What Can a Debt Management Company Really Do For Me?

I'm often asked a question that goes something like this, "What is a Debt Management Company?" or "What can a Debt Management Company do for me?"  So, let me briefly tell you...

Recently, I had to testify in a trial involving one of our past clients.  And, just like I'd seen on TV or at the movies, I was sworn in, sat in the witness box and the attorneys for both the prosecution and defense asked me a few questions.

The first attorney started off by asking, "Mr. Fontaine, what is a Debt Management Company?"

As co-founder and owner of Debt Relief NW, LLC, I've been asked that question hundreds of times.

I had been told to keep my answers brief and to the point if asked to explain, etc.

So I replied...

"Debt Relief NW helps people with severe debt issues find the best solution to deal with their debt."

Short and to the point....yes.  But, there's a lot more to it!

What people really want to know is, "What can a Debt Management Company really do for me?"

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First, it is very important that you only deal with a reputable debt management company that is registered in their state.

As with any profession or business, there are always a few "rotten apples in the barrel".

We have had many clients come to us over the last 15 years or so after they had been taken advantage of by crooked debt management/settlement companies!

Here in Oregon, each debt management company is required to be registered and comply with the statutes governing such companies.

They have some very good insight into looking for a reputable debt management company that you should check out at Debt Management/Managing Your Debt.

In the article, they advise you to make sure the company you are considering is in fact, registered.  To check, click here.

OK, so now that you've done a little homework and made sure that the company your thinking about enrolling with is legit, again, let's see what a debt management company can (and cannot) do for you:

Those who need help with having accumulated too much debt (mainly addressing unsecured debt in this article) have done so because of one or more events that were or are beyond their control, such as:

  • Unemployment
  • Divorce or loss of spouse or partner
  • Serious illness or disability
  • Too little income after retirement!

When this happens, people will use credit cards to help with the intention of "paying them off" when things get better.

But, sometimes, those balances and the corresponding minimum required payments are just too much to handle....NOW WHAT!

We do not believe that "One size fits all" when it comes to dealing with too much debt!

Even though every situation may seem similar, in most cases, there are always several circumstances that have to be taken into consideration BEFORE we can recommend the right solution.

When faces with so much unsecured debt that you cannot (or are starting to fall behind) with the minimum payments required, there are only a few, legitimate options:

  • Credit Counseling Program
  • Debt Settlement Program
  • Bankruptcy

Again, the first step into finding the proper solution to your particular situation is to take the time to find out exactly where you stand in regards to your income/outgo....ie. a monthly household budget!

When someone contacts us for answers, we walk them through a basic budget.  9 times out of 10, they will say something like...

" I had no idea I had this much debt and/or had this little money left over!"

 

Budget Worksheet FREE Download here!

 

Once we/they can see exactly where they are, then we can start to find the best solution.

 

Credit Counseling (or today called Debt Management)

If you have been making the minimum required payments on your credit cards and other unsecured accounts, but the balances are barely coming down, then it may be time for you to enroll in a credit (or debt management) counseling program.

These accounts have not been turned over to a debt collection company....yet.

If you qualify (there are several hoops to jump through), this type of program can help.

The Debt Management Company will contact each creditor and arranged a plan to get your accounts paid off, usually in about 48 months or so.

Most of the major creditors will usually agree to:

  • Lower the interest rate
  • Forgive or eliminate late fees and other charges

You will make ONE PAYMENT to the Debt Management Company and it will be divided and paid out to each creditor per the agreement.

The problem with such plans is that sometimes the total monthly payment required may be the same or in some cases, a little more than the total of the current minimum payments!

If you are having trouble making the minimum payments now, most likely you will not be a candidate for a Credit Counseling/Debt Management Program.

 

NOW WHAT?

 

A Debt Settlement Program may be the best solution.

Most prospects for a Debt Settlement Program have missed or stop making payments altogether to their creditors.

Their accounts have been turned over to a Debt Collector (or are about to be) and you have been getting calls and nasty letters.

If an original creditor feels like they will not be able to get you to keep up/catch up with the payments due on your account, they may charge that account off as a loss and sell or transfer that account to a debt collector.

Again, depending on your circumstances and particular situation, you may be a candidate for a SETTLEMENT on your account.

 

  • You will be making a monthly payment into an FDIC Bank account that will be used to negotiate settlements in the future. 
  • This payment will be much less than the total minimum required payments due now.
  • Your payment will fit into your particular budget.

The debt collection company (or in some case the original creditor) may be willing to take less than the full amount to "settle" this debt.  This could be 50% or less, again, depending on circumstances.

Here's an idea of what an actual settlement agreement looks like:

Recent Settlements See what we have  done for our clients!

Once the account has been settled, it will be reported to the major credit reporting agencies as:

  • "settled as agreed", or
  • "settled for less than the balance", or
  • "settled in full"

Either way, your account will now show that you did something about it and now it has a $0 balance!

As each of your accounts are settled, your credit score will start to improve/increase.

 

But, what is the only option if you simply have too little or nothing to contribute towards either program?

 

Bankruptcy

Bankruptcy, in my opinion, should be the last solution after all other solutions are examined and/or tried.

When I am negotiating with a debt collector for one of my clients, I will have to remind them that we are attempting to negotiate settlements rather that having our client seek BANKRUPTCY PROTECTION.

That is what the bankruptcy laws were intended to do...protect a person's property from absolute ruin and detestation!

We do everything we can to help a client with finding the best solution/program to help with their debt problems, but in some cases, bankruptcy is the best solution.

Make sure you interview at least a couple of bankruptcy attorneys to make sure you feel comfortable with them and their experience.

 

FINALLY...  What can a Debt Management Company do for you?

 

  • Help eliminate the fear and stress that comes with having too much debt!
  • Help find the best solution to fit your particular situation.
  • Help get you back to being DEBT FREE once again!

 

FREE  Debt Elimination Summary

 

 

 

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Tags: debt, debt management, debt settlement, credit cards, credit counseling

How Does a Debt Settlement Program Work?

If you have decided to enroll in a Debt Settlement Program, no doubt you have several questions and concerns.  Here's how a Debt Settlement Program works:

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Faced with just too much debt (basically unsecured debt) and have decided to enroll in a Debt Management Program through a reputable, professional Debt Management Program.

Now what?

Most likely, you have provided the agent with the latest copies of your bill statements, collection letters, or your Free Annual Credit Report.

From time-to-time, you will need to provide the most recent information about the debts you have enrolled, so save the latest (NOT ALL!) statemenst and/or letters that you receive.

It's a good habit to fax or email (much quicker than snail-mail) these to your negotiator  every couple of months or so.  Your Debt Settlement Company may also ask you for a specific update once in a while.

As you learned during your interview/counseling session, rather than making payments to your creditors or debt collectors, you will have authorized an amount that you can afford each month to be deposited into a Client Reserve account with an FDIC insured bank.

As these funds begin to accumulate, your negotiator will be contacting some, but not possibly all of your creditors at once.

"Timing" is very crucial to a successful debt settlement program.

By "timing", I mean that each creditor and/or debt collection agency will accept or decline an offer to settle depending on several factors, such as:

  • How old is this account.
  • Your circumstances (working, unemployed, retired, disabled, etc.)
  • The current balance of the account.

Again, depending on the creditor or debt collector, more favorable settlements may be negotiated a certain times of the month/quarter/year.  An experienced Debt Settlement Company's negotiator will have years of experience and will have worked with most, if not all creditors and debt collectors over the years and will know when and how to get the best settlements possible.

Once a settlement has been negotiated, a SETTLEMENT AGREEMENT will be faxed or mailed to the debt settlement company.

Payment or payments (depending on the agreement) will be set up from the Client Reserve Fund per the agreement.

Once the agreement is completed, a statement or letter of satisfaction will be mailed to you and/or the debt settlement company. 

They (the creditor or debt collector) should report the settlement to all three of the major credit reporting bureaus that your account has been "settled-as-agreed" or in some cases, "settled-in-full". 

But, not all creditors or debt collectors do this, so again, a reputable, professional debt settlement company will assist you to make sure that your Credit Report is accurate.

Depending on the amount of debt your enrolled and the amount of your monthly deposit into the client reserve account will determine how much time your program will take.  This can only be estimated as circumstances and other events may shorten or lengthen the program.

Once all of your accounts have been settled you will receive an accounting summary.

So, that is the basics of a Debt Settlement Program, but, there are other things that you need to be aware of:

What happens if a creditor or debt collector decides to file a legal claim against me, ie., start a lawsuit?

Any creditor or debt collector has the right to file a claim against you for the unpaid balance or your account.

Usually, before they do that, they will have tried to get you to pay by:

  • Making many phone calls
  • Sending many collection letters

Once your account has been charged off, assigned or sold to a debt collection company, you legally have the right to demand that they stop calling you at home or at work. (Unfortunately, as long as it is with the original creditor, you can't prevent the calls.)

You will need to write a letter (sometimes a fax will do) and demand, according to the Fair Debt Collection Practices Act (FDCPA) that they cease and desist all calls immediately.

To receive a Sample Letter, click below:

STOP Collection Calls Free Sample Letter

 

The calls should stop rather quickly, but if they do not, then you can file a complaint with your state's Attorney General's Office.  Just go online to get the link for your state's attorney general's office/department.

 

If you live in Oregon, here is the link.

 

Again, depending on your particular circumstances and the particular debt collection company that has you account, they may or may not decide to pursue a lawsuit.

But, if they do, here's what will happen:

(1)   A Claim will be filed.

"They" (referring to the creditor or debt collector) will retain an attorney to FILE A CLAIM with the county court you reside in claiming that you failed to repay the debt you agreed to repay and now they demand legal action.

(2)  You will receive a SUMMONS.

Receiving a summons is kind of scary!  Usually, someone knocks on you door and asks if you are so-n-so and that you've been "served"!

Most of the time this claim is delivered by an agent of a company that does this, but in some cases, your local sheriff's office may send it via an officer! 

Regardless of how you get the summons, the first thing you do is send a copy to your debt settlement company.  TIME IS OF THE ESSENCE!  DO NOT DELAY!

The summons will state something to the effect that you have 20-30 days from the time of delivery of the summons to give an ANSWER.

This "answer" is a legal term that you would do if you can prove that you do not owe this debt!  If you have proof....I mean written, easy to see proof that you paid this debt or that you do not owe this debt for whatever reason, then you would pay the cost (you'll need an attorney and there is usually a court filing fee) of filing the ANSWER.

But, if you know that you owe the debt, then you will not file the ANSWER.

(3)  Your negotiator will contact the attorney who filed the claim for the plaintiff (creditor/debt collector) and in most cases work out either a settlement for less than the balance due, or some kind of repayment plan.

This will ONLY BE POSSIBLE if you get your negotiator a copy of the summons RIGHT AWAY!

I've been negotiating with attorneys and collectors for my clients for about 15 years.  In all of that time, as long as my client got me a copy of the summons quickly, I was able to stop the summons, prevent either a judgment, wage garnishment or bank levy in about 99% of the cases! 

Again....TIME IS CRITICAL!

Although most creditors/debt collectors will do their homework to determine if a client could be garnished or a bank account levied after a judgment has been awarded, in some cases, they do not.

Here's what I mean....

You cannot be garnished if you are:

  • Retired and receiving Social Security or Retirement Benefits
  • Disabled and receiving Disability Income Benefits
  • or, if your income is below the exemption level (usually around $218 per week or less, but varies by state)
  • Receiving unemployment benefits, workers compensation, spousal support, child support
  • And many others (click here for complete list of exemptions in Oregon)
  • .

HOWEVER!!!!

If you own your home (or have a mortgage), a LIEN can be placed against it.  This means that if and when you sell (or transfer ownership), the judgment amount (plus interest) must be paid before the sell or transfer can be completed.

Can a LIEN be removed/satisfied before selling or transferring property?

Yes.  Depending on several factors, a creditor will most likely be willing to accept either a slight reduction of the balance or will accept payments on the entire amount in order to release the judgment.

 

FINALLY:

If you qualify for a debt settlement program, most likely you will be able to become DEBT FREE and start to rebuild your credit score again as long as you work with your Debt Settlement Company and Negotiator.

For an idea of what an actual settlement looks like, click below:

Recent Settlements See what we have  done for our clients!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Tags: debt settlement, debt, debt collectors, stop debt collector calls, wage garnishment, bank levy

What to Expect While in a Debt Settlement Program

Before you make the decision to enroll in a debt settlement program, here are some very important things to consider:

The decision to enroll in a Debt Settlement Program should only be made after careful consideration and weighing all of you options.

22853064975_8c547f714f_m.jpgFirst, some VERY IMPORTANT POINTS...

Not everyone should enroll in a debt management program! 

Debt Settlement is not an "easy" way to get out of paying the debts you owe!

Not all Debt Settlement companies are alike or legitimate, so be very careful in deciding!

You cannot just forget about your debts and the program!

A Debt Settlement Program may take a few years to complete.  It is not a "quick fix"!

 

NOT EVERYONE SHOULD ENROLL IN A DEBT SETTLEMENT PROGRAM

I began helping people with debt problems almost 15 years ago, so I understand and appreciate it when someone calls seeking help.

Most of our clients (I'd say 95% or so) needed help after something very traumatic and/or financially devestating happened to them.

It could have been one or a combination of the following:

  • Unemployment, downsizing, or a significant reduction in  income
  • Death of a spouse of partner that cut income dramatically
  • Sickness or disability not only limiting income, but requiring payment for medications and treatment
  • Too little fixed income after retirement
  • Divorce

When a catastrophic event happens, it usually does not give us much, if any, warning. 

You have a mortgage, or rent, car payment, normal bills, a few credit card accounts that you are making all of your required payments on each month with maybe even a little left over.

Then, you lose a large portion of income and all of a sudden, there just isn't enough income to keep up with all of your obligations.

At first, you're concerned, but not too worried as you expect things to turn around in a short period of time.

But after a few months, the small savings you had (if any) is gone and you actually had to do a cash advance in order to meet your obligations.

Your credit cards begin to get maxed out and soon, you just simply cannot keep up.

What can you do?

You really only have a few choices:

In a Debt Management or Credit Counseling Program, usually your interest rates ared reduced, late or over-the-limit fees are stopped (and sometimes forgiven), you have one monthly payment to a company that distributes it to each of your creditors as per the agreement.

The calls and letters stop and usually, you debts are paid off in around 48 months.

THE PROBLEM IS....

The minimum total monthly payment is usually as much or MORE than you are currently unable to meet!

Now what?

If you cannot qualify for the Debt Management Program, then the Debt Settlement Program may be just what you need to avoid the 3rd, and in my opinion, the final option after all other options are examined, Bankruptcy.

Previously, I stated that a Debt Settlement Program IS NOT for everyone.

I believe that if you have taken out debt, then you should, if at all possible, repay the debt per the agreement.

Debt Settlement SHOULD NOT be a "get-out-of-debt-free" card!

By the way, a professional, qualified Debt Settlement Company will take the time to go over you particular situation and outline all of your options so that you can make an informed decision.

Be VERY SUSPECIOUS of any company that tries to "sign you up" very quickly without reviewing all of your options!

Once you are enrolled in a Debt Settlement Program, here is basically what will happen:

Most likely, you have missed or stopped payments to your creditors.  These creditors are going to send letters and will call you seeking payment.

While your account is still with the original creditor (it has not been charged off yet), that creditor has the legal right to call you concerning the debt.

However, they must comply with the Fair Debt Collection Practices Act that protects consumers from harassment int he debt collection process.

Once your accounts are 120-180 days late, they most likely will be "charged off" and assigned or sold to a Debt Collector.

A Debt Collection Company will take accounts on consignment or buy debt in order to get some kind of payment from the consumer.

Once that account has been placed with the Debt Collection Company, they will send letters and start to call, and call, and call!

The good news is that now, you can PUT A STOP TO THESE CALLS!

STOP Collection Calls Free Sample Letter

Just use the Free Sample Letter above, follow directions, and the call should stop very soon.  If not, your Debt Settlement Company will help put a stop to them!

The agent who enrolled you into the Debt Settlement Program has gone over your budget to determine an amount that works with your situation that you can contribute to your Settlement Fund each month.

It will be much less than the total monthly amount you were required to pay before!

While this fund is growing, a negotiator from the debt settlement company will contact the debt collector to start negotiating a settlement.

Depending on a number of factors, usually a settlement around 50% of the current balance will be negotiated.

After a written SETTLEMENT AGREEMENT is received, a the payment will be made.

In many cases, the final settlement agreement can be paid out in monthly payments (0% interest) from you settlement account over several months.

Again, it all depends on your particular situation.  Your negotiator will most likely discuss the situation with you.

Once the settlement is completed, the debt collector should contact all 3 major credit reporting bureaus that this account has a $0 balance and has been paid-as-agreed.

Over time, the process of settlement will IMPROVE YOUR CREDIT SCORE as your balances are going down.  But, it will not happen over night!

WHAT IF YOU CANNOT EVEN AFFORD A DEBT SETTLEMENT PROGRAM?

There are times that even after enrolling in a debt settlement program your financial situation worsens and you simply cannot afford to continue.

In that case, BANKRUPTCY may be not only your only options, but your BEST OPTION.

I believe that bankruptcy should be a person's "last resort"

In fact, the bankruptcy laws have changed over time to make it very difficult for someone just to walk away from their financial obligations through bankruptcy!

You should consult an attorney who specializes in Bankruptcy! 

The attorney will meet with you (no charge for the initial meeting) and go over you situation and your options.

FINALLY....

While a Debt Settlement Program is not for everyone, in many cases, it will allow you to:

  • Avoid Garnishments
  • Reduce you monthly outgo
  • Avoid bankruptcy

Need help making your decision? 

Let us help...

FREE  Debt Elimination Summary

 

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Tags: debt settlement, debt, debt collectors, stop the collection calls, garnishment, bankruptcy attorney

Too Much Debt?  Here Are Some Options:

If you are experiencing the stress that comes from having too much debt, take heart!  You have several options:

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There are basically two types of debt:

Secured debt (home mortgage, equity line of credit, automobile, etc.), anything that represents collateral to the lender in the event you default on your loan.

Unsecured debt, such as:

  • Credit Cards (Visa, Master Charge, etc.)
  • Store Credit Cards (Home Depot, Kohl's, etc.)
  • Medical bills (not covered by insurance)
  • Private loans (bank, payday, personal)
  • Private Student Loans not back by the Federal Government
  • Old Apartment/Rental debt
  • Deficiency balance still due after a repossession
  • And, of course, there are many others

In this article, I'm basically addressing UNSECURED DEBT, although, is certain circumstances,  some of the options can apply to Secured Debt as well.

If you are experiencing a severe financial situation, most likely it was caused by something beyond your control, such as:

  • Loss of employment
  • Death of spouse, family member, or partner
  • Illness or disability
  • Divorce
  • Insufficient income after retirement!

See if this sounds familiar...

The company you have worked for decides (or has no choice) but to downsize and layoff (I guess this is a "politically correct" word for GETTING FIRED).

You are one of the unlucky ones and find yourself (for the first time in years), facing the prospect of looking for a new job.

Sure, you will receive UNEMPLOYMENT BENEFITS for a time, but at some point, they will stop.

You had used some credit cards in the past, but the balances were relatively low and you were not only making the minimum payments, but also paying a little more to pay them off sooner than later.

As the job search continues, your unemployment benefits stop and you start dipping into whatever small savings you had. But soon, your starting to understand that you are in trouble!

You have a couple of job offers, but they are not going to pay you as much as you were getting before.

So, you really have no choice and decide to accept a lower paying job just to have some kind of income!  All the while, you are going to keep looking for a better paying job.

But, not only do you not find a better paying job, you have to start using some other credit cards to make up the difference just to get by!

Soon, your credit cards are starting to get "MAXED OUT", and you find yourself unable to keep up with the MINIMUM REQUIRED PAYMENTS! 

NOW WHAT????

When you start missing payments, the creditors will most likely send you a letter or perhaps call to see what is going on. 

Sometimes they seem almost understanding and willing to work with you, but often, they are very mean and demeaning to you!

After a couple of months of missing your minimum payments, you will start getting calls....LOTS OF CALLS, from your creditor.

Unfortunately, as long as the account is with the original creditor, you cannot do anything about the calls.

My advice is to answer once and try to explain that you are going through a rough time and fully intend to repay this debt.  After that, I would just ignore the calls as most of the agents calling are not going to be sympathetic to you anyway.

After 3-4 months of non-payment on your account, most likely the creditor will assign or sell your account to a DEBT COLLECTOR. 

 

At this point, here are you basic options:

 

At first, the debt collector may not offer anything else but FULL REPAYMENT (plus all the interest and fees added) on your account.

Of course, you can't do that (if you could have, you wouldn't have been in this situation)!!!!

The Debt Collector may start calling daily and even several times a day, but know you can put a stop to the calls!

The Fair Debt Collection Practices Act allows a consumer to put a stop to these annoying calls by simply writing a letter telling them to "cease and desist". 

Just click on the button below for a free, sample letter you can use:

STOP Collection Calls Free Sample Letter

But, just because the calls have stopped doesn't mean the debt is going to "go away"!

 

At some point, you may get letter offering a SETTLEMENT of your account for less than the balance.

Most of the time, these letters offer a savings of 25% -35% off the balance if you can pay that amount in a LUMP SUM within a short period of time!

If you can't take advantage of the "offer", then you may get a letter stating that your account is set to be turned over to their "LEGAL DEPARTMENT".  That sounds scary!

The last thing a Debt Collector wants to do is to have to resort to LEGAL OPTIONS  in order to get you to pay on this debt.

Although the letter stated that they could only offer a moderate reduction if you could make a lump sum payment, in fact, they most likely will be willing to accept a better reduction and even let you pay it out over several months!  Here are a few examples:

Recent Settlements See what we have  done for our clients!

If the debt collector is unwilling to budge and/or accept a reasonable settlement with terms you can afford, then they may decide to go ahead and file a claim in order to get a judgment.

With a judgment, then they can apply for a WRIT OF GARNISHMENT, which would be sent to your employer.  Your employer would have no choice (although there are exceptions), but to obey the writ of garnishment and send them 25% of your net, take-home income!

Since that would be financially devastating, and you may would not be able to pay the mortgage or rent, utilities, buy groceries, etc.,  you may be forced to seek BANKRUPTCY PROTECTION!

In my opinion, bankruptcy should be your very last...there's nothing else you can do...option.

However, bankruptcy is not as bad or harmful as you may think!

Although your options of dealing with too much debt are limited, you owe it to yourself to get some advice and see what you can or cannot do, given your circumstances.

 

FREE  Debt Elimination Summary

 

 

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Tags: debt, debt collection, debt settlement, stop creditor calls, wage garnishment, Bankruptcy

"Does Debt Settlement Hurt My Credit Score?"

I've heard this question hundreds of times over the years. 

The simple answer is "NO", but there's much more to it!

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The very question shows a misunderstanding of how credit scores are determined and also how the collection process general plays out.

First of all, if you are a prospect for a debt settlement program, then your credit scores have already been damaged.

If you have had or are going through a severe financial hardship/challenge, then most likely you've either raked up too much debt to be able to make the minimum payments due, or you have fallen behind.

A legitimate, professional debt management company would take the time to go over your individual situation, explore and explain your various options and then (and only then) recommend the solution.

What I am saying is that even though there has been legislation over the past few years to help protect consumers from fraudulent debt settlement companies, there are still some out there...SO BE CAREFUL!

The question is..."Does Debt Settlement Hurt My Credit Score?".

Once you can't keep up with the minimum payments or have fallen behind to the point where some or all of your accounts are being turned over to collection agencies, your credit score has already taken a big hit!

Your credit score is determined by several factors:

  • Payment History                             35%
  • Amount of Debt                               30%
  • Length of Credit History                  15%
  • New Credit                                      10%
  • Type of Credit                                  10%

As you can see, your payment history and the amount of debt you owe account for 65% of the factors in determining your score!

If you've been late or missed payments on a regular basis, your credit score is going to be hurt.

If you have "maxed out" most or all of your cards or accounts, then you are not a very good credit risk (in the eyes of a new lender and the credit bureaus) and therefore, you credit score will suffer.

My point is that if you are a prospect for debt settlement, then your credit score has already been declining.

Once you start (or have the help of a professional debt settlement company) negotiate settlements, your credit report will start showing ZERO BALANCES.

After some time, as you continue to "settle" and/or "pay off" those balances, your credit score will start to improve!

It may not seem reasonable or make sense, but if you understand a little about the mindset of a credit card company or other lenders, then you'll understand.

The credit card industry makes billions of dollars on consumers by offering credit cards to almost anyone!

Several years ago, they discovered that they made more profit from fees, such as:

  • Late payment fees
  • Over the Limit fees
  • Annual fees

These "fees" actually made them more profit than the interest rates!

In a nutshell...THE CREDIT CARD INDUSTRY NOT ONLY WANTS TO EXTEND CREDIT, BUT DON'T REALLY WANT YOU TO EVER PAY OFF YOUR CARDS!

Carefully examine your credit card statement and you'll be in for a shock!

So, if a debt settlement program does not hurt your credit score, then why doesn't everyone that has debt choose debt settlement?

Because not everyone is a prospect for debt settlement!

If you have accumulated too much debt and are really having a hard time making the minimum payments, you may or may not be a prospect for debt settlement.

FREE  Debt Elimination Summary

 

 

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Tags: debt settlement, Credit Score, debt, debt collector

How to Stop Annoying Debt Collectors From Calling!

Debt Collectors...They call and call and call!!! Is there anything you can do to STOP THE CALLS?


If you have ever missed or gotten behind on credit accounts, then most likely, before long, you started getting calls, and calls, and calls!!!

As if the financial stress wasn't enough, now you got some, well, I'll be nice, debt collector agent calling to demand payment or making threats of this or that.

GOOD NEWS!

For the sake of this article, I'm talking about unsecured accounts such as:

  • Credit cards
  • Store credit cards
  • Personal loans
  • Pay-Day loans
  • Medical bills
  • Utility bills
  • Private student loans

As long as the account is with the original creditor (Visa, Master Charge, Discover, etc.), then they (the creditor) has the right to call you about your account.

Somewhere in the fine print of the application you signed, (and probably couldn't read) there was language that you agreed to that they could contact you by phone/mail about your account.

But, once that account is about (varies) 3-4 months delinquent, then the original creditor may decide to charge off, assign or even sell to a debt collector.

Once this happens, then the debt collectors starts with the letters and calls....lots of calls, many times a day....VERY ANNOYING!

But I said I had GOOD NEWS, and I do.

The Federal Trade Commission (FTC) has a lot of very good information about debt collectors and their practices. 

A debt collector must conduct their business practices according to the law found in the FAIR DEBT COLLECTION PRACTICES ACT or the FDCPA.

They (debt collectors) are prohibited from:

  • calling too early or late
  • calling many, many times a day
  • calling you at work (if your boss prohibits calls)
  • making threats of legal action (if they do not follow through or intend to)
  • using profane or threatening language ("Your going to go to jail!")
  • calling and revealing your situation with family or friends

So, what should you do if you have believe you have been harassed by a debt collector?

The best thing you can do is to file a complaint with your state's attorney general's office.  Most likely you can go online to do this.

If the Attorney General's office gets enough complaints, they will start legal action against the debt collector.

"But, how do I stop all those calls?"

Again, the Fair Debt Collection Practices Act says that a consumer can demand that a debt collector stop the calls by simply sending a written request (sometime they'll take a fax).

To make it easier for you, here's all the information you will need:

STOP Collection Calls Free Sample Letter

One more thing....

Just because you have stopped the calls doesn't mean the debt collector is going to stop sending letters, reporting the "bad debt" on your credit report and possibly begin legal action to win a judgment.

If awarded a judgment, they may be able to get a WRIT OF GARNISHMENT or a BANK LEVY!

The best thing you can do is to negotiate with the debt collector for a reduced SETTLEMENT!

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Dealing with debt collectors is not always easy or friendly:

  • They are professionals who specialize in getting you to pay as much as possible!
  • When you are "emotionally" involved, it is harder to negotiate.
  • With little experience, many people end up paying way to much.

Yes, you can put a stop to the collection calls, but you'll still need to deal with the debt.

COULD YOU USE A LITTLE HELP OR ADVICE?

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Tags: fair debt collection practices act, debt settlement, debt, stop creditor calls, debt collector

Will Debt Collectors Negotiate After a Summons or Judgment?

If you have been delivered a summons or had a judgment awarded against you be a debt collector, you should still be able to reach an agreement to avoid garnishments or bank levies! 

Fear-1.jpgFinancial circumstances beyond your control can be very stressful.

More often than not, your situation was caused by one or more events such as:

  • Loss of employment
  • Divorce
  • Illness or Disability
  • Fixed Income of Retirement

When this happens, your debts can be very difficult or impossible to keep up.

 

And, as you may know, sometimes these accounts are turned over to a debt collector.  A debt collector may be contracted by the original creditor or may have purchased the debt for pennies on the dollar after the creditor decided to give up on trying to collect.

This is where the problem starts!

Most debt collection companies as well as the debt collector agent themselves are professional.  

Like it or not, they do serve a purpose of trying to recover debt that is owed.

However, there are some, and you could say many debt collectors who do not act in a professional manner and violate the Fair Debt Collection Practices Act.

If and when you are contacted by a Debt Collector, you need to take action.

THE WORST THING YOU CAN DO IS TO IGNORE THE PROBLEM!

If you legitimately know that you do not owe the debt, you can demand that the debt collector VALIDATE the debt.  But, you must do this right away.

Most letters you receive from the collector will state something to the effect that "If you do not dispute the validity of the debt, it will be deemed an admission that you are liable for the debt."

Here's a link to a blog I wrote about:

FREE GUIDE to

By the way, be very careful of a so-called "Credit Repair Company" that uses the "debt validation" procedure to challenge LEGITIMATE debts in order to try and raise your credit score.  This is not only unethical, but may also be illegal!

OK, let's say you know that you owe the debt and the debt collectors are calling all day.  Here's how to stop the calls: 

If you cannot afford to deal with this debt now, you can put a stop to the never ending calls from a debt collector.  

While you cannot stop the original creditor from calling, you certainly have the legal right to demand the collector from calling.  

Click here for a "How to Stop Debt Collection Calls":

STOP Collection Calls Free Sample Letter

 

But, the problem is not going to go away!

If you do not make some kind of arrangement with the debt collector, they may elect to file a complaint with you county court in order to get a judgment.

The first thing that will tell you that they are very serious and are not going to just go away is that you will receive a SUMMONS.

Receiving a summons is unpleasant and a little scary if you do not know what to do.

I've written many blogs and articles about how to deal with a summons, so check out one of these at:

 

HOW TO DEAL WITH A SUMMONS

 

For this article, let's say that you ignored the summons and the debt collector was awarded a DEFAULT judgment.

A Default  Judgment just means that the judgment was awarded to the plaintiff (debt collector) as you did not contest the claim in court.

When these type of judgments are awarded, in about 99% of the time, the defendant (creditor) did nothing, and thus, the judgment was granted to the plaintiff.

Now the debt collector, with the judgment, can take legal action to recover the debt.  These may include:

If you have some funds or can afford a reasonable monthly payment, you should be able to avoid these actions.

The debt collector really doesn't want to spend the money or take the time to file for those legal actions above, but depending on your situation, should be willing to either accept:

  • A Lump-sum (or in some cases a monthly term payment) Settlement
  • A Stipulated Agreement whereby you repay the balance at 100% plus the interest allowed in your state.  (Oregon is 9%, WA is 12%)

We have been helping people deal with the problems associated with debt for a long time (about 15 yrs.), and I can only recall two cases where the client received a wage garnishment or bank levy.

In both cases, this happened because the client refused to follow our advice.

But, in both cases, we were able to STOP THE WAGE GARNISHMENT and BANK LEVY.

If you would like a FREE CONSULTATION, with absoutely NO OBLIGATION, give us a call or click below:

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Tags: debt settlement, debt collectors, debt, summons, judgment

Garnishment! Why it Happened and How to Stop!

If you've been slapped with a WAGE GARNISHMENT, you need to know WHY it happened and HOW to put a STOP to it!

A wage garnishment or bank levy/garnishment doesn't just "happen"!  

 

cartoon_about_stress.jpg

 

Before a "writ of garnishment" can be granted to a creditor or debt collector, several things have happened:

When you sign up for a credit card, bank card, or any unsecured account (including medical bills), you have entered into a legal contract with the basic agreement that you will repay the loan at the terms and time frame outlined in the agreement.

If you don't, the original creditor has the right to:

  • Call you
  • Write you, or...
  • Hire a Debt Collector, or...
  • Retain an attorney to file a claim...bring a lawsuit!
  • Go to court to win a judgment against you
  • Apply for a Writ of Garnishment 

Let's walk through the process leading up to a WAGE GARNISHMENT, and I'll show you how to:

  1. Prevent a judgment
  2. Prevent a garnishment
  3. Stop a garnishment 

I've been helping people deal with credit and debt problems for many years and it still always is a mystery to me when someone calls for help and says,"I had no idea this was going on"!

Well, I suppose that is possible, but most likely, here is what happened:

1.  Something happened in your life that caused you to be unable to keep up with the required payments.  It could have been one or more of these:

  • Loss of employment
  • Divorce or other family problem
  • Death of a spouse or loved one
  • Long illness or disability
  • Barely enough income after retirement

When you are late or unable to pay the minimum payment due, you probably already know, but...

2.  Creditors start calling and writing, trying to find out what is going on.

Unfortunately, the original creditor has the right (remember that agreement with all the FINE PRINT?) to call or contact you by mail, so at this point, you cannot legally stop them.

3.  If the original creditor cannot contact you or you do not talk with them or return their request for a call, then they may place the account with a DEBT COLLECTOR.

The debt collector will start calling, and calling, and calling....very annoying!

But now you have the right to PUT A STOP TO THESE CALLS FROM DEBT COLLECTORS!

STOP Collection Calls Free Sample Letter

When your account has been placed with a debt collector, you may have the opportunity to SETTLE THE ACCOUNT BALANCE FOR LESS!

This is called DEBT SETTLEMENT and depending on your circumstances, this can be a very effective method for not only reducing the balance due, but also stop the potential legal process that may begin.

Although dealing with a debt collector can be a very intimidating and frustrating experience, if you feel up to it, you may want to call and see what they are willing to do for you,

If you are uncomfortable doing this, you can get help:

 

4.  If the debt collector cannot get you to set up payments to repay or are not willing to accept a REASONABLE SETTLEMENT, then they may decide to FILE A CLAIM.

Once the Claim is filed, a SUMMONS will be issued.  It usually is delivered in person, but may be sent by registered mail.

As I said earlier, although people will say that they never received a summons, in most cases...

  • They had received it, but just ignored it!
  • Someone in the household signed for it.
  • Someone in the household signed for it if delivered by registered mail.

But even if you really never received or saw the summons, at this point, it may too expensive to fight!  Yes, you could, but most likely you won't.

SO, NOW WHAT????

5.  The summons had stated that you had 20 -30 days to give an "ANSWER".

A legal ANSWER is you legal response to the claim/summons that you do not owe the debt and CAN PROVE IT!

Most people know that they owe the debt and so spending the money to give the ANSWER ( yes, it costs money to FILE AN ANSWER!!!)is a waste of time and money.

6.  Even if you do not file an ANSWER, you can still stop the process by negotiating a STIPULATED AGREEMENT.

Depending on your financial circumstances, the plaintiff (creditor) may agree to a repayment plan rather move forward for a garnishment.

The reasoning is that if you are slapped with a garnishment it may force you to seek bankruptcy protection.  If that happens, they may get little to nothing!

 

7.  But, if the previous procedures fail to prevent the garnishment or you receive noticed from you employer that you will be garnished, you still have options:

  • Call the attorney for the plaintiff and attempt to negotiate a repayment plan in lieu of the garnishment.
  • Seek bankruptcy protection.

Even if you receive the notice of garnishment from your employer, you still may be able to contact the attorney for the plaintiff/creditor and work out a repayment plan.

You will need to be able to show hardship and offer a reasonable payment plan.

But if the plaintiff/creditor refuses, then you may be forced to seek BANKRUPTCY PROTECTION.

Bankruptcy is a drastic option, but is not as bad as you think it is.  

Check with a bankruptcy attorney to get understand your options.

 

Now you know "WHY" the "HOW TO STOP" a garnishment.

But, taking action is still too much for most people.......

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Tags: Bankruptcy, debt, summons, stipulated agreement, debt settlement help, garnishment

Stop Oregon Debt Collector Harassment!

If you are being harassed a debt collector?  Good news, under the Debt Collection Practices Act (FDCPA), we have rights that protect us!

woman_on_floor_with_all_her_bills.jpg

Nothing is more frustrarting and annoying than to not only be dealing with the stress of debt, but then to compound it, now your getting numerous phone calls and letters from aggressive and many times, harassing debt collectors!

The Fair Debt Collection Practices Act (FDCPA) limits what a debt collector can and cannot do.

Most people are not aware of the limits and boundaries that debt collectors have, so as a result, they will take advantage of people in an effort to collect.

A debt collector CANNOT:

  • Call too early or too late
  • Call many, many times a day
  • Make threatening remarks ("You could go to jail! or You could lose everything!")
  • Misrepresent themselves as government officials
  • Use profane or obscene language
  • Call friends or family and reveal that you are behind on your bills
  • And are prohibited from many other illegal practices!

Here's a great link that spells out how the FDCPA protects us:

Debt Collection Laws in Oregon

The Federal Trade Commission also spells out exactly what a debt collector cannot do as well.

So what do you do if you are being harassed by debt collectors?

The most abused violation of the FDCPA by debt collectors is making many, many, many phone calls all day long!!!!

GOOD NEWS!  

You can put a stop to a debt collector making calls to you by simply writing a letter demanding them to stop calling you.

However, you cannot stop the original creditor from calling.  When you signed that application, buried somewhere in the "fine print" gave the creditor authority to call you regarding your account.  You can't do anything about that.

But as soon as your account is charged off and/or transferred to a debt collector, you can put a stop to the calls!

STOP Collection Calls Free Sample Letter

But what if a debt collector violates other restrictions of the FDCPA?

First, start a log of who, when, what time of day and what was said.

If you file or open a complaint with your state's attorney general or department of financial affairs, it is very important that you have a written log!

Let's say that after the 15th call today you finally get "fed up" and answer the phone.

The conversation goes something like this....

This is ..... from XYZ company calling about your ..... account.  Is this (your name)?

You say:

Listen you %*$$#@$, you've been calling me over and over and I'm sick and tired of it!!!!

The debt collector says:

You haven't paid your debts and we've been retained to either collect the balance due or sue you in court!

OK, here's where they start getting themselves in "potential" trouble.

If, according to the FDCPA, a debt collector threatens to bring "legal action" and does not within a reasonable time, they are in violation.

As soon as that agent/representative of XYZ Debt Collection agency makes that threatening statement regarding a potential lawsuit, you need to:

Start writing down notes, and ask the caller:

  • I need your name and ID #
  • What is your contact phone number
  • Are you stating that XYZ Company is going to bring legal action against me?
  • When is this "legal action" going to begin?

If the rep hasn't hung up already, they probably will soon.  

The point is that you need a written log with DATE AND TIME and as much information you can get!

NEXT...

Contact your state's Division of Financial Affairs or the Attorney General office and file a complaint!

Don't let these harassing debt collectors get away with it!

The Division of Financial Affairs or your state's Attorney General's office will contact the debt collector and in most cases, the calls and/or violations will cease.

Need some help?

Debt Relief NW, LLC is a Registered Debt Management Company here in Oregon and we have an A + rating as an Accredited Company of the Better Business Bureau.  

We understand and appreciate the turmoil and stress that being in a financial situation like this brings.  You don't have to go it alone!

Contact us for a FREE consultation with absolutely NO OBLIGATION:

 

 

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Tags: debt collectors, debt, fair debt collection practices, Oregon

What a Debt Collector Can and Cannot Do...Know Your Rights!

You do not have to put up with debt collection harassment, but you need to know your rights under the Fair Debt Collection Practices Act in order to put a stop to it!

Our nation's consumer protection agency is call the Federal Trade Commission or FTC.  This agency enforces the Fair Debt Collection Practices Act or FDCPA.  The FDCPA was designed to put a stop to abusive and unlawful attempts by debt collectors to collect debt.

too many credit cards

Debt Collectors are strictly prohibited from using unfair or deceptive techniques in their debt collection activity.

Not all debts are covered by the FDCPA.  The act covers basically all debts, such as:

  • personal loans
  • credit cards
  • store cards
  • medical bills
  • student loans
  • mortgages
  • auto loans

The FDCPA does not include debts you may have incurred in order to operate a business.

So, what happens if you find yourself in a financial situation where you can no longer meet the terms of your loan or credit account?

Once your account has been charged off by the original creditor and placed with a collection agency, the telephone calls will start.  This is the most abused type of debt collection activity, but you have rights that you must not only be aware of, but take advantage of!

Unless you agree to it (and who would), a debt collector cannot call you before 8am or after 9pm.  They also are prohibited from calling many, many times during the day.  Many debt collection agencies use an automated dialer to make thousands of calls a day, hoping to catch someone.

Here is some good advice on how to deal with a debt collector's call:

If you have the address of the debt collector (from one of the many letters you have no doubt received by now), then don't answer.  Your caller ID should indicate an "unknown" number or a number that is certainly not one of your family or friends.

If you (or perhaps one of your family should answer by mistake), briefly tell the debt collector that you are working on the problem and will get back to them...then HANG UP!

REMEMBER...Debt Collectors are professionally trained to get you to agree to pay back your debt right away!  Trying to explain your circumstances hoping for some understanding and/or sympathy is usually a waste of your time.

If you don't have the address of the debt collector (I'll explain why in a minute), then ask for it from the debt collector or at least get the debt collector to identify the company.  Now, you can go on line to get the address...WHY?

Because the FDCPA specifies that once a debt collector has received a written demand to stop placing calls to you, they must stop!  They are allowed one more call to tell you they got your letter and will not call again or that they intend to take further legal action in an attempt to scare you into...yep...giving them money!!!

In most cases, the debt collection agency will honor your demand letter and stop calling you.  That doesn't mean that you are not still responsible for the debt, but at least they will stop call you.

STOP Collection Calls Free Sample Letter

What about calling you at work?

A debt collector is also prohibited from calling you at your place of employment if they are told orally or in writing that you are not allowed to receive calls at work.  Again, most of the time, they will honor your request.

What about calling your family or neighbors?

Yes, but only to find out a little information about you:

  • Do you still live at....
  • Is your phone number still....
  • They may ask about your place of employment as well.

But, they may not discuss your financial situation!

I'll discuss what you can do if they are violating the FDCPA in just a minute, but here are some other basic practices or techniques that are also prohibited by debt collectors:

They are prohibited from...

  • using threats of violence or harm (but, after a dozen years in dealing with debt collectors, I have never heard of this violation)
  • using obscene or profane language
  • making false statements, such as claiming to be an attorney or representing the government
  • making statements such as "you may go to jail" if you don't pay!

threatening to garnish your wages or seize your property if, in fact, they have not been awarded a judgment after several months of legal efforts.

threaten to take legal action if, again, they don't follow through

OK, so what can you do if you feel that a debt collector has violated the Fair Debt Collection Practices Act?

First, contact your State's Attorney General's office to file a complaint.  Usually, the best way to do this is to go on line. 

For example, in Oregon, you can file a complaint at:

Oregon Department of Justice Consumer Protection

Next, you will want to file a complaint with the Federal Trade Commission.

FTC Complaint Assistant

Your state's attorney general's office as well as the Federal Trade Commission doesn't take abusive debt collection practices lightly!  In fact, you have a right to sue a debt collector in a state or federal court within one year of the violation.

If you plan to do so, you should consult an attorney.

Finally, dealing with debt collectors is no fun and is certainly not easy. But, knowing your rights can really help.

Need mor advice?  Let us help:

 

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Tags: fdcpa, debt collection, fair debt collection practices act, credit card debt relief oregon, debt, debt collection in oregon, credit cards