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 Elimination 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 Elimination Summary

 

 Photo Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Do It Yourself Debt Settlement

Before you attempt DO IT YOURSELF DEBT SETTLEMENT, you may want to consider what's involved.

After many years of negotiating debts for our clients, I'd have to say for the average person trying to settle debts yourself is too hard.do it yourself debt settlement

That's not to say that you may not be able to do it yourself, but you need to understand how the process works and how the collection agents are professionally trained to get as much money out of you as possible.

For this discussion, let's talk about unsecured debts and mainly credit cards.

If you fail to make minimum payments on time, what happens?

1.  Your next statement will show an additional LATE FEE of say $35 added to the balance.  Now your minimum payment is last month's plus this month's plus the $35 late fee, and you can't afford it.

2.  You will now most likely get a DEMAND LETTER that says your account is now DELIENQUENT and demand 3 payments plus 2 late fees. Of course by now, you really cannot afford to pay.

3.  The PHONE CALLS START! Your account is transferred to the creditors internal RECOVERY DEPARTMENT or basically their collections department.

The caller may be nice or very demanding, depending on the company.

You can and should explain your circumstances, but they are usually not very sympathetic!

4. At this point (about 3-4 months delinquent) the creditor is not ready to accept a settlement for less than the entire amount including late fees and additional interest.

Oh, by-the-way, your interest rate has been increased.  There is small print on the back of the application you signed that basically states that if you fail to make payments on time, they can INCREASE YOUR INTEREST RATE.

Although the Credit Card Act of 2009 limited the UNIVERSAL DEFAULT method of increasing rates, creditors can still:

  • Increase rates
  • Charge late fees
  • Charge over-the-limit fees
  • Charge annual fees

5.  Just before the account is set to CHARGE OFF, you may get a letter from the creditor offering a settlement. 

The settlement offer may let you have 3 OPTIONS:

  1. Pay 65% of the amount due by the end of the month
  2. Pay 75% of the amount due over 6 months
  3. Pay 85% of the amount due over 12 months

You do the math! Not gonna happen!

SO NOW WHAT???

This is where "Do it yourself debt settlement" gets hard.

By now, you have been getting phone calls several times a day and possibly even at work!

The creditors may even be calling your friends and family!

There are legal ways to stop the calls.   FREE INFORMATION

The account has now been CHARGED OFF and sent to a collection agency. 

Now you starting getting calls and letters from the COLLECTION AGENCY, even though you sent out letters to the original creditor!

If the collectin agency finds out that you have a job, they may decide to FILE A COMPLAINT in your local courthouse.

You will now receive a SUMMONS that states the situation and that you have 20 or 30 days to "answer" or "contest" that you owe the debt.  But, since you owe the debt, that would be a waste of time and money (yes, is costs to file an "answer").

If you call the collection agency or attorney for the creditor, you may be able to negotiate an agreement whereby they stop legal action and if you repay 100% of the debt plus attorney fees and court costs!

If not, they will set a court date and win a JUDGMENT by DEFAULT.

With the default judgment, they can apply for a WRIT OF GARNISHMENT that your employer has no choice but to honor.

In most states, the amount that a creditor can garnish is 25% of your net (after tax) income.

Let's say you earn $$3,000 per month and 30% is withheld for taxes, etc. That leaves $2,100 after-tax income.

At 25% of $2,100, they would deduct $525 each month until the entire debt is repaid!  COULD YOU SURVIVE ON $1,575?

Not hardly, so you would probably end up agreeing to a STIPULATED AGREEMENT that would let you repay the entire amount at maybe $200/month at a reduced interest rate (each state is different).

Can a Debt Settlement Company do any better?

In most cases, yes.  Do It Yourself Debt Settlement takes a lot of time and if you are not trained in dealing with collectors and attorneys, you may end up paying too much or possibly being forced into bankruptcy.

Why not explore your options by requesting a

FREE CONSULTAION

Or Simply Give us a Call

1-877-492-4109

photo by: Henrique Vincente

Tags: debt settlement, Credit Card Debt Negotiation, alternatives to bankruptcy, do it yourself debt settlement

Why will creditors settle my debts for less than what I owe?

settle my debts

Here's a great question that we get all of the time.

"Why would my creditors settle my debts for less?"

If you don't know mych about the process of Debt Settlement, you might be skeptical of the claims that your creditors are willing to significantly reduce your debt. It may be hard to believe at first, but it is TRUE! Through the debt negotiation process, creditors are willing to settle your debt for a substantially smaller amount than what you owe. (usually less than HALF of what you owe)

Why are they willing to settle your debts for less? It's very simple... To Get Paid! Your creditors would rather get some of your money than none of your money. It makes perfect sense. If you end of filing for bankruptcy, your creditors will not be able to collect any of the debt you owe them. So, if you’re behind in making your payments, your creditors are probably willing to listen to negotiation offers for settlement.

Your creditors have to make a decision to either settle your debt, or risk not collecting any money at all (in the event that you file bankruptcy). Debt Settlement is NOT too good to be true — it’s just basic economic sense for everyone involved.

 

Tags: credit card debt, debt elimination without bankrupcy, debt relief programs, debt settlement, Credit Card Debt Negotiation, debt settlement help, alternatives to bankruptcy, settle my debts

Is it a good idea to put a medical bill on a credit card?

I have over $50,000 in medical bills that I paid with a credit card. Did I make a mistake?

Help!

After reading an article by a local newspaper writer, I acutally agreed, which is very seldom.

It seems the person was involved in an terrible auto accident and had no medical insurance.  After all was said and done, she owed over $50,000! Having no insurance, she decided to pay it with a credit card. Now, the credit card has raised it's interest rate and her credit score has declined as she has a terrible debt-income ration.

Some things to consider:

If she had not paid her bills with the credit card, she probably could have negotiated a much lower settlement amount!

Most medical providers are willing to take payments and in some cases, very small payments.

Most hospitals have charity programs that she may have qualified for. lf so, most of the bill could have been taken card of.

Now that she has paid the bill with the credit card, can she afford $1,000/month (approximately the 2% minimum payment due) each month?

Even if she can, how much will she actually pay if she pays it off?

Using one of several credit card calculators available, given the best case scenario that she could pay $1,000/month and never miss a payment, it would take her over 8 years and almost another $50,000 in interest to repay the card.

If she cannot afford the $1,000/month for 8 years and starts making only the minimum payments due (credit card company's nasty little gimmick), it could take her 86 years (according to the calculator) and almost $187,000 in additional interest!

She may need to consider filing for bankruptcy.  At any rate, she should consult a bankrutpcy attorney or a professional debt management company for more information.

 

Tags: debt elimination without bankrupcy, Credit Card Debt Negotiation, debt calculator, debt settlement help

HELP! My Debt is Out of Control!

Too much debt, not enough money!  What can I do? my debt is out of control

First, you need to find out exactly how much money you have coming in and how much is going out each month. 

Most people really don’t have a budget to keep track of their finances.

When you know exactly how much money you have (or how little), then and only then, can you decide which solution would be best for you.

 

OK, you need $500 just to make the minimum payments on your credit cards, but only have $350 or so after all other bills are paid. 

Does it really make  sense  to continue making the minimum payments required by each of your creditors?

Consumers do not understand that the Credit Card Industry does not want, nor expect you to ever fully repay your accounts! Billions of dollars of interest and fees are earned from people just like you, who only pay the minimum payment each month.

It is estimated that in takes the average consumer 15-20 years to repay a single account at a cost of 3-4 times the total amount charged! There’s got to be a better solution, and there is.

Debt Management (sometimes called Credit Counseling) programs? How do they work?

Most unsecured creditors will participate in a Debt Management Program (DMP). To determine if you qualify, information about your accounts will be entered into a national data base. 

You will need:

  • Name of the creditor
  • Account number
  • Current Balance
  • Interest Rate
  • Payment

If you qualify you will have:

  • One monthly payment disbursed to each of your creditors according to the accepted proposal.
  • Lower over-all interest and fees allowing you to pay off these accounts in 48 months or so saving you thousands of dollars in interest and fees.

Although your credit score may decline slightly while you are in the program, once you have completed the program your scores will improve. For more information, visit www.myfico.com

No creditors are calling as they are receiving monthly payments according to the program.

But what  if after  completing the Household Budget Worksheet and examining the Debt Management Program you simply do not have enough left over at the end of the month?

Then, a Debt Settlement Program (DSP) may be your best solution.

Debt Settlement is a program designed for those  who are…

  • Facing severe financial hardship due to circumstances beyond their control (loss or lower income due to unemployment, lay-offs, divorce, disability, insufficient retirement income, etc.)
  • Have considered a Debt Management Program (above), but simply cannot qualify or afford the monthly payment required.
  • Do not want to file for bankruptcy at this time.

How does a Debt Settlement Program work?

If you have fallen behind in making your minimum payments (or are about to), rather than continuing make payments, you will deposit an amount you can afford into a savings account or into an account set up by a qualified Debt Settlement Company

Once there is sufficient funds to make a settlement offer, the creditor is contacted and a settlement is negotiated.

Most creditors will accept a settlement, but there are some cases where a creditor may attempt to seek legal action in order to collect the full balance.

But, successful settlements can still be made in spite of a judgment, as creditors would rather accept a settlement offer than force you to consider bankruptcy.

For those of you who are self-employed, retired and/or receiving Social Security and/or Disability benefits or income from a pension or retirement plan, then you are most likely exempt from any legal action from a creditor.

Once you or a professional negotiator has arranged a settlement, the account is now listed on your credit report as “paid-as-agreed” or "settled-as-agreed" with a zero balance.

Debt Settlement can be a time-consuming venture and you may not get as good of a settlement as a professional debt settlement company.

It might be in your best interest to request a FREE Analysis from a qualified company.

my debt is out of controll

 

Photo by Caston Corporate

Tags: fair debt collection practices act, best way to eliminate credit card debt, debt consolidation vs. debt settlement, Credit Card Debt Negotiation, debt relief solutions

Avoid Bankruptcy!

“I have too much credit card debt and not enough income! I don’t want to file for bankruptcy, but I don’t know what else to do. Are there any good alternatives to bankruptcy?”

Debt Relief

We get asked this question several times a day. The answer is YES! There are some great options available to help you avoid bankruptcy and get back on track.

If you are overwhelmed with too much credit card and other unsecured debts, you are not alone. With almost 1 out of 10 people unemployed and the economy in its worst condition since the Great Depression, thousands people who have always kept up with their debt payments in the past are in trouble and looking for answers.

Debt Management (formerly referred to as Credit Counseling) is a program designed to give the consumer one payment that is then distributed to each to the creditors enrolled in the program. The interest rates and fees are reduced and usually this type of program allows the creditor to be debt free in about 48 months.

Debt Management is a great option, however many people who are struggling financially cannot even keep up with this reduced monthly payment. In that case, more and more people are seeking help with their debt through Debt Settlement.

Most creditors are willing to accept a reduced payoff to accounts that are 180 days or more delinquent. This normally averages 50% of the balance and sometimes even less.

Most Debt Settlement Programs are designed to completely settle all of your debts in 36-48 months, depending on the total amount of debt, type of debt and what your budget will allow you to contribute.

If your financial circumstances won’t allow you to qualify for Debt Settlement, then you should seek the advice of a bankruptcy attorney.

Bankruptcy should be your last option, but in many cases, it is the only and best option.

Tags: debt elimination without bankrupcy, debt settlement, Credit Card Debt Negotiation, alternatives to bankruptcy

Debt Settlement Help

Too much debt? You may need debt settlement help.

debt settlement help

You've done your best to keep up with all of the credit card or unsecured debt you have, but there is just no way to keep up with the payments any longer.

After responding to an ad on TV, you find out that you cannot qualify for a Debt Management Program because the monthly payment is too large.

Rather than filing for bankruptcy, you may want to consider debt settlement help.

Debt Settlement is a program designed for those who are:

Facing severe financial hardship due to circumstances beyond their control.  Unemployment, rising cost of living to those on a fixed budget, divorce, disability...situations that can happen to anyone.

After your accounts have been past due for 120-180 days, most creditors will consider a settlement on the account.

In fact, you may receive a letter or statement offering a 75% settlement if you can send the entire amount by the end of the month. Of course, if you had that kind of money, you probably would not behind in the first place.  What can you do?

If you have 40%-50% that could be paid in a lump sum (most likely, you don't), then play hard-ball and offer 40%.  If you have a lump sum, you should be able to get the account settled for a much lower amount that 75%.

If you do not have the lump sum needed, then counter with a term-payment settlement of what your budget will allow.

Here's an example:

You have a credit card with a balance of $8,000.  It has been charged off and is with XYZ Collections.  

You don't have $4,000 (50%), but you could put $1,000 down and then make $300/month payments on the balance of $3000, for 10 months.

The agent will most likely say that they cannot go beyond 3 or 6 months.

Tell them you have no more funds and if the offer is rejected, then you would most likely have to file for bankruptcy protection.

If the answer is still no, then hang up.  You may get a call right away with a counter.  If you do...Hold firm!

Wait about 3-4 days (ignoring their calls) and then call back and hold firm with your offer.  You may have to give a little (12 months of $300 instead of 10 for a total of $4600 total), but you still have a decent settlement.

If the agent agrees, GET THE AGREEMENT IN WRITING! Never send or authorize a settlement payment without having the written agreement in hand!

Finally, don't be late on your payments!  There will be a phrase in the settlement agreement stating that any missed or late payments will VOID the agreement.

As you can see, it is possible to settle debts with your creditors on your own.  However, if you are uncomfortable with this proccess, there are Debt Settlement companies out there to do it for you.  Since you will have to pay a fee for their services, it may cost you a little bit more.  However, you will still save thousands and have an experienced debt settlment professional doing the negotiating for you.  Either way, Debt Settlement is a great option!

Tags: best way to eliminate credit card debt, settling credit card debt on your own, Credit Card Debt Negotiation, debt relief solutions, debt settlement help

Credit Card Debt Negotiation

credit card debt negotiationCredit Card Debt Negotiation

 

When faced with extreme financial hardship, making it almost impossible to pay the minimum payments due on your credit cards, you may want to try credit card debt negotiation. 

But before you jump in, you need to understand a few things:

  1. Credit card companies, and especially collection agencies, DO NOT CARE about you or your financial circumstances! Don’t waste time trying to explain.  
  2. If your account has not been charged off, you are probably not going to get a very good offer or any offer at all.  Creditors usually wait 120-180 days before giving up and charging off an account. 
  3. Once the account has been charged off, it most likely will be assigned to a collection agency.  The agency will begin to call (incessantly) in order to get as much money from you as possible. 
  4. Collection agencies can make agreements (within their client’s guidelines) to settle accounts for less than the full amount.   
  5. But BE AWARE!  The collection agent has been trained to get as much money out of you as possible!  They will use all kinds of tactics (many that violate the FDCPA) in order to intimidate you. 
  6. You may be told that they never settle for less than the full amount, but this is not true. 
  7. They may say that they settlement agreement must be in a lump sum and usually by the end of the month.  This is not true.  Term settlements can be arranged. 
  8. If you agree to a settlement, GET IT IN WRITING!  Do not be tricked into a verbal agreement. 
  9. Keep records of payment.  If there are any discrepancies or disputes in the future, you must have proof.

Credit card debt settlement is not easy!  It takes many hours and precise follow up to successfully negotiate with your creditors, so you may want to consider seeking the help of a Debt Settlement agency.

Photo By SqueakyMarmot

Tags: debt collection harassment, debt elimination without bankrupcy, settling credit card debt on your own, debt settlement, Credit Card Debt Negotiation