February 20, 2018

The “Do It Yourself Bailout” – Part Four of Jonathan’s Interview with Kenny Golde

Have you ever wondered what it takes to settle your debts for pennies on the dollar?  Recently I interviewed Kenny Golde, who found himself with $250,000 of credit card debt and no way to pay it all back.  However, with tenacity and focus, Kenny has managed to eliminate more than half of this debt through negotiation.  Here is part four of our conversation – it lasts about 8 minutes.  We discuss the procedure for entering into a written settlement agreement with your creditor and the steps you must take to ensure that your settlement is honored by the creditor or collection agency.  Part 5 will be posted tomorrow.

Link to Kenny Golde’s book “The Do It Yourself Bailout.”

The Do It Yourself Bailout – Part Two of Jonathan’s Interview with Kenny Golde

Have you ever wondered what it takes to settle your debts for pennies on the dollar?  Recently I interviewed someone who started with $250,000 of credit card debt and with tenacity and focus, has managed to eliminate more than half of this debt through negotiation.  Here is part two of my conversation – it lasts about 8 minutes.  Kenny and I discuss the psychology of debt collection and the importance of seeing debt negotiation as a business transaction free of emotions or guilt.  “You are the CEO of your own corporation,” Kenny advises.  Part 3 will be posted tomorrow.

Link to WalletPop (Now Daily Finance) article discussed by Kenny in this segment

Link to Kenny Golde’s book “The Do It Yourself Bailout.”

Inside the Belly of the Beast – How Debt Collectors Think

Back in February, 2007, I wrote a blog post entitled Understand the Psychology of Debt Collection Tactics and Avoid Being Manipulated.  In this article I noted that bill collectors use techniques identified by psychologists to trigger guilt and other emotional responses that might cause you to send money to a particular bill collector.

For example, bill collectors will try to persuade you to verbally authorize a draft from your checking account because such an action is immediate.  Presumably the collection statistics for individuals who promise to mail a check are significantly less impressive than those who authorize a direct payment.  Never authorize anyone to access your account electronically, by the way – it is a bad idea for many reasons.

In any case, my Bankruptcy Law Network college Andy Miofsky recently posted an interesting article in the Debt Law Network blog entitled “How to Read Your Debt Collector’s Mind.”  In this article, Andy identifies a number of freely avalable web sites published by and for the debt collection industry that reveal many of these psychological tricks.

If you are dealing with debt collectors you need to treat negotiations as a business transaction and the resources Andy identifies can help you in this regard.

Understand the Psychology of Debt Collection Tactics and Avoid Being Manipulated

My colleague, Boston bankruptcy attorney Nick Ortiz, has written a helpful post on his Massachusetts Bankruptcy and Consumer Protection blog summarizing your right to refuse to speak with a debt collector under the Fair Debt Collection Practices Act.

If you have ever been the target of aggressive collection efforts, you know that bill collectors use applied psychology to intimidate the debtor.  If you did not yet know this, bill collectors follow a script that was developed by psychologists to trigger certain emotional responses in you.  For example the word “promise” is much more emotionally charged than words like “debt,” “outstanding balance” or “financial obligation.”

Debt collection scripts are also designed to suggest that your failure to pay a debt will result in a form of “punishment,” which could lead a stressed out debtor that he could end up in jail (despite the fact that there have never been debtor’s prisons in the United States not been federal debtor’s prisons in the United States since 1833 or state debtor’s prisons shortly thereafter).

In my bankruptcy practice, I encourage my clients to make thoughtful, informed decisions about whether to file a Chapter 7 or Chapter 13.  Recognizing the tactics used by bill collectors can help a debtor avoid emotional decisions, or, worse, bad decisions.  I cannot tell you how many times I have met with clients who partially or totally cashed out a 401(k) to pay a credit card or other unsecured debt.  In Georgia, 401(k) accounts are 100% sheltered from creditors, so any encroachment one of these protected accounts is usually a bad idea.

If you want to learn more about the psychology of influence, I can recommend the work of noted psychologist Robert Cialdini.   I saw Dr. Cialdini speak a few years ago at a tax problem seminar and his work is truly groundbreaking.  His book, entitled “Influence: Science & Practice” is available at Amazon and I recommend it highly no matter what you do for a living.  You can read more about Dr. Cialdini at his InsideInfluence.com web site.

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