Four Magic Words That Could Wipe Out Your Credit Card Debt

(Reprinted from The Oxford Communique at

There are “four magic words” you can say if a collection agency ever comes after you for any unpaid debt. You say the words . . . and your debt can get eliminated all at once.

I know that sounds unbelievable, but NPR did an investigation of this for its show This American Life. In it, a couple got a $3,762.20 credit bill instantly wiped out because of this special sentence.

Here’s how the scenario unfolded . . . It involved a couple named Frederick and Keanne. Fred was buying houses, rehabbing and selling them, which was going great until the housing market fell apart in 2008. As a result, the couple ended up taking on some debt.

Ultimately, they got a notice in the mail saying they owed $3,7672.20 to a company called LVNV Funding and were being summoned to appear in court.

Frederick and Keanne knew nothing about LVNV. The main reason they went to court was to figure out what was going on.

At the court hearing, they learned that, when they failed to pay off their American Express bill, the credit card company sold that IOU to LVNV. Obviously, those kinds of sales to collection agencies make for big business. There are lots of companies that do this.

But here’s where it got interesting . . . Fred and Keanne wanted to know what the specific unpaid charges were, so they said four words that turned out to be magical.

“Show me the evidence.”

It turns out the lawyer representing LVNV didn’t know what the specific charges were . . . which isn’t unusual. When uncollected debts are turned over to firms like this, they often only receive a statement giving the total amount owed, no specific transactions. Nor does the collection firm have the original contract from when the credit card was initiated.

The bottom line is: If you show up in court and say the magic words, and the collection firm can’t come up with it, the case is dismissed. The debt is expunged.

So when these companies take people to court, they’re betting you won’t show up . . . because people usually don’t. The no -show rate is between 80% and 90%.

What that happens, you lose. But when you do show up and say the magic words, there’s a good chance you’ll win.

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