Debt Settlement Kept Us Out of Bankruptcy!

 

couple_Help.jpg

Several years ago, my wife and I faced one of the darkest times of our lives.  Although we were in a financial mess, we found a way to work through it.

Hopefully, our story may help someone else. 

Here goes...

I never dreamed that I would ever be in a situation where I could not pay my bills!

With a good job that paid me a better than average income and my wife earning a good salary as well, we were  living the "good life", until.....

Our lives dramatically changed!

I had been working for the same company for about 10 years, was in charge of a large area of the country, and my sales and sales team usually led the company.

This meant that I was getting a nice bonus each year as well as my large salary!

Like I said, "Life was good!"

Although I had heard the rumors about a possible sale of the company to a larger competitor, I was told "Don't worry, even if this happens, you'll be OK".

Right!

One afternoon, my supervisor called me into his office and I could tell that something was up.

After a few minutes of chit-chat, he finally came out with it and let me know that the sale was going to happen, and that the new company was going to terminate my position and replace me and my team with their own people!

I just stood there...in shock, thinking...

 

            "What was I going to do?"

 

Man_stress_over_money.jpg

So, here I was:

 

  • Unemployed (for the first time in my life!)
  • Have a mortgage (nice, large home!)
  • Family (2 kids, ages 8 and 10)
  • A little over 40
  • No real job prospects in a bad economy!

 

I knew I was in trouble and I was starting to panic!

 

 

JOB SEARCH, BILLS, and STRESS

 

I sent out dozens of resumes and went on several interviews, but no luck.

One night, my wife and sat down and completed a "Home Budget Worksheet".

Even though I kinda had an idea of what came in and what went out, I really hadn't ever taken the time to track it carefully. 

After all, we were making great money and really had nothing to worry about.

Boy, was I shocked to see the real numbers!

We found out that we were spending a lot of money on things we really didn't have to have, such as:

  • Starbucks coffee
  • Athletic club membership (that I rarely used)
  • Internet and TV Service that included about 1,000 shows and channels we rarely watched!
  • Going out to dinner a couple of times a week
  • You get the picture...

And then....

The hot water heater stopped working.  

The plumber said that there was nothing he could do to repair it as it was just too old.

With our savings just about gone, I had to use one of my credit cards to buy a new one and pay for the installation.  

Even though the total was about $1,000, it really only increased my minimum monthly payment by $25 or so.

And the spriral started...

With no one willing to hire me at anywhere close to what I was earning before, I finally had to take a job at just a little over minimum wage.  

It was better than nothing, but the final take home pay was just not enough to cover everything.

I was really beginning to stress out!

 

cartoon_about_stress.jpg

 

CREDIT CARDS TO THE RESCUE?

We had no choice but to pay only the absolute essential bills like the mortgage, utilities, groceries, etc. and let the credit card bills, medical bills, and yes, even the car payment get behind. 

I mean, what else could we do?

Sure, there was a little equity in our home, but with our bad credit rating, we wouldn't qualify for a second mortgage or refinance.

Over time, I had to use the cards to make up the shortage we faced each month.

As the total credit card debt was increasing due to late fees and over-the-limit fees, we had to use a CASH ADVANCE once in a while just to pay a utility bill or buy groceries!

The crazy thing was, even though we hadn't made a payment in 3-4 months, and were getting nasty letters from our creditors, we would still get an OFFER from a credit card company for another card or to consolidate all the others with a BALANCE TRANSFER!

We actually had three cards from one company!  Made no sense!

Sure, this "rob Peter to pay Paul" action was holding them off, but we knew that a"day of reckoning was coming!"

 

DECISION TIME!!!

One evening, after the kids were asleep, we sat down at the kitchen table and took a long, honest look at our situation.

There just wasn't enough money to cover all of our expenses and bills.

 

It looked like BANKRUPTCY was our only option.

 

As we discussed this, my wife told me that she had a friend who had gone through a similar financial situation and had prevented choosing bankruptcy by going through a Debt Settlement Program.

I called the company she had used, but after a few minutes talking to the rep on the phone, I just didn't have a good feeling.

It seemed that all he wanted to do was to get us to "sign up" right away and that he really wasn't listening to our particular situation.

 

Tried the DIY method to negotiate settlements

 

I tried to contact the debt collectors myself, but soon learned that they did not care about our situation and were not very sympathetic and usually very rude.

Sure, they were willing to settle the account for a little less than the full balance, but they wanted the money in a lump sum!

I lost my temper and told one guy, " You %%#@*&^%, if I had that kind of money, I wouldn't be in this situation!"  He seemed as if he could care less.

I was angry and embarrassed!

 

CHOOSING THE RIGHT DEBT SETTLEMENT COMPANY

 

After several frustrating attempts like this, I went online and checked out a couple of debt settlement company's Better Business Bureau reports.

There weren't very many that were accredited and had an A+ rating with no complaints!

It was very evident that not all debt settlement companies were the same!

Since they all seemed to offer the same services, we decided to narrow the field by using the following tests....

 

 

After calling a few, we decided to go with a company that seemed to meet the criteria we wanted.

 

THE PROCESS

 

Once we enrolled, the first thing they did was to put a stop to those annoying and basically harassing calls from the collectors!

I can't tell you how great it was to have someone "in our corner" now!

We had stopped sending payments to the creditors (just didn't have the money!)for about the last 3 or 4 months and some of our accounts had already been turned over to a Debt Collector.

We started making monthly deposits (what little we our budget would allow) into an FDIC insured account for future settlements.

This monthly deposit was a little less than half of what the total minimum payments would have been, so this really helped!

 

Over time, the company was able to settle each of our debts!

 

Some of them were settled at less than 50%, saving us a lot of money!

I really appreciated the service we received.  It helped calm us during the whole process.

Well, it took about 4 years to get all of our debts settled (we had enrolled about $40,000 of various unsecured debts), but it was well worth it.

When we had questions or concerns, we were always able to talk to our representative and/or the negotiator.

Not only did we save thousands of dollars through the settlements, our CREDIT SCORES started to improve!

TODAY

Here we are, still in our home, no creditors calling, all of our credit cards have a $0 balance (we actually cut them all up!) and we FEEL GREAT!

Even though we could have, we are very glad we didn't turn to Bankruptcy Protection.

Hope this has been helpful!

 

Debt Settlement is not for everyone, but for us, it worked better than we expected:

free-debt-relief-summary

 

 

 Photo Credit

 

 

Tags: Credit Score, Bankruptcy, debt collectors, debt free, Best Debt Settlement Companies, credit cards

What Should You Expect From a Debt Settlement Program?

Trying to decide if you should enroll in a Debt Settlement Program?


credit_card_mouse_trap.jpg

Debt Settlement is an option that few people know about.

Did you know that given the right circumstances, most lenders will eventually accept an  amount that much less than the full amount to clear an old account from their books!

I'm talking about unsecured debts like:

  • credit cards
  • personal bank loans
  • medical bills
  • store cards
  • "pay-day" type loans
  • and others

Now, although I've been helping people settle debts such as these for many years, and know that it can really help, not everyone should enroll in a debt settlement program.

WHAT?

Let say you find yourself with $10,000, $20,000, $30,000 or more of unsecured debts and although you are making the minimum payments each month, you are just not seeing the balances reduced due to high interest rates and fees, a DEBT MANAGEMENT PROGRAM may be (notice..."may be") what you need.

You can check out my link above for full details of how a Debt Management Program works, but basically{

  • Each of your creditors agrees to lower the interest rate and in many cases stop or forgive late or over the limit fees.
  • You will make one payment that is about the same (and sometimes a little more) to the company and they will pay each of your creditors according to the agreements.
  • This type of program usually take about 48 months and according to the Fair Isaac Corporation (FICO), being enrolled in a debt management program is NOT a factor in determining your credit score.

But, what if you have a considerable amount of unsecured debt and are just not able to keep up with the minimum payments and cannot afford the required payment of a Debt Management Program?

Many people will seek the help of a bankruptcy attorney, but that is not always the best option.  Yes, bankruptcy is a viable option, but in my opinion, should only be used when you have exhausted every other option!

 

So, how does a Debt Settlement Program work?

 

Instead of making any payments to your creditors, you will set aside an amount of money (your budget will allow) into a Settlement Account with an FDIC insured bank.

Of course, since you are not making monthly payments to your original creditors, they will eventually be turned over to a debt collection company.

Negotiations will begin and a settlement agreement will be arranged.  This agreement MUST be in writing and no payments should or will be made without it!

Most debt collectors will be open to a settlement.

Recent Settlements See what we have  done for our clients!

 

So, what should you look for in a Debt Settlement Company?

  • How long has the company been in business?
  • Are they registered?
  • A+ rateing and accredited with the Better Business Bureau?
  • Does this company have a lot of complaints?  If so, BEWARE!
  • Does the agent really listen, ask a lot of questions to determine what type of help you really need?  Or, does it seem like you are trying to be pressured into signing up right away?
  • Oh, and by-the-way, the counsultations should all be FREE!
  • Are there referrals or testimonials from formet clients?
  • What about seeing some actural settlements

 

Finally....

Dealing with the stress of a financial hardship requires information and help.

A qualified Debt Settlement Company may be just what you need, but you need to do a little homework first!

FREE
Debt Elimination Summary

 

 

Photo Credit

 

 

 

 

Tags: debt settlement, Bankruptcy, credit card, Best Debt Settlement Companies, BBB

Debt Settlement...How Does it Work?

Given the right circumstances, a Debt Settlement Program is an option that can give you freedom from debt!  

Here's how a debt settlement program works:

 

Let's face it, credit and credit cards are something most people deal with every day.   

You know how that can go....

You get an offer for a credit card with 0% and fees (for 6 to 12 months at least).  All you have to do is fill out the form and submit.  

bunch_of_credit_cards.jpg

At first, you use the card to buy some items that may be just a little bit too expensive for you you right now, but, with a minimum payment of only $50 or so,why not?

But, you get another offer (or two, or three, or four...) and you figure:

"I can afford a $200 or so each month...Why not?"

I actually took this picture...kinda says it all:

shop_now_pay_later.jpg

Sure, you can afford the total minimum payments due each month of about $200.

But what happens if one of the following happens (as has done with most of my clients):

  • Loss of Employment
  • Divorce
  • Major injury or illness
  • Total Disability
  • Death of Spouse or Partner
  • Too little fixed income after retirement!

Just to name a few!

Pretty soon, you just can't keep up with all the payments due (beside the mortgage or rent, utilities, groceries, etc.)

NOW WHAT DO YOU DO?

When your cannot keep up with the minimum payments, it doesn't take long to realize that you are in trouble!!!  

A lot of people start taking cash advances from one card to make the payments on the others.  This is just putting off the inevitable!

You may be able to take out a second mortgage, but this has dangers as well.  Be very careful here!

Please don't be fooled into getting one of the "PayDay Loans"

These "lender traps" may end up costing you very high interest rates (I've seen them as high as 85%), making it almost impossible to ever repay!

A Debt Settlement Program may be the answer. 

Here's the basics:

If you haven't stopped making of payments to your creditors, rather than continue this process, you will start making a payment (really a deposit) to an account set up for you at an FDIC bank.

Two things will happen:

  • Your account will start to grow, which will allow for negotiations (more later).
  • The creditors and debt collectors will be calling and sending letters.

Yes, your "original" creditor (Visa, Citibank, Home Depot,etc.) can legally call you about your account.  You gave permission (all the fine print) when you signed up.

But, once your accounts are transferred to a debt collector (usually 3-4 months), you can put a stop to the calls.  This will help:

STOP Collection Calls Free Sample Letter

You will also be getting letters from your creditors or debt collectors.

They may offer some kind of "hardship plan" to help you get caught up, but most of these are just a trick to get you to keep paying, and paying, and paying!

Debt Collection companies (and sometimes the original creditor) are usually willing to accept a SETTLEMENT for less than the balance due.

Why would they do that?

The original creditor may just want to clear up old debts and charge off your account as a loss to their over-all profit/loss for tax purposes.

They have figured in how much "loss or breakage" they can accept and still be profitable!

They may have ASSIGNED your account to a debt collector who will get paid a percentage from what they are able to collect from you.

The original creditor may also charge off your account and SELL the account to a debt collector who is also a DEBT BUYER.

There are millions (possibly Billions) of dollars of "debt" bought and sold for literally "pennies-on-the-dollar".

Whether you account was assigned or sold to a debt collector, you can see that they may be open to a settlement. 

Example:

You have a Citibank Card with a balance of $10,000.

It was sold to XYZ Debt Collection Services for $500...that's right..."pennies-the-dollar"!

Do you think they might be open to a settlement of say...$3,000 - $5,000? 

Sure, check this out:

Recent Settlements See what we have  done for our clients!

As time goes by, one-by-one, your accounts are settled and your Credit Report shows a $0 balance!

Does this happen over-night?  

Of course not!  Depending on how much debt you have and your particular financial situation, a Debt Settlement Program may take 4 or 5 years to help you finally become...

DEBT FREE!

But, doesn't that sound great?

A Debt Settlement Program is not the answer for everyone, but may be just what you need!  It's easy to find out:

free-debt-relief-summary

 

 

Photo Credit

  

Tags: debt collector, credit report and credit score, Best Debt Settlement Companies, credit cards, mimimum payments

What to Do if You Receive a Summons for Unpaid Bills

Receiving a summons can be a very stressful situation!  Here's what you should know about a summons and more importantly, what you need to do about it:

It seems like a week doesn't go by that a prospect or one of our clients receives a SUMMONS.

Most of the time, a SUMMONS is delivered to you at home.  But in some cases, it may be mailed by certified mail or delivered to your place of employment.

couple_Help.jpg

Before I explain what you need to do, you need to know why this is happening and what you can do to prevent it in the future!

When you find yourself in a financial hardship due to any number of reasons, most likely, you just can't afford to keep up with the minimum payments due on your credit accounts.

At first, after the creditor doesn't receive the payment that is due, you will get a statement with a warning (along with extra LATE FEES and added INTEREST) telling you how much you need to send in this month to catch up.

When you can't make that payment (and of course, you can't), you may start getting calls from a representative of the company.

I know you would like to explain your situation and would like to get a "little sympathy", but most of the time, the rep just doesn't care.  

I suggest that you either ignore those calls or if you just can't resist, say something like:

"I'm going through a very hard time and just cannot afford to make any payments at this time.  I plan to get caught up in the near future, but for now,  please stop calling me!"

Don't wait for an answer, just HANG UP.

Most likely, the calls will either stop or slow down and now you'll start getting letters.

These letters may threaten to "charge off" your account and turn it over to a debt collector or to an attorney.

This usually happens after 3-4 months of non payment, but sometimes, they may wait 6 months or more.

But, at some time, they will send these accounts to a collection agency or a law firm that deals mainly with debt collection.

Now, you will start getting calls and letters from them.

You can also put a  stop the calls now (before, the original creditor had the right to call you).

This will explain:

STOP Collection Calls Free Sample Letter

If your circumstances don't change, and you can't negotiate a repayment or settlement agreement with the collectors, they may decide to start their "legal options" by filing a claim.

Once the claim (legal claim that you owe the debt) a SUMMONS will be delivered or sent to you.

The SUMMONS is going to say something like:

"You must APPEAR and give an ANSWER to this claim."

Without going into a long explanation, this basically just means that if you don't owe the money the PLAINTIFF is CLAIMING, you (the DEFENDANT), must provide PROOF to the court.  

This must be done in a short period of time (usually 20-30 days from the date of delivery) and it must be in "legally correct form" which usually requires an attorney's help.

Most of the time, you (the Defendant), owes the money, so when you don't give an ANSWER to the court, then the the attorney may apply to the court for a date in order to be awarded a JUDGMENT by DEFAULT.

Before this happens, here's what you need to do....

Even if the summons has been delivered, the creditor (plaintiff) may still be willing to accept a SETTLEMENT or a STIPULATED AGREEMENT:

Debt Settlement

Depending on your particular circumstances, you may be able to negotiate a settlement/reduced payment of the balance.

For example, if you are retired and receiving only Social Security or Retirement benefits as your only source of income, these funds are 100% EXEMPT from any levy or garnishment even if a judgment has been awarded!

If you are disabled, and only receiving SSI and/or Disability Benefits, these are also 100% EXEMPT from any levy or garnishment.

There are several other situations where you may have LEVERAGE to negotiate a settlement.

It's not easy, but very possible.  We do this everyday for many of our clients:

Recent Settlements See what we have  done for our clients!

Stipulated Agreement

If you cannot negotiate a settlement, the law firm may apply to the court for a WRIT OF GARNISHMENT.  

With this, they can GARNISH YOUR WAGES and/or  FUNDS IN YOUR BANK ACCOUNT!  For most people, this would be devastating.

Many times, a creditor (or attorney for the plaintiff), may be willing to agree to a series of payments to repay the debt instead of garnishment.  Of course, by now, the balance is much more due to interest, fees, court costs, etc.

As long as you meet the terms of the agreement, the attorney will not go forward with a garnishment or bank levy.

As you can see, a SUMMONS is serious and you can't ignore it!

I hope this information has helped, but if you feel like you need more information, then click here:

free-debt-relief-summary

 

 

Photo Credit

 

 

Tags: summons, debt collector, stipulated agreement, oregon wage garnishment, Oregon debt collection

Don't Panic if You Receive a Summons!

It's bad enough to be under the stress and pressure of having too much debt and not being in a position to make adequate payments, but now, you get a SUMMONS!

I'm going to explain not only why it happened, but also what you can do to take care of it.

 

22853064975_8c547f714f_m.jpg

 

I think it was Tony Robbins who either used an acronym about FEAR:

WHAT IS FEAR?

  • False
  • Evidence that
  • Appears
  • Real

When you get a knock on the door and someone (sometimes a sheriff or police officer) hands you a summons and says, "You've been served", it can be a very fearful experience!

 

FIRST, DON'T PANIC!

 

Take a deep breath, sit down and slowly....I said slowly (I know how you feel) the summons.

Most of the time, a summons will read something like this:

"You are hereby required to appear and defend the complaint filed against you in the above-entitled cause within thirty (30) days from the date of service of this summons on you.  If you fail to appear and defend, the plaintiff will apply to the court for the relief demanded in the complaint."

It usually goes on to read:

"You must "appear" in this case or the other side will win automatically.  To "appear" your must file with the court a legal paper called a "motion" or "answer".  The "motion" or "answer" must be given to the court clerk or administrator within 30 days along with the required filing fee.  It must be in proper form and have proof of service on the plaintiff's lawyer or, if the plaintiff does not have a lawyer, proof of service on the plaintiff."

OK...now they have your attention! But, before you "get carried away", let's examine the SUMMONS carefully:

"You are hereby required to APPEAR and DEFEND the COMPLAINT FILED AGAINST YOU...

"APPEAR AND DEFEND"

I know it sounds like you must appear in court, but that's not what it means.  The phrase, "appear and defend" is further explained in the second paragraph. 

The second paragraph (above) also says that you must file an LEGAL PAPER called a MOTION or ANSWER.

This MOTION or ANSWER is, in fact a LEGAL PAPER that you would file with the court if you don't believe you owe or are responsible for the debt they are claiming you owe. 

Yes, it will cost you a fee  just to file your ANSWER, and it must be filed in the appropriate legal fashion.  This usually requires an ATTORNEY to be retained, which also costs you more money!

But, in most cases, the client or DEFENDANT in the claim actually owes the debt, it is not necessary to file an ANSWER.

So, the 30 days to appear and defend doesn't mean you have to go to court!

OK, so what should you do?

Here's what has happened so far:

When you have debts that you are unable to pay, the creditor will send nasty sounding letters and call and call and call (you probably have experience this already). 

If you cannot or do not respond by making some form of repayment, then the original creditor may decide to hand over to a COLLECTION AGENCCY or hire an ATTORNEY to file a CLAIM or  "COMPLAINT". 

Most of the time, the original creditor will use a DEBT COLLECTOR or DEBT COLLECTION AGENCY to attempt to get you to repay the debt. They will start by sending you letters that may sound threatening in an attempt to scare you into paying the debt.

And as you probably know, they will call constantly.  Even though we have laws that protect us from harassing phone calls from debt collectors, most people are not aware or do not know how to put a stop to these calls. 

The FAIR DEBT COLLECTION PRACTICES ACT clearly spells out what a debt collector CAN and CANNOT DO!

The good news is now, you can put a stop to those calls! 

As long as the account is still with the original creditor, they have the right to call you.  Now, they must do it according to the FDCPA (above), but you can't put a stop to the calls until the account is turned over to third party collection agency.

You must send a letter and they must stop calling (even though they can continue to send letters).

This will help:

 

STOP Collection Calls Free Sample Letter

 

But, even though you can and have put a stop to the calls, in most cases, they are not going to give up trying to collect on the debt.

See my blog on HOW TO DEAL WITH DEBT COLLECTORS for some good tips.

  • OK, you've receive the summons.
  • You understand that you don't have to appear in court in 30 days

Now what?

You should contact the attorney who filed the claim and attempt to SETTLE THE DEBT by making a lump sum payment for less than the balance due. 

This is not always an easy thing to do at this point because the PLAINTIFF (the creditor or debt collector) has had to pay a pretty hefty FEE TO THE ATTORNEY to file the claim, prepare the summons and have it delivered to you.

 

Yes, many times you can still negotiate a settlement or other reduced repayment plan even though a judgment has been awarded!

 

Here's an actual example of a settlement we were able to negotiate even though a judgment had been awarded.  Click on the link below:


Actual example of a judgment that was settled.

 

But, if you are unsuccessful in negotiating a settlement, then you might have to attempt to negotiate what is called a STIPULATED AGREEMENT.

In a Stipulated Agreement, you and the plaintiff/attorney for the plaintiff have a legal document  written up ( the collector's attorney does this and you will not pay a fee). 

The agreement will basically state that if you make a certain dollar amount payment each month until the balance is paid in full, then they will not go forward with any more LEGAL OPTIONS.

 

WHAT...LEGAL OPTIONS?

 

When a Plaintiff (the creditor) is awarded a judgment (and they will be in most cases), then they now can choose to do several things...legally, to collect on the debt:

They can get a WRIT OF GARNISHMENT, giving them the ability to take 25% of your take-home pay until the debt is paid in full!

They can get a WRIT OF LEVY, giving them the right to levy one or more of your BANK ACCOUNTS! 

Again, before you go into PANIC MODE!!!!

The following sources of income are 100% exempt from any bank or account levy:

  • Social Security
  • Disability Income
  • Unemployment Income
  • Retirement Income
  • And several other sources

However, if you receive normal income (called W-2 Income) from your employer, and you deposit those funds into your checking or savings account, they can be garnished/levied.

The bank has now option but to obey the Writ of Garnishment delivered!

There is nothing more devastating to someone to deposit their check (from W-2 or other "earned income") and have their check or debit card declined at the grocery store because their account was liquidated over the weekend!

To make sure this doesn't happen, DON'T IGNORE THE SUMMONS!

Hopefully, I have made my point...

Let me summarize (if your still not clear, please re-read this article!):

DO NOT, DO NOT, DO NOT, Ignore a SUMMONS!

If you take the appropriate action (as I've spelled out), you should be able to work out a mutually agreeable option.

If all of this sounds a little intimidating, I understand. If you need more guidance:

free-debt-relief-summary

 

Photo Credit

 

Tags: bank levy, how to stop a wage garnishment, receive a summons, judgment, settlement

"Pay-to Delete", Is This Ethical or Even Legal?

Over the last 15 years, I have come across all kinds of so-called "credit repair" suggestions and/or scams.

One of these is called "Pay-to-Delete".  The basic idea is that if you have an account that is past due, charged off, or in collections, you can offer to pay 100% of the balance in exchange for the creditor or debt collector promising to delete that account from your credit report.

Sounds OK, but also sounds "a little to good to be true". 

 32458360454_79054e6f63_n.jpg

 

The major crediot reporting bureaes are "for profit" businesses that collect data on all of us about how we use credit.  This includes:

How many accounts/credit cards you have

What type of credit accounts you use

How much debt you have

How you pay...on time, late, etc.

Judgments

Bankruptcy

The credi bureaus, mainly the big three:

Equifax

Experian

TransUnion

 

 

 

 

 

 

Tags: how to stop a wage garnishment, Debt Settlement Services, Oregon debt collection

Debt Collectors...Don't Mess with Texas!

There are a few states that will not allow a debt collector to garnish wages, and Texas is one of them.  

If you live in Texas and have too much debt or are having trouble with debt collectors, here are some valuable tips that you need to know:

texas_flag.jpg

If you, or someone you know, has gone through a time where you were not able to keep up with your debts, then you also know how stressful it can be!

Add to that a debt collector who calls all the time and may even make threats as to what they can do to you if you don't pay, and, well, it is really a bad experience.

But, if you live in Texas (and this will help everyone else as well), I have some good news and tips for dealing with and going through this tough financial nightmare:

We've been helping people solve their debt problems and deal with debt collectors for over 15 years.  

Once in a while, a prospect or new client tells us that they really don't know h

We take time to counsel and/or interview a prospect about their particular situation.

Even though each of our clients has too much debt in relation to their income and ability to repay their debts, each has a unique "reason" that led them to us.  

See if any of these sounds familiar:

  • Loss of employment
  • Divorce
  • Illness or disability
  • Too little fixed income after retirement

Once you start to fall behind or stop making the minimum payments required by the creditor, here's what happens:

At first, you start getting letters from the creditor warning you of the missed payment(s).

Then the calls start!  Lots of calls!

Now, at this point you cannot stop them from calling you (they have the legal right), you do not have to put up with harassment!  Such as:

  • threaten violence or other criminal acts;
  • use profane or obscene language;
  • falsely accuse the consumer of fraud or other crimes;
  • threaten arrest of the consumer, or repossession or other seizure of property without proper court proceedings;
  • use the telephone to harass debtors by calling anonymously or making repeated or continuous calls;
  • make collect telephone calls without disclosing the true name of the caller before the charges are accepted.

The penalties for violation of these laws by a creditor or debt collector are severe.  If you believe they have violated these laws, contact your state's attorney general's office (online is best) and file a complaint.  

We are in Oregon, so an Oregonian would go here:

Oregon Consumer Financial Protection

If the original creditor cannot get you to start making payments again or will not work with you to modify your account, then they may decide to charge it off and send it or sell it to a debt collector.

So, the letters and calls start again, but now, you can put a stop to these calls! 

STOP Collection Calls Free Sample LetterIf a debt collector cannot get you to start making payments or will not agree to a modification of your account, they may decide to FILE A CLAIM against you.

This would be done in your county's courthouse, and then you would be SERVED A SUMMONS.

I've written numerous blogs over the years that explain the who "Legal Process" that a debt collector may take.  For more information, click below:

"Don't Panic if you Receive a Summons!"

But for now, let me explain to Texas residents how they are protected from debt collectors as opposed to those who live in other states.

Once a judgment has been awarded (usually called a "default judgment" as the plaintiff/creditor wins by default), a creditor usually has several options:

  • Apply for a writ of garnishment for your wages
  • File a LIEN on your home or property
  • Apply for a writ to LEVY the funds in your bank account

In Texas, the Texas Consumer Protection Laws specifically state that a creditor/plaintiff CANNOT:

  • Garnish wages or
  • Place a lien on your home (provided it is homesteaded properly)

They can apply for a levy to take funds from your bank account, so be very careful!!!

Here's a link to help you protect your bank account funds.

However, as far as your home or place of residence, you need to make sure it has been properly HOMESTEADED.  

I found a great site that I recommend that you visit:

Ken Paxton, Attorney General of Texas

Bottom line...

Good news:

If you live in Texas, debt collectors cannot garnish wages or place a lien on your home.

HOWEVER...

That doesn't mean that the responsibility for your debts goes away!

You have several options, such as:

  • Debt Management
  • Debt Settlement
  • Bankruptcy

If you would like help in deciding which option is best for you, click below:

free-debt-relief-summary

 

 

 

 

 

Tags: Texas, can a debt collector garnish retirement income, debt collection in texas, exemption from garnishment

Oregon Wage Garnishment...How to Prevent...How to Stop

A wage garnishment can be financially devastating, taking 25% of you net, take-home paycheck!

Here what you need to know to prevent or how to stop garnishments.

woman_on_floor_with_all_her_bills.jpgA wage garnishment doesn't "just happen".  After years and years of assisting people with debt problems, it still always amazes me when one of our prospects or newer clients that have received a notice from their employer that their pay check is going to be garnished, says something like:

I had no idea that this could happen.  I never received anything about it.

 How did this happen?

OK... Time Out!!!

A wage garnishment (technically called a Writ of Garnishment) can't happen without several steps preceding the order.

Let's start from the start...

You have several credit cards or other unsecured debts and because of something that has happened to you, such as:

  • Divorce
  • Severe illness or disability
  • Death of spouse or loved one
  • Too little fixed income after retirement

...now you just cannot keep up with the minimum payments due and start missing payments or just stop making payments all together.

When this happens, the creditor will start calling and writing letters trying to find out what is going on and to see if something can be done to get you to start making payments again.

If you ignore these calls and/or letters (and many, many people do), then the original creditor has no choice but to charge off, transfer or even sell the account to a debt collector or debt buyer.

Now the calls and letters really start to increase!

The good news is that you can put a stop to these annoying and sometimes harassing calls:

STOP Collection Calls Free Sample Letter

Just follow the link above, and the calls will stop.

But, that doesn't mean that these debt collectors are going to stop their efforts to get you to pay!

So what should you do?

Let's say that you have several credit cards and because of going through a serious illness or injury, you have not been able to work, your income went down, and now, you are not able to make even the minimum required payments due.

When the creditor or collector calls, you may be able to negotiate a SETTLEMENT.

Again, depending on a number of circumstances, the creditor or collector may accept an amount that is 40% - 60% of the balance.

Recent Settlements See what we have  done for our clients!

If you don't engage them, then the creditor or collector may decide to FILE A CLAIM against you in the county court where you live.

After the Claim has been filed, a SUMMONS will be issued and you will be SERVED the summons.  This could be at home or even at work!

When you receive the Summons, again, you CAN NOT IGNORE THE SUMMONS!  Even after the summons has issued and served, you should still be able to negotiate either a settlement or a repayment agreement.

But, if you don't, then there will be a court date set, and the creditor/collector will be awarded a DEFAULT JUDGMENT.

Once the judgment has been awarded, the Plaintiff (creditor/collector) can apply for a WRIT OFGARNISHMENT.  This will be sent to your employer and your employer has no choice but to obey the Writ!

Most likely, your state demands that the employer withhold an additions 25% of your net check (after taxes and required deductions have been removed).

This can be devastating!  Here's an example:

  • You earn $36,000/year or $3,000/month.  
  • You are paid every two weeks and that bi-monthly check is $1500.
  • State and Federal taxes equal 30%, so $450 is withheld and your net check is now $1,050.
  • Your employer must withhold an additions 25% or $262.50.
  • That's $525 each month!  You think it was hard to pay bills before...

I'm thinking you are starting to understand, that you cannot just ignore your debts, letters or calls, and especially a summons.

If you did, and now you have a wage garnishment, here's what you can do:

Contact the attorney for the plaintiff (that's the collector or creditor).

Explain you situation and if you have it (most likely you won't) offer a lump sum settlement on a reduced balance.

Usually, they won't take a reduction, but if the offer is large enough, they might.

Most of the time, they will be willing to accept an agreement whereby you pay them, say $200 -$300 a month (instead of, in this example, $525/month).

But, due to your financial hardship, you just can't afford any payment or the garnishment?

In this case, you should seek the services of a bankruptcy attorney.  This may be your only choice to protect yourself from the creditors!

I hope you understand my simple point....

  • A wage garnishment doesn't just happen.
  • If it does, you still have options.
  • The key is to take action!  Don't just "hide your head in the sand"!

free-debt-relief-summary

 

 

Photo Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tags: stop wage garnishment, dealing with debt collectors, summons, how to prevent wage garnishment, oregon wage garnishment, default judgment

Don't Be Afraid of Debt Collectors!

22853064975_8c547f714f_m.jpgReceiving a call or letter from a debt collector can be a scary experience. Here's what you need to know and what to do so that you don't have to be afraid:

 

  • Debt collectors (for the most part), are just trying to collect monies owed.  They are not "evil" or "our to get you".  If you follow my advice, you should be able to work with them to resolve your debt problem.
  • Having said that, some (yep, there's always a few) go too far in their debt collection efforts.  I'll show you how to handle this type of collector.
  • No matter how serious you financial and/or debt situation is, there is a solution.  DON'T BE AFRAID!
  • A debt collector can be from an attorney's office.  There are many lawyers that only practice debt collection.  You can work with them as well.
  • Regardless of what a debt collector says, you are not going to jail or have all of your belongings seized or confiscated!

 

You probably already know this, but let me briefly explain the debt collection process:

There are several reason why you find yourself barely able or unable to keep up with your debts.  (For the sake of this article, I'm only dealing with UNSECURED DEBT (credit cards, medical bills, personal loans, etc.) and not SECURED DEBTS (debts secured by the item itself (house, car, etc.)

Having been helping people deal with the stress, frustration and seemingly hopelessness of have too much debt, in about 99% of the time, something like this has cause the financial hardship:

  • Unemployment for a long time
  • Divorce or separation 
  • Trying to make ends meet on a fixed income after retirement
  • Long illness or disability
  • Death of spouse or partner

Using credit cards or credit in general may help in the short term, but when your situation doesn't improve or change over a long period of time, then you get to the point where is is very difficult or impossible to just make the minimum payments!

NOW WHAT?

So when you start missing payments or don't make the required minimum payments due, the calls and letters start!

I'll show you how to put a stop to the calls later, but for now, it is very important that you realize what to DO AND NOT DO, when the original creditor calls or writes.

Unfortunately, the original creditor (Visa, Macy's, Home Depot, etc.) that issued the card or account, has the legal right to call you when you miss payments.  You can do one of two things:

  • Not answer the call (just let all calls go to a recording), or...
  • Answer the call.

While your account is still with the original creditor (and it will be for 3-4 months), you might want to answer at least one call to see "where you are at" with this creditor.

Here's what I mean:

Depending a various circumstances, once you've be delinquent on making payments for a couple of months or more, you may get an offer (usually in the form of a letter), with a reduced payment plan or even a reduced balance settlement that could work for you.  

Let's say that you've been unemployed for about 6 months, used up all (if any) of your savings, and have been using credit cards to make up for the lack of income for things like groceries, gas, or even a cash advance to keep the lights on!

But, GOOD NEWS, you've found a new job and the pay is pretty close to your last job.

One the one hand, this is great!  But, on the other hand, you are so far behind in paying your credit card debt, it looks like there is just "no way" you can catch up!

You really only have a few options:

  • A Debt Management Program
  • A Debt Settlement Program
  • Bankruptcy

Debt Management is a program offered by most creditors, whereby they agree to reduce and/or eliminate interest rates and fees until you get "caught up".  This used to be referred to a Credit Counseling Program.

If you qualify, you will have ONE PAYMENT that is pretty close the total of all the minimum payments that are currently required on all of you cards or accounts.

The problem is that with a Debt Management Program, that payment may be too high for you to be able to qualify.

If you would like to learn more about this and/or see if you qualify, click below:

 

free-debt-relief-summary

 

If you do not qualify for a Debt Management Program, then you should consider a:

Debt Settlement Program

By now, most or your credit cards and other accounts most likely have been placed with a Debt Collection Agency.

Sometimes the accounts are even sold by the original creditor for "pennies-on-the-dollar" to companies.

Now, these collectors or "debt buyers" will start to contact you by phone and mail.

Whereas before, when your account was still with the original creditor, you could not stop calls, once the account is assigned or sold to a collector, you CAN PUT A STOP TO THESE CALLS! Here's how:

 

STOP Collection Calls Free Sample Letter

 

At this point in the collection process, most likely you will get or can negotiate a SETTLEMENT.

The debt collector who has the account (or the debt buyer) can offer to settle the outstanding debt for less than the full amount.

This can be done in a LUMP SUM or even in several, interest-free PAYMENTS.

Check out some actual settlements we have negotiated for our clients:

 

Recent Settlements See what we have  done for our clients!

 

Once the account has been settled, not only will you be done with this debt, but your credit report/score will start to improve.  

It won't happen over night, but over a relatively short time (3-4 months after settlement), your scores will increase!

 

Finally, if you cannot qualify for a Debt Management or Debt Settlement Program, you may need to seek BANKRUPTCY PROTECTION from your creditors.

The law allows (in certain situations) for someone to basically "start over with a clean slate" through bankruptcy.

While I believe you should try to either take care of your debts through Debt Management or Settlement, if you just cannot do either, then seek the help of a Bankruptcy Attorney!

The attorney will offer you a FREE, Initial Consultation and he/she will explain your options.

As you can see, when dealing with the stressful situation of having too much debt and too little income, you don't have to fear the debt collection process.

But, you just can't "put your head in the sand" and ignore the problem.

There are answers and freedom waiting for you:

free-debt-relief-summary

 

 Photo Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tags: dealing with debt collectors, alternatives to bankruptcy, Credit Card Debt Negotiation, Oregon debt collection

Wage Garnishment in Oregon...Know Your Rights!

If you receive a notice that your wages are going to be garnished, you need to act, and act fast! Here's some helpful tips you can use:

Help.jpg

Here at Debt Relief NW, it seems like we get dozens of calls weekly from people who "just found out", that their pay check was going to garnished!

I've highlighted the phrase, "just found out" to make a point:

A WAGE GARNISHMENT DOESN'T JUST HAPPEN!

There is a legal process that must unfold before a creditor or debt collector can receive a writ of garnishment from he court to send to your employer.

I am going to outline, in a nutshell, so to speak, of the process and what you:

  • COULD HAVE DONE TO PREVENT IT and,
  • WHAT YOU CAN DO NOW TO STOP IT

For the purpose of this article, I'm only referring to UNSECURED DEBTS, such as:

  • Credit or Store Cards
  • Personal loans (NOT mortgage or auto loans)
  • Deficiency judgment after a repossession
  • Medical bills
  • Private student loans

OK, let me lay out an example (based on over 15 years of helping people with their debt issues):

I'll call him Joe.  Joe has a decent job and earns about $20/hour.  At 40 hours a week and an average of 4.2 weeks/month, his GROSS (before taxes and deductions) is $3360/month.

Of course, after taxes and other deductions, his NET INCOME ("TAKE HOME")  is only about $2352 (approximately 30% less than his Gross Income).

He is renting an apartment and has all of the usual bills.

His total budget or outgo is about $2100 a month, leaving him barely $250 for emergencies, etc.

Included in that budget is about $15,000 of credit card debt spread over 3 cards:

  • Visa                 $8,000
  • Master Card    $6,000
  • Home Depot    $1,000

The total monthly MINIMUM PAYMENTS on all add up to $300/month.

Joe is having a very difficult time making the $300/month, minimum payments and then, he is working around the house and falls off a ladder and breaks his leg!

His insurance policy doesn't provide for any "disability income" for the accident, so not only is he going to be off work for about 3-4 months, he doesn't have any means of income.

Fortunately, he had a little savings account, but it wasn't enough to cover all of his monthly budget.

So, Joe does what thousands of people do every day, he pays all of the most important bills, like his rent, utilities, groceries, etc. and let's the credit card bills get behind.

NOW WHAT?

After he misses a payment or two, he starts to get letters and calls, lots of calls!

At this point, Joe can't do anything about the annoying calls, because as long as his account is still with the original creditor, they have the right to call him about it.

But, once the account is charged off, sold, or transferred to a collection agency or other third party, then he can put a stop to the calls!.  (I'll show you how in just a minute.)

Of course, Joe tries to explain to the caller what he is going through and they may or may not offer some kind of "HARDSHIP PROGRAM"  to help him through this.  But, it really doesn't matter as he just will not be able to make any payments until he is back to work and get some other bills caught up.

NEXT...

The original creditor(s) will most likely charge off, sell or transfer the account to a collector after about 120 days of so if nothing can be arranged.

So now, Joe starts getting letters and calls (LOTS OF CALLS)  debt collectors!

He'd like to make some kind of arrangement with them, but they are demanding full payment on the balance or else!

At this point, he can put a stop to these calls.  Here's how:

STOP Collection Calls Free Sample Letter

But, even though the calls are stopped and he is just "ignoring" the letters, the debt is not going to go away.

THE DEBT COLLECTOR DECIDES TO FILE A CLAIM

If the debt collector is unsuccessful in getting you to start making payments, then the debt collector may decide to start the legal process of obtaining a judgment.

An attorney for the collector will FILE A CLAIM at the courthouse of the county where you reside.

This CLAIM will generate a SUMMONS that will be delivered to you, usually in person, but sometimes by registered mail.

I'm not going to go into all of the details of what to do with the SUMMONS here, but you can check out a blog I've written that will be very helpful called:

 

WHAT TO DO IF YOU RECEIVE A SUMMONS.

 

But, please DO NOT IGNORE THE SUMMONS!

The fact that the collector decided to file a CLAIM proves that they are very serious about collecting on this debt.

If you ignore the summons, then a court date will be scheduled (you don't have to go), but a representative from the collector (now called the PLAINTIFF) will show up and the court will award them a DEFAULT JUDGMENT.

It's called a "default" judgment because no one contested it and they won by default.

NOW WHAT HAPPENS?

Now, the PLAINTIFF ( the collector) can apply for a WRIT OF GARNISHMENT.

The Writ of Garnishment is sent to your employer and they, by law, must obey the writ and withhold up to 25% of your net, after-tax, income.

Joe has just gone back to work and then he get's this notice from the payroll department that he is being garnished...and he starts to panic, which is understandable!

Remember when we did the math earlier about what his actual "take-home" or "after tax" income was?

That amount was $ 2,352.

Most states allow for up to 25% of the net, after-tax check to be deducted and sent to the creditor until the full balance (inflated now with interest and legal fees) is repaid!

WOW...WAIT A MINUTE...

$2,352 X 25% = $588 will be deducted from Joe's Net Check!

He could barely make it on the $2352, and now he has to somehow make it on $1764!

Yep....PANIC!

 

couple_Help.jpg

OK, so Joe's really in trouble, you get it...

How did this happen and what can he do about it now?

Joe could have stopped this "process" and ultimate JUDGMENT by trying to work out a SETTLEMENT PLAN with the debt collector.

Most debt collectors would much rather accept less than the full balance than go to all of the time and expense to seek a judgment:

Recent Settlements See what we have  done for our clients!

When Joe received the summons, he could have contacted the attorney for the collector and most likely worked out some kind of repayment arrangement that may have included a reduced settlement!

Once the judgment was awarded and the plaintiff had spent more money in legal fees, they went after the garnishment.

But that doesn't mean that you still could not work out something to stop the garnishment!

You may be able to get them to stop the garnishment and take a more "reasonable" amount to repay the debt.

Depending on the circumstances, you may even be able to not only stop the garnishment, but also get a reduced settlement.  Each case is a little different.

If this help, great.

If you find it a little "over-whelming", then maybe we can help:

free-debt-relief-summary

 

Photo Credit

Photo Credit

 

Tags: debt collection, summons, how to prevent wage garnishment, credit card, garnishment