

00:44:42.640 | to a simple, cheap prepaid number somehow.

00:44:47.360 | But I would keep a separate cell phone.

00:44:48.760 | If I didn't want to do Google Voice route, I'd keep a separate cell phone.

00:44:52.200 | So that way that phone can be off all of the time unless I'm in work mode.

00:44:56.800 | I'm in war mode, in which case I turn the phone on, I listen to the voice messages and

00:45:00.760 | I start making calls to my creditors and I tell them, "Here's what I'm doing.

00:45:03.680 | Here's what I can send you.

00:45:04.680 | Here's when I can send it to you."

00:45:06.060 | And then I power that thing off and it's not allowed to interrupt my life.

00:45:09.280 | I'm not going to have my date night with my wife ruined by a bill collector calling.

00:45:17.040 | Other options as well you can use, of course, if you have an iPhone, there's a really useful

00:45:20.840 | calling app called Sudo, S-U-D-O.

00:45:23.480 | Very useful.

00:45:24.480 | Allows you to keep 10 different phone numbers and integrated identities with telephone,

00:45:29.880 | texting and email all on your iPhone in a separate app.

00:45:33.380 | Also with Android, probably the best app I've found on Android devices would be the Burner

00:45:36.960 | app but it's a little easier on iPhone.

00:45:40.160 | Someday Sudo is going to come to Android so maybe that'll happen soon as well.

00:45:43.320 | But you want to have these phone calls logged in one specific place.

00:45:45.920 | You want to have a record of them as well.

00:45:48.120 | And then again, finally, with calls, you want to record your calls.

00:45:51.040 | So again, I talked about Google Voice.

00:45:52.900 | If you're using a smartphone to record your calls, you can use an app like Tape-a-Call.

00:45:57.320 | Tape-a-Call Pro.

00:45:58.320 | It costs you $10 a year and allows you to record all of your phone calls.

00:46:02.160 | I would do that.

00:46:03.820 | Or another easy option is to use a simple and cheap voice recorder and then to take

00:46:09.360 | all of your calls on a speakerphone so that way you can record both sides.

00:46:14.560 | Easiest way, you probably have an old cell phone, an old smartphone sitting around that's

00:46:18.120 | old, maybe an old iPhone 4 or things like that that you can't sell.

00:46:21.160 | It's not worth anything.

00:46:22.640 | But it'll work great as a voice recorder.

00:46:25.120 | And so you just use the voice memo and record that thing and put it on speakerphone and

00:46:30.880 | do that.

00:46:31.880 | That works really well.

00:46:32.880 | That's a great voice recorder.

00:46:34.200 | Anytime you're in a potentially contentious situation, I think it's a good idea to protect

00:46:38.520 | yourself by recording things.

00:46:41.820 | Sometimes video, you can do that.

00:46:42.960 | But oftentimes, at least audio is very, very helpful.

00:46:45.600 | I've done this in the past when I've been in contentious situations with somebody that

00:46:50.000 | I made sure I made – I need a record.

00:46:52.080 | I need a record of it.

00:46:53.800 | There are various state laws on recording circumstances.

00:46:57.720 | In general, it has to do with where you are in public.

00:47:00.520 | Everybody has no expectation of privacy in a public place.

00:47:03.880 | On the phone, some states require just simply one person to know that they are being recorded.

00:47:11.400 | In some states, they're supposed to – both parties are supposed to know that they're

00:47:14.320 | being recorded.

00:47:15.680 | What I would do is I would go ahead and play it safe and make sure that both parties know

00:47:19.560 | that they're being recorded.

00:47:20.560 | This will also help to make sure the other person, the bill collector, is going to follow

00:47:27.120 | the rules.

00:47:28.120 | Again, remember, in these circumstances, so I started, take responsibility.

00:47:33.040 | I'm going to stand good for my debt.

00:47:35.640 | I'm not going to be abused.

00:47:36.960 | So I want to help you.

00:47:39.680 | You're going to stand good for your debt.

00:47:41.240 | I don't want you to be abused.

00:47:43.000 | So one thing you do is at the beginning of every call, "Hey, just a moment before we

00:47:47.240 | get started, I just want to let you know that I'm recording the call for quality and – what

00:47:50.960 | do they call it?

00:47:52.080 | For quality assurance purposes, right?

00:47:55.600 | Just going to make sure I want to let you know that up front."

00:47:57.600 | Now let's get to it.

00:47:58.600 | Here's what's going on.

00:47:59.920 | Make those records and keep them carefully.

00:48:02.520 | That's just a phone system.

00:48:05.240 | Quickly on email, email is not used heavily with regard to bill collection.

00:48:11.520 | Necessarily it's not – it's sometimes used but it's not used heavily.

00:48:15.480 | But what I would also do is I would establish new email addresses.

00:48:19.460 | If my personal email address, my standard email address is filled with my bill collectors,

00:48:24.320 | I want out.

00:48:25.320 | I'm going to cancel that address and I'm not going to use it.

00:48:27.800 | I'm going to set up a new one for my actual personal communication.

00:48:31.320 | It is really frustrating when you're having a good day at work, you're working hard

00:48:34.520 | and all of a sudden at lunchtime, you pull out your phone and you're looking at your

00:48:37.440 | email and there's 10 emails from a bunch of bill collectors and it comes and ruins

00:48:41.080 | your mood and reminds you how much stress you're under.

00:48:43.440 | Or you're out on date night with your wife and go to the bathroom and you look at your

00:48:46.920 | email and all of a sudden you're reminded about the fact that you're fighting your

00:48:50.240 | way out of debt and it wrecks your evening.

00:48:52.720 | So I would have email segregated away from my normal interaction.

00:48:58.480 | So a couple of ways to do that, number one is of course if they already have one address,

00:49:03.080 | you may consider just starting a new address for your personal work.

00:49:06.320 | But I would also just consider establishing a new address for the purpose of working my

00:49:10.680 | way out of debt.

00:49:12.280 | So establish a new email address because – especially because we're dealing with sensitive personal

00:49:17.000 | information.

00:49:18.000 | I would use proton mail so that my emails are stored in an encrypted format.

00:49:21.200 | It would be superior to Gmail.

00:49:23.440 | So at least we get – it's free.

00:49:25.720 | You can set up an account, use proton mail so that your emails are being stored encrypted

00:49:29.560 | and then use that for communication with your creditors if you need to.

00:49:32.620 | But keep that separate and only limited communication via email.

00:49:37.400 | Mailing address, one thing I don't know why more people don't do is think about

00:49:43.320 | setting up a separate mailing address to use to communicate with your creditors.

00:49:46.880 | If I were in this situation, I would go ahead and pay a little bit of extra money to establish

00:49:52.000 | a post office box and use that for communication with my creditors.

00:49:55.120 | Here's why.

00:49:56.120 | PO boxes are cheap to use and for most of us, they're pretty convenient.

00:49:59.680 | There are many post offices near us.

00:50:03.800 | PO boxes are – they range depending on where you live.

00:50:06.560 | But we're talking $100 to $200 a year.

00:50:09.040 | They're pretty cheap.

00:50:10.960 | They allow you to communicate reliably via the mail without having your actual physical

00:50:16.520 | location necessarily be known.

00:50:19.640 | This is really important.

00:50:21.520 | One of the things that people who are the most abused often face is they miss mail.

00:50:26.280 | Of course, people ignore their mail.

00:50:28.840 | But when you get to people who are really struggling, what one author affectionately

00:50:32.600 | calls clueless people, when clueless people move a lot, they lose mail and they lose important

00:50:38.880 | communication and you cannot miss your mail.

00:50:43.040 | If you miss important communication in a debt collection scenario, you could actually wind

00:50:48.960 | up in jail in an extreme circumstance.

00:50:51.480 | Now, most of the time, of course, you're not.

00:50:54.120 | But you need that communication so that you can receive the letters, you can receive the

00:50:57.400 | offers, you can communicate properly with your debtors.

00:50:59.760 | But how you would end up in jail, as you work your way through, let's say that you didn't

00:51:03.480 | pay your debts and you ignored all of your summons, you ignored the credit card, you

00:51:07.840 | just moved and they didn't have any way to get a hold of you.

00:51:11.040 | One of the things that can actually happen, and some debt collectors will use this, if

00:51:14.080 | they don't hear from you, they will sue you in court.

00:51:16.400 | Now, you don't actually have to show up in court.

00:51:19.400 | They will sue you.

00:51:20.400 | If you don't show up to defend yourself, they'll win the lawsuit and they'll take out a judgment

00:51:23.640 | against you, which means you owe them $10,000.

00:51:26.240 | The court authorizes them to collect the $10,000 that you owe.

00:51:29.680 | That's a legal judgment that they have attained against you.

00:51:32.960 | And once they've obtained that judgment in court, they can now use that and a judgment

00:51:39.980 | creditor can get the court to go ahead and issue a wage garnishment order or they can

00:51:45.760 | get the court to issue an order to attach your bank account.

00:51:49.120 | But what do they do if they can't find you?

00:51:52.320 | Well, if an aggressive creditor can't find your income or they can't find your assets

00:51:56.400 | for them to take to pay your bills, they can file papers with the court that require you

00:52:00.720 | to appear for a debtors examination.

00:52:03.320 | And then the way it works, if you show up at the debtors examination, then they have

00:52:07.400 | the right to ask you and you have to answer under oath their questions about your finances.

00:52:12.520 | You have to explain why you're not paying your bills.

00:52:14.560 | You have to explain to them how much money that you have and where it is and what assets

00:52:18.760 | you have.

00:52:19.760 | And this is a real problem because you're under oath.

00:52:21.080 | So if you lie, you will now be found guilty of perjury, which is a real legal problem.

00:52:26.600 | Now if you don't show up for that debtors examination, even if it's just because you

00:52:30.560 | didn't receive the notice or maybe you decided you didn't want to go, then the court can

00:52:35.200 | find you in civil contempt for disobeying its order to appear.

00:52:39.960 | And so now you're found in contempt of court where if they know where you are, that could

00:52:43.620 | eventually wind up putting you in jail because you're found in contempt of court.

00:52:48.360 | Or it makes it very inconvenient when you get pulled over for a simple infraction.

00:52:52.560 | All of a sudden, now your car is left on the side of the road and you're going away in

00:52:55.640 | the back of the police car because you didn't get your mail.

00:52:58.700 | So you didn't know that a judgment was taken out against you and you had a debtors examination

00:53:03.280 | ordered and you didn't show up in court.

00:53:06.280 | And depending on who you owe money to and depending on how nasty they are, they can

00:53:11.880 | use this as a tool to try to collect debts from you, especially somebody you owe money

00:53:15.160 | to that's an unsecured debt that doesn't really have any other authority and leverage over

00:53:20.080 | you.

00:53:21.080 | They'll use these debtors exams as a way to try to get you in there and try to get you

00:53:24.120 | to slip up and not appear.

00:53:26.620 | So you need to receive mail.

00:53:28.880 | Your problem is not going to get better because you ignore it.

00:53:31.780 | If you have creditors and they don't know where you are, you need to give them a mailing

00:53:35.180 | address where they can communicate with you.

00:53:38.220 | Ignoring these things causes problems.

00:53:40.460 | So you do it with a post office box.

00:53:43.280 | What I would do is if I were receiving mail at my house, even if I'm not planning on moving,

00:53:48.220 | I would put a move order in with the local post office and I would forward all of my

00:53:51.660 | mail from my house to the post office.

00:53:54.580 | And that gives you the ability to even just to protect your family.

00:53:58.180 | It's really obnoxious to go to the mailbox and go out there and you're looking for a

00:54:04.020 | card from grandma and you're looking for a catalog from something that you like and a

00:54:08.140 | magazine subscription that you enjoy and have to face every single time five – you know,

00:54:14.060 | five deficiency – five letters from lawyers because you're not paying your bills.

00:54:20.460 | If it were me, I wouldn't want to do that to my family.

00:54:22.420 | I wouldn't want to do that to my wife.

00:54:23.900 | I would make sure that I would use a post office box and I would go when I'm in a good

00:54:27.500 | frame of mind, I'm going to go in, I'm going to sort the mail.

00:54:29.500 | I'm just not going to show up at the house and mess with my family.

00:54:34.060 | This would also give you more flexibility in terms of moving without also exposing all

00:54:38.860 | of your mail.

00:54:40.060 | Once you have your mail forwarded to a post office box, it gives you the ability to move

00:54:43.060 | and still receive your mail.

00:54:45.540 | But it allows you to change your living circumstances.

00:54:48.020 | As you work your way out of debt, you may need to move in with friends or family for

00:54:52.420 | a temporary amount of time in order to eliminate your rent payment.

00:54:55.380 | You may need to rent a cheap apartment in order to cut your expenses.

00:54:59.660 | So while you're making these things – making these life changes in order to pay your bills,

00:55:04.220 | this will allow you to do that without being connected to your mail, without your creditors

00:55:08.420 | knowing where you physically are all the time.

00:55:10.780 | Finally, also, you're going to be sending and receiving a good amount of certified mail.

00:55:14.260 | The post office will make this much more convenient for you.

00:55:17.220 | When your creditors are serving you, they're going to be sending certified mail which has

00:55:20.980 | to be signed for.

00:55:22.220 | Again, I would – if I were in a mess, I'd sure hate to – my wife is a mother.

00:55:27.780 | I'd sure hate to have her at 2 o'clock in the afternoon have to go and get another

00:55:31.780 | certified mail from the mailman that – just about how deeply in debt we are.

00:55:41.060 | I'd a whole lot rather deal with that.

00:55:42.900 | I'll get off of work.

00:55:43.900 | I'll swing by the post office and I'll sign for it there.

00:55:46.260 | And then also you'll be sending it.

00:55:47.500 | And then in a moment, we'll talk about financial interaction.

00:55:49.740 | You're going to be sending a lot of things like money orders.

00:55:53.740 | And the post office makes this a convenient place for you.

00:55:56.340 | Post office sells money orders very inexpensively.

00:55:58.300 | They're good to use in these circumstances and so I would be at the post office quite

00:56:02.900 | a bit in this situation.

00:56:05.000 | So once I've adjusted these things, I would update my creditors with my new information.

00:56:08.740 | I would go through all of my credit cards, all of my bank relations, all of the people

00:56:12.660 | that I owe money to and I would change my phone number, my mailing address, my email

00:56:17.940 | address, my mailing address with them.

00:56:19.940 | By the way, the post office now allows – they didn't up until a few years ago but the

00:56:23.860 | post office now allows what's called street addressing.

00:56:27.280 | So it used to be that if you were going to use a P.O.

00:56:29.380 | Box, you had to say P.O.

00:56:30.380 | Box 1234.

00:56:32.980 | But now just like UPS store and other places, now you can go ahead and say 123 Main Street

00:56:39.800 | is my address, 123 Main Street number 1234.

00:56:43.280 | And that's really helpful as well because it allows you to use your P.O.

00:56:45.940 | Box with some of your financial relationships without having to necessarily – where they

00:56:52.340 | often wouldn't accept a P.O.

00:56:53.580 | Box number.

00:56:55.140 | And then I would refuse to take correspondence anywhere else from those creditors to make

00:56:58.060 | sure it's coming where I say it was going to go and work with it.

00:57:02.040 | Why is this important?

00:57:03.040 | Why all these little things?

00:57:04.480 | Because this is going to take a long-term process.

00:57:07.380 | For most of us who are getting these deep situations, there's going to be months and

00:57:12.540 | years, maybe even decades of work and possibly of harassment.

00:57:19.820 | If you have many accounts and are very late, your accounts are going to be sold.

00:57:24.540 | They're to a debt collection agency.

00:57:26.460 | Then they can't collect.

00:57:27.460 | They're going to resell it.

00:57:28.700 | They're going to resell it.

00:57:30.700 | And that's why your records are so important because it will be very hard for you to know

00:57:34.500 | what's valid and what's not if you don't have good records.

00:57:37.780 | For example, under the Fair Debt Collection Practices Act, a creditor has – a debt collector

00:57:44.000 | has the right to notify you of a debt.

00:57:48.420 | But if they – if you don't actually – if you think the debt is not actually true,

00:57:55.200 | maybe it's something you paid off and there was an administrative problem, the debt was

00:57:58.500 | sold.

00:57:59.500 | They think it's valid but you've already paid it off.

00:58:01.060 | Or maybe it's just a fraudulent – it doesn't happen much.

00:58:03.420 | Maybe somebody just thinks it's a fraudulent scenario and they're trying to collect something

00:58:06.460 | from you.

00:58:07.520 | You have the right to challenge them and say to them that – wait a second.

00:58:13.780 | I don't know any money.

00:58:14.780 | Prove to me what I owe, why I owe it and give me proof.

00:58:18.700 | The problem is that if you don't do that within 30 days of receiving the initial notice,

00:58:24.860 | then the debt collector can move on and assume that it is valid.

00:58:33.180 | So if you don't contest a debt within that time period, right within five days after

00:58:38.780 | you – sorry, within – yeah, is it five or 30?

00:58:42.220 | If you don't receive it and you don't contest it and they don't prove it to you,

00:58:46.860 | you may wind up being responsible for a debt that you don't actually owe and it would

00:58:51.180 | really be a shame to have to pay extra money back that you didn't borrow, that you don't

00:58:55.940 | morally owe but you legally owe.

00:58:58.580 | Again, that's why I distinct it moral, legal and practical.

00:59:02.380 | You're not morally responsible for a debt that you didn't incur but yet legally you

00:59:06.540 | wind yourself paying something double because of your bad bookkeeping.

00:59:10.060 | Don't let that happen to you.

00:59:12.740 | Next, if you don't have them already – in fact, if you listen to this, you're going

00:59:17.420 | to – just make it simple.

00:59:19.140 | You need new bank accounts.

00:59:21.820 | When you are in a contentious situation and you're facing legal problems, finding new

00:59:29.260 | bank accounts, I think you need to work very hard to keep your footprint in the public

00:59:35.140 | banking system as minimal as possible.

00:59:38.900 | There's some caveats to that.

00:59:41.060 | It doesn't mean you want to take away all your money.

00:59:42.740 | For example, you don't want to all of a sudden start cashing out your 401(k).

00:59:46.620 | You need to understand your 401(k) as an example is protected from the legal claims of your

00:59:52.100 | creditors but your bank account is not.

00:59:55.140 | And so if I were facing an extremely contentious situation like this, I would try to make my

00:59:59.940 | money as minimally visible as possible and I would try to minimize my footprint in the

01:00:05.780 | banking system.

01:00:07.220 | I want to make sure that I have full control of my finances.

01:00:11.900 | And so I would close my old bank account and I would do my very best to live on cash as

01:00:17.240 | much as is possible.

01:00:19.620 | Now, this will help you – let's talk about cash in a moment.

01:00:24.100 | But it will help you get out of debt.

01:00:26.200 | But just an example of why this is so important.

01:00:29.660 | If – legally, here's how things work.

01:00:31.420 | If you have an account, you've had a longstanding account for the last decade with Bank A and

01:00:37.220 | you have creditor number one that you have – were in good standing with five years

01:00:42.500 | ago but you haven't paid them in a couple of years.

01:00:47.220 | But you used to pay creditor number one by means of a check, whether that was out of

01:00:50.940 | your check or maybe you made an automatic payment from your bank account.

01:00:55.180 | So you fall behind with creditor number one.

01:00:58.100 | They sue you in time.

01:00:59.880 | They sue you and they win the lawsuit because they will.

01:01:03.420 | Creditor lawsuits, if you owe somebody money, you'll never win because guess what?

01:01:06.780 | You owe them money and they have the right to collect.

01:01:09.180 | So they sue you in court and they gain a legal judgment against you.

01:01:12.380 | That legal judgment entitles them to collect on your assets.

01:01:17.220 | They go from being a creditor to being a judgment creditor, which gives them additional legal

01:01:22.100 | rights.

01:01:23.100 | Well, in this circumstance, they have the legal authority to get your money.

01:01:28.140 | All they need to do is look back in their records and they look and say, "Oh, look.

01:01:32.500 | Joshua paid us with Bank A. Let's go ahead and just send our bank representative over

01:01:37.780 | to Bank A with our legal judgment and our right to attach and collect his assets."

01:01:44.540 | They just walk right over to Bank A, they enter the appropriate paperwork and they clear

01:01:47.860 | out your bank account.

01:01:48.900 | Simple and easy.

01:01:50.060 | And you made it simple and easy for them because you've used Bank A to pay creditor number

01:01:55.020 | one.

01:01:56.020 | Now, if you didn't still have Bank A, they go over to Bank A and they say, "Well, we're

01:02:00.620 | here to collect the money from Joshua's accounts," and they say, "Well, Joshua doesn't have any

01:02:06.780 | accounts here.

01:02:07.780 | He closed them a few years ago and wiped them out."

01:02:10.140 | Now they have to go and they have to find Joshua's accounts, which means additional

01:02:14.260 | cost.

01:02:15.260 | They have to hire a private investigator or they have to figure out some other way of

01:02:18.120 | figuring out where does Joshua bank.

01:02:21.120 | They probably just go on Facebook and see what Joshua's Facebook profile says and,

01:02:24.660 | "Look, there's a picture of Joshua at the local bank."

01:02:26.660 | We'll talk about social media, I think, more in a minute.

01:02:31.300 | But you've made it easy for them by having Bank Account A. So you need to shut down your

01:02:36.660 | bank accounts and live on cash as much as is possible and you want to then go ahead

01:02:43.020 | and make sure that you at least open a new bank account.

01:02:46.740 | So that will give you some level of protection.

01:02:49.500 | The next reason you need to do this is just for your own – well, one more legal thing

01:02:55.580 | – sorry, I got out of order.

01:02:58.100 | Make sure that you don't open a bank account with a financial institution to whom you owe

01:03:02.700 | money.

01:03:03.700 | You better think about this and go through your creditors because a lot of the big banks

01:03:08.020 | that many people do business with are also big creditors.

01:03:12.900 | In some circumstances, you may wind up facing a situation known as a bank setoff.

01:03:19.180 | So if you, for example, just have a simple – you have a checking account at your local

01:03:23.900 | credit card – credit union and you have a line of credit at your local credit union

01:03:28.780 | and you start missing payments.

01:03:31.060 | A bank setoff is where your financial institution, your bank, your credit union, whatever, takes

01:03:36.660 | the money from a deposit account that you have, a checking, savings, CD or money market

01:03:40.540 | account in order to cover a payment on a loan that you missed.

01:03:45.220 | Now there are some restrictions.

01:03:46.500 | They can't take certain kinds of money.

01:03:48.260 | Some kinds of money are exempt such as social security benefits or disability benefits,

01:03:53.500 | things like that.

01:03:55.260 | But – and they can't take them out to cover credit card payments unless you've

01:04:01.020 | previously authorized them to cover credit card payments.

01:04:04.860 | But this could be very inconvenient for you.

01:04:06.980 | So just a good simple rule of thumb is don't have a bank account with money in it at the

01:04:11.700 | same place that you owe money.

01:04:13.860 | Otherwise you might wind up facing a bank setoff.

01:04:16.700 | That's a problem.

01:04:18.740 | So now there are other lenders as well and all of these kind of steps will depend on

01:04:24.340 | what kind of debt you're facing and how far down the road you are.

01:04:28.460 | For example, owe money to the IRS.

01:04:29.860 | That's bad news because they can get right into your bank account without a court order.

01:04:34.500 | When you give them that information, either by writing a check to pay a tax payment or

01:04:40.100 | them sending you a refund, now they'll suddenly know right where to go to find your money

01:04:43.840 | without any problem.

01:04:47.180 | Certain types of debts, if you're behind on child support, there are much lower legal

01:04:53.900 | liabilities for those debts to be collected than other things.

01:04:58.500 | And so you've got to be proactive about this and protect yourself now because the only

01:05:05.700 | advance notice you're going to receive, you're going to receive court orders, et cetera,

01:05:08.940 | by one day you just go and try to use your debit card and find out that it doesn't work

01:05:12.180 | and all of a sudden you wind up and realize that your bank account has been wiped out.

01:05:17.780 | So what I recommend for you is that you live, while you're in the situation, live on cash.

01:05:23.100 | This is good for you and it's good for your budgeting ability.

01:05:27.580 | It's also good – it's good for you.

01:05:31.460 | Frequently it's been – I can't name many good things that have come with all of

01:05:36.480 | our money being digitized.

01:05:38.580 | Now there are some of us who thrive in a digital environment.

01:05:41.900 | We live on spreadsheets and for us, the digital economy has been great, buying and selling

01:05:46.200 | everything digitally, doing everything on cards and automatic payments, et cetera.

01:05:50.620 | But for people who don't live in front of a computer and for people who aren't all

01:05:54.140 | that numbers savvy, my observation that the digital economy has not been kind because

01:06:00.620 | it doesn't impose the same restrictions that other things – that cash has imposed

01:06:09.580 | in the past.

01:06:11.060 | Many people, the way that they figure out how much money they have to spend is they

01:06:13.500 | look at their bank account and try to think if there's any money in it.

01:06:15.980 | If there is, they swipe the debit card or they look at the credit card and see what's

01:06:19.580 | the balance available and if there's a balance available, they swipe their money.

01:06:22.540 | This is not good.

01:06:24.140 | So for most of us, living and working on cash will be very, very helpful.

01:06:31.740 | And so it's good for you and good for your budgeting ability.

01:06:33.740 | It's good for you in terms of saving you money.

01:06:36.400 | One of the things that I have observed with people who are strapped and who owe lots of

01:06:40.260 | money is frequently they will authorize all kinds of automatic payments.

01:06:45.620 | When you authorize these payments, they come in at the most inconvenient time.

01:06:49.460 | You need to make a $1,000 mortgage payment.

01:06:51.380 | You have $1,100 in the account.

01:06:52.660 | So you go ahead and you write that $1,000 mortgage payment.

01:06:55.540 | Then all of a sudden you forgot that you had a power bill due and that was automatically

01:07:01.420 | taken out of your account.

01:07:03.220 | And then you had authorized that $40 a month payment to the local furniture store and that

01:07:10.580 | $40 a month payment to the local furniture store put you in a position and it wiped out

01:07:14.220 | your account – sorry, wiped some money out of your account.

01:07:19.060 | And now instead of having $1,000 to cover the check to the mortgage company, you only

01:07:22.940 | have $970.

01:07:26.700 | And so your check to the mortgage company bounces.

01:07:29.260 | Well now your check to the mortgage company bounces and the mortgage companies don't

01:07:32.300 | accept partial payments.

01:07:35.820 | And you don't ever get that $1,000 together again and it gets wiped out.

01:07:39.860 | Well guess what?

01:07:40.860 | If I can't pay all my bills, I'm never going to pay a furniture payment before I'm

01:07:48.980 | going to pay a mortgage payment.

01:07:51.420 | That would be dumb.

01:07:54.700 | Even if I had signed a collateralized obligation wherein I was saying that the furniture I'm

01:08:00.980 | buying from the furniture store on credit is going to be secured by the furniture, even

01:08:05.740 | if that – and that's not necessarily common.

01:08:08.340 | Most of the time those loans are just an unsecured loan.

01:08:10.980 | Even if I were in that situation, the furniture is in my house and the furniture company has

01:08:14.760 | no ability and authority to come and invade my house to take the furniture back.

01:08:20.860 | But if I don't pay my mortgage, the whole house will be gone and the mortgage company

01:08:25.220 | does have the right to sell my house at foreclosure and to foreclose on me.

01:08:29.340 | So it's way more important for me to pay that mortgage payment.

01:08:32.220 | And I've seen this again and again and again with people who are struggling where you wind

01:08:36.200 | up with a stupid automatic payment messing everything up.

01:08:40.860 | Don't do it.

01:08:42.740 | Live on cash while you're in the situation.

01:08:45.720 | Keep minimal money in the checking account.

01:08:48.040 | If you need to use a checking account, which by the way you don't, you can today.

01:08:52.420 | I'm convinced.

01:08:53.420 | I thought about doing this.

01:08:54.420 | I'm going to live without a checking account just to prove it can still be done.

01:08:58.340 | There are a whole lot of people in the United States of America and around the world who

01:09:01.220 | live exclusively on cash.

01:09:03.500 | Yes, you buy money orders for things you need physical payment for, but you can pay your

01:09:09.940 | power bill at an in-person location.

01:09:11.860 | You can pay all these things in person and you can live still without a bank account.

01:09:18.740 | But if you do need to use a bank account, at least do – keep one account for your

01:09:23.220 | mortgage and you only put money in there that's going to be sent to the mortgage payment and

01:09:27.140 | you write one check out of that and that's it, nothing else.

01:09:31.100 | So living on cash is good for you.

01:09:33.300 | It protects you and we want to – it's good for you in case you lose in court.

01:09:38.620 | You may wind up in court when your creditors win.

01:09:40.500 | It's good for you to have the money out and it's also good for you in terms of your

01:09:44.420 | privacy from your potential collectors.

01:09:48.820 | You want to keep your income as private as possible, especially if you're in a contentious

01:09:52.900 | situation.

01:09:54.340 | You should immediately cancel any direct deposit that you have that you're earning from a

01:09:58.260 | paycheck.

01:09:59.900 | Immediately cancel any direct deposit because you cannot afford to have a creditor decide

01:10:06.020 | what happens with your money because they have a judgment and they take money out of

01:10:09.980 | your account.

01:10:10.980 | In fact, I wouldn't even want – if at all possible, I don't want my creditors

01:10:15.100 | to know where I work.

01:10:17.380 | So if you have had the same job for 10 years, well, they're going to know that.

01:10:21.900 | But if you're in a job that has changed since you stopped paying the money, make sure

01:10:25.280 | that you're minimizing the records of where you work.

01:10:28.620 | So don't deposit your paychecks in the bank account.

01:10:31.340 | Cash them.

01:10:32.340 | You can – the way that you deal in this world, you can go and cash your checks for

01:10:35.900 | free or very cheaply at the bank on which they're drawn.

01:10:39.100 | If you're paid from a local bank, take your check in there and just cash it right at the

01:10:42.500 | bank.

01:10:43.500 | Many banks, it's cheap.

01:10:44.500 | It's free.

01:10:45.500 | Some banks, it's just cheap.

01:10:46.500 | They charge you a few dollars.

01:10:47.500 | Or cash them somewhere else.

01:10:48.500 | But I'd rather pay $5 or $10 to cash a check than run the risk of my wages being

01:10:54.780 | garnished and 50 percent of my income being taken in a wage garnishment order.

01:10:59.540 | You've got to protect yourself and protect your family.

01:11:02.380 | Again, I put – this is in the situation – when people are in a situation, they don't

01:11:05.860 | eat.

01:11:06.860 | I'm sorry, but it's more important that you eat and that your children eat and that

01:11:11.460 | your lights are on than that your creditor get paid now.

01:11:14.540 | As long as you're taking responsibility for your debt and you're going to pay it

01:11:18.380 | when you can, I'm OK with that.

01:11:21.880 | But I put some of this stuff in the world of taking somebody's coat and making them

01:11:28.540 | be cold at night because you're taking their coat for security, that we must not take advantage

01:11:33.260 | of people who are poor and destitute.

01:11:35.380 | We've got to make sure that – especially when someone is struggling – that the basic

01:11:39.140 | needs are cared for.

01:11:41.580 | Now there are exceptions to what I'm saying and that advice would be important for you

01:11:46.020 | to pay attention to depending on what your source of funds are.

01:11:51.820 | There's a difference between what are called protected funds and unprotected funds.

01:11:56.180 | Generally money that you earn from wages working at a job are unprotected funds.

01:12:00.740 | Those funds are available for the claims of your creditors.

01:12:04.700 | But funds – income that you receive under some form of government assistance program

01:12:12.740 | such as Social Security or veterans' benefits or unemployment compensation, those funds

01:12:18.420 | are protected funds and they are not legally attachable.

01:12:21.780 | They cannot be taken by your creditors.

01:12:25.100 | And so what you should do with those types of funds is make sure that those funds actually

01:12:29.900 | are put in via direct deposit.

01:12:35.220 | Because if a bank receives an attachment order or a garnishment order from the court, it

01:12:40.180 | has to look – the bank is required to look at the account and try to find out what is

01:12:44.620 | the source of the direct deposits that are there.

01:12:47.720 | So if the source of the direct deposits are coming from the Social Security Administration,

01:12:52.100 | then they look down and they know that that's protected funds.

01:12:55.020 | If the source of the direct deposit is coming from wages, they know that's not protected

01:12:59.020 | funds.

01:13:00.120 | So you want to make sure that something like Social Security funds are direct deposited

01:13:05.520 | into your account because that is protected.

01:13:10.020 | If you received your Social Security funds physically by a check and then you went and

01:13:15.300 | deposited that at check, now we have a problem because the bank can't see automatically

01:13:21.340 | that that is – that that check was Social Security.

01:13:25.060 | So they're going to freeze the account and you have to claim and you will have to proactively

01:13:28.940 | prove your right to having those funds released and then ultimately they can be released.

01:13:34.940 | So the bottom line is if you're receiving some form of government assistance income,

01:13:39.020 | Social Security, veterans' benefits, unemployment, make sure that those funds are deposited via

01:13:43.420 | direct deposit.

01:13:44.780 | Do not mix those funds with other money.

01:13:48.860 | If you're using bank accounts, set up a new bank account or use a bank account exclusively

01:13:53.340 | for your Social Security income and your protected funds because when the money is commingled,

01:14:00.100 | now we've got a problem.

01:14:01.180 | Now Social Security funds will keep their protection even if they were commingled but

01:14:06.180 | now we wind up in a situation where the burden of proof is on you.

01:14:09.720 | So you should keep Social Security income in a separate account and do not mix it with

01:14:14.520 | any other income that you have in order that it retains its ongoing protection.

01:14:22.140 | Same advice applies to retirement accounts.

01:14:25.540 | Retirement accounts – quick clarification.

01:14:28.700 | There are certain retirement accounts that are covered by what's known as the ERISA

01:14:32.780 | regulation, ERISA, E-R-I-S-A, Employee Retirement Income Security Act I think.

01:14:38.860 | So this would include your big accounts, just 401(k)s, 403(b)s, et cetera.

01:14:44.380 | Any tax-qualified account that's governed by ERISA.

01:14:47.500 | But ERISA does not govern individual retirement accounts, Roth IRAs, et cetera.

01:14:52.220 | Those are governed by state law.

01:14:53.900 | ERISA accounts have essentially ironclad protection from the claims of creditors.

01:14:59.420 | So money that's in your 401(k) or 403(b) is very, very safe from the claims of creditors

01:15:06.020 | and you should be very careful with those funds.

01:15:10.580 | One of the things that frustrates me to no end is when people take money who are in a

01:15:14.260 | problem situation, they take money that is in a 401(k) and use it to pay off their creditors

01:15:20.980 | while also recognizing that that may put them in a situation where they can never get free

01:15:27.580 | of the debt and they can never have that money back.

01:15:30.100 | Money that's in your 401(k) will stay with you right through bankruptcy court.

01:15:34.420 | Again this is where I'm getting clear.

01:15:35.660 | I want you to pay your creditors but we got to make sure that you're also protected

01:15:39.500 | and that you're not left destitute by doing so.

01:15:42.540 | And so individual circumstances here are very important.

01:15:46.380 | In general, if you are in a financially contentious situation, you want to keep your money to

01:15:50.980 | the greatest extent possible in ERISA-governed accounts.

01:15:55.300 | I would keep money out of 401(k) and not roll it over into an IRA.

01:16:00.060 | Now most US states have established their own legislation for protection for IRAs.

01:16:04.780 | But sometimes they have certain dollar amounts.

01:16:07.140 | Some states have stronger protection than others but they have certain dollar amounts.

01:16:11.140 | So you want to be very careful.

01:16:12.660 | But the same thing applies to distributions from retirement accounts.

01:16:16.420 | As long as your money is in the retirement account, it's protected from the claims of

01:16:20.460 | creditors.

01:16:21.620 | But if it starts to be distributed from retirement accounts, be very careful.

01:16:26.780 | Now it should be protected.

01:16:27.820 | The income flow from an account, in my understanding, should be protected but it won't be protected

01:16:33.580 | if it's commingled with other funds.

01:16:36.100 | So separate your funds, separate your accounts and keep those things separate so that you

01:16:40.460 | can have – the proof is available for you.

01:16:44.540 | And some of those things will be governed by state law as well.

01:16:48.260 | So be very, very careful.

01:16:51.140 | By the way, there are times where I believe that you should take money from retirement

01:16:54.420 | accounts to pay your creditors.

01:16:56.500 | But in extreme situations, especially if somebody is going to wind up in bankruptcy court, then

01:17:00.900 | that may not be advisable at all and we need to be very, very careful.

01:17:05.500 | So these are just some tactics and let me try to give you a few more discussions on

01:17:12.020 | wages.

01:17:14.400 | Keep the source, protect your wages.

01:17:16.520 | Keep your wages as quiet as possible.

01:17:18.540 | Don't announce the source publicly.

01:17:21.280 | Some of this, when you get into a contentious situation, you're hiding from a private investigator.

01:17:26.260 | When a court judgment is taken out against you, you're hiding from a private investigator.

01:17:30.260 | So for most people, it's pretty easy.

01:17:32.740 | You owe money.

01:17:34.140 | You don't have the money to pay right now.

01:17:35.580 | I'm assuming you don't have the money to pay.

01:17:37.220 | You've just got enough money that you're putting together.

01:17:40.220 | But if you go and update your LinkedIn status to say that now I work at company ABC, an

01:17:45.700 | investigator finds it very easy to go to company ABC and deliver the wage garnishment order.

01:17:55.340 | But if you very quietly took a job at company XYZ and nobody knew you were there at company

01:17:59.980 | XYZ, now you have the possibility to start to accumulate some money so that you can use

01:18:05.420 | it to pay your bills, to keep your family housed and fed and clothed, and then you can

01:18:11.620 | go ahead and start making payments.

01:18:14.240 | And you need to protect your money and fight like crazy to make good settlements.

01:18:19.460 | One of the things that you want to do is you want to be in as much control as possible

01:18:23.520 | of the process.

01:18:24.940 | And you may need to accumulate funds in order to settle with creditors.

01:18:28.820 | Let's say that you owe $10,000 on a bill and you have five people that you owe $10,000

01:18:36.500 | to.

01:18:37.500 | You owe $50,000.

01:18:38.500 | Well, you need to start accumulating money and start making offers to try to settle with

01:18:42.780 | your creditors.

01:18:44.940 | Settling is an entirely reasonable thing to do.

01:18:48.820 | Remember, your creditor has the choice to always settle or not settle with you.

01:18:52.840 | And so it's morally upright and morally fine for you to forgive any debt that you want

01:18:58.660 | and your creditor can do that as well.

01:19:00.820 | So a debt can be forgiven.

01:19:02.300 | That's fine.

01:19:03.300 | And that can also be settled.

01:19:05.260 | And so if you're in a situation where you're offering money, you may need to accumulate

01:19:08.980 | this money.

01:19:09.980 | It can be dangerous for you to accumulate that $5,000, $7,000, $8,000, $10,000 in the

01:19:14.820 | bank, which you're going to use to settle with creditor number three because they'll

01:19:20.060 | give you the best offer right now.

01:19:22.260 | You can't afford to have this other creditor come in and invade your bank account.

01:19:26.900 | And you can't afford to have your wages garnished by this low-priority creditor, which puts

01:19:33.420 | you in a situation where you're not making your mortgage payment.

01:19:35.580 | Let me give you – tell you practically why this is so important.

01:19:39.980 | Your only debts – pretend for a moment.

01:19:41.380 | Your only debt is a mortgage payment and an unsecured credit card.

01:19:47.680 | Your family lives in the house that you're in and you don't have the opportunity to

01:19:52.580 | sell the house and move somewhere else and have that be an ideal living situation.

01:19:56.800 | You don't – it doesn't make sense for you to sell the house and try to use proceeds

01:19:59.780 | to pay off the debt.

01:20:01.060 | And so you're stuck in a situation.

01:20:02.780 | Maybe you got hurt.

01:20:03.780 | Maybe you're underemployed.

01:20:04.780 | You can't find a job.

01:20:05.780 | You're stuck in a situation where you can barely make your mortgage payments, but you

01:20:09.300 | can't pay the credit card.

01:20:13.560 | The priority here is staying in the house and protecting the living needs of your family.

01:20:19.580 | Now fast forward.

01:20:20.580 | The credit card is unpaid.

01:20:22.580 | They're unpaid for a couple of years.

01:20:24.660 | They sue you.

01:20:25.660 | They've got a judgment against you.

01:20:27.300 | Now they have the right to come and to invade your house – sorry, and to invade your assets

01:20:32.840 | and to try to collect any valuable personal property.

01:20:35.060 | They have the right to send the sheriff to try to pick up your boat, sell the boat at

01:20:38.780 | auction.

01:20:39.780 | Hopefully you've done that by now to get rid of the boat and pay the bills.

01:20:42.660 | But this is the legal situation which you find yourself.

01:20:46.260 | You can't afford to have your wages garnished and then not be able to pay your mortgage

01:20:50.960 | payments so that you lose your house.

01:20:54.100 | You've got to figure out another plan.

01:20:56.180 | The best plan is get an extra job.

01:20:58.420 | If you send the credit card company, stay out of court.

01:21:01.540 | Send the credit card company little bits of money and accumulate money and make a settlement

01:21:04.520 | with them and get them paid off.

01:21:06.300 | That's the best plan.

01:21:07.600 | But you've got to make sure that you're protected.

01:21:09.180 | Or if you're working with someone else, make sure that you're helping them understand

01:21:11.820 | how to prioritize and protect themselves.

01:21:14.340 | So keep the source of your wages quiet.

01:21:16.640 | Don't publish it on LinkedIn.

01:21:18.620 | Cash your checks.

01:21:19.620 | Don't put them in the bank.

01:21:20.620 | And protect your business and your side income.

01:21:23.280 | Understand how wage attachments work.

01:21:26.380 | This is a big, big deal.

01:21:27.660 | So again, you have a creditor.

01:21:29.780 | They sue you.

01:21:30.780 | They gain a judgment against you and they now become a judgment creditor.

01:21:34.840 | The first thing most judgment creditors are going to go after is your paycheck through

01:21:38.420 | a wage garnishment.

01:21:40.540 | Now this is a very effective technique if you receive a regular paycheck from an employer

01:21:45.940 | because they're the very first person to be paid.

01:21:48.420 | Your employer takes a certain amount out of your paycheck and they send it off to your

01:21:53.120 | creditor and you never have a chance to say anything about it.

01:21:56.880 | Now federal law allows a judgment creditor to take up to 25% of your net earnings, up

01:22:03.760 | to 25% of your net earnings, or the amount by which your weekly net earnings exceed 30

01:22:12.600 | times the federal minimum wage.

01:22:16.020 | So at a $7.25 an hour wage, 7.25 times 30 is $216.50.

01:22:24.440 | So they can take any amount that exceeds $217.50 per week, whichever of those is less.

01:22:31.620 | So either 25% or any amount – 25% of your earnings or any amount that exceeds 217.50

01:22:37.360 | per week, whichever is less.

01:22:39.560 | That's the federal law.

01:22:42.800 | There are some states that have a little bit more protection as well, but that's the

01:22:47.520 | federal law.

01:22:48.520 | That's a huge amount of money that somebody could take, 25% of your net earnings.

01:22:53.560 | And then for some kinds of debts, it can actually be more.

01:22:57.200 | Child support for example allows – if you're behind on child support and you haven't

01:23:01.000 | paid your child support, up to 50% of your wages may be taken to pay your child support.

01:23:08.080 | That's a significant scenario.

01:23:11.720 | Income taxes as well.

01:23:13.140 | If you don't pay your income taxes and you ignore your communication with the IRS to

01:23:16.920 | collect the taxes that you owe, they can take basically all of your wages.

01:23:22.320 | There's a formula that they can use but it can wind up with you getting as little

01:23:28.760 | pay as 180 bucks a week and there's a real problem with that.

01:23:36.320 | So wage attachments and garnishments are no joke.

01:23:39.920 | This is a huge deal and you want to make sure that you avoid that.

01:23:44.160 | The judgment creditor sends the sheriff.

01:23:46.080 | The sheriff notifies your employer.

01:23:47.720 | The employer lets you know and unless you have some legal course of fighting it, from

01:23:53.800 | now on your employer is going to send that money out.

01:23:56.600 | Now you're going to have to pay the money.

01:23:58.320 | I'm just encouraging you.

01:24:00.480 | Try to do everything you can to avoid this circumstance and there's no reason why you

01:24:04.240 | need to make it easy on them.

01:24:08.240 | You need to protect your wages and in these circumstances probably your best source of

01:24:13.160 | income is to have some sort of side income or business income that is not easily found

01:24:17.680 | so you can have extra money.

01:24:18.880 | But you don't want to have your wages garnished.

01:24:21.120 | Protect your wages.

01:24:22.120 | Keep it private.

01:24:23.240 | Work like crazy and save money so that you can pay your debts.

01:24:26.860 | You need to protect your property when you're in this situation.

01:24:30.080 | And so your first course of action is for you to probably seriously consider selling

01:24:35.480 | any personal property yourself in order to pay your debts.

01:24:38.840 | As quickly as you can deal with things, the better.

01:24:42.640 | The problem that people face is when they don't pay their debts and then it gets worse

01:24:46.440 | and worse and worse.

01:24:47.800 | But at every stage of this process, you're better off if you move fast and if you pay

01:24:53.120 | your debts quickly.

01:24:55.760 | So if you start to go behind and you start to know you're going to be behind, let's use

01:24:59.480 | a car as the best example because car repossession is something that happens to a lot of people.

01:25:05.400 | If you're missing one payment on a car, don't hang out, not worry about it.

01:25:10.880 | Freak out and get busy.

01:25:13.120 | If you find yourself missing one car payment, the immediate question is why and is this

01:25:17.880 | going to change?

01:25:20.120 | If you're going to be late on your car payment, if you're going to be late on a mortgage payment,

01:25:22.960 | you should freak out and start the analysis of what's going on.

01:25:27.680 | Now it may be that you're late on your car payment and you can't pay the car payment

01:25:30.560 | right this second because there was an unexpected one-time bill that showed up unexpectedly

01:25:36.280 | or a bank error or something like that.

01:25:38.280 | Well, in that situation, you want to analyze it but it may not be the best to sell the

01:25:42.580 | car right off the bat.

01:25:44.280 | But if you're one payment late or you just lost your job and you think you're going to

01:25:47.720 | be one payment late, freak out and start selling your property yourself.

01:25:54.340 | You don't want to dilly-dally around and wait a few months and all of a sudden wind up in

01:25:58.440 | a situation where you're hiding your car from the repo man.

01:26:01.800 | You want to avoid repossession if at all possible because you're going to be better off selling

01:26:06.680 | things on your own.

01:26:08.120 | So if you think you may not be able to make your car payment or if you missed a car payment,

01:26:12.400 | put that car on the market and start looking like crazy to figure out how to sell it and

01:26:17.760 | make sure that you retain control of it.

01:26:19.900 | Now if it's been a few months, for example, and you still can't sell it, then I would

01:26:24.640 | hide it from the repo man.

01:26:27.360 | If you buy – you got to figure out how to do it in terms of how people find things like

01:26:32.040 | cars depending on where you're doing.

01:26:33.520 | They just come to your house.

01:26:34.760 | They come to your job.

01:26:35.760 | They figure out where you're driving.

01:26:37.440 | If you're shopping at buy here, pay here places, a lot of times a lender will have

01:26:41.960 | a GPS unit on the car.

01:26:44.340 | So you got to figure out how to do it.

01:26:46.120 | But you want to sell the car privately.

01:26:48.220 | If you allow your personal property to be repossessed, then your creditor is going to

01:26:52.960 | take it and they're going to sell it themselves and they're not going to hold out for the

01:26:56.320 | best price.

01:26:57.740 | But often if you go into the private market, you may be able to sell it for more and it's

01:27:02.040 | always going to be in your best interest to sell it at the highest price that you can

01:27:05.080 | buy.

01:27:06.200 | So make sure that you're doing everything you can to make sure that your property is

01:27:09.560 | not taken from you and sold without your control.

01:27:13.680 | So that means move fast and you sell it quickly in order to pay off the debt.

01:27:18.400 | If you owe more – you're probably going to owe more on the car than it's worth or

01:27:21.720 | owe more than you can sell it for.

01:27:23.520 | You may have to borrow the difference, but it's a whole lot easier to borrow – you

01:27:27.120 | own a $15,000 car that you sell for $13,000.

01:27:32.200 | It's a whole lot easier to go to your friend or family member and say, "Can I borrow $2,000

01:27:36.560 | from you and get rid of the $13,000 debt than it is to wind up having the car company repossess

01:27:43.100 | the car?"

01:27:44.100 | They sell it at auction for $9,000 and now they sue you for $6,000.

01:27:49.720 | If you're in a situation, do your best to protect your property.

01:27:54.960 | And if a creditor has gone all the way to the point where they're now a judgment creditor,

01:27:59.700 | they can do a lot of stuff to find and to take your property.

01:28:05.020 | Most of the time this is pretty easy.

01:28:07.380 | They just come by your house and look to see what you have.

01:28:10.540 | And they can – if you have a home and you're facing a judgment creditor, they can record

01:28:14.460 | a lien on your home.

01:28:15.980 | They can take the money out of your bank account.

01:28:18.180 | They can come by and they can find out that you have a boat sitting in the front yard

01:28:21.420 | and they can go ahead and say, "Listen, you got to sell that boat."

01:28:25.260 | And they have all kinds of ways that they can do it.

01:28:27.340 | Once they become a judgment creditor, they can go and they can take out – they can

01:28:30.700 | find information from the DMV, the Department of Motor Vehicles.

01:28:35.340 | They can find out information about what things are registered to you.

01:28:39.560 | They can go and they can look through all of the paperwork that you've given to them

01:28:43.060 | for the original loan application.

01:28:45.180 | They can look at your credit reports of assets owned or liabilities owned.

01:28:49.860 | They can look at what you had when you told them where you live, the name and address

01:28:54.460 | of your employer, all of the information about everything that you own.

01:29:00.180 | They can – they have tremendous opportunities.

01:29:03.380 | And then again, at the end of the day, if they can't find any property, they can force

01:29:06.940 | you to show up in court for a debtor's examination where they require you to show up and testify

01:29:12.040 | about what you own, the assets that you have.

01:29:15.180 | They can take advantage of social media.

01:29:17.780 | You're on the social media posting about all the fancy stuff that you have and there

01:29:21.300 | are pictures of you on your Facebook profile.

01:29:23.620 | All of that can be used as evidence by your creditors to find your stuff and force the

01:29:30.860 | sale of your stuff.

01:29:33.260 | They can force you to bring them your tax returns, your bank statements, all of the

01:29:39.180 | information on your business activities.

01:29:42.240 | You want to make sure that you protect your property and stay out of this by you selling

01:29:46.300 | stuff quickly and paying your debts.

01:29:48.340 | You want to make sure that you protect your property by keeping it clear of liens as much

01:29:51.640 | as possible.

01:29:53.120 | When you have a judgment creditor that wins a lawsuit against you, they can start to put

01:29:56.860 | liens on your property and that's a real problem.

01:29:59.780 | So do everything you can to fight and make sure that you avoid the liens.

01:30:05.640 | The simplest way to get out of this mess is pay your debts.

01:30:10.900 | Pay your debts as quickly as you can and pay your debts as much as you can.

01:30:17.900 | This process is very, very difficult and expensive for creditors to do.

01:30:24.820 | Think about what it would take to send a private investigator.

01:30:26.820 | If you owe somebody $1,000 on a credit card and that's your only debt, they're not going

01:30:30.820 | to send a private investigator to your house to take pictures of your boat and try to force

01:30:34.100 | the court to sell your boat.

01:30:35.620 | It's not going to happen.

01:30:36.620 | It costs too much in manpower and it's just not worth it.

01:30:39.100 | They'll sell that debt to a bill collector for $500.

01:30:42.860 | They'll write off the loss and the bill collector will harass you on the phone until you send

01:30:46.780 | them a couple hundred bucks.

01:30:49.180 | But all through the process, the fastest way out of this mess is pay your debts.

01:30:54.780 | And most of your creditors, if you will communicate with them, will be willing to work with you.

01:31:00.500 | Remember, you're dealing with a person and the person just wants their money.

01:31:05.220 | And if they think that there's a chance that they're going to get their money, they'll

01:31:08.420 | work with you.

01:31:09.860 | Now they've got certain tools and techniques that they know are going to allow them to

01:31:13.660 | have more strength in the negotiation process.

01:31:17.540 | And depending on how strong their position is, the more or less likely they will be to

01:31:21.460 | work with you.

01:31:22.460 | Your landlord, if they're a good landlord, is probably going to start eviction proceedings

01:31:26.820 | immediately as soon as is allowed by state law so that they have that legal pressure

01:31:31.620 | against you.

01:31:32.740 | Your mortgage company has no incentive to take partial payments on your mortgage payments

01:31:37.420 | because they know they can take the house and they've got an ironclad ability to foreclose

01:31:41.580 | on you if you don't take it.

01:31:43.580 | But if you'll communicate with people, they don't want to take the house.

01:31:46.220 | The mortgage company doesn't want to take the house.

01:31:48.280 | They just want their money.

01:31:49.640 | Your landlord doesn't want to kick you out.

01:31:51.260 | They just want their money.

01:31:52.820 | So communicate and make payments as possible.

01:31:57.000 | People are real human beings.

01:31:58.880 | And if you just simply pay as much as you can oftentimes and negotiate with people and

01:32:02.740 | do the best you can and demonstrate your fidelity, demonstrate your character, the fact that

01:32:08.100 | you're going to stand good for your debt, they'll probably be willing to work with you.

01:32:13.400 | And then if you pay quickly and you make small payments and you work out a new payment plan

01:32:16.780 | and you negotiate, you can forestall a lot of this stuff.

01:32:21.260 | So pay your debts as quickly as you can, as you're able.

01:32:26.980 | Increase your income, cut your expenses and pay your debts.

01:32:31.260 | Don't borrow any more money, but pay your debts.

01:32:35.540 | Just pay your debts.

01:32:37.100 | I don't have anything smarter to say than that.

01:32:40.340 | There are times where if you'll think strategically, you can make adjustments.

01:32:45.140 | For example, sometimes you can just pay your debts by returning the collateral.

01:32:47.900 | If you're dealing with a small thing, return the property that was used as security.

01:32:53.340 | Sometimes you can negotiate your debts and saddle them with somebody.

01:32:56.020 | But pay your debts.

01:32:57.180 | And then finally, a couple of quick things.

01:33:00.780 | Protect your family while you're working your way through the process and do the best you

01:33:04.220 | can to keep the financial stress out of your family as much as you're able.

01:33:07.820 | I think it's wise that everyone in your family knows that you're under financial stress so

01:33:12.740 | that everyone can tighten their belts.

01:33:15.060 | Family members may need to get extra jobs.

01:33:17.380 | That's going to require hardship.

01:33:20.260 | Kids may need to go to work.

01:33:21.260 | Spouses who stay at home may need to go to work.

01:33:23.380 | They may need to work extra jobs.

01:33:25.180 | But try to keep the financial stress from breaking apart your marriage.

01:33:29.340 | Financial stress is a huge component in breaking up marriages.

01:33:32.960 | And protect your family from that.

01:33:36.180 | That's why for me it's a big deal.

01:33:38.020 | Keep the bill collectors out of the house and away.

01:33:40.300 | And keep those fights shielded with them.

01:33:42.540 | I can fight really, really well with people.

01:33:46.620 | I'm good at it.

01:33:47.620 | I can stand up and I can yell and I can argue and I can write nasty letters and I can fight.

01:33:53.940 | But I don't want that to happen in my living room and that stress to be pushed onto my

01:33:57.500 | wife and to my children.

01:33:59.940 | They need to know we're in stress.

01:34:01.340 | But I'm going to keep those fights as insulated as possible and help to protect the peace

01:34:06.260 | of my house.

01:34:08.420 | Prioritize your spending to focus on the important things first.

01:34:11.660 | Make sure that if at all possible you pay your rent.

01:34:14.380 | Don't get kicked out on the street.

01:34:16.000 | You think it's bad to fight with a bill collector.

01:34:22.020 | It's a whole lot worse when you're living in your car with kids and dogs.

01:34:26.700 | So fight.

01:34:28.180 | But take care of things first.

01:34:30.380 | And do everything you can to stay out of court as quickly as possible.

01:34:34.260 | I always – that was funny.

01:34:38.500 | I think of this frequently when it comes to financial counseling.

01:34:42.220 | When Jesus was preaching in the book of Luke, Luke chapter 12, he said this.

01:34:45.940 | He said, "When you're on your way to court with your accuser, try to settle the matter

01:34:49.900 | before you get there.

01:34:51.700 | Otherwise your accuser may drag you before the judge who will hand you over to an officer

01:34:57.060 | who will throw you into prison.

01:34:59.260 | And if that happens, you won't be free again until you've paid the very last penny."

01:35:03.140 | That's from Luke chapter 12.

01:35:05.160 | There is no place that that statement is more accurate than dealing with debt and paying

01:35:09.700 | your debts.

01:35:11.240 | So when you're on your way to court with your accuser, try to settle the matter and

01:35:15.580 | come to your own agreement quickly before you get there.

01:35:19.740 | Otherwise your accuser may drag you before the judge who will hand you over to an officer

01:35:24.580 | who will throw you into prison.

01:35:26.020 | And if that happens, you won't be free again until you've paid the very last penny.

01:35:29.460 | Now we need to talk in closing here about bankruptcy and about keeping financial records.

01:35:34.820 | It's very important that you do good research about bankruptcy.

01:35:40.260 | And if you're in a hardcore situation, bankruptcy is very important for you to understand and

01:35:45.740 | for you to get good advice on.

01:35:48.020 | Being knowledgeable about the bankruptcy code is important and it is wise.

01:35:53.460 | And I hate seeing people abused who cause major problems when if they were knowledgeable

01:36:04.380 | about bankruptcy planning, they would be well-served.

01:36:08.260 | The clearest example I can give you is if you're in extreme financial duress, do not

01:36:13.140 | pay debts that can be cleared in bankruptcy with assets that will survive bankruptcy,

01:36:18.660 | i.e. don't take money out of your 401(k) to pay your credit cards.

01:36:24.820 | When your credit cards can be discharged in bankruptcy and your 401(k), you won't lose

01:36:29.620 | it.

01:36:31.100 | Now what about your moral obligation?

01:36:33.940 | That's why I spent so much time on that.

01:36:36.820 | You need to pay your debts.

01:36:38.300 | And so if you have $100,000 in your 401(k) and you owe $5,000 on your credit cards, then

01:36:43.780 | I'm going to tell you every single time, take a distribution from your 401(k) and pay

01:36:47.820 | the stupid credit cards.

01:36:50.140 | But if you have $5,000 in your 401(k) and you owe $100,000 in credit cards, do not take

01:36:56.580 | $5,000 out of the 401(k) to pay the $100,000 in credit cards.

01:37:00.540 | You need that protection because you're going to need that money to establish yourself and

01:37:05.540 | to be able to pay a first last in security on the next apartment that you rent.

01:37:13.660 | Bankruptcy can be very important.

01:37:16.360 | Bankruptcy especially, it's important that you understand that bankruptcy may be a way

01:37:20.660 | for you to do something like stop your foreclosure.

01:37:23.300 | With bankruptcy, I'm not going to do in detail on today's show, just no time.

01:37:28.200 | But with bankruptcy, there are two types of bankruptcy that are appropriate for individual

01:37:36.960 | borrowers.

01:37:37.960 | There's what's called chapter 7 bankruptcy and there's what's called chapter 13 bankruptcy.

01:37:42.220 | In essence, chapter 7 bankruptcy is a complete wiping of your debts.

01:37:49.400 | That's where your creditors receive nothing.

01:37:52.240 | Chapter 13 bankruptcy is a payment plan system where certain creditors receive certain things

01:37:57.720 | and certain creditors don't.

01:37:59.440 | But the bankruptcy court protection is very, very important, especially for people who

01:38:03.120 | are very vulnerable.

01:38:05.000 | It's important that you understand if you're facing difficult circumstances, talk to somebody

01:38:09.320 | knowledgeable about bankruptcy.

01:38:11.560 | Chapter 13 bankruptcy can be a way of stopping a foreclosure and of reworking out a payment

01:38:18.160 | program.

01:38:20.400 | Bankruptcy is not just as simple as saying, "Well, I'm not going to pay my money.

01:38:23.640 | I'm not going to pay my debts.

01:38:24.640 | I'm just going to declare bankruptcy and walk away."

01:38:26.600 | Yes, there are those circumstances in which it's so impossible that that's exactly what

01:38:31.760 | happens.

01:38:33.080 | And there are debts that we can accumulate that simply can never be paid.

01:38:36.720 | And that's why bankruptcy court is so important.

01:38:40.000 | When somebody lends you money, they are taking a risk.

01:38:43.680 | They're taking a risk and they're going into it with their eyes wide open.

01:38:47.300 | And they should take that risk.

01:38:48.600 | And one of those risks is that you may not pay and bankruptcy court is there.

01:38:52.280 | I don't want you to walk away from your debts, but I want you to pay your debts.

01:38:56.140 | But frankly, there are many situations in which we can never pay the debts that we owe.

01:39:02.360 | And that's why bankruptcy court is so important.

01:39:05.400 | Bankruptcy court is important because it gives you the opportunity to stop certain actions.

01:39:10.960 | If you're facing a difficult circumstance, you're facing foreclosure, for example, you

01:39:15.080 | seriously need to understand how chapter 13 bankruptcy works and consider a consultation

01:39:20.300 | with a bankruptcy attorney.

01:39:21.960 | A chapter 13 bankruptcy is a very valuable tool for you to stop a foreclosure proceedings

01:39:27.580 | and for you to put yourself in a situation where you can renegotiate and come up with

01:39:31.980 | a new payment plan.

01:39:33.620 | And a chapter 13 bankruptcy is one where it puts you in a situation where you can make

01:39:40.020 | payments under – with a bankruptcy – what's the name for it?

01:39:43.980 | The steward, the supervisor.

01:39:45.980 | I'm blanking on the name, but the court-appointed person who will make sure that you can pay

01:39:52.260 | a certain amount and they'll work with you and they'll help you to put yourself in

01:39:55.820 | a situation where you can pay a reasonable amount of your income.

01:40:00.860 | If you're making $50,000 per year and you're supporting a family and you have a whole lot

01:40:04.420 | of debt, you can never put yourself in a situation where you're going to put 75 percent of

01:40:08.900 | your income to pay creditors and you may need the bankruptcy court protection in order for

01:40:13.780 | you to pay those bills.

01:40:16.060 | And they'll rework it, they'll negotiate, you'll negotiate the amount down and you'll

01:40:19.260 | work out a payment plan that puts you in a situation where you can work your way out.

01:40:25.980 | Chapter 7 bankruptcy is also very, very valuable for you to understand and there are circumstances

01:40:30.180 | in which it's important for you to know that.

01:40:31.980 | Today's show is not about bankruptcy, but I want to emphasize to you that you must understand

01:40:38.140 | and research this stuff.

01:40:40.260 | And my heart hurts so much because frankly the people that get abused every day by the

01:40:45.540 | financial system are people who are clueless.

01:40:48.220 | And you wind up in a mess because you're clueless.

01:40:50.900 | You didn't, nobody sat down and taught you how to balance a checkbook.

01:40:53.900 | And so you did 10 years of stupid stuff and never balanced your checkbook and you wound

01:40:57.440 | up with a long list of debts.

01:40:59.280 | And because you're never in the habit of going and seeking out financial advice, you never

01:41:02.960 | thought to ask somebody for advice.

01:41:06.220 | And because you never got good advice, you didn't know what you could do when you first

01:41:09.760 | fell behind on your first month and you didn't know what you could do in month six and you

01:41:12.940 | didn't know what you could do in months 12 and your life is being destroyed by people

01:41:17.140 | who actually know how to understand the law.

01:41:19.900 | So stop being clueless and ask for help.

01:41:23.060 | That's my point.

01:41:24.220 | Ask for help.

01:41:25.220 | If you're listening to this show and you're not clueless, I beg you, extend help to people

01:41:31.500 | who are clueless and try to help them because when somebody is facing an overwhelming circumstance

01:41:39.620 | and they're facing bill collectors calling all the time, it can be a very lonely place

01:41:44.880 | to be.

01:41:48.680 | And I'm sick and tired of people being abused because they don't know their rights and they're

01:41:52.840 | not being fought for and the bullies are destroying their life.

01:41:57.160 | So please help them.

01:42:00.520 | Go and pay for a consultation with a bankruptcy attorney.

01:42:03.720 | Help them to sit down and understand what's available to them.

01:42:08.040 | Cruelty is not an unforgivable sin.

01:42:10.680 | It's not the end of your, even your financial life.

01:42:13.100 | There are all kinds of things that you can do.

01:42:15.720 | Now none of us want to enable people who are abusers of the system, but frankly, most people

01:42:19.920 | are not.

01:42:21.120 | Most people are wanting to do the best that they can with what they've got.

01:42:26.040 | Finally, I just, if you're in the situation, when you get this thing cleaned up, and I

01:42:32.440 | promise you, you can do it.

01:42:34.680 | May take years, but you will feel better once you get on track and you start to get these

01:42:39.480 | things done.

01:42:40.560 | May take years, but you will be in good shape when you're on the other end and you'll feel

01:42:46.200 | proud of what you've done.

01:42:47.520 | You'll feel proud of the fact that you stood good for what you owed and that you made restitution

01:42:51.960 | for your debts and that you fixed what you could.

01:42:55.720 | You'll be very, very proud of that.

01:42:57.320 | That protects your integrity.

01:42:59.780 | And when this mess is cleaned up, you'll come out the other side with a set of habits that

01:43:03.960 | will put you on the path to long-term wealth.

01:43:08.880 | I don't know how to cite the statistic, but I hear over and over and I see over and over,

01:43:13.520 | the average millionaire has been broke or bankrupt one or two or three times on their

01:43:17.240 | way to it.

01:43:18.480 | It's not uncommon to find somebody who's been in a situation where they went broke, went

01:43:23.000 | completely bankrupt, and they're in a situation where they rebuilt it all.

01:43:28.920 | So this is not the end of the road.

01:43:31.560 | Don't roll over and die.

01:43:34.800 | Stand up and fight and clear your name and clear your debts and live with integrity.

01:43:42.760 | Now when this mess is cleaned up, make sure you know this, you would better keep your

01:43:47.360 | records for life and you better understand the law.

01:43:51.560 | It's very important that you get very good at keeping these records and you understand

01:43:57.240 | how they can be used against you.

01:44:00.640 | When somebody's deeply in a mess, the records can be sold and resold so many times that

01:44:06.880 | it becomes very confusing.

01:44:08.880 | And you may have some debt that's a long time ago that was sold, they call it zombie debt.

01:44:13.400 | It was sold against you and now all of a sudden you receive another claim from somebody and

01:44:16.960 | you need to be able to go back and show, "No, look, this claim was paid in full and it's

01:44:21.880 | done, paid in full."

01:44:24.960 | You need to dispute those debts quickly.

01:44:27.840 | You must, under the Fair Debt Collection Practices Act, you have the legal right to require the

01:44:34.480 | debt collector to verify the amount and the validity of the debt, but you have to act

01:44:40.160 | quickly because when they contact you and you don't respond, that debt can become a

01:44:46.520 | valid debt because you don't respond.

01:44:48.120 | So you better respond within that 30-day deadline and dispute the validity of the debt and check

01:44:53.360 | your records and you got to keep those records from now on.

01:44:56.280 | If you don't, you'll wind up with problems.

01:45:00.840 | In closing today, let me give you just a couple of final suggestions.

01:45:04.960 | This subject is – I hope I've conveyed to you there's a lot of specific knowledge

01:45:10.220 | that is very circumstantially dependent.

01:45:14.360 | Big difference if you have a social security income or wage income.

01:45:17.280 | I've given you enough I think specific examples that you can understand.

01:45:21.680 | My only hope in today's show is to give you kind of an overview, give you some useful

01:45:25.360 | tactics that I don't often hear discussed on this.

01:45:28.280 | But I want to encourage you to look for help in your situation.

01:45:31.760 | Try not to bear this alone because these topics are so specialized and so – there's a

01:45:39.360 | lot of particular information and there are huge differences in circumstances.

01:45:44.760 | Every type of debt is different.

01:45:46.000 | The structure of the debt is different.

01:45:47.440 | The amount of the debt is different and you need discussion with advisors who can analyze

01:45:52.200 | your situation and try to present some circumstances.

01:45:56.040 | I hate to see people declare bankruptcy who with a couple of years of hard work can avoid

01:46:00.840 | it by just paying off their debt and settling with their creditors.

01:46:04.000 | I hate to see people work for years when the obvious example is bankruptcy and they need

01:46:08.480 | the bankruptcy protection.

01:46:10.120 | There are big differences in the scale of the debt.

01:46:13.300 | Some debt can be solved by a little bit of extra work and a little bit of penny-pinching.

01:46:18.680 | Other debt can never be solved by that and it's only going to be solved by building

01:46:22.080 | an entirely new business that increases hugely.

01:46:25.720 | So you need specific indication – sorry, specific help.

01:46:29.880 | Self-help opportunities.

01:46:30.880 | The very best self-help opportunity I would start you with is Nolo has a book called Solve

01:46:36.000 | Your Money Troubles, Strategies to Get Out of Debt and Stay That Way.

01:46:39.200 | It's a very good book.

01:46:40.920 | Again, it's called Solve Your Money Troubles, Strategies to Get Out of Debt and Stay That

01:46:46.160 | Way.

01:46:47.160 | Nolo is wonderful in terms of the books that they produce.

01:46:50.120 | It's a publishing outfit that produces all kinds of self-help books and they are fantastic.

01:46:54.480 | I've never been disappointed with a Nolo title.

01:46:57.280 | Solve Your Money Troubles, Strategies to Get Out of Debt and Stay That Way.

01:47:00.500 | Number two, you should seriously look and consider engaging with a consumer credit counseling

01:47:06.480 | company.

01:47:08.540 | Sometimes this will gain you benefits but the best place to start with is the Consumer

01:47:13.520 | Credit Counseling Service or an organization that is affiliated with the National Foundation

01:47:19.300 | for Credit Counseling.

01:47:21.440 | There are a lot of scams in the world of credit counseling and a lot of people will sell you

01:47:25.520 | things that simply aren't true.

01:47:28.280 | But there are a lot of legitimate helpful people that can help you to figure out a good

01:47:32.800 | solution in certain things.

01:47:35.160 | So there are people that can help you with the IRS.

01:47:37.640 | There are people that can help you negotiate with your creditors.

01:47:41.040 | But look and consider working with a debt and credit counseling agency.

01:47:45.120 | There is a 12-step program for – what's it called?

01:47:49.400 | Debtors Anonymous, I think.

01:47:50.400 | There's a 12-step program for people who are significant debtors.

01:47:54.160 | If you have a spending problem, then that would be very well worth your looking into.

01:48:00.120 | If you are prone to overspending and your debt is the result not of a medical expense

01:48:06.240 | or a business failure but it's due to you just like to buy new tennis shoes at the mall

01:48:14.600 | every weekend, that's a problem.

01:48:17.140 | So consider joining a 12-step program like Debtors Anonymous.

01:48:20.560 | And finally, get legal help.

01:48:23.020 | You definitely – if you have significant amounts of debt that you owe, you owe thousands

01:48:29.320 | of dollars, then it's probably well worth your consideration to consider getting legal

01:48:34.800 | help and to consider bringing in a lawyer.

01:48:40.060 | At the very least, try to find a consultation.

01:48:42.600 | You may be able to find a consultation with a lawyer through a local legal aid society

01:48:46.920 | if you have low income.

01:48:49.040 | Then you may be able to get help through a local legal aid office.

01:48:54.240 | Sometimes there are legal clinics available that can work with you, whether that's through

01:49:00.640 | affiliate, through university, et cetera.

01:49:03.680 | Sometimes you may have legal protection offered through your company or through some kind

01:49:09.400 | of prepaid legal program or you may just go ahead and contact a lawyer.

01:49:15.840 | But a consultation with a lawyer can be very, very helpful.

01:49:18.960 | Now consultation with a lawyer can be very, very helpful.

01:49:22.680 | I'll just stop that.

01:49:23.680 | I don't have to give caveats.

01:49:24.960 | The majority of lawyers that I've interacted with are very good at their work and they're

01:49:29.160 | very good at understanding the particulars of your situation and they're good at giving

01:49:34.080 | advice.

01:49:35.080 | So get counsel from as many people as possible.

01:49:37.640 | And most of all, I encourage you, open up.

01:49:39.960 | Open up about your problems to somebody else.

01:49:42.600 | You're not the only one.

01:49:43.960 | You're not alone.

01:49:44.960 | It's not like everyone else has a perfect financial history and if you just keep up

01:49:50.040 | the facade, then everyone else will think that you're smart.

01:49:54.960 | It's not the case.

01:49:56.880 | Talk and get help.

01:49:58.120 | And it's a whole lot easier to humble yourself and to talk and to get help.

01:50:02.640 | And then a number of years from now, two years from now, you may be able to go into a new

01:50:07.440 | year celebrating being totally debt free and having paid off all your debts and cleaned

01:50:11.780 | everything up and your financial life can be totally different.

01:50:14.720 | But get help.

01:50:15.720 | Open up and ask for help.

01:50:17.880 | I think that covers most of what I wanted to accomplish.

01:50:21.200 | Kind of a bear of a show, a big one.

01:50:23.160 | I hope this was useful to you and I beg you, for those of you who are not in this situation,

01:50:29.000 | take the time to get involved in other people's lives and help them.

01:50:31.880 | The person who is the least likely to look for help is the person who is struggling the

01:50:37.520 | most.

01:50:38.520 | It seems counterintuitive, but for whatever reason, that's where we face it.

01:50:42.480 | Wouldn't you experience it?

01:50:43.720 | It's funny, oftentimes the unhealthiest person is the one who is least likely to go for medical

01:50:48.000 | advice.

01:50:49.000 | It's the healthy person who is always getting medical advice.

01:50:51.120 | We face the same thing in this world.

01:50:52.440 | So I hope I've given you some tools and some ideas that may help you lower the stress as

01:50:56.040 | you work your way through this to pay off your debt.

01:50:59.080 | Remember to go to HelloFresh.com, use the coupon code RPF30.

01:51:07.600 | There will be a few new shows here in December.

01:51:09.200 | I'm trying to line up mainly for January, but I'll release a couple new shows and then

01:51:13.840 | I'll probably do some reruns here in December as I try to work on some stuff behind the

01:51:17.720 | scenes.

01:51:18.720 | It was pretty sick last week.

01:51:19.720 | My children were all sick last week, so our Thanksgiving vacation wound up being a little

01:51:25.520 | bit longer than we intended.

01:51:26.520 | But thank you all so much for listening and I'll be back with you soon.

01:51:41.080 | This show is part of the Radical Life Media network of podcasts and resources.

01:51:46.720 | Find out more at RadicalLifeMedia.com.

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