Foundation Concepts:

1. Life events and bad choices can put many people into debt that they can no longer manage.  When this happens, they need to develop a debt management plan to help them prioritize their debt and begin paying if off.  The first step is to recognize that there is a problem and to begin to take steps to address it.
   
   
2. Debtors must first determine if they can cover their basic daily expenses.  They will need to examine their income and their expenses for essential needs such as housing, food, transportation, medical, child care, etc. With the funds that remain, they must determine if they are able to make their minimum monthly payments on the debt that they have.  If not, they may need to consider filing bankruptcy.
   
   
3. A debt repayment plan involves writing down all the debts you owe, to whom, the balance due, the interest rate and the minimum monthly payment.  If you can cover the minimum monthly payments you should take any remaining money and apply it to the debt with the highest interest rate, as it is cost you the most.  Once that debt is paid in full, you move the amount you were paying to that creditor to the debt with the next highest interest rate and so on.
   
   
4. You are free to call you creditors and negotiate a better payment at any time.  Customer service is empowered to lower your interest rate, but if you are calling to ask for forgiveness of part of the debt, or for them to stop the accumulation of interest or fees, you will need to ask for someone in the collections department who is authorized to negotiate a hardship case.
   
   
5. Late or missing payments will result in higher interest rates, late fees and negative information being added to your credit report which will negatively affect your credit score.  If you remain in default, your debt may be turned over to a collection agency and/or a judgment may be filed against you.  If the judgment is awarded by the court, your wages can be garnished in repayment for the debt.
   
   
6. There are debt counseling agencies who can help you create a budget you can live with, negotiate with creditors and even enter into a debt consolidation plan.  Be careful.  Many of these organizations are more concerned about the fees they want to charge you than in solving your debt problems.  Look for not for profit debt counseling agencies with good reputations like Consumer Credit Counseling Services or GreenPath Debt Solutions.
   
   
7. If you are being harassed by debt collectors, check out the FTC website to make sure they are operating within the Fair Debt Collections Practices Act, which limits the contact that debt collectors can have with you. 

Discussion Questions:

What was the cause of Jane’s financial problems?  Can you think of other life events that could have a negative impact on a person’s ability to cover their expenses?

How does Jane feel about the situation she is in?  Do you think there are any other people in Jane’s life that she could have turned to for help with this problem?  Who would you turn to?

What steps does Pastor Brad recommend that Jane take:

• Examine her income and expenses to see if she is able to make her minimum monthly payments
• List all of her debts with the creditor, balance due, interest rate and minimum monthly payment on one sheet.
• Put any extra money that she has towards the debts with the highest interest rates
• When one creditor is paid off, to use that money to make extra payments to the creditor with the next highest interest rate.
• Call her creditors and see if she can negotiate and any reduction in her debts.

How do you think it might feel when collection agencies call?  Do you think that they treat the debtor with respect?  How do collection agencies get paid?  Do you think this affects how they treat the people they call?

What are some things that debt collectors cannot do:

• Call before 8AM or after 9PM
• Call repeatedly (i.e. multiple calls or even hang ups in a short period of time)
• Speak to you at work if your employer does not allow it
• Speak to your employer, friends or family
• Threaten you physically or threaten your reputation
• Use profane language
• Encourage you to pay with a post-dated check
• Threaten to seize property which they do not have a legal claim on
• Misrepresent themselves
• Identify themselves as debt collectors on any mailing
• Continue to harass you after you have sent them written notice to stop calling