Received a 1099-C!  What do I do?

If you have had an unsecured debt settled for more than $600 and less than the full balance, you may get a 1099-C around tax time.

Unfortunately, many tax preparers and/or accountants do not understand how to take care of this so you don't have to pay much or nothing extra in taxes!

received-a-1099C

The IRS wants to get as much tax from us as possible.  Although we should pay our fair share of tax, many people pay much more than they should by not knowing or understanding the tax code on a 1099-C!

DISCLAIMER...

I am not a tax professional or attorney, so I am not giving tax or legal advice. 

You should always consult a qualified tax authority.

Don't be surprised if they don't really understand how to deal with a 1099-C!

Example:

You had a Visa Credit Card with a balance of $5,000.

For whatever reason, you just could not keep up with the minimum payments due and the account became delinquent.

After receiving numerous calls, emails and letters, the account was transferred or sold to a "debt buyer".

A debt buyer (company who buys huge blocks of debt found in the records of the Credit Bureaus) can attempt to collect a debt just like the original creditor or the average debt collector.

Anyway, you are able to settle the account for $2,000, for a difference of $3,000.

Actual Settlements See what we have  done for our clients! Click here!

The IRS says that this $3,000 was "FORGIVEN" and should be added back into your total gross income for that year.

Most people (and many tax professionals) mistakenly think that you have to pay $3,000 of additional tax! 

NO....NO...NO..!!!

The 1099-C actually says (fine print at the bottom) that you may be EXEMPT if at the time of this "FORGIVENESS" you were INSOLVENT.

In IRS terms, INSOLVENT means that at the time of this settlement/forgiveness your LIABILITIES were greater than your ASSETS, then you DO NOT have to add this FORGIVEN income back in to be taxed!

How do you prove to the IRS that your were INSOLVENT at the time of the settlement/forgiveness?

The process is actually very simple (although again, many tax professionals do not understand it!).

You will need to provide some documentation and an IRS Form 982.

Here is a link that will provide you with the necessary documentation, IRS Form 982 and a simple example.

FREE DOWNLOAD 1099-C PACKET

At Debt Relief NW, LLC, we have been helping people deal with having too much debt for a little over 20 years now.

If you have questions, let us know:

Personalized  Program Comparison Click here!

 

 

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Tags: debt collection, debt relief in Portland Oregon, 1099-C, IRS Form 982

I've Received a Summons...What Now???

The doorbell rings and someone is standing there with some documents. 

The man says, "You are being sued and I'm here to serve you a  SUMMONS." 

He hands you the SUMMONS and walks away...

NOW WHAT?

credit_card_debt_1_girl

You go back inside (a little in shock!) and start to read the documents.

The SUMMONS says something like 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/CLAIM, you have 30 days to file the proper documentation and proof with the court.

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

After (and only AFTER) being awarded the JUDGMENT, can the PLAINTIFF/CREDITOR/COLLECTOR 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!

A BANK LEVY will FREEZE you bank account and you will not have access to your funds! VERY BAD!

WHAT DO YOU DO???

You cannot ignore this SUMMONS!

The creditor or collector retained a Law Firm that specializes in Debt Collection by filing CLAIMS resulting in a SUMMONS.

You may have been receiving calls and letters about your delinquent account and have not been able to do anything about it or just ignored them...

Well, now they have your ATTENTION!

At Debt Relief NW, LLC, we've been helping people deal with receiving a SUMMONS for over 20 years.

Of all those, only one or two resulted in a WAGE GARNISHMENT or BANK LEVY.

Why???

 

BECAUSE THEY IGNORED THE SUMMONS!!! 

 

Of those who let us know about the SUMMONS, we were able to:

1)  Negotiate a settlement the total amount CLAIMED.        

      To do this usually takes a LUMP SUM payment of 70%-80%.

      Rarely will the Creditor/Collector/Plaintiff accept a settlement reduction        and accept payments over a long period of time as well. 

2)  Negotiate a repayment plan on the FULL BALANCE.

      Usually, there is a STIPULATED AGREEMENT.

      It must be signed (sometimes notarized) by the DEFENDENT (CLIENT)

      It is filed with the court, but removed after the agreement is completed.

 

BOTTOM LINE...

In most cases a settlement can be negotiated BEFORE a creditor or collector decides to FILE A CLAIM (resulting in a SUMMONS).

But if you receive a SUMMONS, act quickly and legal options to the Plaintiff such as WAGE GARNISHMENT and/or BANK LEVIES can be prevented!

Actual Settlements See what we have  done for our clients! Click here!

 

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Tags: summons, judgments, wage garnishment

Errors on My Credit Report...How to Get Them Removed?

Estimates vary, but some estimate that more than 70% of us have errors on our credit report!

Why is that a big deal???

credit_denied

  Credit reporting       agencies:

  •                   Experian
  •                   Equifax
  •                   TransUnion

 

 

 

 

These Credit Bureaus sell our information to lenders and that information determines if we can get a loan or credit card and what the interest rate will be.

Obviously, the better your credit score, the better rate you will receive.

What to do if you find errors?

Save a copy (PDF) of the page in your credit report that has the error (not the entire CR).


Write a brief explanation of why you are disputing this entry/information.


Prepare your written PROOF (cancelled check, bank statement, etc.) showing that this debt was paid.

Now what?

You are going to go online and open disputes with each credit bureau that is reporting the error.

Going online is much quicker and easier than calling or sending your information by mail.

Each bureau has it's own website.  You'll find that it fairly easy to follow the instructions.  Here are the links:

 

Equifax

Experian

TransUnion

 

What next?

You will need to follow up with each dispute.

Normally, it takes 45 days or so for them to correct the dispute or communicate with you.

But, we are not living in "normal" days and it seems like everyone one is "short staffed", "backed up", etc.

Once the dispute has been corrected, the bureau is supposed to send you a CORRECTED credit report.

What if your DISPUTE IS DENIED?

Your credit report should list the creditor, collector or the company who may have bought your account.

You will need to contact them and find out what is going on!

If you still owe the debt, you should be able to negotiate a settlement.

Not easy, but possible.

If you need advice or help:

Personalized  Program Comparison Click here!

Hope this helps!

 

 

 

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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.

Why?

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!

NOT SO!

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.

NOW WHAT????

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.

HOWEVER....

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!

Personalized  Program Comparison Click here!

 

 

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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!


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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.

Personalized  Program Comparison Click here!

 

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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!

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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:

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.

BE VERY CAREFUL!

BBB        A+        Accredited Click here!

 

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.

IF YOU IGNORE THE CALLS AND LETTERS, THIS WILL MOST LIKELY HAPPEN!

YOUR DEBT IS NOT GOING TO JUST "GO AWAY"!

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...

DON'T IGNORE THE CALLS AND LETTERS AND LET THIS HAPPEN!

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.

Finally:

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:

Personalized  Program Comparison Click here!

 

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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

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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.

 

Personalized  Program Comparison Click here!

 

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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!

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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.

WHAT TO DO WHEN YOU FIND ERRORS

  • 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.

NEXT:

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:

Equifax

Experian

Transunion

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.

 

NOW WHAT?

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.

 

WHAT DO YOU DO IF YOUR DISPUTE IS DENIED?

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:

Personalized  Program Comparison Click here!

 

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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.

BACK TO OUR MAIN ISSUE...

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!

OK...

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.

NOW WHAT????

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

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 CANNOT IGNORE the SUMMONS!

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

Personalized  Program Comparison Click here!

 

 

 

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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"!

 

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

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