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!


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!


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!


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! 


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.


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

Wage Garnishment in Oregon...Know Your Rights!

If you receive a notice that your wages are going to be garnished, you need to act, and act fast! Here's some helpful tips you can use:


Here at Debt Relief NW, it seems like we get dozens of calls weekly from people who "just found out", that their pay check was going to garnished!

I've highlighted the phrase, "just found out" to make a point:


There is a legal process that must unfold before a creditor or debt collector can receive a writ of garnishment from he court to send to your employer.

I am going to outline, in a nutshell, so to speak, of the process and what you:


For the purpose of this article, I'm only referring to UNSECURED DEBTS, such as:

  • Credit or Store Cards
  • Personal loans (NOT mortgage or auto loans)
  • Deficiency judgment after a repossession
  • Medical bills
  • Private student loans

OK, let me lay out an example (based on over 15 years of helping people with their debt issues):

I'll call him Joe.  Joe has a decent job and earns about $20/hour.  At 40 hours a week and an average of 4.2 weeks/month, his GROSS (before taxes and deductions) is $3360/month.

Of course, after taxes and other deductions, his NET INCOME ("TAKE HOME")  is only about $2352 (approximately 30% less than his Gross Income).

He is renting an apartment and has all of the usual bills.

His total budget or outgo is about $2100 a month, leaving him barely $250 for emergencies, etc.

Included in that budget is about $15,000 of credit card debt spread over 3 cards:

  • Visa                 $8,000
  • Master Card    $6,000
  • Home Depot    $1,000

The total monthly MINIMUM PAYMENTS on all add up to $300/month.

Joe is having a very difficult time making the $300/month, minimum payments and then, he is working around the house and falls off a ladder and breaks his leg!

His insurance policy doesn't provide for any "disability income" for the accident, so not only is he going to be off work for about 3-4 months, he doesn't have any means of income.

Fortunately, he had a little savings account, but it wasn't enough to cover all of his monthly budget.

So, Joe does what thousands of people do every day, he pays all of the most important bills, like his rent, utilities, groceries, etc. and let's the credit card bills get behind.


After he misses a payment or two, he starts to get letters and calls, lots of calls!

At this point, Joe can't do anything about the annoying calls, because as long as his account is still with the original creditor, they have the right to call him about it.

But, once the account is charged off, sold, or transferred to a collection agency or other third party, then he can put a stop to the calls!.  (I'll show you how in just a minute.)

Of course, Joe tries to explain to the caller what he is going through and they may or may not offer some kind of "HARDSHIP PROGRAM"  to help him through this.  But, it really doesn't matter as he just will not be able to make any payments until he is back to work and get some other bills caught up.


The original creditor(s) will most likely charge off, sell or transfer the account to a collector after about 120 days of so if nothing can be arranged.

So now, Joe starts getting letters and calls (LOTS OF CALLS)  debt collectors!

He'd like to make some kind of arrangement with them, but they are demanding full payment on the balance or else!

At this point, he can put a stop to these calls.  Here's how:

STOP Collection Calls Free Sample Letter

But, even though the calls are stopped and he is just "ignoring" the letters, the debt is not going to go away.


If the debt collector is unsuccessful in getting you to start making payments, then the debt collector may decide to start the legal process of obtaining a judgment.

An attorney for the collector will FILE A CLAIM at the courthouse of the county where you reside.

This CLAIM will generate a SUMMONS that will be delivered to you, usually in person, but sometimes by registered mail.

I'm not going to go into all of the details of what to do with the SUMMONS here, but you can check out a blog I've written that will be very helpful called:





The fact that the collector decided to file a CLAIM proves that they are very serious about collecting on this debt.

If you ignore the summons, then a court date will be scheduled (you don't have to go), but a representative from the collector (now called the PLAINTIFF) will show up and the court will award them a DEFAULT JUDGMENT.

It's called a "default" judgment because no one contested it and they won by default.


Now, the PLAINTIFF ( the collector) can apply for a WRIT OF GARNISHMENT.

The Writ of Garnishment is sent to your employer and they, by law, must obey the writ and withhold up to 25% of your net, after-tax, income.

Joe has just gone back to work and then he get's this notice from the payroll department that he is being garnished...and he starts to panic, which is understandable!

Remember when we did the math earlier about what his actual "take-home" or "after tax" income was?

That amount was $ 2,352.

Most states allow for up to 25% of the net, after-tax check to be deducted and sent to the creditor until the full balance (inflated now with interest and legal fees) is repaid!


$2,352 X 25% = $588 will be deducted from Joe's Net Check!

He could barely make it on the $2352, and now he has to somehow make it on $1764!




OK, so Joe's really in trouble, you get it...

How did this happen and what can he do about it now?

Joe could have stopped this "process" and ultimate JUDGMENT by trying to work out a SETTLEMENT PLAN with the debt collector.

Most debt collectors would much rather accept less than the full balance than go to all of the time and expense to seek a judgment:

When Joe received the summons, he could have contacted the attorney for the collector and most likely worked out some kind of repayment arrangement that may have included a reduced settlement!

Once the judgment was awarded and the plaintiff had spent more money in legal fees, they went after the garnishment.

But that doesn't mean that you still could not work out something to stop the garnishment!

You may be able to get them to stop the garnishment and take a more "reasonable" amount to repay the debt.

Depending on the circumstances, you may even be able to not only stop the garnishment, but also get a reduced settlement.  Each case is a little different.

If this help, great.

If you find it a little "over-whelming", then maybe we can help:

Personalized  Program Comparison Click here!


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Tags: debt collection, summons, how to prevent wage garnishment, credit card, garnishment

Too Much Debt?  Here Are Some Options:

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


There are basically two types of debt:

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

Unsecured debt, such as:

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

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

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

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

See if this sounds familiar...

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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


At this point, here are you basic options:


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

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

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

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

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

STOP Collection Calls Free Sample Letter

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


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

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

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

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

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

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

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

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

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

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

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


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

Preventing Wage Garnishment in Oregon

It is much easier to PREVENT a WAGE GARNISHMENT than to STOP A WAGE GARNISHMENT! If it's already hard to pay bills with your take home pay, what would you do if that was cut by 25% more!

Here are some VERY IMPORTANT things you must know in advance.

I've been helping people deal with debt issues for almost 15 years now.

I've taken hundreds of calls from stressed-out, scared, "OMG, what am I going to do now?" people who had had their payroll check garnished!

The title of this blog is Preventing Wage Garnishment in Oregon, but it applies to all states.

OK, so how do you PREVENT a Wage Garnishment?

If you have just started to fall behind or have fallen behind on making the required payments on your credit cards or other unsecured debts, here is what normally happens BEFORE a wage garnishment begins:

  • First, you get calls & letters from your original creditor
  • Then, you get Calls & letters from a debt collector
  • You may be issued a Summons
  • You may get a Judgment awarded against you
  • Finally, you may be Garnished


Let's walk through what you MUST DO in order to PREVENT A WAGE GARISHMENT:


Calls & letters from your original creditor(s)

When you are behind in making your monthly payments due to your creditors, those creditors will try  to help you get caught up and/or get a fresh start on repaying your debt.

Let's face, the creditors want to get repaid plus interest and fees, so at first (maybe the first 3 months or so you are behind), they will call and send letters.

Unfortunately, as long as your account is with the original creditor, they have the right to call you EVEN if you write a letter to stop calling.

Now, once they charge off or assign your account to another agency...debt collector, you can put a stop to those calls.  I'll show you how in just a minute.

I understand how stressful and possibly embarrassing it is to get calls like that, so at this point, rather than ignore them, try saying something like this:

"Yes I know that I am behind, and I fully intend to get caught up just as soon as possible.  But, please stop calling me."

Sometimes this works and the original creditor will reduce or even eliminate the calls. 

But, don't expect that to happen every time.

Sometimes they can be very rude!  In that case, don't waste your time trying to explain or arguie,  just hang up!

As to the letters....

You may get a letter offering you:

  • Reduced payments for 6 months or so to allow you to get caught up...or,
  • A settlement offer to reduce the balance you owe, if you can that amount in a lump sum or just a few months.

While I am not in favor of the first offer which is called a "Hardship Plan", sometimes the SETTLEMENT OFFER is not bad...if you have the funds to take advantage of it!

If the original creditor cannot get you into some kind of repayment plan or  "back on track" in 3-4 months, they most likely will charge off, transfer or sell you account to a debt collector.


Calls & letters from a debt collector


ISo, the calls and letters start again!  Lots of calls and letters!

But now, you can put a stop to those calls.  Here's how:

STOP Collection Calls Free Sample Letter

But again, just because the calls stop, the letters continue, so you are not "out of the woods" yet!

Depending on the type of debt collector your account has landed with, you may be able to get a settlement, whether in a lump sum payment or possibly a settlement paid out over several months.

Here are some actual debt settlements we have completed for our clients:

If your still not able to make REASONABLE payment toward a settlement, then the debt collector may decide to FILE A CLAIM and then you would get a SUMMONS.




If you have ever had a summons delivered to you at home or even at work, it is a very stressful and humiliating experience!

Although most of the time the summons is delivered, in person, by a person contracted by the debt collector, sometimes a summons may be delivered by a sheriff officer!




  • You are not going to jail!
  • They are not going to take your TV or other "stuff".
  • In about 99.9% of the time, you are never going to court.

So again....


The SUMMONS will state who the PLAINTIFF is (that's the creditor or debt collector) and name you as the DEFENDANT.

It will also state what the amount of the claim is (how much you owe now, including interest, fees, etc.)

Then it will state something to the effect that you have"20 (or 30) days to give an ANSWER to the court at (address, etc.).






It means that if you KNOW FOR CERTAIN and HAVE PROOF that you do not owe this CLAIM, then you can file an ANSWER to the court in the allotted time (usually 20-30 days from receipt of the summons).

The ANSWER must be in the correct, legal document form and so you most likely will need an attorney to prepare itAnd, in addition to attorney fees, their is a hefty fee to file the ANSWER with the court!

So again, don't start down that road unless you know you can prove that the claim has no merit!





It is a misunderstanding that just because you are behind on your payments a creditor or collector can get a wage garnishment.  NOT TRUE!!!

Before that can happen, a JUDGMENT must be awarded by the court.

I'll explain more in just a minute...




This could be the most important point for you to take from this article...




I can't tell you the number of times a prospective client or even one of our current client calls and says that they have been garnished and admitted that they had received the summons, but just ignored it!




On the other hand....

In most cases, we have helped our clients AVOID GARNISHMENT by either negotiating a:

  • SETTLEMENT, LUMP SUM OR TERM PAYMENTS on a reduced balance, or

So, just because you have received a summons does not mean it's too late, but, we need to move fast to prevent a...




Most of the time, a person who is in such a severe financial situation that they cannot keep up with their debts and these debts have gone to a debt collector and a settlement or repayment plan could not be arranged, a DEFAULT JUDGMENT will be granted by the court to the plaintiff (creditor or debt collector).

Now, once the JUDGMENT has been awarded, NOW, AND ONLY NOW, they (the plaintiff) can apply for a WRIT OF GARNISHMENT.

Most states allow for up to 25% of the "take home/after tax check" to be garnished (deducted) !!!!


Some include:

In Oregon, income under $218 after tax/take home income. In other words, if you bring home less than $915 per month, you cannot be garnished.

Other sources of income that are exempt from garnishment:

  • Social Security
  • Retirement
  • Supplemental Security Income (SSI)
  • Public assistance (welfare)
  • Unemployment benefits
  • Disability Income (other than SSI)
  • Workers compensation
  • Spousal and Child support

WARNING!!!   If you have a judgment against you and receive income from one or more of the sources above, you should make sure your bank understands that any garnishment request should be denied!

If you don't and the bank doesn't do it's "due fiduciary diligence" and transfers your funds, you can get them back, but it may take some time!


OK, if you were barely paying the bills before, and 25% is deducted from your check, what are you going to do now?




When I refer to "bankruptcy", I like to call it "BANKRUPTCY PROTECTION".

The bankruptcy laws in our country and your state, are there to PROTECT you from losing everything you have when a dire, financial crisis hits you!

Yes, I think a person should do everything possible to AVOID bankruptcy, but when all else fails, the you need to seek the help of a qualified bankruptcy attorney.

The bankruptcy attorney can not only advise you on what type of bankruptcy plan you qualify for, but they will put a stop to all calls and collection efforts by your creditors.



If, or when, you face a financial hardship and you just can't keep up with the payments, you have options!

Do not...I repeat...DO NOT "hide your head in the sand"!


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Tags: debt collection, wage garnishment, debt settlement, oregon wage garnishment, debts, bankruptcy attorney

How to Improve Your Credit Score After Debt Settlement

Debt Settlement is an excellent option for dealing with debt.  But, after you have settled all of your debts, you need to do some work to make sure your credit report and score is being reported correctly!  Here's what you need to do....

We have been helping people deal with the stress of have too much debt for many years.  Once one of our clients has successfully completed the debt settlement program, they are not sure what they can do to improve their credit score. 

As an example, I received this email yesterday:

"I'm so glad we've finally wrapped everything up!  Do you have any advice for me, with regards to building back up my credit score?" 


It is very important to understand the "basics" of how your credit score is determined. 

According to the Fair Isaac Corporation, your score is determined from the following:


  • Payment History (35%) 
  • Amounts you Owe (30%)
  • Length of Credit History (15%)
  • Types of Credit Used (10%)
  • New Credit (10%)


As you can see from the breakdown above, at least 65% of your credit score is determined by how you have handled credit (History) and how much outstanding credit you are carrying now.

Our credit reports are used by lenders, insurance companies, potential employers, etc. to get a snapshot of how you have dealt with and are dealing with credit and debt.

When someone enrolls in our Debt Settlement Program, they have usually gone through (or are going through) a very emotional and stressful time in regards to debt and debt management.

Once the balances and the subsequent "minimum payments required" get too large to manage, most people choose a debt settlement program rather than bankruptcy protection.

When accounts have been delinquent for 5-6 months, they are usually charged off and/or sold or turned over to a debt collection agency.  Most of the time, the debt collector will accept a settlement of 40% -60% of the balance, sometimes more or less, depending on circumstances.

Click below to see some actual settlements we have negotiated for our clients:

Once an account has been settled, the debt collector is supposed to report the settlement to the major credit bureaus, but many times they don't.

This is where spending a little time and effort can pay off tremendous benefits as regards to your credit score.

FIRST, you need a copy of your credit report to see what is being reported.

All of us can received a FREE COPY of our credit reports annually.

There are several companies you can find online that offer credit reporting services, but I've found the easiest to be:

Just follow the instructions and get a copy from all 3 of the Major Credit Reporting Agencies:

  • Experian
  • Equifax
  • TransUnion

Once you have it or them printed, take some time to go over the report.  These reports are not that easy to understand, but with a little effort, you can determine what is being reported.

What you are looking for are ERRORS. 

Let's say, for example that you had your XYZ Credit Card account settled last year.

The balance was $14,875, but the debt collector, Atlas Collection Corp (not real)., accepted $7,000 to settle this account.

As you are checking your credit report, you see that the balance of$14,875 was charged off from XYZ Credit Card and the notation says that it has been "placed for collection" or something like that.

Several pages further back in your credit report, you see that Atlas Collection Corp. has the account and is reporting the balance at $14,875 (might be more or less, depending on additional interest and fees.)

Atlas Colletion Corp. never reported the settlement, or reported the settlement, but the Credit Reporting Agency never changed the reporting to read....

    Balance $0     "account settled-as-agreed" or in some cases, "settled-in-full"

As long as this account is showing a large, unpaid balance, your credit score will suffer!

Now what?

Time for you to go to work...

You are going to go online and open a DISPUTE with each credit reporting agency that is not reporting this account as $0 balance and/or "paid-as-agreed".

To do so, click on the links below and follow the instructions. 

Going on line is far easier and quicker than trying to send in by mail, but either way will work.

You will need to be able to show proof that the account was settled, so you will need:

  • Copy of the Credit Report page showing the error (you want to circle the error and make it easy for the agent to see what you are disputing)
  • Copy of the settlement agreement
  • Copy of the cancelled check or check-by-phone or debit card you used from your bank statement
  • Brief letter of explanation, such as:

John Doe

123 Street

City, State Zip

Social Security # (they have it anyway) xxx-xx-xxxx

I am opening this dispute to correct an error on my report.  I've included the page showing the error along with proof that it should be a $0 balance now.

I negotiated a settlement for this account and it was paid as agreed on X/XX/2015.

I've enclosed not only a copy of the settlement agreement, but also a copy of the cancelled check as proof of payment.

Please correct the error to reflect a $0 balance and that the account was paid-as-agreed.

Thank you,

_____________________________________ (sign here)

John Doe

Phone: 555-555-5555

Email:  JDoe@

You will need to copy all of your documents and proofs in a .pdf format, not only for your records, but also to attach when you go online.

The credit bureaus should correct the error within 45 days. 

You can go back online, login and check the progress.

If they do not honor your dispute, then do it again.  DO NOT GIVE UP!

Most of the time, if you have demonstrated a legitimate error and have provided proof, the credit bureau(s) will make the correction.

As your credit report starts to reflect $0 balances, your credit score will increase.

If you would like more information, click below:

How to Dispute Errors  on Your Credit Report



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Tags: debt collection, Credit Score, debt settlement in oregon, impove your cedit score

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

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

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

too many credit cards

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

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

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

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

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

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

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

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

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

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

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

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

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

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

STOP Collection Calls Free Sample Letter

What about calling you at work?

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

What about calling your family or neighbors?

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

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

But, they may not discuss your financial situation!

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

They are prohibited from...

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

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

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

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

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

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

Oregon Department of Justice Consumer Protection

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

FTC Complaint Assistant

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

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

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

Need mor advice?  Let us help:


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

Should You Be Afraid of Debt Collectors?

A recent newspaper article in Portland, OR from The Oregonian stated that as many as 33% of all consumers will be dealing with debt collectors!

Although dealing with a debt collector can be frustrating and annoying, there is really no reason to ever fear a debt collector.

Believe me, I certainly understand why most people who find themselves in a financial situation that has caused some or all of their accounts to be turned over to a debt collector are nervous.  The thought that you might lose your home, possessions and/or bank accounts would cause any sane person to be afraid.

fear of debt collectors

Well, the good news is that in most cases, that FEAR is not necessary!

In this blog, I am talking about dealing with unsecured debts (credit cards, store cards, medical bills, etc.) and not secured debts such as a home mortgage or auto loan.

So, here are a few things to remember and tips on how to deal with debt collectors:

It rarely does much good to talk with a debt collector on the phone.

Once your account is 60-90 days past due, you can expect a call from either the RECOVERY DEPARTMENT of the creditor or from a DEBT COLLECTION COMPANY.

While your account is still with the original creditor, the Fair Debt Collection Practices Act or FDCPA laws that allow you to put a stop to collection calls do not apply...yet!

Most of the time, when the original creditor's agent calls, they are just trying to find out what your situation is and may offer a plan to help you get back on track.

BE VERY CAREFUL!!!  They may offer what is called a "HARDSHIP PLAN", whereby you agree to allow them to deduct a certain amount of money (usually less than the total amount your last statement DEMANDED) from your checking account for say, 6 months. 

At the end of the 6 months, they promise to "REVIEW" your case and get you started making regular payments again.  But usually, after you have paid the agreed upon amount for 6 months, your have barely made a dent in reducing your balance and are right back to where you started!

If you take the call from the original creditor, be very calm and simply say something like:

"I realize I've fallen behind on my bill and fully intend to get caught up soon. But, at this time, there is nothing I can do, so please stop calling me."

Yes, I know I just said that they have the legal right (at this point) to call, but they may honor your request and leave you alone for a month or so.

If the recovery department of the original creditor is unsuccessful in getting your to start making payments, the account most likely will be charged off and sold or transferred to a debt collector after about 120 days.

You most likely will get a letter from the debt collector and no doubt will start getting phone calls!

A Debt Collector's job is to get you to pay...period!  Although there are plenty of "decent" debt collectors who actually may show some empathy for you, there are many that are just the opposite.

These debt collectors will use all kinds of tactics to get you to pay up!  Although most debt collectors follow the laws and/or guidelines of the Fair Debt Collection Practices Act, there are always a few "bad apples".

Don't get into a dialog with a debt collector!

While I think it's OK to have one short conversation with the original creditor, it's usually a whole different story now that your account has been turned over to a debt collector!

If they have sent you a letter demanding payment, etc., get the address of the debt collector and write them a letter demanding that they cease calling you at home.

Here is a sample letter you can use:

STOP Collection Calls Free Sample Letter

If the calls don't stop (it will take a week or so) then you can file a complaint with your state's attorney general's office.

Usually, the debt collector will stop calling as they can be fined very severely!


After a reasonable period of time (varies with each debt collector), if the debt collector is unsuccessful in getting you to start paying , the original creditor may:

  • Recall the account and turn it over to another debt collector and the process will start again.  Yes, you will have to send another letter to the new debt collector to stop the calls!
  • Turn the account over to a Law Firm that only practices debt collection.


If your account is placed with a Law Firm that practices debt collection, you will get the same letters and calls, but now, you need to be careful.

If the Law Firm decides to FILE A CLAIM for the debt you owe on behalf of the original creditor or the debt collector, you will get a SUMMONS.

I've written several blog articles over the years on what to do if you receive a summons, but in short:


Most people think that a debt collector and/or debt collection law firm can just garnish your income, levy your bank account and/or put a levy on your home or other property.

While it's true that they can AFTER they are awarded a judgment, they cannot do anything until then.  That's why it is so important to take action if you receive a summons!

In most cases, you can prevent the CLAIM from moving on to a JUDGMENT by contacting the attorney's office and working something out.

Most "judgments" are awarded to the creditor/debt collector/plaintiff because the debtor didn't take any pro-active steps.

If you are employed and receive regular W-2 income, then you can't let

If you...

  • Are retired, with only Social Security and/or Retirement Income, or
  • Disabled and receiving Disability Income only, or
  • Are unemployed and receiving unemployment income, or
  • Receive child support or alimony payments, then...

These sources of income are exempt from garnishment. Notice, I didn't say exempt from state or federal taxes you may owe, but from garnishment for unsecured debts.

The best way to put an end with dealing with debt collectors is to NEGOTIATE A SETTLEMENT of your account. That is, if you have some funds available to make an offer of 40%-60% of the balance. 

If not, you can still usually negotiate a settlement by agreeing to make monthly payments rather than a lump sum payment, but you may have to pay a little larger settlement.

Click here for some very useful information on how to negotiate a settlement:

One final thought...

If your financial circumstances are such that you have no ability to offer a settlement, either in a lump sum or payments, then you may need to consult a bankruptcy attorney.

Bankruptcy is a way to help those who qualify to put and end to debt collectors and get a fresh start.

If all of this sounds a little overwhelming, we can help:



Photo credit: 

Kevin B 3

Tags: debt collection, fair debt collection practices act, credit card debt, debt settlement, Bankruptcy, debt, credit cards, Oregon, PORTLAND

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

Tips on How to Deal With Debt Collectors

Dealing with a debt collector can be one of the most frustrating experiences you will ever go through!  Here are a few tips that will help.

It's 5:30 PM, and you've just sat down at the table to finally relax and enjoy a meal.

 ring phone ringing


You don't recognize the caller from your caller ID, but you know who it probably is. 

Yep, another call from that debt collector.

If you're like so many people these days who for one reason or another have fallen behind on your credit card or some other unsecured debt, you know how annoying it is to get these calls!

Let's put a stop to these calls!

If you do not know the address of the debt collector, then go ahead and answer the phone (just this time only!).  Tell the debt collector that you want to pay this bill, but cannot at this time.

Of course, the debt collector will try to get you to agree to some small amount to be paid as a check-by-phone or from your debit card. DO NOT DO IT!!!!

Instead, ask for the address (as though you intend to mail a check later).  If the debt collector will give it to you...great.  If not, then just hang up.  In a week or so, you should get (if you haven't already) a letter from the debt collector with the address you need.

According the the Fair Debt Collection Practices Act (FDCPA), if you write a letter demanding that the debt collector stop calling you, they must stop or face some very hefty fines!

Click below for a FREE sample letter to send:

STOP Collection Calls Free Sample Letter


Make sure you send the letter either by Priority Mail with a tracking number or by Registered Mail.  You want to have proof that the debt collector received the letter.

OK, you've sent the letter, and since it will take a week or so for the calls to stop, what should you do the next time the phone rings?  Here is what I suggest:


If you do not have caller ID, GET IT!  You will be able to see who is calling and if you do not recognize the caller...DON'T ANSWER.  Your friends and family will leave a message. 


Debt collectors are trained to do one thing and one thing only...get you to pay!  And although there are very clear laws that limits what they can and cannot do, some debt collectors are pretty low-down, and if you're not careful, they will get you to start paying. 


Although a "Hardship Plan" may have it's place, once in a while, for the most part, they are not a very good solution to your problem.

In most hardship plans, you will agree to make a lower payment for about 6 months and then the creditor will re-evaluate your situation.  While this may help with your "cash flow" for a short term, in the long term, you will not be any better off.


Believe or not, most debt collection companies will take a settlement on your account for much less than the current balance.  A 50% reduction is not unusual and depending on your circumstances, you may able to get an even better settlement reduction.

Check out some of the settlements we have done for our clients:

If you don't have a lump sum to offer, they will (in most cases) work out a TERM-SETTLEMENT plan.  Don't be afraid to ask!

Depending on how old your account is and your specific financial circumstances, the debt collector may have purchased your account from the original creditor for literally pennies-on-the-dollar, so they will usually take a settlement paid out over a 6-12 months, and in some cases longer.

What about a SUMMONS!

If you have received a summons, it is still not to late to work out a settlement or a repayment plan, but you need to take action quickly!  I have written many blogs detailing HOW AND WHAT TO DO IF YOU RECEIVE A SUMMONS.  Please take a few minutes to check out.


Dealing with Debt Collectors is certainly not easy, but can be done.

Would you like some assistance?  Just let us know:

Photo Credit:   Sean MacEntee

Tags: debt collection, debt settlement, debt, debt collection in oregon, credit card debt relief portland oregon, debt collection in texas