Debt Survival

Survival protocol for when income drops and debts pile up. Covers payment priority hierarchy, creditor negotiation, collector defense using FDCPA rights, validation letters, statute of limitations, settlement strategies, and what actually happens if you stop paying.

# Debt Survival

Your income dropped. Your bills didn't. You're staring at a stack of obligations that made sense when you had a paycheck and now feel like a wall closing in. This skill is about triage: what to pay, what to negotiate, what to let go, and what happens if you do.

This is not a debt optimization guide for people trying to improve their credit score by 20 points. This is for people who cannot pay everything and need to know what matters most. Laws referenced (FDCPA, FCRA, statute of limitations) are US-specific.

```agent-adaptation
# Localization required — this skill references US-specific laws and systems.
# Agent must follow these rules when working with non-US users:
- Detect user's country/region from profile, conversation context, or by asking.
- If non-US: substitute the relevant local equivalents for all legal references.
  Examples:
  - FDCPA (Fair Debt Collection Practices Act) → Consumer Credit Act (UK),
    National Consumer Credit Protection Act (Australia), Consumer Protection Act (Canada)
  - FCRA (credit reporting) → Consumer Credit Regulations (UK), Privacy Act (Australia)
  - Statute of limitations on debt: varies dramatically by country and debt type —
    research the specific jurisdiction before advising the user
  - Bankruptcy rules: highly jurisdiction-specific. Research local process.
  - Credit bureaus (Equifax, Experian, TransUnion US) → same names operate
    internationally but with different rules; plus national bureaus (e.g., Noddle/TransUnion UK)
- Always cite the legal sources you reference for the user's jurisdiction.
- Always warn before any legal action step: "This step is US law — verify the
  equivalent rights and procedures in your country before proceeding."
- If unsure of jurisdiction: ASK the user for their country/region before
  providing any jurisdiction-specific legal guidance.
```

## Sources & Verification

- Fair Debt Collection Practices Act (FDCPA): 15 U.S.C. 1692 ([law.cornell.edu](https://www.law.cornell.edu/uscode/text/15/chapter-41/subchapter-V))
- CFPB debt collection rules: Consumer Financial Protection Bureau, Regulation F ([consumerfinance.gov/rules-policy/regulations/1006/](https://www.consumerfinance.gov/rules-policy/regulations/1006/))
- Statute of limitations by state: Nolo, "Statute of Limitations on Debt Collection by State" ([nolo.com/legal-encyclopedia/statute-of-limitations-state-702.html](https://www.nolo.com/legal-encyclopedia/statute-of-limitations-state-702.html))
- Medical debt credit reporting changes (2023): Consumer Financial Protection Bureau, "Medical Debt and Credit Reports" ([consumerfinance.gov](https://www.consumerfinance.gov/about-us/newsroom/cfpb-kicks-off-rulemaking-to-remove-medical-bills-from-credit-reports/))
- Federal student loan default and garnishment: Federal Student Aid ([studentaid.gov/manage-loans/default](https://studentaid.gov/manage-loans/default))
- Debt collection industry purchase prices: FTC, "The Structure and Practices of the Debt Buying Industry," 2013
- FDCPA statutory damages: 15 U.S.C. 1692k (up to $1,000 per violation)
- HUD housing counselors: [hud.gov/counseling](https://www.hud.gov/counseling)

## When to Use

- User's income just dropped (layoff, hours cut, disability, divorce) and they can't cover their bills
- User is behind on payments and doesn't know what to prioritize
- Debt collectors are calling and the user doesn't know their rights
- User is considering not paying something and wants to know the real consequences
- User has old debt resurfacing and doesn't know if they still owe it
- User is being sued for a debt

## Instructions

### Step 1: The Payment Hierarchy — What to Pay First

When you can't pay everything, the order matters. Not all debt is equal. Some unpaid debt makes you homeless. Some unpaid debt hurts your credit score. Those are very different consequences.

**Agent action**: Help the user list all their debts and monthly obligations. Categorize each one using the hierarchy below. Save to `~/documents/debt-survival/payment-priority.txt`.

```
PAYMENT HIERARCHY — PAY IN THIS ORDER:

TIER 1: SURVIVAL (pay these first, always)
  1. Food and medicine
  2. Rent or mortgage (roof over your head)
  3. Utilities — electric, water, heat
     → Call utility companies BEFORE missing a payment
     → Ask about budget billing, payment plans, or LIHEAP assistance
     → Most states prohibit utility shutoff in winter months
  4. Essential transportation (car payment IF you need it for work/interviews)
  5. Child support (non-payment has legal consequences including jail)

TIER 2: PROTECT (pay if possible, negotiate if not)
  6. Health insurance premiums
  7. Car insurance (required by law, and losing it cascades)
  8. Secured debts where you'll lose the collateral
     (car loan if you need the car, home equity loan)
  9. Student loans
     → Federal: apply for Income-Driven Repayment (IDR) — payments
       can drop to $0 based on income. Go to studentaid.gov
     → Federal: apply for deferment or forbearance if income is zero
     → Private: call and ask for hardship options

TIER 3: NEGOTIATE (call before you miss, or after — but call)
  10. Credit cards — call the issuer and ask for their hardship program
      → Most have programs: reduced APR, lower minimums, deferred payments
      → Say: "I'm experiencing a financial hardship and I'd like to
        discuss options for my account."
  11. Medical bills — almost always negotiable
      → Ask for an itemized bill first (charges often drop)
      → Ask for the "self-pay" or "uninsured" discount (30-70% off)
      → Request a payment plan with no interest
      → Apply for the hospital's financial assistance / charity care
        (non-profits are legally required to have one)
  12. Personal loans

TIER 4: LAST PRIORITY
  13. Collections on old debt (see Step 3)
  14. Debts past the statute of limitations (see Step 4)

THE PRINCIPLE: Feed yourself. Keep the lights on. Keep your housing.
Everything else is negotiable, deferrable, or survivable.
```

### Step 2: What Actually Happens If You Don't Pay

The debt industry runs on fear. Most of that fear is exaggerated. Here's the real timeline of consequences by debt type.

**Agent action**: If the user is considering not paying a specific debt, look up the consequences for that debt type and their state's statute of limitations. Save the analysis to `~/documents/debt-survival/{creditor}-consequences.txt`.

```
WHAT HAPPENS IF YOU STOP PAYING:

CREDIT CARDS:
  30 days late → Late fee. Reported to credit bureaus.
  60 days late → Interest rate may jump to penalty APR (29.99%).
  90 days late → Credit score drops significantly (60-110 points).
  120-180 days → Account "charged off" — sold to a collection agency.
  After charge-off → Collector calls. Possible lawsuit (varies by
    amount and state). Cannot garnish wages without a court judgment.
  Credit score recovery → The late payments stay on your report for
    7 years from the date of first delinquency, but their impact
    fades over time. After 2-3 years the effect is substantially reduced.

MEDICAL BILLS:
  Hospitals generally wait 120-180 days before sending to collections.
  Medical debt under $500 is no longer reported to credit bureaus (as
  of 2023 credit bureau policy changes).
  Medical debt cannot lead to wage garnishment in many states without
  a lawsuit and judgment.
  Non-profit hospitals MUST offer financial assistance. Ask for it.

STUDENT LOANS (FEDERAL):
  270 days late → Default. Entire balance becomes due immediately.
  Federal government can garnish wages WITHOUT a court order (up to 15%).
  Federal government can seize tax refunds and Social Security.
  NO statute of limitations on federal student loans.
  SOLUTION: Get on an Income-Driven Repayment plan BEFORE default.
  If already in default: look into loan rehabilitation or consolidation.

STUDENT LOANS (PRIVATE):
  Treated like any other unsecured debt.
  Subject to state statute of l