Summons, Judgments, Garnishments...What You Need to Know!

If you have received a summons for an unpaid, unsecured credit debt, you know how intimidating it is!

In order to help you understand why this has happened and what your options are now, I'm going to walk you through the basic process and give you ideas on how to prevent in the future.

22853064975_8c547f714f_mDealing with the stress of having too much debt and not able to make the minimum payments due is a terrible experience.

Then, you get a knock at the door and are handed a SUMMONS!

Now what?

Do you have to go to court?

Are they going to garnish your paycheck or levy your bank account?

Most likely, the answer is NO!

Let me walk you through the basic litigation process and I think you'll understand more and hopefully feel better!

When you applied for the credit card or unsecured loan, you were making a promise to repay the debt per the payment and interest of that account.

But, things happen in life and you most likely have had one or more of the following events cause this:

  • Unemployment
  • Illness or disability (medical bills!)
  • Death of a spouse or partner
  • Divorce
  • Retired on a very limited fixed income!

 

 Letters and calls

 

When you don't make the minimum payments required by your credit account agreement, you'll start getting letters and calls.

The letters will warn you that you missed a payment and now you must make up the missed one, pay the late fee and add the next payment due!!!!

The calls usually come after a couple of months of missed payments.  Unfortunately, the original creditor has the contractual right to call you.

Once these accounts are charged off and/or sold to a collection agency, you can put a stop to the calls.

(I'll show you how to stop calls from collectors in just a minute.)

I've been helping people deal with credit issues for over 15 years and have not found it very helpful or productive to try to explain yourself to the agent making the call.

If you feel like you just have to...try saying something like:

"I've had some things happen and can't make the payments now.  I intend to get caught up soon, but would appreciate it if you would stop calling."

This may work, but don't be surprised if it doesn't.

Collection Letters and Calls

After 2-3 months of non-payment, your credit card or unsecured account will most likely be transferred to a DEBT COLLECTION AGENCY.

If the calls had stopped, they will begin again.

But, now you can stop the calls.  Here's how:

STOP Collection Calls Free Sample Letter

The calls will stop, but the letters will continue.

You may get a letter with a SETTLEMENT OFFER

It will say something like...

The current balance is $$$$$$$, but we are making a one-time settlement offer of $$$$$.  This must be received in our office by (date).

 Sometimes, these are not bad offers!  I've seen some at 40% or so of the balance (yes with all of the added interest and late fees), but for example, a $4,000 settlement on a balance of $10,000 is a pretty good deal!

However, I'm guessing that if you had that kind of money, you wouldn't have gotten behind in the first place!

Debt Collection Agencies (sometime attorneys who specialize in debt collection) have either purchased the debt or have taken it on a kind of consignment.  The debt collector will get a percentage of what they collect.

So, they are going to play "HARD-BALL" and try to get as much as possible out of the debtor (you).

You can negotiate a settlement, but the final settlement will be determined by several factors:

How much the collector paid or stand to earn on this particular debt.  Different creditors (Capital One, CitiBank, etc.) each have their own parameters of what they will or will not take as a settlement.

Your particular financial circumstances also play a very important part of the negotiating process!

If you are employed and are paying a mortgage, the collector may not be willing to come down much as they may decide to file a claim hoping to get a judgment in the future.  I'll explain more about this later.

But, if you are unemployed, disabled, retired, renting and just barely getting by, they will be more willing to accept a good settlement (40%-50%).

Before you make the call, it is a good idea to have "all your ducks in a row" so to speak!

You need to have completed a budget (what's coming in and going out each month).  The collector will need to provide this in order to present you offer to the original creditor or their manager.

Here's a FREE BUDGET WORKSHEET to help:

Budget Worksheet FREE Download here!

Now that you know where you stand financially, you can make the call.

Most debt collectors are surprisingly professional and even polite, so you do the same!

Being aggressive or having a "take it or leave" attitude will not help!

But on the other hand, don't beg or show weakness either.

Just explain your situation and that you are trying your best to work out settlements rather than being forced to seek BANKRUPTCY PROTECTION.

Although bankruptcy is an option, you should do everything you can to avoid it as it stays on your credit report a long time and makes it difficult when applying or credit in the future.

OK... Let's say you negotiate a good settlement....Now what?

Before you set up or make any payments, you MUST....ABSOLUTELY MUST have the agreement emailed, faxed or mailed IN WRITING!

Once you have the written agreement, you can either call to set up automatic payments or mail them per the agreement.

To give you an idea of what a real settlement agreement looks like, click below:

Recent Settlements See what we have  done for our clients!

If you are mailing the settlement, make sure it arrives on or before the due date!  They can and will void the agreement if you are late!

If you cannot reach a settlement agreement, the collector may opt to go for a judgment.

I've written several articles about this process.  Rather than go into it in this blog, check out:

What To Do If You Receive a Summons

I hope this has helped. Let us know if we can help...

FREE  Debt Elimination Summary

 

 

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Tags: consumer debt collection, credit card hardship plan, summons, stopping debt collection calls, avoid before filing bankruptcy, credit card debt help, settlement, mimimum payments

3 Ways to Avoid Bankruptcy

three ways to avoid bankruptcyJust the word BANKRUPTCY sounds terrible! Before you decide if bankruptcy is best for you, here are 3 ways to avoid bankruptcy:

One of the most popular financial-advice gurus today is Dave Ramsey.  He has stated that BANKRUPTCY is one of the top five life-altering negative events a person can experience:

  • Divorce
  • Severe illness
  • Disability
  • Death of a loved one
  • Bankruptcy

I'm not sure I totally agree, but most people will do whatever it takes to avoid bankruptcy. Bankruptcy basically means that you have taken on too much debt and cannot repay.

I have counseled hundreds of people in financial trouble for many years and it has been my experience that most people who are in serious financial debt got that way from circumstances beyond their control, such as:

  • Loss of employment
  • Illness or disability
  • Death of a spouse or life partner
  • Too little income after retirement

Here are 3 Ways To Avoid Bankruptcy

#1 Figure out where your money is going

The first thing you should do to avoid bankruptcy is to take time to complete a Budget or Financial Worksheet.  It sounds so simple, but most people I counsel have no idea what they are spending each month. All they know, is there is not enough money to pay for everything.

You have to know exactly where you stand, financially.  How much money is coming in and how much is going out each month.

I know it's very, very tight, but ask yourself if there are areas of your life or expenses that you could reduce or eliminate, such as:

  • Do you have a large car payment? Maybe you could downsize or refinance to reduce your monthly payment.
  • How about all those lunches, coffee, lattes?  Can you cut down to a couple times a week instead of every day?  Think of it as a special treat, not a necessity.
  • Maybe now is a good time to quit smoking!  I know it's easier said than done, but at well over $100-$150 month it would be good for your budget and your health.
  • Do you have to have that health club membership?  Could you work out at home instead to save $35-40$?

Have I made my point? You may be able to find a few hundred dollars each month that could possibly save you from bankruptcy!

#2 Consider enrolling in a Debt Management Program

If cutting your budget won't work, or you have already cut it as far as you can, then perhaps DEBT MANAGMENT (formerly called Credit Counseling or Debt Consolidation) may help.  Debt Management is a program whereby you can arrange repayment of your unsecured debts like:

  • Credit Cards
  • Store Cards
  • Personal Loans
  • Private Student Loans
  • Medical Bills

You will have ONE MONTHLY PAYMENT which is divided and sent to each of your creditors per the agreement arranged with them by a DEBT MANAGEMENT COMPANY. The program is usually designed to repay 100% of your debt over 3-5 years.

The problem is that you may not be able to afford the monthly payment which is usually about 2.5%-2.7% of your total unsecured debt. Do a quick calculation to see if that fits into the budget you created in step 1.

Sometimes, the debt management payment may be higher that the very low (almost impossible ever to repay in your lifetime) minimum monthly payments that credit cards require! If you cannot qualify for Debt Management, then your next option is:

#3 Settle Your Debts for Less with a Debt Settlement Program

In a DEBT SETTLEMENT PROGRAM, negotiations are made with each of your creditors to accept much less (often 50% or less) of the balance.  You will be making a monthly contribution to a FDIC Reserve Bank Account where your funds accumulate for settlement offers.

Depending on several factors, you may able to not only GET OUT OF DEBT in 24-48 months or less, and you will avoid BANKRUPTCY.

Although you can negotiate with creditors on your own, it is not easy! We have been helping clients negotiate and settle debts for over 10 years.  Is DEBT SETTLEMENT FOR YOU? Find out today!

If cutting expenses, debt management or debt settlement will not help, then you should consult a qualified bankruptcy attorney. Bankruptcy is a way for you to get a fresh start and is not nearly as tramatic as you may think!

 


Tags: debt settlement, Bankruptcy, debt management, avoid before filing bankruptcy

How to Protect Your Credit Report During Bankruptcy

protect your credit reportBankruptcy should always be a last resort (see our Debt Relief Options for bankruptcy alternatives). However, if you have decided to file bankruptcy but have not done so yet, take your time and don’t rush the process – it is more important to ensure that all your bases are covered rather than make a mistake that may cost you later.

Obtain Credit Reports

You need to obtain your credit reports from the three major credit-reporting agencies (Experian, Equifax, and TransUnion). Fortunately, you can conveniently obtain all three of your reports online in only minutes at www.annualcreditreport.com

  • With these three reports, you will have access to a file number and a phone number needed for accessing customer service.
  • You will see the addresses for each creditor on the credit report. If it is not there, then you can call customer service to ask them to provide you with the missing information.
  • When you call the bureau you can ask them to provide you with the phone numbers for each of the companies showing on the credit report.

Get Updated Information

  • Call each creditor and ask them how much is owed and for the address where payment should be sent.
  • If they don’t handle the account, then ask them for the name and address of the collection agency that will take payment.
  • When dealing with creditors and collection agencies don’t let them bully you or upset you over outstanding balances. Just collect the information you need. All you have to say is, “Thanks. I will call your company back soon regarding this matter.” Don’t give them time for a rebuttal – just hang up. If they push the matter, then only as a last resort tell them you will be filing bankruptcy. Give them the name and number of your attorney and end the call.

Make a list of accounts

Your attorney will need the name, addresses, balances, and account numbers for eachcreditor to complete the bankruptcy papers.

If there are creditors that you want to continue paying, then it is very important at this time to tell your attorney that you want to offer reaffirming on the debt. The attorney will then send the offer to the creditors you have selected who must accept it. Then the judge must accept the offer too.

The creditors will continue reporting the balance owed and show the status “reaffirmed” on your credit report.

Once the Bankruptcy is complete

Creditors have the means and responsibility to manually update account information with credit reporting agencies. However, at this point no one is requiring creditors to do this.

When creditors don’t update account information with the credit reporting agencies, then you get an incorrect credit report that still shows you owe on the accounts in question, and that they are currently in collections or charge off status when in fact they are not.

The clear, quick way to fix this problem is to:

  • Obtain a copy of your bankruptcy and discharge papers from your attorney or the courthouse. This may include a copy fee.
  • Make three copies of the section of papers that list all of the creditors and collection agencies that were included in the bankruptcy – usually this is called the Schedule F.
  • Forward these documents along with the discharge to all of the credit-reporting agencies requesting that each creditor included in the bankruptcy be updated to properly reflect a zero balance with the status included in bankruptcy.
  • Be sure when mailing correspondence to the credit reporting agencies to include a copy of your driver’s license and mail “certified return receipt requested”. This will ensure disputes are processed with little delay.

Finally, if you have a creditor or collection agency which is not honoring your bankruptcy and continuing collection efforts, then be sure to contact your bankruptcy lawyer. Give your lawyer the name and address of the company bothering you so that he or she can send them official notice. Follow up with the lawyer if the creditor persists in harassing you. It is a violation and they can be held accountable if they don’t cease after notification of the bankruptcy.

As with all consumer issues, knowing your consumer rights throughout the bankruptcy process is essential. Taking a proactive approach at the onset of the process will help you on your “road to credit recovery”.

protect your credit report

Tags: debt relief options, avoid before filing bankruptcy, protect your credit report

Bankruptcy: How to PROTECT YOUR CREDIT REPORT

protect your credit reportBankruptcy should always be a last resort (see our Debt Relief Options page for bankruptcy alternatives). However, if you are determined to file bankruptcy, then please take your time and don’t rush the process. It is more important to ensure that all your bases are covered than to make a mistake that may cost you later.

FIRST: Obtain Your Credit Reports

You need to obtain your credit reports from the three major credit-reporting agencies (Experian, Equifax, and TransUnion). Fortunately, you can conveniently obtain all three of your reports online in only minutes from www.annualcreditreport.com.

  • With the reports direct from each bureau you will have access to a file number and a phone number needed for accessing customer service.
  • You will see the addresses for each creditor on the credit report. If it is not there, then you can call customer service to ask them to provide you with the missing information.
  • When you call the bureau you can ask them to provide you with the phone numbers for each of the companies showing on the credit report.

NEXT: Get Updated Creditor Information

You need the most up to date information you can get when filing for bankruptcy.

  • Call each creditor and ask them how much is owed and for the address where payment should be sent.
  • If they don’t handle the account, then ask them for the name and address of the collection agency that will take payment.
  • Call the collection agency and ask them how much is owed and for the address where payment should be sent.
  • When dealing with creditors and collection agencies don’t let them bully you over outstanding balances. Just collect the information you need. All you have to say is, “Thanks. I will call your company back soon regarding this matter.” Then HANG UP!

Finally: Make a List of accounts for your bankruptcy attorney

Your attorney will need the addresses, current balances, and account numbers for all of your accounts to complete the bankruptcy papers.

  • If you don’t see a creditor or collection agency on the credit report, but you know for a fact you owe money, then you need to find any billing statements or collection letters you may have received. These statements and letters will have necessary address information and phone numbers along with amounts still owed.
  • If there are creditors that you want to continue paying, then it is very important at this time to tell your attorney that you want to offer reaffirming on the debt. The attorney will then send the offer to the creditors you have selected who must accept it. Then the judge must accept the offer too. The creditors will continue reporting the balance owed and show the status “reaffirmed” on your credit report.

Once the bankruptcy has been discharged, your balances will show as zero on your credit report. 

When creditors don’t update account information with the credit reporting agencies, then you get an incorrect credit report that still shows you owe on the accounts in question, and that they are currently in collections or charge off status when in fact they are not.

If you find that any of your creditors listed in your bankruptcy are still showing outstanding balances or if any of your creditors continue their collections efforts once the bankruptcy has been discharged, there are are a few steps your can take to resolve the issue.

  1. Obtain a copy of your bankruptcy and discharge papers from your attorney or the courthouse. This may include a copy fee.
  2. Make three copies of the section of papers that list all of the creditors and collection agencies that were included in the bankruptcy – usually this is called the Schedule F.
  3. Forward these documents along with the discharge to all of the credit-reporting agencies requesting that each creditor included in the bankruptcy be updated to properly reflect a zero balance with the status included in bankruptcy.
  4. When mailing correspondence to the credit reporting agencies, include a copy of your driver’s license and mail “certified return receipt requested”. This will ensure disputes are processed with little delay.

If you have completed these 4 steps and you still have a creditor or collection agency which is not honoring your bankruptcy and continuing collection efforts, then be sure to contact your bankruptcy lawyer. Give your lawyer the name and address of the company bothering you so that he or she can send them official notice. Follow up with the lawyer if the creditor persists in harassing you. It is a violation and they can be held accountable if they don’t cease after notification of the bankruptcy.

protect-your-credit-report

Tags: debt relief solutions, avoid before filing bankruptcy, protect your credit report

7 things to AVOID before filing bankruptcy

Are you thinking you may have to file bankruptcy?  If so, here are 7 things to AVOID before filing bankruptcy:

1. Do not pay back money to friends or relatives. If you have borrowed money from family members or friends, now is not the time to pay them back. If you make any payments like this within one year prior to filing your petition, you must disclose those payments on your bankruptcy petition and to the trustee at your meeting of the creditors. The bankruptcy court considers these to be preferential, insider payments. That means, you are using money that could go to your other creditors to pay to people you know. It also means that the court can recover those payments from the person you paid. Imagine your mom getting a letter or call from your trustee saying she owes the court money.

2. Do not run up your charge cards. Some people think that if they are going to file for bankruptcy anyway, they may as well charge their Christmas presents or buy the new television they've been wanting. But, that is a really bad idea. Luxury goods over $550 are not dischargeable if purchased within 90 days of your filing date. Also, if you have recently run up your charge cards before you file, the credit card company is more likely to challenge your discharge. If they can convince the court that you incurred the charges knowing that you were going to file for bankruptcy, that is considered fraud and the charges are not dischargeable. You could also face dismissal of your bankruptcy and other penalties for fraud.

3. Do not take a cash advance. Similar to running up your credit cards, cash advances taken right before you file will not be dischargeable, and you will remain liable for repaying that debt.

4. Do not get a home equity loan. People often get a home equity loan to consolidate credit card or other unsecured debt. This is a horrible idea because you are now putting your home at risk. Unsecured debts can be discharged in bankruptcy, but if you want to keep your house, you will have to continue paying the home equity loan.

5. Do not cash out your retirement account. Many people tap into their retirement accounts to try to keep up with their bills, then end up filing for bankruptcy once that is gone. Retirement accounts can be protected in bankruptcy, so there is no need to use up those funds. You will also pay income tax and penalties on the amounts withdrawn. Finally, a retirement account distribution may affect your means test. Protect your future by saving your retirement for its intended purpose.

6. Do not transfer property. Now is a bad time to transfer assets such as cars, boats, real estate, etc. If you do not receive fair market value for the transfer, it could be considered a fraudulent transfer and the trustee will go after the person who received the property to get either the asset itself or the cash value of that asset.

7. Do not ignore your problems. When you are overwhelmed by debt, it is easy to procrastinate and try to ignore the problem. But, if you do that, you are more likely to end up having your wages garnished or bank account levied. The earlier you deal with the problem, the faster you will get relief.  Bankruptcy should be your last resort.  Before making the decision to file bankruptcy, you should consider Debt Consolidation and/or Debt Settlement.

Want to know more about how to avoid bankruptcy?  Our debt eliminations programs can help you get out of debt without bankruptcy.  Get a FREE Debt Analysis by clicking on the button below or feel free to give us a call at 877-492-4109 for a free, no obligation, analysis of your debts and financial situation!

avoid before filing bankruptcy

Tags: debt elimination without bankrupcy, alternatives to bankruptcy, avoid before filing bankruptcy