Those were the top named service requests reported by Pre-Paid Legal Services (NYSE: PPD) based on input from their participating law firms.  Pre-paid legal services provides specified legal services to their members.

“The Pre-Paid Legal Services Top Five List is intended to be a ’snap-shot’ of the issues that legal service plan members are facing today, and given the economic hardships that so many Americans are experiencing, it’s not a pretty picture,” said Pre-Paid Legal Services Founder and CEO Harland C. Stonecipher.

Debt collection activities by the lender, or service provider owed the money, don’t have the same restrictions as activities by debt collection agencies. Debt collection agencies must stop harassment when requested by the debtor.

The Federal Trade Commission (FTC) protects consumers from abusive actions by debt collectors.  Debt collectors are defined more broadly than just agencies.  It also includes attorneys who attempt to collect debts on a regular basis, as well as those companies who buy debts and then try to collect them.

Debt collectors must stop contacting you if you make the request in writing.  For other actions you can take see the FTC website.

Many households these days are nearly drowning in a sea of debt, potential foreclosure, and possible bankruptcy.  There are ways to legally eliminate unsecured debts.

Debt settlement is probably the most common way.  It is simply paying the lender an agreed to amount that is less than the face amount of the debt owed. Most lenders won’t consider debt settlement if the debtor has made any sort of payment within the last six months.

This is important because the first time you contact the lender they will exert extreme pressure on you to get some sort of payment.  They may even refuse to talk with you unless you make a “good faith” payment.  Don’t start the clock again by making the payment.

Contacting the lender to discuss debt settlement is a flag that you will not or can not pay off the debt in full.  If the lender believes that you have sufficient assets they may start legal proceedings to sue you for a judgment.  Once the judgment is made they can initiate collection activities through wage garnishment, impounding your bank account and other assets.

On the bright side more lenders are willing to consider debt settlement because they are aware many consumers don’t have the where with all to pay their debts in full.  Even a partial payment is better than no payment at all.

Debt settlement does eliminate your debts for payments of 40% to 50% of what is owed.  However the downside is that it destroys your credit rating as the short pay is reported to the credit reporting agencies. There also may be a tax implication as well.  Debts that are forgiven can be considered as income by the Internal Revenue Service and be taxed.

Before you take any action, do the necessary research, so you know the consequences.

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