Debt Settlement...How Does it Work?

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

Here's how a debt settlement program works:

 

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

You know how that can go....

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

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

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

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

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

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

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

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

Just to name a few!

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

NOW WHAT DO YOU DO?

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

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

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

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

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

A Debt Settlement Program may be the answer. 

Here's the basics:

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

Two things will happen:

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

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

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

STOP Collection Calls Free Sample Letter

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

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

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

Why would they do that?

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

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

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

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

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

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

Example:

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

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

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

Sure, check this out:

Recent Settlements See what we have  done for our clients!

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

Does this happen over-night?  

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

DEBT FREE!

But, doesn't that sound great?

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

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

What to Do if You Receive a Summons for Unpaid Bills

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This will explain:

STOP Collection Calls Free Sample Letter

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

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

The SUMMONS is going to say something like:

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

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

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

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

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

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

Debt Settlement

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

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

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

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

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

Recent Settlements See what we have  done for our clients!

Stipulated Agreement

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

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

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

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

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

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

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

How to Deal With a Wage Garnishment in Oregon (or most any state!)

If you think it is hard to make ends meet now, what would you do if you had 25% of your paycheck taken as a result of a garnishment?

22853064975_8c547f714f_m.jpgBefore I show you how to deal with a wage garnishment here in Oregon (or for most any state), let's get some things straight:

THIS GARNISHMENT DIDN'T JUST HAPPEN!

I can't tell you how many times one of our clients calls to tell us that a debt collector or creditor just garnished their paycheck and they had no idea it would be happening.

OK, I know that in some VERY RARE CASES, they may have not received or seen the SUMMONS that came in person or by registered mail, but in most cases, they got it, but just ignored it.

Brief review of the collection process and how this happened:

If you find yourself in a very difficult financial situations due to a number of things, such as:

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

...and, you simply cannot keep up with the minimum payments required by your creditors, here's what usually happens:

When you miss a scheduled payment, you may get a phone call or letter.

If you don't reply or miss another, you ABSOLUTELY will get a phone call or letter....lots of em'!!!

(I'll show you how to ultimately put a stop to these calls later, but for now, let's keep moving through the process that could lead to a WAGE GARNISHMENT.)

The creditors wants to do whatever they can to get you to start making payments again.

You may get a letter offering to "bring your account current if you make "such-n-such" payment by a certain date.

Or, they may say to call them to look into a "Hardship Program" (which I really don't like).

But if you just can't afford any payment after paying  rent, utilities and buying groceries, WHAT NOW?

In most cases, the original will CHARGE OFF the balance of the debt you owe them.

This means that they are going to report to the 3 major credit bureaus:

  • Experian
  • Equifax
  • TransUnion

...that they didn't pay them back as promised and they have lost a lot of money!

Your account will most likely be transferred or sold to a debt collection agency.  This may even be a Law Firm that only deals with debt collection.

Now, you start getting calls and letters from the debt collector, but the good news is that now, you can LEGALLY STOP THE CALLS.

As long as your account was with the original creditor, they had the right to call you about your account.

But, once that account is charged off and placed with a collection agency, you have the right, according to the Fair Debt Collection Practices Act, to demand that they stop calling you. 

The letters will continue, but the annoying, and sometimes HARASSING phone calls will stop.  Here's how you do it:

STOP Collection Calls Free Sample Letter

But, just because they have stopped calling doesn't mean that they have stopped trying to collect!

If they cannot get you to start making payments to them (they may even offer a reduction in the balance...called a SETTLEMENT) then they may decide to FILE A CLAIM against you in your county's courthouse.

The debt collector's CLAIM say that you have not fulfilled the promise to repay this debt and they are going to seek legal action against you....sue you!

You will get a SUMMONS, and it will state all of the above and it will state that you have 20-30 days (varies by state) in order to give an ANSWER.

OK, lots of "big words" there, so let me give a simple definition:

SETTLEMENT  

This is when the creditor and/or the debt collector agrees to a substantial reduction of the balance to settle this account, once and for all.

If your interested, here's some actual examples of settlements we have negotiated for some of our clients:

Recent Settlements See what we have  done for our clients!

CLAIM   

The Debt Collector or in some cases the original creditor files a claim in court that you owe them money. When this happens, you get "served" a SUMMONS.

 

SUMMONS

The summons names you as a DEFENDANT and the Creditor or Debt Collector is the Plaintiff.  They have "claimed" that you owe this debt unless you can prove it, and I mean, absolutely prove it with copies of canceled checks, etc.

 

ANSWER

If you know, for certain AND CAN PROVE IT....FOR CERTAIN, then you have the legal right to file AN ANSWER with the court.  Not only does it cost you a FILING FEE (I believe it is about $165 here in Oregon), it has to be legally correct. 

In other words, you may think about hiring an attorney to prepare the ANSWER. And, of course, that costs more money!

But, IN MOST CASES, you really do owe the money, so giving an "ANSWER" is not necessary.

So, NOW WHAT?????

If you cannot negotiate a settlement or arrange a repayment agreement, the Plaintiff (debt collector), may decide to just go forward with a court date in order to be awarded a JUDGMENT.

Once the JUDGMENT has been awarded to the Plaintiff, they can apply for a WRIT OF GARNISHMENT.

This Writ of Garnishment is sent to your employer and your employer has no choice but to honor it.  This means that they are going to withhold (after all of the other withholdings) another 25% of your net, take-home paycheck!

So you see, this garnishment didn't just happen....there was a long process and it could have been stopped numerous times along the way!

What too many people do when they finds themselves in a terrible, financial hardship is to "hide their head in the sand" rather than seek numerous solutions.

Believe me, the last thing most creditors what to do is to have to spend the time and money to file a claim, follow up with calls and letters to you, and possibly spend more money in setting a court date, paying an attorney to represent them, etc.

Last week, we had a client call us to say that she had neglected to act on a summons she had received and the creditor (plaintiff) had been awarded the judgment....acted on the judgment....and her HR department sent her a message that her check would be garnished about $500!

We were able to contact the attorney for the collector and negotiate a repayment plan (you rarely get much, if any of a reduction/settlement after a judgment has been awarded) whereby our client agreed to pay only $200 per month until the balance was paid.

She could not handle the loss of $500, but she could make $200 work.

FINALLY....

Here in Oregon (or in any state for that matter), the best way to deal with a garnishment is to not let it get to that state.

But, if it has, then you may be able to get a reasonable repayment agreement in place.

If you need help or guidance, let us know:

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Tags: debt settlement, hardship plans, summons, debt collector, oregon wage garnishment, debts

You've Enrolled in a Debt Settlement Program....Now What?

Now that you've made the decision to enroll in a debt settlement program, what happens next?

 

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Once you have looked at all of your options and decided to enroll in a debt settlement program, you cannot just sit back and do nothing. 

Here is what you need to be doing:

Debt Settlement is the best option for those who have accumulated too much debt and cannot keep up with the minimum required payments.

In a nutshell, most (if not all) of your unsecured accounts will ultimately be turned over to a collection agency.  This unusally occurs about 120-180 days from your last payment.

At first, you will get several calls and letters from the debt collector.

These calls can be very frustrating and annoying, so you should take advantage of a law from the Fair Debt Collection Practices Act (FDCPA) that says that if you make a written request to the debt collector to stop calling you, they must stop or face very serious fines from the Federal Trade Commission!  Here's how to do that:

STOP Collection Calls Free Sample Letter

If the calls do not stop, then you should contact your state's attorney general's office to file a complaint.  If you live in Oregon (as we do), here is the link:

How to File a Complaint with the Oregon

You will continue to receive letters from the debt collector.

It is VERY IMPORTANT that you send the latest letter (s) to the Debt Settlement Company you have retained to negotiate settlements for you.

The easiest and fastest way to do this is by email or fax.  But, if you cannot email or fax, then you can mail the letters.

When you enrolled in the debt settlement program, you stopped making payments to your creditors (most likely, you had done so already) and began making a payment to a FDIC Insured Settlement Reserve Account through your debt settlement company.

As your fund grows, the negotiator will begin contacting your creditors to work out a reasonable settlement.

Depending on a number of circumstances, your settlement should be somewhere around 50% of the current balance.

If your reserve account has enough funds, the settlement may be paid in a lump sum.

But, if not, a good negotiator can still negotiate a very good settlement and pay it over a period of time (with no additional interest or fees).

Here are a few examples of actual settlements we have negotiated for our clients:

Recent Settlements See what we have  done for our clients!

Once a settlement has been completed, the creditor/debt collector is supposed to report that the account has a $0 balance and was "settled-as-agreed" to the three major Credit Reporting Bureaus.... Equifax, TransUnion and Experian.

Unfortunately, not all debt collection agencies follow through and your credit report may be showing incorrect information.

About 2 months after the settlement is completed, you should request a FREE Credit Report to make sure it is being reported correctly.

Click on this link to request a Free Credit Report:

ANNUAL CREDIT REPORT

Your debt settlement company will provide you with proof of payment and help you open and complete a dispute.

Sometimes, a debt collector may decide to FILE A CLAIM with your county court about your debt.

If this happens, you will receive a SUMMONS.

Please DON'T PANIC!

The summons will state that you have a limited time to APPEAR AND ANSWER the claim against you.

It sounds like you will have to go to court, but this is not so. 

An ANSWER is a legal response to the CLAIM that you can prove that you do not owe the debt.

Most of the time you know you owe the debt and therefore you will not need to do anything.

Again, and this is VERY IMPORTANT, if you receive a summons, contact your debt settlement representative right away!!!!

The debt settlement company will contact the attorney for the debt collector and most likely will still work out a reasonable settlement.

I can't stress enough how important it is NOT TO IGNORE a summons.

After helping people for 15 years, the only time a client has a WAGE GARNISHMENT or BANK LEVY is that they failed to inform us that they had received a SUMMONS!

A quality, professional debt settlement company should welcome and answer any questions or concerns you may have.

You should be able to contact them via phone or email and receive a reply in a short period of time.

 

Here are some things to look for in a Debt Settlement Company

 

As time goes by, one by one, your debt will be settled.  Depending on the total amount of debt you had and how much you could afford to deposit into your settlement reserve account, your program may take anywhere from 36 - 60 months.

Remember....

The goal of debt settlement is to...

  • protect you from wage garnishments or bank levy
  • prevent you from having to resort to bankruptcy
  • help get you out of debt

Yes, getting settlements that substantially reduce the balances is great, but not necessarily the main goal.

FINALLY:

A good communication line between you and your debt settlement representative is critically important to a successful program.

Although it may seem like it is taking a long time, ultimately you will be debt free and your credit scores will begin to improve...but it just doesn't happen over night!

Here is what some of our former clients have said:

 

A FEW TESTIMONIALS

 

If you are just beginning your search for information about debt settlement, we can help. Just click on the button below:

 

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Tags: wage garnishment, debt settlement, Credit Score, summons, debt collector

What Can You Do to Improve Your Credit Score?

You have several options for improving your credit score. 

Take a few minutes to see what you can do!

It seems like everywhere you turn you see an ad about your credit score. 

Some of don't just offer to get your credit score (for Free or small monthly fee), but also may claim to be able to improve your credit score dramatically in a short period of time.

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Although there are several companies that will provide you with a Free Credit Report, did you know that we all can get a FREE CREDIT REPORT annually?

So, you don't have to go through a third party company or pay for this service if you don't want to.

But let's say that you already have your credit report and not only is your credit score a little lower than you thought it was, you also see some errors on what is being reported.

What can you do to improve your credit score?

Before we get started, you must understand that a credit report is nothing more than a snapshot of you credit history at a particular point in time.

Lenders rely on the information contained in a credit report to determine if and how much money they are willing to loan you.

I wrote an article/blog recently addressing the concept of "Pay for Deletion" on a credit report.  Basically, you offer a creditor or debt collector a sizable settlement to not only settle the account for less than the balance, but also to delete the account from your credit report.

I'm not going to get into that here, but if you'd like more information, click on my blog link above.

There are several factors that go into calculating our credit scores:

Payment History, which accounts for about 35% of your credit score.

The first thing any lender wants to know is whether you've paid past credit accounts on time or are late or just have not made any payments in a long time!  Your payment history is very important!

How much Credit are you paying on now?

Just because you have credit accounts now doesn't necessarily mean that you cannot get more credit.  But, if you have $25,000 of available credit and have used up $20,000 on various credit accounts, you are using 80% of your available credit now and may not be able to get more.

How long have you been using credit?

To a lender, the longer you have been using credit, and more importantly, how you have handled your credit in the past, gives them a pretty good idea of how you are going to handle the credit you are applying for now.

What type of credit are you using?

Your credit score takes into account the various "loans" you have, such as:

  • Mortgage
  • Auto
  • Student
  • Revolving, etc.

New credit, or actually, too much new credit, may hurt you credit score.

Beware of opening and/or applying for too many new credit accounts in a short period of time!

Many people believe that opening several credit accounts (store cards, credit cards, etc.) will help them get better scores.  Actually, this is a negative!

If you have a couple or even a few cards or accounts, don't try to get too many more in short period of time.

OK, so you check out your credit report and are disappointed with the score and see errors as well.

Each of the 3 major credit reporting bureaus allow you to DISPUTE legitimate errors on your credit report. 

Items such as:

  • An account showing a balance that you paid off a long time ago.
  • An account that was in collections that you paid off or settled but there is still a balance showing.
  • An account with a balance that you have not (or been unable to make any payments on) for longer than your state's Statue of Limitations for collection of credit accounts.
  • A judgment that you had paid off or settled.

Although creditors and debt collectors are supposed to report that an account has been paid off, settled or satisfied to the 3 major credit bureaus as well as to the court where the judgment had been recorded, many time they do not follow through!

First, you MUST HAVE PROOF that shows that there is an error and you are requesting that it be corrected.

I know that there are many so-called "debt repair" companies that claim to be able to remove negative information and improve your credit score dramatically.

BE VERY CAREFUL OF THESE TYPES OF CLAIMS!

The Federal Trade Commission has some great information for consumers!  They have an article entitled, "Credit Repair: How to Help Yourself", where it states:

You see the ads in newspapers, on TV, and online. You hear them on the radio. You get fliers in the mail, email messages, and maybe even calls offering credit repair services. They all make the same claims:

“Credit problems? No problem!”

“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

“We can erase your bad credit — 100% guaranteed.”

“Create a new credit identity — legally.”

Do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the Federal Trade Commission, the nation’s consumer protection agency, say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.

I agree 100%!

Once you have copies of canceled checks, a statement from the creditor or debt collector show a $0 balance or that the account has been "settled-as-agreed", then you need to turn them into a .pdf document.

In a minute, you are going to go online to open your dispute. (Yes, you can mail or fax your dispute, but I don't recommend it.)

You want to be able to clearly show where the error is by making a copy of the page with the disputed item circled. 

PLEASE DO NOT SEND YOUR ENTIRE CREDIT REPORT!

The credit bureaus deal with thousands of disputes daily and what you want to provide to the agent who is reviewing your dispute is clear, easy to understand documentation that there is an error and they will correct it right away!

So, BEFORE YOU GO ONLINE TO OPEN YOUR DISPUTE....  you need:

  • Brief, concise explanation of why you are disputing this error.
  • Clear, easy-to-understand proof that the account has been paid as agreed.
  • Or, proof of your last payment showing that the statute of imitations has expired and therefore the item or account should be removed.

Once you have all of this saved as a .pdf document (if you don't know what that is...get some help!), then go online. 

Here are the links to the 3 major credit reporting agencies:

Equifax Dispute

 

TransUnion Dispute

 

Experian Dispute

 

If you have followed these instructions, you should get a letter or see online that the disputed item has been corrected.

If not, then contact them until it is!!!!

Good luck!

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Tags: debt settlement, Credit Score, credit repair, credit report, debt collector, credit cards

I've Been Garnished...What Can I Do?

Wage garnishment or a bank levy is a terrible situation to be in.  If you've been garnished, here are some things you can do to stop the garnishment:

We get calls each week from someone (we are in the Portland, Oregon area) that has been garnished or has been notified by their payroll office that they are going to be garnished.

As if things were not bad enough all ready, WHAT CAN YOU DO NOW?

 

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Just to lay some groundwork...

A WAGE GARNISHMENT can only occur AFTER A JUDGMENT has been awarded to the plaintiff.

A lot of people are mistaken in thinking that just because one of your credit accounts has been charged off and assigned or sold to a collection agency, that they can come after your property.

THAT IS JUST NOT TRUE!

FIRST....

When you get behind on paying your credit accounts on time, there is a sequence of events or a time line that must take place.

You will get calls and/or letters from the original creditor trying to find out what's going on.  By-the-way, as long as your account is still with the original creditor, you can't do anything to stop them from calling.

But, once that account is charged off and transferred or sold to a debt collector, you can.  I show you how later.

NEXT...

Once the account is placed with a debt collector, you will start getting calls and/or letters from them.

If you have some funds and/or a little money left over to make a reasonable monthly payment, you may want to discuss this with the debt collector rather than just ignoring the calls.

You may be able to work out a SETTLEMENT, which is a reduction of the balance.

This settlement may have to be in a LUMP SUM or possibly in SEVERAL PAYMENTS.

To get an idea of what a SETTLEMENT AGREEMENT  looks like, click on the button:

Recent Settlements See what we have  done for our clients!

But, if you do not have any additional funds and are sick and tired of the relentless calls, you can put a stop to it now:

STOP Collection Calls Free Sample Letter

If you cannot afford anything to put towards the debt you owe, and you are not taking their calls or responding to their letters, the debt collector may decide to FILE A CLAIM.

An attorney is retained to file the claim in your county's courthouse.

Once the claim is filed, you will receive a SUMMONS.  Although this can be a frightening experience, DON'T PANIC!

The summons will state that you the claim against you (you are the defendant) by the creditor or debt collector (this is the PLAINTIFF).

It will also state that if you want to contest the claim, ( called give an ANSWER), you must do so within a short time period (usually 20-30 days after receiving the summons).

If you can prove that you do not owe the debt, then you should give an answer to the court within the time specified. 

This costs a hundred dollars or more and must be in the correct legal documentation, so you may need an attorney also

RECAP.....

  • You could not keep up with the payments due on some or all of your accounts. This may be due to a number of circumstances, but here you are.
  • You can not work out a reasonable repayment plan or settlement with the original creditor, so you account is assigned or sold to a debt collector.
  • You cannot afford a settlement with the debt collector and the debt collector files a claim and you receive a summons.

NOW WHAT??????

Most of the time the plaintiff will be awarded a DEFAULT JUDGMENT by the court.

Once the JUDGMENT has been entered, the plaintiff has the option of seeking a WRIT OF GARNISHMENT to get back what is now owed.

Additional interest, fees and court costs have now been awarded to the plaintiff as well!

If you are employed and receive a check (W-2 wages), then the writ of garnishment is presented to your employer and/or payroll department.

You may be notified, but you may just be shocked to see that your payroll check has been reduced by 25%!

(I'll give you some advice on what you may be able to do about this in a minute.)

If you receive income from commission or what is reported for tax purposes as 1099 INCOME, then the plaintiff may seek to get a bank levy on ONE OR ALL OF YOUR BANK ACCOUNTS!

This can really be DEVASTATING!

We have had people call us after their bank account(s) were depleted and they could not by groceries, pay rent, etc.!

The laws of your state (I am in Oregon and most of my clients reside here) will allow numerous EXEMPTIONS to wage garnishment and/or a bank levy.

Here are some of the "basic" exemptions (I give you a link to a more detailed list below):

  • Exempt wages....If you earn less than $1,000 a month, most likely this is exempt.
  • All Social Security Income
  • Retirement Income (very important information below)
  • VA benefits
  • Any Public Assistance (welfare)
  • Unemployment benefits
  • Disability benefits
  • Worker's compensation benefits
  • Spousal or child support or any other support you receive for you or your dependents.
  • Many "property" exemptions.

 

If you live in Oregon, you can get detailed information here:

Basic Exemptions from Wage Garnishments or Bank Levies

If you are retired and receive income from your 401(K), IRA, Pension, etc. as well as Social Security, those incomes are exempt from garnishment or levy, BUT BE AWARE!!!!!

Most people who are retired have their Social Security checks and any other retirement Income checks automatically deposited in their bank.

In May of 2011, a law was passed that protected Social Security and Retirement Funds from creditors, via garnishment/levy.

HOWEVER.... (THIS IS REALLY IMPORTANT!)

As long as your Social Security and/or "Retirement" income is deposited in a bank account that has NO OTHER FUNDS CO-MINGLED, then your bank will not "FREEZE" your account if they receive a writ of levy.

For example:

Let's say you are retired, receiving a modest Social Security check and a small Retirement check. Together, they are automatically deposited in you bank account.

The problem is that you just don't have enough money each month, so you take a part-time job earning $500 or so extra each month.

You deposited that extra $500 together with the other Retirement funds and not that account has CO-MINGLED FUNDS and if a writ of levy were presented to the bank, the banker would have no recourse but to freeze the account (you cannot withdraw ANY FUNDS) and would have to send the amount of the levy to the creditor!

Or.....

Let's say you took some of your retirement funds that are automatically deposited in you checking account and transferred them to a savings account.  Those funds in the savings account are now SUBJECT TO LEVY!

 

LESSON HERE....

If you are retired, and receive a summons and/or judgment, you need to sit down with your banker and make sure that you funds are protected from any future/possible levy.

 

FINALLY....

If you have been garnished, it may not be too late to put a stop to the garnishment.

Contact the attorney for the creditor/plaintiff to see if they would be willing to accept a reasonable repayment plan rather than continuing with the garnishment.

For most people, losing another 25% of their income when things were financially tough anyway, would cause them to seek BANKRUPTCY protection.

So, the creditor/plaintiff might be open to another option rather than wage garnishment.

We have been able to help many people, just like you to stop a garnishment, but time is critical.

If you would like help or advice, just let us know:

 

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Tags: wage garnishment, debt settlement, Bankruptcy, stop creditor calls, debt collector, bank levy, debts

"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!

bunch_of_credit_cards.jpg

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.

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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!

Recent Settlements See what we have  done for our clients!

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

What is a 1099-C and What to do About it!

If a creditor settled or wrote off a debt for you in 2015, you may get a 1099-C.  Here's what you can do to avoid paying any additional tax...

Debt settlement is an option that we use and you can use to help avoid bankruptcy and become free from the burden of too much debt.

Basically, is a debt settlement, the creditor or in most cases a debt collector who has purchased the debt agrees to accept an amount far less than the actual current balance.

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If the "forgiven" amount is greater than $600, then the creditor or debt collector may report it to the IRS.  They don't do it in every case, but you need to be aware of what to do about it if it happens to you!

There a couple of different looking 1099-C forms.  Here is an actual form one of our clients received and I'll walk you through the process of how to file the proper forms to exempt the settlement/forgiveness when you file your taxes.

Here is an actual 1099-C one of our clients received.  Click to view:

1099-C

The actual balance at the time of the settlement was $3,041 and the settlement was for $788, saving this client $2,253!

The 1099-C reflected this and you can see that in box 2, the amount is being reported as "Amount of debt canceled".

If this client did not file the proper forms with her 2014 taxes, she would have had an additional $2,253 added in as additional income and based on her 30% tax bracket (average net federal), she would have to pay an additional $676 of tax!

Here's what she did:

According to IRS publication 4681, she needed to prove that "at the time of forgiveness (settlement), she was INSOLVENT.

All she (and you) needed to do was to list all of her assets vs. liabilities to see where she stood.

This doesn't have to be a "fancy" spreadsheet or anything, but just write down (again, at the time of the settlement/forgiveness) your assets/equity on one side and your liabilities/debts on the other.

Something like this:

                      Assets:                                           Liabilities:                                  

         Home value:          $  0 (she rents)          Credit Cards total (including this debt):    $15,000

         Auto value today:   $ 5,000                      Auto loan:           $1,000                            

         Savings:                 $    250                      Student loan:      $ 10,000

         Personal assets:    $ 2,500                      Medical bills:       $     500

         Total Assets:          $ 7,750                      Total liabilities:     $ 26,500

It is clear that her Liabilities were greater than her Assets, therefore the amount forgiven should be exempt from taxation. 

NEXT:

She downloaded IRS Form 982 and followed the simple instructions we gave her:

In Part 1, on line 1a, she marked the box with an "X".

In the same Part 1, on line 2, she wrote in the amount that was forgiven, $ 2,253.

That's all on the Form 982. 

NEXT.....

She could have just included that with her tax return and in most cases, that would have been sufficient.  But, I recommend writing a brief, legible explanation of what caused your situation, etc.  Again....very brief neatly written (doesn't have to be typed).

Something like this:

In 2014, I was laid off from my job of 15 years!  As I looked for work, I had to rely on credit to get by.  When it got to the point that I just couldn't keep up with the payments, I considered bankruptcy. 

Fortunately, the bankruptcy attorney I went to see referred me to a Debt Management Company who helped me pay off and/or settle my debts.

 

Finally....

You have:

  • Asset vs. Liabilities worksheet
  • IRS Form 982 completed (yep, just two boxes)
  • Brief, legible handwritten explanation of your circumstances

 

Now....

  • Make a copy of these along with your tax return for your files.
  • Mail your tax return along with the documents above.
  • That's it!

 

If you would like more information or need any help, click below:

FREE DOWNLOAD 1099-C PACKET

 

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Tags: debt collector, credit card, 1099-C, debts, additional taxes

Debt Control: 4 Programs That Work!

Debt...although a necessary evil in today's economy, it can be devastating.  Here are 4 Debt Control programs that may work for you!

controlling debt control

Are you having a hard time with any of these?

  • Credit Cards
  • Medical bills
  • Utility Bills
  • Personal Bank Loans
  • Auto Loans
  • repossession Deficiencies
  • Judgments

 

If you do (and millions of people are just like you), you should consider one (or more) of these programs:

DEBT ACCELERATOR PROGRAM

There are all kinds of estimates or studies that have been done to try and calculate how many people are carrying debt loads that are becoming difficult to handle.

The average US household credit card debt is estimated to by around $15,000.  Now, some families are carrying very large amounts of debt and some have less, but the point is... we (most people) are carrying far too much debt. 

I  believe it was Dave Ramsey who either first developed or made popular the idea of the Debt Snowball Plan.  Sure, there are some critics of this type of plan, but usually those critics have not been dealing with people (and especially people's emotions) for very long.  While I don't agree with everything he promotes, the fact that he is helping people get control of their debt is admirable, and I applaude his teachings.

Basically, in a DEBT ACCELERATOR PROGRAM (my term for a Roll-Up or Snowball Plan) you are going to be paying a little more that the total required minimum payments of all of your accounts. Don't think you can find a "little more" money each month?

  • How about making a few changes in your lifestyle?  For example:
  • Daily StarBucks coffee = $5.00 x 30 days/month = $150 per month
  • Fast food lunch at say $6 bucks x 30 days/month = $180 per month
  • Health club membership you never (or rarely) use = $25/month

Get the idea??? If you are serious about finding some extra money to pay off your debt in a shorter period of time, you can do it!  OK, I'll get down from my "soap-box"! 

Let's say you have a total monthly minimum required payment of $500.  Although you have been paying consistently for several years, the balances are barely going down!

Of course, you know (or should know) why.  The credit card industry has tricked the average consumer into thinking that they are "repaying" their debt by making the minimum required payment each mont.  But, if you will take a close look at your next credit card statement, you're going to be shocked (outraged is better) to learn that your balance was hardly reduced at all.  Here's why:

Hypothetical Credit Card:

  • Balance                                    $7,000
  • APR                                             19%
  • Minimum Payment is 2.25% of balance

$7,000 x 2.5% = $175

19% / 12 (months in a year) = 1.583% interest on $7,000 = $110.81 (THAT'S RIGHT...DO THE MATH)

So, when you send in your "minimum payment" of $175, here's what next month's statement will look like:

Previous Balance                      $7,000.00

Interest charge                         $  110.81

Payment received                    -$   175.00

New Balance                            $6,935.81

YOU GOT IT!  You sent $175 and your balance was only reduced by $ 64.81!!!

No wonder it takes peope 10, 15 or more years to pay off the average credit card (especially if you continue to only make the "minimum payment required"!

But, by making a few changes in your spending habits, you find an extra $100 per month.  By adding an additional $100 per month to the $175 (and not reducing the $175 as you balance goes down), you can pay off that credit card in just 33 months, saving you thousands in interest!

Now that you have that one paid off, YOU DON'T LOWER THE TOTAL MONTHLY PAYMENT, you just reallocate or add it to the next credit card, and so forth, and so forth until all of your credit cards are paid off!  DOESN'T THAT SOUND GREAT!

But, what if you not only can't afford the total minimum payments, you don't have any extra funds for a Debt Accelerator Program?

Then, a DEBT SETTLEMENT PROGRAM may be the answer!

So many people have run into some very difficult times, financially.  This may due to:

  • Loss of employment
  • Too little fixed income after retirement
  • Death of a spouse or partner
  • Disability
  • Divorce
  • And many other "financial challenges" that you may be facing

Does that mean that you can never recover or be DEBT FREE once again?

No, in fact, debt collectors are usually more than willing to SETTLE a debt for less than the total balance, depending on your particular circumstances.

When you fall behind on your payments to your creditors, as you know, the calls start becoming more frequent and frustrating! 

Did you know that once your account has been transferred to a debt collector, you can legally make them stop calling?

STOP Collection Calls Free Sample Letter

After you account is with a debt collector (may be a "debt purchaser"), you will need to make a SETTLEMENT OFFER of much less than the total balance.  Now, here's where it get's tricky.

A professional debt collector usually receives a bonus or commission depending on how much they can get you to pay.  In some cases, they start out very firm and tell you that they cannot offer a discount at all (not true).  Sometimes, they are willing to offer 70% or so, and you may have received a letter with the offer.

My experience with dealing with debt collectors over the last 12 years is that they are all working on different "numbers" (for lack of a better word), meaning that they have certain goals their bosses give them and they may or may not be able to go as low as you want.

If you get an offer that works for you, MAKE SURE YOU GET IT SENT TO YOU IN WRITING! I don't know how many times we get a client who made a "settlement agreement" over the phone, made all the payments as agreed, but found out that the debt collector denied ever making the agreement and demanded the remainder of the full amount!

For more information about "how" and "if" Debt Settlement really works, CLICK HERE.

FEDERAL STUDENT LOAN FORGIVENESS PROGRAMS

If you are like thousands upon thousands of current, former or parents of students with too much Federal Student Loans to repay, we have SOME GOOD NEWS!

Again, as with any "government" program, depending on your particular circumstances, you may qualify for one of these new programs. Basically, if you income falls within certain parameters, you may be able to have anywhere from NO PAYMENTS to maybe only a $100 or so.  Make these payments for 20 years, and the remainder of the balance will be forgiven! 

And, if you are in or go into some sort of "public service" career, you may only need to pay the reduced payments for 10 years!

Trying to determine not only IF YOU QUALIFY, but HOW MUCH YOUR PAYMENT WOULD BE, is not very easy (remember....government...). Let us help:

877-492-4109

Finally, if your financial circumstances are so bad that you cannot qualify for any of the programs above, then you should consider BANKRUPTCY PROTECTION!

Notice I said "bankruptcy protection", as in PROTECTION FROM YOUR CREDITORS!

If you ignore the collection letters and calls and are not able to work out a repayment plan or settlement, the creditor or debt collector may decide to FILE A COMPLAINT and then you would receive a SUMMONS.

If you ignore the summons (as so many people do), then the creditor (or PLAINTIFF), will most likely be awarded a DEFAULT JUDGMENT.

Now the credior has the legal right to apply for a WRIT OF GARNISHMENT, not only for your INCOME, but possibly your BANK ACCOUNT(S).

You should seek the cousel of a BANKRUPTCY ATTORNEY right away.

So, there are 4 Programs to control you debt:

  • Debt Accelerator Program
  • Debt Settlement Program
  • Federal Studen Loan Forgiveness Programs
  • Bankruptcy

You don't have to live in fear or frustration. Get some help today!

 

 

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Tags: credit card debt, Bankruptcy, debt collection in oregon, debt collector, stop the collection calls, debt settlement in oregon