Can Debt Settlement Improve My Credit Score?

Debt Settlement is an option to clear old debts and improve your credit score.

When you find yourself faced with a very stressful financial situation, there are only a few options:



     Consolidation Loan

     Debt Management

     Debt Settlement





A consolidation loan may be:

  • Second Mortgage on your home or other property
  • Personal loan with your bank or credit union
  • Balance transfer from a credit card offer

Getting a second Mortgage or even what's called an "Equity Line of Credit" through your bank or another lending institution, may be possible with lower than normal credit scores.

Just be very careful and do your homework and math to make sure that the lender is not charging you such a high rate of interest or fees that this type of loan makes no sense in the long run!!!

But, a Consolidation Loan will not really change your credit scores right away!  Here's why:

The calculations to determine a credit score in fairly complicated, but one of the most important or "weighted" portions of that calculation is the ration of current debt to the total available debt you have.

For example:

Let's say you have 5 credit cards with a total available credit of $20,000.

You have maxed-out 4 of the 5 for a total of $15,000 of debt.

You "Debt Ratio" looks like this...

                   $15,000 divided by $20,000 equals a 75% debt/available debt ratio

That's high as far as the Credit Bureaus evaluate your "credit worthiness" with a credit score!

For more information, check out:

How Are Credit Scores Determined?

So, even if you do qualify for a Consolidation Loan, your credit score may not improve quickly!



Debt Management is what we used to be referred to as Credit Counseling a few years ago.

In a Debt Management Program, each of your creditors agrees to lower you interest rate and may forgive or bring current late fees, etc.  Each creditor is a little different.

But, consider this:

  1. Your total monthly payments on all of your debts may not be less!
  2. But, being enrolled in a program like Debt Management, will not quickly improve or change your credit scores!
  3. If you miss a scheduled payment, you may void the agreement and you are right back where you started. 

Before you enroll in one of these programs, you might consider and even do much better by looking into a DEBT ACCELERATOR PROGRAM.



If you qualify, a Debt Settlement Program may give you all of the results you are looking for:

  • ONE Lower Monthly Payment
  • Total Balances of you debt reduced by 50% or more!
  • Debt Free in about 3-5 years, depending on your particular circumstance
  • Ultimately Improve your Credit Score!

A Debt Settlement Program is for someone who is going through a very tough time, especially in the financial area!

  • Loss of employment or cut in pay
  • Divorce or other family upheaval
  • Death of a spouse or loved one
  • Limited income after retirement
  • Disabled or suffering from severe illness

Most of your accounts are either delinquent or about to become severely "behind".

You've probably had one or more of your accounts turned over to a Debt Collector and are enduring the constant phone calls and letters.

By the can put a stop to those calls now:

STOP Collection Calls Free Sample Letter

Rather than continuing to make minimum monthly payments on your accounts, you will be making a monthly payment that FITS YOUR BUDGET into a FDIC insured bank account.

As these funds are growing, negotiations with your creditors and debt collectors begin to arrange a SETTLEMENT AGREEMENT.

The final settlement amount varies, depending on a number of circumstances, but settlements of 50% or less are not uncommon.

But, will Debt Settlement Improve your credit score?

Yes, but over time!

It may be hard to understand, but a potential lender is looking for a couple of key items in a credit report, such as:

  • How much credit are you carrying now?
  • Length of employment?
  • Credit History...not just late payments, but how long and how have you handled your credit payments over time?
  • What is your "credit worthiness"...If a loan is granted, what is the likelihood that you can and will repay as agreed?

Just because you have fiancial trouble now or in the past IS NOT an automatic DECLINE OF CREDIT!

When you have had all of your accounts settled with a ZERO BALANCE, you will be offered NEW CREDIT as your Credit Scores will have improved.


FREE  Debt Elimination Summary


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Tags: debt settlement, Credit Score, debt collectors, debt management, credit cards

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!


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!!!!


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!


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:



FREE  Debt Elimination Summary




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

When It Comes to Debt Settlement, One Size Does NOT Fit All!

A recent article in our Portland, OR newspaper, The Oregonian, stated that one in every three people in America are facing debt collection.  If you are one of the 33%, what are your options?

shop now pay laterSadly, when faced with the annoying and often harassing tactics used by many debt collectors, people are often given only one choice...debt settlement.

But, after over 11 years helping people deal with having too much debt, I want you to know that although debt settlement is often a very viable choice, and often the only choice to prevent bankruptcy, it is not the only choice. In other words, ONE SIZE DOES NOT FIT ALL!


Unfortunately, many debt settlement companies ONLY offer and therefor ONLY recommend debt settlement as the solution to dealing with a severe debt load.

Let's briefly look at the various options:

There are so many different possible scenarios or various financial circumstances that people are facing that a quality, experienced company that assists people with debt will do a thorough analysis to determine the proper program.  It is much like a doctor who should do a thorough exam before prescribing a drug or procedure!

The first step is to determine what kind of "DEBT" you are dealing with.

For example, SECURED DEBT, such as a mortgage, auto loan, or any other loan that is secured by property (usually the property itself), must be dealt with differently than UNSECURED DEBT.

Some of the more common forms of UNSECURED DEBTS are:

  • Credit Cards
  • Store credit cards
  • Personal or Signature bank loan
  • Medical bills
  • Private (not Federal) Student Loan
  • On Line shopping sites such as QVC, EBay, and others that offer credit

Once we have identified what type of debts you are facing (and there are usually a combination), then we need to determine where you are FINANCIALLY.  In other words, after you pay all of your basic bills to or rent (all secured debts), as well as... food, utilities, gas, medicine, insurance, etc., is there any money at the end of the month to pay towards those debts?

The easiest way to determine where you stand is to complete a simple, Household Budget Worksheet.  

Budget Worksheet FREE Download here!

Once you've detemined where you stand, then we can look at the various options.

A DEBT MANAGEMENT PROGRAM (often referred to as Credit Counseling), has been used by people with debt problems for years.

This program is designed for someone who is currently making all of the minimum payments required on their unsecured debts, but because of the HIGH INTEREST RATES (APR) and ANNUAL FEES and OTHER FEES (late fees, over-the-limit fees, etc.), realize that they are not making any progress to actually paying off these debts.

For example...

Did you realize that if you have a credit card with a balance of say, $5,000 and an annual percentage rate (APR) of 19%, it may take you 15-20 years or more to pay the card off by making the monthly minimum monthly payment required.

For more information:  DEBT CONTROL: 4 PROGRAMS THAT WORK!

If you are barely making all necessary payments (secured) as well as your monthly minimum payments, but there is nothing left over, then a Debt Management Program may be best for you.

But, if you actually have (or can make some living adjustments to find) and extra $100-$200 per month to put towards your debts, then you should consider:


Originally called by various names such as a "Snowball Plan" or a "Roll Up Plan", in a DEBT ACCELERATOR PROGRAM, you are going to pay off your debt in an average of 4-5 years without enrolling in a Debt Management Program (which may or may not harm your credit score).

Basically, in a Debt Accelerator Program, you will be making the normal minimum payments each month as before, but you are going to increase one of your debts by say $150/month.

There are several theories about whether you should accelerate the highest balance or interest rate first, but I don't want to get into that here.

I recommend that you start with the lowest balance first, make the minimum due plus the additional $150, and pay that one off'll be amazed!

And, not only amazed, but excited to go to the next debt!

Now, you take the former minimum payment (say it was $50) and after adding the $150, were making $200 per month instead of just the $50 and you add that $200 to the next card or debt's minimum due.  Let's say the next one is $75.

Now you are making a total of $275 towards the next card ($50 + $150 + $75 = $275).

Get the idea?  Soon, you keep "Accelerating" each debt and you will be DEBT FREE in a much shorter time and save thousand of dollars in interest and fees!


What if not only do you not have any extra money to put toward a Debt Accelerator Program, you can't even make the minimum monthly payments your unsecured debt require now?


Rather than opt for bankruptcy, millions of people have used a Debt Settlement Program to pay off all of their unsecured debts and avoid bankruptcy.

Debt Settlement is a program designed for those who are really in trouble, fincially.  Usually, most or all of their debt have gone to debt collectors who are are calling severaly times a day and sending threatening letters!

STOP Collection Calls Free Sample Letter

You will be making a monthly contribution to a bank insured (FDIC) account to hold those funds until there is a reasonable amount built up to make a SETTLEMENT OFFER.

Again, depending on several factors, most settlement offers are going to be around 50% of the balance.  Some are for more, other less.

Recent Settlements See what we have  done for our clients!

People often ask if a Debt Settlement Program hurts their credit score.  But, they are not thinking the process through.  If you're accounts have gone to debt collectors or judgments, your credit score has all ready suffered!

Once you get all of your debts, you have $0 balances, your credit scores will improve!

OK, but what if you can't even afford to make a contribution to a Debt Settlement Program?

Then, it is time for you to seek BANKRUPTCY PROTECTION from your creditors!

Again, unfortunately, their are many Debt Settlement Companies that only offer one solution to everyone's debt problem.  But, as you can see, ONE SIZE DOES NOT FIT ALL, when it comes to dealing with debt.

Seek the counsel and advice of a qualified Bankruptcy Attorney.  You should be able to have a FREE Consultation and hear about your options.  In fact, good bankruptcy attorneys will work with you as far as their fees go. If not, seek out another bankruptcy attorney!

I hope I have made my point that when it comes to DEBT SETTLEMENT, one size does not fit all!


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Tags: debt collection harassment, credit card debt, debt settlement, Bankruptcy, debt collectors, debt management, credit cards

Credit and Debt...Good or Bad?

According to an article in The Oregonian recently, about a third of Americans are facing debt collection!  If you are one of the three facing this debt crisis, here are a few tips on how to control your debt.

Wipe Out DebtWhy is that?  Why do so many people, according to the article...1 in 3...have debt issues.  Notice, the article didn't say they just had debt, the article stated that 33% of Americans have DEBT COLLECTION PROBLEMS.!

While I am not in favor of carrying too much debt, there is a difference between GOOD DEBT and BAD DEBT.


For example, for most people, it is almost impossible to buy a home without incurring debt.  Depending on where you live, a home will cost around $200,000 these days (some more, some less).  With so many of us just trying to pay the bills, much less save any money of significance, if you want a home, your going to go into debt...for a long, long time!

But I believe having a mortgage payment that you can afford (and that's another whole story) is not actually a bad debt but rather a good debt.  In the long run, most home will appreciate in value. 

Sure, we all are still coming out of the home mortgage fiasco over the last several years, where most home values in America plummeted.  But, if you look at the history of home values, for the most part, they go up over time.

So, when you send in your mortgage payment, yes, a very large part of the payment is going to interest and very little to the principal in the early years, but you are in part, paying yourself.

Let's say you have a home that had a purchase price of $185,000.  You were able to qualify for a loan and after 10 years, the balance on your mortgage was about $140,000. At year 20, the balance should be around $80,000.

But, if your home appreciated at about 5% (could be higher or lower) each year, your home could now be worth approximately $475,000! 

That's a good use of debt!

On the other hand, what about a automobile loan?

Most people rent homes and buy cars.  Sure, I understand that it is much easier to qualify and afford a car payment vs. a home mortgage, but let's think about that for a minute.

You see the ad on TV and convince yourself that you need, deserve, it "just makes sense" to go out and buy a new car.  Yes, your old "clunker" barely runs and needs a couple of thouands in repairs, but does it make sense to spend $2,000 to repair the PAID FOR car or spend $20,000 or so (of debt) for a brand new car)? 

Cars DEPRECIATE!  That simple means that every year you own the car (I'm not talking about exotic or collector cars), the value goes down.

If you haven't experience it, you probably know someone who bought a new car (they didn't buy it, they started making payments on it) and for whatever reason wanted to sell or trade it in.

While the original sales price was $20,000, and they had been making payments of, say $375 each month for the last 3 years (on a 5 year note), the loan balance is about $8,600, but the value of the car is only $10,000- $12,000.

Let's say they sold the car (usually much better than a trade in) for $11,000.  They had made 36 payments of $375 or $13,500:

Total of payments              $13,500

Sale price                        -  11,000

Net profit/loss                  - $ 2,500

That looks like BAD DEBT to me!

Now, I'm certainly not an expert and there are plenty of sites available to check out, but what do you think about this...

Rather than purchasing a new car at $375/month and seeing it's value go down, down, down... you saved $375 a month.  OK, try to stay with me on this:

You BORROW (friend, family, bank) $2,000 to repair you current car.

Pay back that loan at $375/month for about 5.5 months.

Now you start saving the $375/month towards purchasing another car 3 years from now.

At only 2% (now much paid in savings interest these days) after 3 years, you should have close to $16,000!

You sell the old "clunker" for at least a $1,000 and now you have $17,000 to pay towards another (most likely not new) car.  You will be amazed at what $17,000 can when talking about cars!

I don't even want to start talking about Credit Card Debt.

I've been helping people with too much credit card debt for over a dozen years now and I believe that there is only one instance I could recommend using a credit card.

If you are have your financial affairs in order, meaning that you have all of your bills paid on time with a reasonable amount left over, then you may be a candidate to take advantage of some of the offers from credit card companies.

If you like to travel, there are some credit card companies that will give you airline "points" or "mileage" by using their card.  The creditor estimates that for every "free" ticket they give a customer that pays the entire balance every month  (they lose money on this guy)they will be a "zillion" times compensated by the majority of credit users who only pay the minimum each month!

Here's what I mean...

I have a good friend who owns a small auto-repair business.  He pays for all of his parts orders with one credit card that offers great mileage and bonuses.  He then pays the entire balance off every month before any interest is charged! THAT IS THE KEY!!!!

Let me repeat...HE PAYS THE ENTIRE BALANCE OFF EVERY MONTH BEFORE INTEREST IS CHARGED!  He receives lots of ticket and bonus offer from his credit card company.  I'm sure they don't like a guy like that, but in reality, he is probably only one in a thousand anyway!


It really boils down to how you use it!

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Tags: debt collection, credit card debt, debt collectors, debt, credti, credit card companies

Your Credit Score May Get a Boost!

If you are having a hard time increasing your credit score, there may be some good news on the horizon!

credit score

Major credit reporting company Fair Isaac (FICO) has been pressured by Washington to change its credit-risk scoring model to give a break to consumers that have had debt turned over to collection agencies!

While this "change" to the basic credit score scoring model is still in the works, it could be a seen as a great idea to consumers, while at the same time, another dangerous, slippery slope by lenders.


Recently, I've reviewed a few articles recently about the changes may be coming to credit reporting agencies.  One of the best was from Paul Sperry for Investor's Business Daily.  I highly recommend you checking out Mr. Sperry's article.

For years, those unfortunate people who for reasons usually beyond their control, found themselves with too much debt and not able to make payments, saw their accounts charged off by the creditors and turned over to a collection agency.

If you've read any of my blogs in the past, you know what I think about most collection agents and agencies.

While there are a lot of debt collection companies out there that are professional and stay (for the most part) within the Fair Debt Collection Practices Act (FDCPA), as with any group or organization, there are always a few "bad apples".

It seems that the Consumer Financial Protection Bureau (CFPB), created by the Obama administration, has been in talks with the Fair Isaac company to "ease up" on some of the weight they give information about your credit to determine your credit score.

Currently, FICO uses the following guidelines (along with a lot of othe information) to produce a credit score:

FICO What is in your credit score


 As you can see, your payment history is worth 35%, so if you have had debt issues in the past and have had some or all of your accounts  go to a collection agency, your credit score would suffer.

However, under the proposed new guidelines "suggested" by the Consumer Financial Protection Bureau, FICO would no longer penalize your credit score because of delinquent MEDICAL DEBT or ANY DEBTS THAT GO TO A COLLECTION AGENCY THAT GET'S REPAID!

To me, that is great news!

In dealing with people over the last dozen years or so, I would say that the greatest majority of people who wound up in a severe debt situation, did so due to circumstances beyond their control, with MEDICAL DEBT being one of the largest debt!

It's not unusual to see someone with $10,000, $20,000 or more of medical debts.  When you see the (in my opinion) OUTRAGEOUS MEDICAL FEES charged by some doctors and hospitals, it's no wonder that people get into trouble.

If these people can find some relief to their credit score by making some changes to the way a credit score is calculated, then I'm all for it!

I like what the article said, "Obama regulators argue that it's important to insulate consumer credit scores from medical debt, for one, because such bills are "unexpected".

Another important and much needed action by the CFPB was that they released a report (2012) that basically stated that less than 80% of credit reports were accurate.

Inaccurate information on your credit report can really hurt.  The good news is that you can challenge mistakes and get the credit reporting bureaus to change your report, thereby increasing your credit score and/or credit worthiness.


If you find yourself with too much debt, or just overwhelmed by all of this, we may be able to help:










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Tags: debt collection, FICO, debt collectors, debt collection in oregon, debt settlement in oregon, fair debt collection practices

Don't Panic if You Receive a Summons!

If you are served with a summons for past due debts, DON'T PANIC!

You need to understand what a debt collector CAN and CANNOT DO!


Make no mistake, it is a scary time when someone knocks on your door and says something like, "Are you....You've been served!"

Sometimes, the delivery person is a police officer and that even makes it worse!

Someone has said that FEAR is:

  • False
  • Evidence, that
  • Appears
  • Real

So true!  We often get "freaked-out" because we think something is what is not.

Let me try and help you get over the fear of receiving a summons!

I/we've been helping people with DEBT, basically UNSECURED DEBTS, for many years.

When you have too much debt to keep up with the payments due, they may be charged off by the original creditor or placed with a collection agency in an effort to collect on the delinquent debt.

If you've ever been in that situation, you know that you get letters and calls and calls and calls.  By the way...hears how to put a stop to collection calls:

STOP Collection Calls Free Sample Letter

If the collector cannot get you to pay the debt, they may decide to FILE A COMPLAINT. This is a legal technique whereby an attorney, licensed in your state, is hired by the debt collector or creditor to file an official complaint with your county court.

Next, you will receive a SUMMONS.  And this is when it gets scary!

We're located in Portland, Oregon and in the County of Multnomah.  A client recently sent us a SUMMONS and this is what it said (you can understand why they were upset!):

"YOU ARE HEREBY required to appear and defend the complaint filed against you in the above-entitled action within thirty (30) days from the date of service of this summons to you.  In case of your failure to do so, for want thereof, Plaintiff will apply to court for the relief demanded in the complaint."

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


OK, let's calm down and look closely at the SUMMONS.

First, in the case of UNSECURED DEBTS (Credit cards, medical bills, personal loans, Store Cards, private student loans, etc.), the Plaintiff (this is the creditor or who you owe the money to) cannot:

  • Put you in jail
  • Take other belongings
  • Cause you any harm, etc.

In fact, there are limits and protection for consumers by the Fair Debt Collection Practices Act that you should be aware of.

Next, the SUMMONS seems to say that you are going to have to GO TO COURT!

NO IT DOESN'T!  (Remember, FEAR...False Evidence that Appears Real?)

If you don't believe you owe the DEBT=CLAIM, then you must file an "Answer", which not only costs (about $165 last I heard in Multnomah County) but it must be in the proper, legal format which may require an attorney to prepare...more costs!

BUT, since you owe the debt (not the time to talk about the outrageous fees and interest tacked on), then you won't be filing an ANSWER.


You should contact the attorney for the Plaintiff (creditor) and try to work out a repayment plan.

If you are employed (receive W-2 income), then you are not going to have very much leverage at this point.  But, you should be able to negotiate a reduced settlement (if you have a large sum of funds to offer) or a repayment plan of the entire debt balance.

If the Plaintiff is awarded a judgment (which most likely they will win), then they can file a WRIT OF GARNISHMENT and your employer would have no choice but to deduct 25% of your net income (most states) and send it to the Plaintiff until the entire balance is paid!

Think about that for a minute.  Let's say that you usual bring home pay (after taxes are withheld) is $2,500/month.  At 25%, that's an additional $625 per month that would be deducted, leaving you with only $1875 to pay bills!  Ouch!

Remember when you ignored those letters and calls?  Well, this is one of the results that can happen.  It is always better to try and negotiate with the creditor or collection agency than let the account go to this.

If you are self employed, you may have a little more leverage in that your "salary" may be low enough (if you are using a good accountant) to be exempt from garnishment.  To see what this exemption amount is, check with your state's attorney general's website.

In Oregon, go to: State of Oregon Garnishment Forms.

If you are retired and are living solely on Retirement or Social Security, then those funds are protected from Garnishment or even a Bank Levy.

If you are SELF EMPLOYED or RETIRED, or receiving only DISABILITY INCOME, you should be able to negotiate a pretty decent settlement at 50% or less of the balance.

We've prepared a very good booklet that will explain how Debt Settlement can work:

FREE EBook Debt Settlement  Basics

 OK, I hope you are starting to understand that just because you receive a SUMMONS, you are still going to be OK, BUT YOU HAVE TO TAKE ACTION...AND I MEAN IMMEDIATELY!!!

If you are not sure you can deal with debt collectors or the attorney for the Plaintiff, we can help:



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Tags: fair debt collection practices act, credit card debt, debt settlement, debt collectors, debt negotiaion, debt relief in Portland Oregon, credit cards

Real Life Story on How to Become Debt Free!

Want to learn a method to become DEBT FREE?  Here's a recap of a real life success story you don't want to miss!

get out of debt

I had to comment on an article I read in the 4/2/14 edition of The Oregonian newspaper.

The title was:

           "Couple put strategy into action, paid off $127,000 in debt"

Here's a recap of what they did:

Had over $127,000 of debt:

  • Student Loans
  • Credit Card debt
  • Auto loans
  • Personal debt

It took them a little over 4 years, but they were able to pay off all of their debts and are now living DEBT FREE!


Find ways to save money/increase net funds. Here are some things you can do:

1. Adjusting your tax withholding.

If you are getting back a large TAX REFUND each year, consider changing the number of dependents/withholdings.  This alone generated about $100/month extra to put towards debts.
2.  Cut your household budget by trimming unnecessary "luxuries" (you can add them after you are DEBT FREE!)

Using grocery coupons. Become a "coupon expert".  This alone could help save you 20%-30% off your grocery bill each month!

Do you really have to have a "Starbucks" coffee each morning?  At an average of $4-$5 per day, that adds up to $100 -$150 each month!

Take a hard look at additional monthly expenses that you could "live without"...

  • Gym membership (you rarely use)
  • Magazine subscriptions
  • Too many "premium cable channels"
  • Going out-to-eat several times a week

I know...but think about this...

As hard as giving some of those things up seems,


OK, you get the idea.  So now you've found an extra $100 -$200 per month.

3.  What now?

List all of your debts showing:

  • Account
  • Balance
  • Interest Rate (not as important as you think at this point)
  • Minimum payment

Sort by the smallest balance first (don't worry about interest rates).

You are going to make all of the minimum payments, but you are going to add the extra (let's say $150/month) you found by making sacrifices, etc. to the smallest balance.

Once that one is paid off, you are going to add the extra $150 plus the minimum payment required on that smallest balance and add that to the minimum payment you are required to make on the second smallest balance.

For example:

Let's say you had several cards, but the Visa Balance was $1000 and the Discover Balance was $2500.

The minimum payment for the Visa was $30/month and the Discover was $65.

You are going to make a payment of $30 plus $150 to Visa until it is paid off.  At the same time, you are making the $65 to Discover as well as all of the other minimum payments required.

Once the Visa is paid off, you are going to take the $180 ($30 + $150) and add that to the $65 due on Discover.  Now you ar making $245/month to Discover (and all of the other minimums as well). 

Once the Discover card is paid off, you take that $245 and add it to the mimium on card # 3.

Get the idea?

Can you imagine how excited you will be when you start seeing those balances down to $0!

Yes, it won't happen over night, but before you know it, you are going to be 100% DEBT FREE!

This is not a new idea.  This is a Snowball Debt Reduction Plan.

If you are serious as this couple was, get your Snow Ball Calculator today!

This all sounds great, you say, but what if you can't keep up with the minimum payments despite making cuts trying to find extra funds, etc.?????

That is a very real problem that anyone that has had:

  • Loss of employment
  • Death in the family
  • Illness or Disability
  • Divorce

...can attest to.

If you cannot afford a Snow Ball Debt Reduction Plan, then you should consider a...


Debt Settlement is for those who are doing and trying everything they can to keep from seeking bankruptcy protection.

FREE EBook Debt Settlement  Basics

Basically, funds are deposited in a bank account until there are sufficient funds available to begin negotiations with your creditors/debt collectors.

Depending on several factors, your debts may be settled for 50% or less.

Recent Settlements See what we have  done for our clients!


Regardless of your financial circumstances, there is a solution! 


For more information about the couple who paid off the $127,000, visit their website at:



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Tags: debt settlement, debt collectors, debt elimination, snow ball plan, debt free, credit card, credit card debt relief portland oregon

Are Social Security Benefits Protected From Garnishment or Bank Levy?

If you are receiving Social Security Benefits, most are protected from creditors, but not all!

social security garnishmentIt is a common misunderstanding that a debt collector has the right to garnish your income or bank account for an unpaid bill.

While this is kind of true, it is very important that you realize that a debt collector CANNOT apply for garnishment or a bank levy without first being awarded a judgment by the courts.

Having said that, you must also realize that the IRS and State Agencies CAN garnish or levy for certain debts, such as:

  • Child Support
  • Spousal Support (alimony)
  • Federally guaranteed student loans
  • Federal and State Taxes
  • Other debts owed to State or Federal Agencies

Rather than get into those debts, let's talk about what can or cannot happen to your Social Security Benefits if a debt collector (again, not from the list above) receives a judgment.

Let's say that you have an unsecured credit card debt, and you just cannot afford to make the minimum payments.  The account becomes 30,60 or 90 days past due and you are receiving phone calls and nasty letters. 

It is at this point that your credit card account may be sent to a collection agency.  Now things really get serious.  More calls and letters, but now you can put a stop to those calls:

STOP Collection Calls Free Sample Letter

It is one thing to put a stop to the calls, but the letters will continue.  Too many people are so frustrated about being in such a terrible financial situation that they do their best to ignore these letters.

If that's what you have done, then it is possible that the debt collector will file a complaint.

A "complaint" is a legal process whereby the person who is owed the debt contacts an attorney (licensed in your state) and the attorney files the proper paper work (complaint) with the court in your county.

Next, you will receive a SUMMONS, and this is a little scary!

The worst thing you can do is to ignore the summons.  DO NOT IGNORE A SUMMONS!

Most of the time, some sort of settlement or agreement can be worked out even after a summons is issued, but if you do nothing, a court date will be scheduled and the debt collector will be awarded a judgment.  This is called a Default Judgment, as the debt collector (plantiff) was awarded the judgment because no one from your side (defendant) was there to argue.

By the way, unless you can prove that you do not owe the debt, there is really no reason to give the legal "ANSWER" that the summons mentioned.  Most courts charge a hefty fee to file an "ANSWER", and it must be "legally" correct, meaning you might have to pay an attorney for their services!

So now you know that except for the debts to the Federal or State governments and the other obligations mentioned above, there is a legal process that must happen before a garnishment or levy can happen.

But, let's say your creditor (debt collector) is awarded the judgment and sends a writ of garnishment/levy to your bank.  NOW WHAT?

Good news!  As of May 1, 2011, when a bank receives a garnishment writ or order, it must review your records or statements to determine if a Social Security check has been direct-deposited into your account in the past 2 months.  This is called the Look-Back Period.

The bank will determine the total amount of "exempt funds"...funds from Social Security Benefits.  SSI (Supplemental Security Income), Veterans benefits, and federal employee retirement checks will receive the same type of protection.

Other retirement income is also exempt from garnishment or levy, but is not given the same automatic "Look-Back Period" afforded direct deposits from Social Security Benefits!

Many banks or credit unions will help protect it's bank customers retirement funds from garnishment or levy, but you just assume they will!

If you are falling behind on your debts and have received a summons, then you should contact your bank immediately and find out what their procedure is if they are presented a writ of garnishment or levy.  Most banks will "FLAG" your account to notify anyone at the bank that those funds are exempt, BUT DO NOT TAKE IT FOR GRANTED! 

Another important point!!!!

Let's say that your Social Security Benefit is directly deposited in your checking account.  You want to move some funds to a savings account to make sure you have a little money set aside for a rainy day.  Seems like a good idea....WRONG!!!

If you transfer funds from the account that had received the Social Security Benefit, they are now NOT PROTECTED from garnishment or levy!


Let's say that you have a part-time or side business to help out.  You get a little money from this extra job and you deposit it in the same checking account that receives your Social Security Benefit.  Prior to May of 2011, these funds were considered "co-mingled fund" and now all of the funds were subject to garnishment or levy!

Now, the bank will exercise the 2 month "Look-Back Period" and will determine how much is from Social Security and how much was from another, unprotected source.  Those funds would be subject to garnishment or levy.


Once you have received a summons, you know that the debt collector is very serious and will do every legal thing they can to collect that debt.

  • 1)  Contact your bank to determine what level of protection you have from a possible garnishment or levy.  If they don't give you a good feeling of security, consider moving your account!
  • 2)  If you receive "other sources of income", you should consider not having them direct-deposited or deposited at all!  I know, but until this summons/debt is dealt with, I would not risk it!  I've seen a client of ours who was too stubborn to take our advice have a coupld of thousand of dollars "frozen" by his bank and he couldn't make rent or buy groceries!


Yes, Social Security Benefits are protected from garnishment or levy, but you CANNOT take it for granted!

If you receive a summons, then you must be pro-active.  The worst thing you could do is to do nothing.




Photo by Heidi Elliot

Tags: wage garnishment, debt collectors, wage garnishment in oregon, can social security be garnished, exemption from garnishment, levy, social security benefits, bank

Wage Garnishment in Oregon...How to Stop

Here's some very helpful tips on how to put a stop to wage garnishment in Oregon.

First you must understand that a debt collector cannot simply be awarded a wage garnishment for unsecured debts without first having gone through the legal process:

  • File a claim in your county courthouse
  • A SUMMONS is delivered to you
  • Default judgment is awarded if no settlement can be reached
  • Apply for a Writ of Garnishment

OK, you've been having a very challenging time, financially due to circumstances beyond your control, such as:

  • Loss of employment
  • Divorce
  • Death in the family
  • Illness
  • Fixed income of retirement
  • Disability

Although you have done your best to try and keep up with your minimum payments, a couple of your accounts have been turned over to a COLLECTION AGENCY, and they have been calling day and night...driving you nuts!



STOP Collection Calls Free Sample Letter


Most debt collectors and debt collection agencies are willing to work out a repayment and/or settlement of the debt you owe.

Having said, " owe...", let's make sure that you really do owe the debt before you pay for something you shouldn't.

The Fair Debt Collection Practices Act allows a debtor who feels that they do not owe the debt claimed by the creditor/collector to require a DEBT VALIDATION.

After you write a letter demanding that the debt collector validate the debt, they must not only stop collection activity (calls, letters, etc.), but provide you with proof that the debt is legitimate.

Some debt collectors are actually "debt purchasers", who buy lists of so-called debts at pennies-on-the-dollar, hoping to get someone to pay who may or may not actually owe the debt.

Here's a FREE Sample Letter for you to use:


One more thing about making sure you actually owe this debt:

Make sure the STAUTE OF LIMITATIONS for you state has not expired.

For example, in my home state, Oregon, the statue of limitations on unsecured debt is 6 years.  This means that if there has been no payments on this account for over 6 years, the debt must be removed from all credit reporting agencies and cannot be collected on any more!

So, now that you have determined if the debt is legitimately yours, it's time to contact the debt collector.

Prepare yourself for a small battle on this!  These are professional debt collectors and they are usually paid a percentage of what they can get you to pay.

Tell them you intend to pay the debt, but you just don't have anything now.

Don't let them trick you into paying just a little bit ($25 or so) "to keep the account in this office" or "to keep the account from going to the legal department".  If the account has passed statute of limitations, that "little payment", could reset the clock!!!

But, for the sake of this blog, Wage Garnishment in Oregon...How to Stop, if you have received notice of a wage garnishment, here's what you can do:

Your employer has no choice but to comply with a WRIT OF GARNISHMENT.  If they ignore it or do not reply, they could receive a hefty fine!

But, make sure that you are making enough money to qualify for a garnishment!  In Oregon, if you take home income is about $850-$900 or so, they you cannot be garnished.

Here's the Oregon site that will help.

Just make sure your employer is aware of the exemption limits.

By the way, if you are receiving certain types of income, these cannot be garnished.

Basically, all retirement income, social security, disiability income, etc. is exempt. 

Check out the complete list here.

But if your income is not exempt, then to put a stop to a wage garnishment, you must contact the debt collector and/or attorney for the debt collector and arrange a STIPULATED AGREEMENT.  

You will need to be prepared to demonstrate to the debt collector or attorney that you are in a very bad financial situation and the wage garnishment will force you into bankruptcy unless they agree to a stipulated agreement.

Prepare a basic household budget showing all of your income and expenditures.  You may have to provide a couple of months of bank account statements and maybe a pay stub or two.

But if you can demonstrate how bad things are, they may be willing to enter into a stipulated agreement.

Now, if by chance you could find a large lump sum, say 50% -75% of the balance, they may and most likely, will take that as a settlement and release the judgment.

I know, but maybe you have someone who could help...just asking.

Of course, if you get the Stipulated Agreement or Settlement Agreement, make sure to get it in writing!

The real key to stopping a wage garnishment in Oregon or any state for that matter is to be pro-active.  Don't just ignore the letters and especially don't ignore the summons.

In most cases, a debt collector will be willing to work with you.






Tags: credit card debt, debt collectors, debt validation, how to stop collection calls, credit repair, how to prevent wage garnishment, how to stop a wage garnishment, credit reporting agencies

Debt Settlement and Colleciton Agencies

debt settlement and colection agenciesIf you have an old credit account that has been placed with a collection agency, you may be able to settle that debt for less than the balance.

How to settle debt with collection agencies

#1 If you are not sure you owe the debt, you have the right to request a DEBT VALIDATION from the debt collector.

According to the Fair Debt Collection Practices Act (FDCPA), every consumer has the right to make the company trying to collect a debt PROVE that you actually owe it.

You must write a letter and it should be something like this:

To whom it may concern:

Although I received a letter dated (date on the letter) from you demanding payment of the above debt, I do not think that I owe it and request that you VALIDATE THE DEBT according to the FDCPA, 15 USC 169g Sec. 809 (b).

Please provide the following:

  • Produce copies or the original contract that you say I signed, showing the date and my signature.
  • Provide a calculation that explains how you have arrived at the balance you say I owe.
  • Provide proof that your agency is registered in my state or why you have an exclusion.

If you can provide the above documentation, I will need at least 30 days to determine if this information is correct and again, according to the FDCPA, all collection activity must cease.

Looking forward to clearing this matter,

Your signature

Print your name


Send the letter by CERTIFIED MAIL to prove that the collection company received it.

#2 If the debt collector does provide proof that you owe the debt, you should negotiate a settlement for less than the amount owed.

This can be tricky as these collectors are professionally trained to do whatever it takes to get you to pay as much as possible!

#3 If you get a settlement offer, make sure you GET IT IN WRITING!

Regardless of what the debt collector says, they can and MUST provide you with a letter, fax or email of the terms you agreed. DO NOT, I REPEAT, DO NOT authorize any type of payment without the settlement agreement in writing.

Once the payment has cleared, you should get a letter from the collection agency stating that the account has been "settled as agreed".

Your proof of payment (canceled check, bank statement showing a check-by-phone transaction for the amount agreed) along with the SETTLEMENT AGREEMENT, will be enough to prove that you have paid this debt as agreed if it ever surfaces in the future.

If this seems overwhelming or if you have questions, we can help.  Simply give us a call or click on the link below for a FREE debt elimination summary.

Tags: debt settlement, debt collectors, debt validation