Texas Debt Collection...Did You Know???

If you are a Texas resident and cannot keep up with the minimum payments due on your credit cards, then I have some good news!

Im a little stressed right now


We're talking about UNSECURED debts like:

  • Credit Cards (Visa, Master Card, Discover, etc.)
  • Store Cards (Kohls, Home Depot, Lowes, etc.)
  • Personal loans with no collateral
  • Private Student Loans
  • Medical Bills
  • Quick Pay or "Pay Day" loans

If you find yourself in a situation where you just cannot keep up, then what happens?

You will start getting calls, letters and emails from the creditor trying to get you to start making payments again.

You would think that if you could just "explain your situation" the agent would understand, but this is rarely the case!

After helping people deal with debt for over 20 years, I think is is better to not speak with the agent and of course, not to call back if they leave a voice mail.

Same with emails, just ignore for now.


After a month or so of unsuccessful attempts (calls, letters, emails), your account will most likely be transferred to the internal collections department or sold to a debt collector.

Well, now the calls, letters, and emails will start again!

But now that your account has been transferred, you can stop the calls:

STOP Collection Calls Free Sample Letter

After a few more months, a creditor, collector or debt buyer could decide to retain a law firm that specializes in debt collection to file a CLAIM.

A claim is filed with your local county courthouse and you will then receive a SUMMONS.

The summons will basically state that the creditor (PLAINTIFF) claims that you ( the DEFENDENT) owes a certain amount of money claimed.

The summons will also state that you have 30 days (varies a little from state-to-state) to APPEAR and give an ANSWER.

It sounds like you will have to go to court and stand before a judge to explain yourself!


It means that if you can PROVE with UNDENIABLE PROOF that you do not owe the CLAIMED debt, you have 30 days to file the proper papers with the court.

If not, then the Plaintiff may petition the court for a DEFAULT JUDGMENT.


Only after a judgment is awarded (usually will take 4-6 weeks after the summons is served) the Plaintiff can have the attorney file a claim for WAGE GARNISHMENT.


If you a resident of the great state of Texas, your wages CANNOT be garnished!

In most other states, the court can approve a wage garnishment and your employer would have to send 25% (average per state) of you NET, TAKE-HOME to the creditor or attorney for the creditor!

But again, NOT SO IN TEXAS!

Does that mean that you can just forget about your debts?

NO! Please understand...

A creditor may not be able to garnish your wages, but they can have their attorney apply to the court for a writ of LEVY ON YOU BANK ACCOUNTS!

That means that you could try to use your debit card or write a check and find out there are no funds available!!!

So what can you do?

Once you account(s) go to "collections", you may be able to negotiate a SETTLEMENT for less that the full balance.

But you need to do this BEFORE A JUDGMENT IS AWARDED!!!

Yes, you can negotiate a repayment plan after a judgment has been awarded, but it is difficult to do so.

If you can get to the creditor, collector or debt buyer before legal action starts, then a SETTLEMENT can be negotiated.

A SETTLEMENT is an agreement between you and the creditor or owner of the debt to repay a certain percentage of the balance due.

Once the agreement is completed, the account is now considered "paid-as-agreed" or in some cases "settled for less than the full amount".

Either way, the account now has a $0 balance and believe it or not, you credit score will start to improve! 

Here is an actual example of a settlement we negotiated for one of our clients recently:


Capital Community Bank 1.11.22

Some settlements may be higher or lower, depending on the circumstances, but a decent settlement should be around 50%-60%.

I hope this has been helpful.

     To recap:

  • If your unsecured debts are only a month or so delinquent, then they are most likely not going to be open for settlements.

  • But, after 4-6 months (can vary), your accounts should be able to be negotiated for a settlement.

  • REMEMBER...DO NOT IGNORE A SUMMONS! Just because your wages cannot be garnished in Texas, you bank account could be levied!

FREE  Debt Elimination Summary



photo credit

Tags: Credit Card Debt Negotiation

Will Creditors or Collectors Settle My Account for Less Than the Full Balance?


Credit card debt is on the increase!  With all of the inflation effecting everything we need, consumers are turning to credit cards to get by!


What happens when you just cannot keep up with the monthly required minimum payments?

Will a creditor or collector accept less than the full balance?

If so, how delinquent do my accounts have to be?

If you find yourself in a severe financial situation due to:

  • Unemployment
  • Divorce
  • Illness or Disability
  • Too little income after retirement
  • High inflation and gas prices!!!!

You may be forced to use credit cards in order to stay afloat. 

Most people who do this plan to repay those accounts when things improve, but many times, things either don't improve or don't improve quickly enough!

So, you cannot keep up with the minimum payments due....

                           What can you do?

Credit Card companies will start to send you letters and make calls...lots of them!

They are trying to get you to start making payments again.

They will usually do this for 4-6 months and if no repayment arrangements can be set up, then they will either hire a collection agency or sell the account to a debt buyer.

Yes there is a billion dollar market of companies who buy older debt accounts for pennies on the dollar in order to try an collect for profit. 

Perfectly legal and it happens more than most people realize!

At some point in all of this, you may get a letter or email making you a SETTLEMENT OFFER. 

The offer may be for 20% - 40% or more of a reduction pf the inflated balance...

Don't forget late fees, over-the-limit fees and of course HIGH INTERST RATES.

But, dealing with a collector or the recovery department of a creditor can be very frustrating!

Most of the time these settlement offers come with a short time frame in order to make the settlement offer.

It is possible to get a good settlement with a monthly repayment plan that does not add more interest or fees.

For example, we settled a US Bank account for one of our clients recently:

Balance was               $ 13,799.86

Settlement for             $    5,519.94

Difference of               $    8,279.92

Since this client did not have the total needed for a lump sum payment, we were able to negotiate a series of 24 payments (NO ADDED INTEREST)!

   Click to see the actual settlement.

Some settlements are a little more or less, depending on a number of circumstances, but this will give you an idea of what a settlement looks like.

I hope this was helpful.

FREE  Debt Elimination Summary


Photo credit


Don't Ignore Debt Collection Letters!

If you are having a difficult time keeping up with the minimum payments due on your credit cards or other unsecured debt, you are going to start receiving calls and letters from collectors!


These calls and letters are upsetting and cause stress and fear.

Most likely, you've never been in this situation before and feel helpless and...yes...afraid.

If this is you, then this blog will help!


The worst mistake you can make after receiving a call or letter is to "just ignore" it!

When we open a credit card account (or any other unsecured account), we are signing an agreement/contract that basically says that we agree to the terms the terms of the contract.

If we do not make the required payments when due, then we have broken our promise and the creditor has a right to contact you.

What can you do?

If you can afford to catch up and get back on track, then great, just send the balance due and start making regular minimum payments.

The problem is that most people who find themselves in a stressful financial situation just cannot do this!

There are several reasons you may have gotten into trouble:

  • Unemployment
  • Divorce
  • Serious Illness or Disability
  • Trying to make it on a fixed income of Social Security or Retirement Income
  • Or other reasons beyond your control

So, if you cannot get caught up and start making the minimum payments due, what options do you have?

Debt Management Program

These used to be called "Credit Counseling".

Basically in the Debt Management or Credit Counseling program, you will make a monthly payment to the company.

The past due balances, fees and interest rates will be modified, but you will end up repaying what you borrowed/charged.

The problem with these types of programs is that the monthly payment is about the same (sometimes a little more) than the previous minimum payment was!

If you can handle this...great!

If not, then you should consider a:

Debt Settlement Program

After 3-4 months of non-payment on your account, the account will most likely be transferred or sold to:

  • Internal Recovery Department of the creditor
  • Debt Collection Agency
  • Law Firm/Debt Collector
  • Purchased by a Debt Buyer

At this point, the Collector may be willing to accept a reduced amount called a settlement.

These can be as much as 40% - 80% of the balance, depending on several factors.

Here's a couple of examples:

Recent Settlements See what we have  done for our clients!

In a Debt Settlement Program, you will be making a monthly deposit (that you can afford) to a Settlement Savings Fund.

As this fund grows, the company will negotiate with the creditor, collector or attorneys for a settlement agreement.

By the way, there are many so-called Debt Settlement Companies that are NOT registered with the state and violate the laws of what they can charge, etc.


Accreditated and A +  by the Better Business Bureau 


If a settlement cannot be negotiated, then there is the possibility that the creditor or owner of the account my decide to retain an attorney in order to start legal action.



First, you will get a SUMMONS. 

The summons legal document stating that the Plaintiff (creditor) has made a legal CLAIM that you (the DEFENDENT) have not met the agreements of the contract.

It will basically say that if you cannot PROVE that you do not owe the CLAIM within 30 days (varies from state-to-state) and submit to the court your Proof called an "ANSWER", then the Plaintiff may petition the court for a DEFAULT JUDGMENT.

If this happens, then the attorney for the plaintiff can petition the court to issue a writ of garnishment or bank levy!

Certain assets and income are exempt, but you have to be very careful!

The point of this is...


Yes, even if you have a judgment awarded against you, there are ways to stop wage or bank garnishments, but prevention is the best way!

What if you cannot afford a Debt Management Program or a Debt Settlement Program...

Then you may have to consider Bankruptcy.

If you have a wage garnishment awarded, your employer will be legally obligated to send 25% (may be different in some states) of you net, after-tax income to the creditor!

Think about that...

Let's say your take-home, after-tax income is $5000/month.

If you are garnished, your employer would send $1,250 to the creditor per the garnishment order, leaving you only $3750 to pay all your bills!

A Bankruptcy attorney may be able to help.

Check around and interview several.

There should be "no charge" for the initial consultation.


If you're in a financial situation where you just can't keep up, DON'T "BURY YOUR HEAD IN THE SAND", reach out for help/options:

FREE  Debt Elimination Summary


Photo Credit


Tags: best way to eliminate credit card debt, oregon wage garnishment, how to pay off credit card debt, making just the minimum payments

Covid, Loss of Income, Debt, Bills...       What Can I Do?

We've all been though a very unusual and stressful couple of years due to Covid and the resulting ramifications such as:

  • Personal illness 
  • Family illness 
  • Loss of Income 
  • Unemployment



Were you one of so many people who were forced to use credit cards in order to meet their basic needs?

If so, you may find yourself with more debt requiring more payments than you can afford.


As stressful as this is, you have options.

Let's say that you've accumulated $10,000, $20,000 or more of various credit card or other unsecured debts such as:

  1. Medical bills
  2. Store Cards, or even
  3. Personal Bank loans

The total minimum monthly payment due each month is just too much for you right now.

                             What can you do?

Many people are forced to miss payments or use one card to make payments on the others.

Although you know this is a terrible idea, you have no other choice.

Another option may be to pull money out of your home equity through an equity line of credit or even refinancing your mortgage.

Again, not always the best idea, but what else can you do?

Maybe you have a parent, family member or friend who will loan you money.

I've seen this many times and the results are not pretty!

                           OK...What are my options???

Your credit card company may send you an offer to modify your payment options.

Even though this may sound good, usually, this is not a very good idea!

There are programs that may reduce and/or eliminate interest and fees.

These used to be referred to as "Credit Counseling" or "Debt Management" programs.

The problem with these type of programs is that even though the interest may be lowered and "over-the-limit" or "late fees" may be forgiven, the over-all payment is about what you should be paying now!

Unfortunately, some people decide to file for Bankruptcy.  If you financial hardship is bad enough, then Bankruptcy may be your only option.

But, you need to understand that there are several types of Bankruptcy and depending on your particular situation, you may or may not qualify.

Bankruptcy will stay on your record for 7-10 years, depending on the type of Bankruptcy you choose.

With a Bankruptcy on your record, you will find it more difficult to rent an apartment, qualify for a car loan or even hurt your chances of landing a job.

Although Bankruptcy may be the right option for you, be sure to think it through!

Here's an article that may help:

             "Bankruptcy: How it Works, Types and Consequences"


                     What about Debt Settlement?

Once your unsecured accounts (mainly discussing credit cards) become delinquent 3-4 months, they most likely will be turned over to the credit card's internal recovery department, assigned to a collection agency or sold to a debt buyer.

This is when there should be an opportunity to settle your debt for less than the total balance due.

A lump sum may be required or a good settlement with monthly payments (with no more interest) can be negotiated.

Even though you can do-it-yourself, negotiating with debt collectors can be very frustrating, time consuming and stressful!

You want to find a company that is highly rated with the Better Business Bureau as well as registered with the state.

Does a Debt Settlement Program Work?

After negotiating a settlement, a settlement agreement is sent.

Then, the settlement is either paid in a lump sum (if funds are available) or paid in monthly payments without any more interest.

Recent Settlements See what we have  done for our clients!


FREE  Debt Elimination Summary


Photo Credit



Tags: debt relief solutions, debt elimination without bankrupcy, debt settlement vs bankruptcy, debt settlement in oregon, alternatives to bankruptcy

How to Get Errors Removed From Your Credit Report

Some estimate that more than 70% of us have errors on our credit reports!

These can range from incorrect personal information such as:

  • Social Security Number
  • Date of Birth
  • Current Address
  • Accounts that you have paid off still showing a balance due!


Since your credit report is so important, you owe it to yourself to not only check it for accuracy, but also learn how to correct mistakes.

First, if you have not looked at your credit report, you can request a FREE Credit Report from www.annualcreditreport.com.

There are also numerous sites you can sign up for and pay a fee as well.

Once you download the report, save it for future use.


  • Print a copy of the page that has the error you want to dispute.  No need to copy the entire report.
  • Circle the error.
  • Write a brief, legible explanation of why you are disputing this entry.
  • Prepare your "evidence" such as:
  • copies of cancelled checks
  • copy of Drivers License or something showing correct DoB, etc.


It is much easier and you will get results much quicker if you go online to open a DISPUTE with each of the 3 major credit bureaus.

Here are the links:




Each bureau has a little different way they want you to open the dispute.

Just follow the instructions and you'll find it's really simple.



You are supposed to receive a reply from each of the bureaus in about 45 days or so.

They are also supposed to send you a CORRECT COPY of your credit report.

As with anything else, you will most likely have to follow up, so make sure to SAVE ALL OF YOUR DOCUMENTS, ETC.



There should be information in your credit report that will tell you who to call or contact about your account.

If your account has been delinquent for a long time, you should be able to negotiate a settlement rather than having to repay the entire balance!

This can be a lot of work and frustrating, but worth the effort.

If you could use some help or advice, click below:

FREE  Debt Elimination Summary


photo credit  

Tags: dispute errors on your credit report, debt settlement in oregon, how to eliminate credit card debt, Equifax

Summons...Do I Have to Go to Court?

If you have ever received a summons, you know how stressful it can be!

The summons states that you have 30 days (more or less in certain states) to APPEAR and give an ANSWER...

Does that mean you have to go to court?

This will help...

You know that when we apply for a credit card, store card, or an unsecured loan, we are agreeing to repay whatever we charge at certain interest rate and minimum payment.

So what happens if I cannot keep up with the minimum payments?

You will start to get CALLS and LETTERS 

We know that  the credit card industry makes it's billions and billions from interest rates, annual charges, and late or over-the-limit fees

Miss a payment and they go into "over-drive" to try and get you making payments again.

You may get several calls a day (mostly from computer dialers) from the original creditor or from a debt collector who has been assigned your debt or purchased your debt/account.

As long as your account is with the original creditor, they have a right to call.

But, when the account is transferred, sold or assigned to a collection agency, you can put a stop to the calls:

STOP Collection Calls Free Sample Letter

But remember...

Just because the account has been outsourced for collection and you have successfully stopped the persistent and annoying calls, YOU STILL OWE THE DEBT!

There a several options for dealing with this:

  • Debt Management (used to be referred to as Credit Counseling)
  • Debt Settlement
  • Bankruptcy

For more information on each option, click on the link above.


You either were not aware of your options or just could not take advantage of either of them due to your financial circumstance.

After the creditor fails to get you to start paying again, they may assign your account to a Law Firm that specializes in Debt Collection.

This firm will make the calls and send the letters as before.

You might have to send them the same "Stop the Calls" letter.

If they are unsuccessful in getting you to start making payments again, they may file a COMPLAINT or CLAIM in the county courthouse where you live.

This will result in a SUMMONS being delivered to you.

The SUMMONS states that you have 30 days (average) to APPEAR  and give an ANSWER.

Sounds like you have 30 days to show up in court and explain why you have not been able to pay this debt.

But, that's NOT what it means!

If you'll look closely at the SUMMONS, the words "APPEAR" and give an "ANSWER" are highlighted or in italics.

It means that if you have absolute, documented proof that you do not owe the debt, you have 30 days to file the proper documentation and proof with the court.

If not done within the 30 days, the PLAINTIFF (creditor or collector) may petition the court to be awarded a DEFAULT JUDGMENT.

This may take 2-3 months depending on several factors.

But, after being awarded the JUDGMENT, they can now apply for a WRIT OF GARNISHMENT or BANK LEVY.

WAGE GARNISHMENT in most states is 25% of your NET (after-tax) income!

Hard to make ends meet on 100% of your net, after-tax income?

Try it with 25% less!

Let's say you are bringing home $4,500 each month.

If a WRIT OF GARNISHMENT is sent to your employer, the employer has not choice but to comply with the COURT ORDER and send $1,125 to the creditor/collector per the ORDER!

Yep, that leaves you with only $3,375 to live on!  

WAGE GARNISHMENT IS TERRIBLE and if an alternative payment arrangement cannot be negotiated, you may be forced to seek BANKRUPTCY protection!


You received the SUMMONS and you know you owe the debt.

Now you understand that you do not have to file any documentation with the court and you DO NOT HAVE TO GO TO COURT.


Many times a SETTLEMENT can be negotiated with the law firm/collector.

Recent Settlements See what we have  done for our clients!

If a SETTLEMENT cannot be negotiated, a repayment agreement called a STIPULATED AGREEMENT can be set up.

This STIP is usually filed with the court and it basically says that as long as you make the agreed upon payments on the agreed upon date, they will not move forward with legal options such as WAGE GARNISHMENT or BANK LEVIES.

Once the STIP has been completed, a LETTER OF SATISFACTION is sent to the court.

The JUDGEMENT is removed.

This is supposed to happen, but you have to follow up as many collectors do not do this!

OK...I hope you understand a little more about this process now.

The most important thing you need to take away from this is:

Even though you do not have to go to court (or necessarily file any documents),


You must be "PRO-ACTIVE" to prevent garnishments, levies or liens.

FREE  Debt Elimination Summary




Photo Credit



Tags: how to prevent wage garnishment, debt collector, receive a summons, stopping debt collection calls, summons, judgments, wage garnishment

What Can a Debt Collector Do and Not Do to Me?

If your are having a hard time keeping up with your credit card debt, you may start getting calls from a debt collector.  This can be very stressful!  You need to know what a debt collector can do and cannotg do.  This will help!

cartoon_about_stressThere are many reasons you may be falling behind in making at least your minimum payments:

  • Laid off or reduced hours due to Covid-19
  • Divorce
  • Loss of loved one
  • Too little fixed income in retirement
  • Illness or disability
  • Just bad decisions


So if you don't have enough stress right now, the phone rings and the caller says something like,

" This is Bob from XYZ collections.  We have your Visa Card account with a balance of $8,500.  You must make a payment today or we may decide to turn your account over to an attorney for collection!"

You try to explain your situation, but it doesn't do any good. 

He starts back in saying there are several options they have for collection, including:

  • Lawsuits
  • Garhishments
  • Bank Levy
  • Lien against your home

You hang up and start thinking:

Can they start taking money from my paycheck?  I can barely make ends meet now!

If they take money out of my bank account, I can't pay the rent or mortgage!  

Will I have to sell my house if they put a lien on it?

And your mind just keeps going....

OK, calm down.  

There are several laws to protect consumers from illegal debt collection efforts found in the Fair Debt Collection Practices Act (FDCPA).

Can debt collectors contact me any time or any place?

They cannot call before 8am or after 9pm.

They can call you at work, but you can stop them by telling them you cannot receive calls at work.

Once your account is transferred or sold to a collection agency, you can put a stop to the calls:

STOP Collection Calls Free Sample Letter

Can a Debt Collector take money from my paycheck or bank account?

A debt collector cannot touch your money (paycheck or bank account) without first obtaining a judgment and writ of levy from the court.

Having said that, there are certain types of debts that don't require a court order for garnishments, such as:

  • Failure to pay alimony or child support
  • Taxes
  • Federal Student Loans (each state has different laws)

There are several sources of income that are exempt from garnishments or levies:

  • Social Security
  • Pension and/or retirement funds
  • Alimony or Child support
  • Disablitiy income 

But, as far as your unsecured debts (credit cards, personal loan, medical bills, etc.) are concerned, there is a whole process that must take place BEFORE a creditor can garnish or levy.

After the original creditor or the debt collector attempts to get you to start making payments by making numerous calls and sending letters, they may dedice to seek legal options.

First, they must FILE A COMPLAINT in the county court where you live.

This will result is a SUMMONS that must be delivered to you.

The summons will state that the PLAINTIFF (creditor) is CLAIMING that you owe a certain amount for this specific debt.

It will also say that you have 30 days (varies by state or court) to APPEAR AND GIVE AN ANSWER.

Although this sounds like you have to go to court, that's not what it means!

If you will read carefully, the words "APPEAR" and give an "ANSWER" are in italics!

This basically means that if you CAN PROVE (with written, clear documentation) that you do not own this debt, you have 30 days (or whatever you state or court says) to file an ANSWER with the court.

This ANSWER must be in the proper, legal form and therefore may require an attorney to prepare and there is a filing fee as well.  But, these costs may be worth it if you can PROVE (not just say) that you do not owe the debt.

But if you owe the debt they are CLAIMING you owe, what now?

Now you have to take action!

You need to contact the attorney for the plaintiff (collector) and see if you can work out a repayment plan or settlement to keep them from moving forward with their lawsuit!

Please....DO NOT IGNORE THE SUMMONS!  It will not just "go away"!


FREE  Debt Elimination Summary


Photo Credit


Tags: how to prevent wage garnishment, debt collector, stop the collection calls, receive a summons, lien

I Don't Understand Why I Received a Summons?

A know on the door and someone hands you some papers and says...

  • "You've been served" how did this happen?
  • Why did this happen?
  • What can I do about it now?



If you have ever received a summons before, it can be a very stressful experience!

The Summons will say something like...

"You have 30 days to APPEAR and give an ANSWER..."

Sure sounds like you are going to have to go to court!



Before I get into the "why did i receive this...", let me tell you that about 99% of the time you will NOT HAVE TO GO TO COURT.

If you look at the summons carefully, you will see that the words APPEAR and ANSWER are italicized.

This is a legal term/phrase that basically means that if you can PROVE with WRITTEN DOCUMENTATION that you don't owe or have paid this debt (THE CLAIM), you have 30 days to file the proper forms with the court.

Since most of the time the CLAIM is correct, there is no need to do that.


The biggest mistake many people make is to IGNORE the summons!

If you do, then most likely the attorney for the PLAINTIFF (owner of the debt) will seek a DEFAULT JUDGMENT.

Now that a JUDGMENT has been awarded, the attorney can petition the court for a writ of GARNISHMENT (wages, bank or both).

In most states, this is about 25% of your NET TAKE HOME pay.

Your employer must comply with the WRIT OF GARNISHMENT or face severe penalties!

Think it was hard to pay the bills on you current take home check?

Now you have 25 %  less...


Contact the attorney for the plaintife and see if you can work out some kind of repayment agreement to stop the garnishment options.

This could be a:

  • Full settlement for less than the current claim
  • Monthly payments on the full balance
  • Or even a settlement for less than the balance paid in monthly payments

Once a wage garnishment starts, it is very difficult to get the attorney to accept a settlement!


After dealing with clients for almost 20 years, it still amazes me when one of them says that they never received any summons or had no idea they owed the debt.

I guess that is possible, but ....

Anyway, most likely, here's what happened.

Due to circumstances beyond you control, you just couldn't keep up witht the minimum payments due on your credit cards or other unsecured accounts.

And yes, you may have even used a cash advance on one to help pay the minimum due on the other!

I know, you fully intended to pay all this back, but your circumstances just haven't changed.

The Creditor sent letters and made phone calls, but they were not successful.

So, in some cases, they sell or assign your account to a Law Firm that specializes in debt collection.

Even so, if you had contacted the collector or attorney/collector, you should have been able to negotiate some sort of settlement that would not only save you some money, but stop any legal options!

Recent Settlements See what we have  done for our clients!

Each creditor/collector is different and so there are no set amount of settlements.

A SUMMONS doesn't just happen by accident.

The good news is that regardless of the circumstances, there is most likely an alternative to wage or bank garnishment.

FREE  Debt Elimination Summary



Tags: how to prevent wage garnishment, debt collector, making just the minimum payments, unsecured debt

What Can Debt Collectors Do to Me?

A debt collector has the right to collect for unpaid bills.  That makes sense, but misunderstanding about what a collector can and cannot do causes stress and fear. 


Fear-1If you find yourself unable to keep up with at least the minimum payments due on your credit accounts, before long, those accounts may be turned over to a DEBT COLLECTOR!

This may cause FEAR or STRESS, which is natural, but often unfounded!

Someone has called F.E.A.R. :

  •         False
  •         Evidence, that
  •         Appears
  •         Real


You may be in this situation as a result of...

  • Unemployment
  • Divorce
  • Serious illness or Disability
  • Trying to make ends meet on a limited, FIXED INCOME of retirement
  • or other reasons beyond your control



What happens when you start missing the minimum payments due?

The original creditor will start trying to get you to start making payments again.

Each creditor (Visa, Master Card, Discover, Capital One, etc.) has slightly different processes for recovering past due debts, but all take pretty much the same approach:

They send out letters encouraging you or kind of demanding you to start making payments or even warning you that unless you do "such-n-such", they will escalate their collection efforts to the next level.

And then the calls start.  Lots of calls!

If you somehow have the funds available to catch up, then you may want to contact them and see what can be done, but.......


"Robbing Peter to Pay Paul" just results in more and more problems!

However, if you don't have the money to pay your debts (and you probably are in this situation because you just can't keep up), then it is usually best not to bother contacting them and trying to explain your situation.


Credit card companies are in business for one reason and one reason only, and that is to make HUGE PROFITS!

These profits come from:


...and about anything else they can tack on to get more money from us!


OK, then what happens next?

After about 3-4 months, if the calls and letters don't work to get you to start sending them money, they will usually:

  • Charge the account off as a loss
  • Assign it to a collection agency
  • Sell the account to a DEBT BUYER   (Yes there are hundreds of companies that BUY Millions if not Billions of dollars of debt!), or...
  • Retain a LAW FIRM that specializes in debt collection


Now these other agencies begin to contact you by mail and phone.

While your account is still with the original creditor, they have the right (in the fine print of the application) to call you.

But once these accounts are transferred or sold to another party,  you have the legal right to stop them from calling 

STOP Collection Calls Free Sample Letter


But, whether these companies are working on a commission basis or have purchased the account, their goal is the same...


Depending on your particular situation, you may be able to accept or negotiate a SETTLEMENT.

In fact, they may mail you an offer or you can call and try to negotiate.

A SETTLEMENT is an agreement to accept an amount less than the full balance.

Once this settlement is completed (lump sum or in payments), the account is deemed "settled-as-agreed" or "settled for less than the full balance" and it will be reflected as a ZERO or $0 Balance on your CREDIT REPORT.

If you'd like to know more on how DEBT SETTLEMENT affects your CREDIT SCORE, CLICK HERE:

What Can You Do to Improve Your Credit Score?

But what if you don't have the funds necessary to accept to negotiate a settlement offer?

The collection agency may be patient and keep the account on file for several months.


The original creditor may RECALL the account and RE-ASSIGN it to another collection agency.

If this happens, then the LETTERS and CALLS will start again.  You'll have to follow the same procedure to STOP THE CALLS.


Sometimes your account lands with a Law Firm that specializes in DEBT COLLECTION.

This firm will send the letters and make the calls, but if no agreement can be reached, they may start the LEGAL PROCESS to collect.

A CLAIM will be filed with the COURT in the county where you reside.

A SUMMONS will be delivered to you.  It will state that you have 20 or 30 days (varies by state) to APPEAR and give an ANSWER to the court.

Sounds like you have to go to court within that time-frame or else!!!!

Good time to give disclaimer:

I am not an attorney and am not nor cannot give legal advice. My comments are just my opinion gained over many years of helping people deal with debt.  If you have concerns, please consult an attorney.

"Appear and give and Answer":

If you have clear proof (payment stubs, bank records, etc.) that prove that you DO NOT owe the debt that the PLAINTIFF (creditor or owner of the debt) CLAIMS you owe, then you have the 30 days or so to file your ANSWER with the court.

This ANSWER must be in the proper, legal form your county court demands and usually it is best to have an attorney prepare it and file with the court.

Of course, this takes more money, so don't even start if you cannot prove (no question) that you DO NOT OWE THE DEBT!

But what if you owe the debt the SUMMONS says you owe?

Then you need to contact the attorney's office and try to negotiate either a SETTLEMENT or a REPAYMENT agreement! 


If an agreement cannot be arranged in about 2-3 months, then the attorney will probably apply for a JUDGMENT by DEFAULT. (No one filed an ANSWER), so they win by default.

Many people think that if you get behind on your bills that a creditor can just TAKE MONEY OUR OF YOUR BANK ACCOUNT, GARNISH YOUR WAGES or put a LIEN on your home or other property.

NO,         NO,        NO ! ! !

A creditor, debt collector or attorney cannot just take your money or property!

I hope you are starting to understand that there is a whole lengthy, legal process that has to take place before that could possibly happen! 


If you owe taxes, child support, alimony or some other debts, then your bank account, wages and liens can be done without all the above process! 

If your creditor (plaintiff) has been awarded a judgment, now they can apply for a wage garnishment, bank levy or place a lien on your home or other property.



If you have EARNED INCOME (not Social Security or other Retirement income) then it can be subject to garnishment per the judgment.

In most states, this is usually about 25% of your net (after tax) income. 



Once the plaintiff is awarded a Judgment, they can search for you bank accounts. 

This is usually done by using your social security number.

In 2011,  a law was passed to protect consumers from incorrect bank levies.

If you bank receives a court order to "freeze" you bank account due to a judgment, the bank is required to follow laws on what they can and cannot do.

However, not all banks do so and this can result in a very frustrating situation.  To learn more, click here:

Bank Laws Concerning Levies and Garnishments



One of the most misunderstood options a creditor has for collecting a debt (REMEMBER: ONLY AFTER A JUDGMENT IS AWARDED!) is a LIEN.

If a lien is placed on your home, is DOES NOT MEAN that you have to sell your home to pay the debt!

A LIEN is basically a plaintiff taking a position (usually behind a first or second mortgage) on your home.

If you home is paid for, then they would have first position.

What does this mean?

It means that when you go to sell or transfer ownership (give to your children after your death as an example), the amount of the judgment must be paid.


If you sell the house for say $250,000 and the judgment balance is $20,000, the title company will have to send $20,000 to the plaintiff at closing.

That's why they do a "Title search" when you are buying/selling/refinancing a house in order to see if there are any LIENS.

In this example, you would net $225,00 and the Lien is removed from court records.


OK, let's review:

Can a creditor take anything you own without being awarded a judgment?   



If you receive a SUMMONS, do you have to go to court?                                 



If you receive a SUMMONS, can you still negotiate a settlement or a repayment agreement to stop any other legal options a creditor may have?   



Can a creditor take money out of your bank account without being  awarded a judgment?                                                                                                           



Even after being awarded a judgment, can a creditor take money from your bank account that comes from:

  • social security
  • disability
  • retirement
  • child support, or
  • alimony.                                                                                       

No ! 


Hope this helps.


FREE  Debt Elimination Summary



Pic Credit

pic 2 credit







Tags: debt collector, how to improve your credit score, impove your cedit score, settlement, mimimum payments

Why Do Some Creditors Go After a Judgment?

A creditor has the right to file a claim, seeking a judgment if credit cards and/or other debts and loans are not repaid according to the agreement.

Some do and some don't.....WHY???


If you have too much debt and because of circumstances (usually beyond your control) you just can't keep up with the minimum payments, a creditor has several options to collect, including legal options.

Why some do and some don't is not clear.  

I've been helping people deal with having too much debt and not enough income to repay for almost 17 years now.

Usually, when an account (for this blog, I'm talking about unsecured accounts like credit cards, personal loans, medical bills, etc.) becomes delinquent, a creditor will usually do one or more of the following:

  • Have an agent or computer call you.  Sometimes several times a day!  Although ultimately you can stop these calls later, as long as the account is still with the original creditor, they have the contractual right to call.
  • Send out letters trying to get you to catch up or start repaying.
  • Assign the account to the creditors internal collections or recovery department.  The calls and letters start again.
  • Assign or sell the account to a collection agency or debt buyer (sometimes they can be one in the same.)
  • Place the account with a Law Firm that specializes in debt collection.  This firm will contact you, but if you cannot repay they may decide to start the legal process.

If you have some funds available or are able to make a reasonable monthly payment, a repayment agreement or settlement usually can be negotiated.  A creditor would rather get you "back on track" to keep that interest going rather than "give up" and "charge off" the account as a loss.

The point of this blog is to try and understand WHY some creditors will be patient and work with you and some won't.

Although I don't claim to understand why and/or when a creditor chooses to seek legal options to collect, this is what I've learned over the years:

Never forget...a lender is in business to make money/profit! 

This profit comes from the interest and fees they charge us for the use of their money!

Certain creditors have a set of rules/guidelines of how the seek the loss revenue of these delinquent accounts and they change for year to year.

Few examples:

When we first started our company in 2003, American Express was one of the easiest companies to negotiate settlements for our clients.  We could get them to settle for 30% -40% and let us set up monthly payments as $0 interest over a long period of time!

But over the last couple of years, American Express has determined that will not negotiate directly with like ours and will only discuss settlements or repayment plans with the client.

We have to coach or American Express clients, and although we still help them, it is very frustrating and time consuming!

One more...

Discover Card has starting going after judgments very quickly over the last year or so.

Now, if we can't negotiate a settlement, most of the Discover accounts are being placed with debt collection law firms to start the legal process within a few months!


I think (and this is just based on my experience over the years) that certain companies go through leadership changes and/or profit-loss margins that force them to become more aggressive, more quickly.

Why can't a Consumer or Debt Settlement Company negotiate with a company like Discover right away and avoid the legal process?

That depends on the circumstances of the consumer and the creditor!

Let me give you a hypothetical example that may help you understand:

Mary goes through a nasty divorce and ends up with a lot of credit card debt and a lot less income!

At first, she does the best she can to make as many minimum payments she can, but after a few months, realizes there is just not enough money coming in to keep up.

She calls the creditor and explains her situation, but even though one or two are willing to adjust her payments, there is still not enough to satisfy all of them.  AND THEY ALL WANT THEIR MONEY!!!

She doesn't want to file for BANKRUPTCY PROTECTION from her creditors now, so she calls a Debt Settlement Company like us and after going over her situation, budget, etc. we agree that her best option now is debt settlement, she enrolls.

She has a total debt balance of $27,000 spread over 5 credit cards.

They total monthly minimum payments they want is about 2.25% of the total or in this case, about $600/month, but her budget (even with making cuts as much as possible) only allows her to commit to $350/month (and that is going to be really hard to do).

She has:

  • Walmart                       $3,500
  • Citibank                        $4,500
  • Discover                       $5,500
  • Bank of American         $6,500
  • Lending Club                $7,000

We knew that our client had not made payments on her accounts for 3-4 months when she contacted us and that some of the accounts were in the process of being charged off.

In fact, a couple of the accounts (including the Discover account) had been placed with a debt collection Law Firm!

One evening, the doorbell rang and she was served a SUMMONS for her Walmart account.

She sent it to us and to avoid the possibility of this going to judgment and potential garnishments, we negotiated a STIPULATED AGREEMENT.

This is an agreement (usually filed with the court) that says basically that as long as she/we pay the agreed amount according to the terms negotiated, they (the Plaintiff/Creditor) will not pursue legal options such as garnishment, bank levies, or liens.

Even though this stopped the potential garnishment (25% of her net take-home income), the terms of the stipulated agreement called for a down payment of $1,000 (she had about $1,300 in reserves) and monthly payments of $200 until the total of $2,400 was paid.

Since we had to take care of the immediate problem with the Walmart Summons, their wasn't enough to negotiate on the other accounts for a few months.

The creditors were all contacted and we explained where she/we were at.

All of them agreed to be patient except Discover!

Recent Settlements See what we have  done for our clients!

After a couple of months, they/Discover placed her delinquent account with a Law Firm/Debt Collector.

This firm sent letters and we contacted them to explain her situation.  They would not agree to a small monthly payment until the Walmart was completed and they filed a COMPLAINT and a SUMMONS was served.

Why were they not willing to wait a few months?  It all depends on their profit/loss or margins at that time.

Bottom line...

Most creditors/collectors are willing to negotiate settlements and/or work with a client or us, but depending on various circumstances, some decide to seek legal options quickly.


Make sure to make sure to communicate with any creditor/collector sooner or later.

If you are using a company like ours to help, send all letters received IMMEDIATELY!

Hope this helps!

FREE  Debt Elimination Summary





Photo Credit