Highlights from the Dave Ramsey Show

QUESTION: Travis in San Antonio is receiving calls from debt collectors, and the calls are freaking his wife out. Travis doesn't know how to convince her that they're just blowing smoke. Dave tells him about the games collectors play with you.

ANSWER: You can teach this to your wife: They play on your emotions. They know that when you are emotional, you're not making good decisions. When you are angry or afraid, you don't make good decisions, and I don't either.

When we were going broke, American Express called my wife and asked why she would stay with a man who wouldn't pay his bills. She called me at the office crying and saying that she was thinking that same thing. It's funny now, but 25 years ago I was one angry guy. I was ready to drive down there and whip somebody who talks to my wife that way. I got so mad I paid them. Who won that exchange? He did.

We had one other bill with them and we started learning how collectors work and how their job is to create emotion by whatever method they want to use. You must realize that this is a game to them; it's psychological warfare. Once my wife and I realized we had been played like that, then the next time they called and started that routine, my wife told him to not get his panties in wad. When we get some money, we'll pay you. Then she hung up on him. By then, she got the idea that this was a game.

You have to teach your wife that this is an idiot in a cubicle 500 miles away that couldn't get a better job. In most cases, they violate federal law on a daily basis; in particular the credit card collections side of things. There are some good collectors who abide by the law, but not many. In the credit card world, there are none of them. They are just scum. They will tell a little kid that they will take his toys if his mother doesn't get on the phone.

They are scum. We deal with Discover, First Card, Chase, Bank of America and others. You can tell they are lying if their mouths are moving. They are scum, and you've got to realize that's what you're dealing with. It's a highly profitable piece of their business. Because it's unsecured debt, they have very little power over you, particularly in your state of Texas because they can't do much by getting a lien against you. They can't garnish your wages or take your house.

You have all kinds of protection from them, so all they can do is yell at you and make you believe they are going to take your oldest child and hold them in a vault or something. If they threatened to take your children and you were able to record it, you need to sue them because you can probably get the whole debt forgiven at that point because they violated federal law. That is an illegal act to threaten something like that.

There is a wonderful new website we're endorsing called Collection Bully. This is a group of attorneys who will sue on behalf of someone who has been abused by a collector that is violating federal law. I would start recording these calls as often as possible because you'll need the evidence to turn over to someone and get some help on this.

The biggest thing is to get in a position where you can start paying these bills and get rid of them. But in the meantime, you have to teach your wife that these people are liars. If there is breath passing their vocal cords and making a sound, it's a lie. You've got to start with that, because in Texas, they aren't going to do squat to you.

I'm not telling you that so you don't pay your bills, and you're not asking that so you don't have to pay your bills. You're not talking to humans—you're talking to a barking dog on the end of a chain who doesn't have any brains left.

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Question: Tom in Arizona says his paycheck is being garnished. The collector is garnishing the wrong person though. Tom wants to know how to get them to stop this garnishment on his income. Dave suggests giving them a chance to correct the problem first before going to the bar.

Answer: I would be calling the law firm about the first instant I figured that out and tell them they have about 13 seconds to refund your money or we're going to have a lawsuit like they've never seen. They need to stop this garnishment. You can't garnishee the wrong people arbitrarily and just decide you're going to zap anybody with the same name's money. If they can't figure that out, 13 seconds after that, I'm going to be hiring an attorney to go after them. But I think they'll get really nervous really fast when you say, "Look, it's not me. You have the wrong Social Security number. You have the wrong middle initial. Your lack of competency here—your malpractice—is about to get you people filed with all kinds of complaints at the bar and personally sued, so you need to refund my money and pull this garnishment in about the next minute and a half."

You don't need to contest the judgment. The judgment's not on you. The judgment is on someone else who has a different middle initial and a different Social Security number than you. You don't have a judgment on you. You don't have anything to contest.

Go to the lawyer who did the garnishment. They are in the middle of a malpractice mess here. I think you can call over there and probably get a paralegal and probably get this straightened out in 20 minutes because I think they're going to freak out because they're going to realize they are unbelievably liable here. That's my guess. If they don't freak out and they don't reverse this instantaneously and write you a check today, then I'd be filing charges on them at the bar and hiring an attorney to sue them.

Give them the opportunity to correct their incompetence because everybody makes mistakes, but the question is how does a professional react to the mistake? They react very, very quickly because they realize they're at fault. It would be the equivalent of, for instance, if someone called here to buy a book and gave us their debit card number and one of our people put the wrong debit number in and took the order for $1,000 worth of Total Money Makeover books out of the wrong guy's account. It's the same kind of thing. If somebody called here and said that we did that, we'd be going, "Oh, my God. Quickly, we will fix this. We're so sorry." That better be the reaction you get out of these bozos. If not, dude, you need to start lighting people up. Just immediately go, "Listen, I'm filing charges on you at the bar this afternoon, and I'll be filing a lawsuit on you personally and the attorney. I'm going after everybody here."

It's unconscionable that they're that sloppy. I think you ought to talk to your payroll department about watching their processes and strategies and match Social Security numbers before they allow a garnishment. I don't think they were very diligent either. If someone sends me a garnishment—I'm the employer here—on one of our team members, we have the right to look at the Social Security number and match it. If the Socials don't match, they have the wrong garnishment. I'm not bound to fill that order.

Several people need to be lit up here. This is unbelievable.

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Question: Kori in Kentucky and her husband are on Baby Step 1. They have an old debt from 2008 and three collectors have called them about it. They paid one of the collectors, so how do they deal with the others? Dave gives her some welcome advice and gets riled up when he tells her how to talk to them.

Answer: The people who contact you now on a debt that has already been paid—send them a copy of the note that shows the balance owed with a copy of the canceled check stapled to it. Say, "This debt has been paid. Please clear your account, you idiots." They just make up crap. They just add stuff to it. It doesn't matter.

You have a letter or a bill with a date on it that says a dollar amount that is owed. You have a check that is canceled right around that same date for that amount. You do not have any more debt. You don't need a letter that clears it. You have a bill from some goob that says $313 is owed. Then you wrote a check for that around that same time and that check cleared. You do not have a debt. Take both of those pieces of paper, make multiple copies, and send it via certified mail to anyone who tries to collect from you. Tell them if they try to continue to collect a debt that is no longer owed, you're going to sue them and turn them over to the Federal Trade Commission. Get all up in their grill because they're stupid fools. They're incompetent, and you need to knock them into next week. Really, you're not dealing with intelligent life. You probably already figured that out. They're not only not very nice but they're not very smart because they're incompetent and breaking federal law. Once a bill has been paid, it is illegal to try to collect it. Hello!

Keep the original canceled check the rest of your life. No one gets that. That's golden. Send them a copy of it.

You're just too nice. You just can't be this nice. You grew up where everyone told you to always be nice, especially on the phone, and I don't want you to be nice. I want you to go crazy. The only way you get attention from these people when they are acting this way and they're acting improperly—basically, they're trying to steal from you, so you need to go off on them just to get their attention. If a simple conversation will suffice, then do that. But the problem is you're going to figure out pretty quick that it probably won't. You start nice and then just have your hand on the volume switch, and every time nice doesn't work, take it up a notch. Say, "Please take me to court! I've always wanted to own a little collection agency! Please take me to court because I'm going to put you in jail for extortion! Please come after me!" Yell it at them! "Please! Your parents are apparently cousins! Please come after me! I would love it! I'm begging you! Sue me, please! I have a canceled check, I have the bill, the debt is no longer owed, you're in violation of federal law, and I'm going to sue you until I take all the furniture out of your mother's house, you idiot! Please come after me!" This is how you've got to act. Go off on them.

It's the most abusive, out-of-control industry in America today, and none of the "governmental agencies" that are supposed to be watching over this stuff are doing anything about it. They violate federal law on a daily basis. The credit card collections industry is completely out of control, and nobody seems to give a rip. So the consumer has one option, and that's stick a knife in their throat, metaphorically speaking, and slice. You've got to bleed 'em out, man. It's your only shot. You've got to go for it. Otherwise, they're just going to control your freaking life. "Oh, please sue me. Please sue me, you idiot." This is where you've got to go, and then hire an attorney and sue 'em for $10 million because they're so completely out of whack.

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