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

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

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

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

 

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Just to lay some groundwork...

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

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

THAT IS JUST NOT TRUE!

FIRST....

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

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

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

NEXT...

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

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

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

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

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

Recent Settlements See what we have  done for our clients!

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

STOP Collection Calls Free Sample Letter

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

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

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

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

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

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

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

RECAP.....

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

NOW WHAT??????

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

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

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

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

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

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

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

This can really be DEVASTATING!

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

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

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

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

 

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

Basic Exemptions from Wage Garnishments or Bank Levies

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

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

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

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

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

For example:

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

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

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

Or.....

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

 

LESSON HERE....

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

 

FINALLY....

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

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

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

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

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

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

 

FREE  Debt Elimination Summary

 

 

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

"Does Debt Settlement Hurt My Credit Score?"

I've heard this question hundreds of times over the years. 

The simple answer is "NO", but there's much more to it!

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The very question shows a misunderstanding of how credit scores are determined and also how the collection process general plays out.

First of all, if you are a prospect for a debt settlement program, then your credit scores have already been damaged.

If you have had or are going through a severe financial hardship/challenge, then most likely you've either raked up too much debt to be able to make the minimum payments due, or you have fallen behind.

A legitimate, professional debt management company would take the time to go over your individual situation, explore and explain your various options and then (and only then) recommend the solution.

What I am saying is that even though there has been legislation over the past few years to help protect consumers from fraudulent debt settlement companies, there are still some out there...SO BE CAREFUL!

The question is..."Does Debt Settlement Hurt My Credit Score?".

Once you can't keep up with the minimum payments or have fallen behind to the point where some or all of your accounts are being turned over to collection agencies, your credit score has already taken a big hit!

Your credit score is determined by several factors:

  • Payment History                             35%
  • Amount of Debt                               30%
  • Length of Credit History                  15%
  • New Credit                                      10%
  • Type of Credit                                  10%

As you can see, your payment history and the amount of debt you owe account for 65% of the factors in determining your score!

If you've been late or missed payments on a regular basis, your credit score is going to be hurt.

If you have "maxed out" most or all of your cards or accounts, then you are not a very good credit risk (in the eyes of a new lender and the credit bureaus) and therefore, you credit score will suffer.

My point is that if you are a prospect for debt settlement, then your credit score has already been declining.

Once you start (or have the help of a professional debt settlement company) negotiate settlements, your credit report will start showing ZERO BALANCES.

After some time, as you continue to "settle" and/or "pay off" those balances, your credit score will start to improve!

It may not seem reasonable or make sense, but if you understand a little about the mindset of a credit card company or other lenders, then you'll understand.

The credit card industry makes billions of dollars on consumers by offering credit cards to almost anyone!

Several years ago, they discovered that they made more profit from fees, such as:

  • Late payment fees
  • Over the Limit fees
  • Annual fees

These "fees" actually made them more profit than the interest rates!

In a nutshell...THE CREDIT CARD INDUSTRY NOT ONLY WANTS TO EXTEND CREDIT, BUT DON'T REALLY WANT YOU TO EVER PAY OFF YOUR CARDS!

Carefully examine your credit card statement and you'll be in for a shock!

So, if a debt settlement program does not hurt your credit score, then why doesn't everyone that has debt choose debt settlement?

Because not everyone is a prospect for debt settlement!

If you have accumulated too much debt and are really having a hard time making the minimum payments, you may or may not be a prospect for debt settlement.

FREE  Debt Elimination Summary

 

 

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Tags: debt settlement, Credit Score, debt, debt collector

How to Stop Annoying Debt Collectors From Calling!

Debt Collectors...They call and call and call!!! Is there anything you can do to STOP THE CALLS?


If you have ever missed or gotten behind on credit accounts, then most likely, before long, you started getting calls, and calls, and calls!!!

As if the financial stress wasn't enough, now you got some, well, I'll be nice, debt collector agent calling to demand payment or making threats of this or that.

GOOD NEWS!

For the sake of this article, I'm talking about unsecured accounts such as:

  • Credit cards
  • Store credit cards
  • Personal loans
  • Pay-Day loans
  • Medical bills
  • Utility bills
  • Private student loans

As long as the account is with the original creditor (Visa, Master Charge, Discover, etc.), then they (the creditor) has the right to call you about your account.

Somewhere in the fine print of the application you signed, (and probably couldn't read) there was language that you agreed to that they could contact you by phone/mail about your account.

But, once that account is about (varies) 3-4 months delinquent, then the original creditor may decide to charge off, assign or even sell to a debt collector.

Once this happens, then the debt collectors starts with the letters and calls....lots of calls, many times a day....VERY ANNOYING!

But I said I had GOOD NEWS, and I do.

The Federal Trade Commission (FTC) has a lot of very good information about debt collectors and their practices. 

A debt collector must conduct their business practices according to the law found in the FAIR DEBT COLLECTION PRACTICES ACT or the FDCPA.

They (debt collectors) are prohibited from:

  • calling too early or late
  • calling many, many times a day
  • calling you at work (if your boss prohibits calls)
  • making threats of legal action (if they do not follow through or intend to)
  • using profane or threatening language ("Your going to go to jail!")
  • calling and revealing your situation with family or friends

So, what should you do if you have believe you have been harassed by a debt collector?

The best thing you can do is to file a complaint with your state's attorney general's office.  Most likely you can go online to do this.

If the Attorney General's office gets enough complaints, they will start legal action against the debt collector.

"But, how do I stop all those calls?"

Again, the Fair Debt Collection Practices Act says that a consumer can demand that a debt collector stop the calls by simply sending a written request (sometime they'll take a fax).

To make it easier for you, here's all the information you will need:

STOP Collection Calls Free Sample Letter

One more thing....

Just because you have stopped the calls doesn't mean the debt collector is going to stop sending letters, reporting the "bad debt" on your credit report and possibly begin legal action to win a judgment.

If awarded a judgment, they may be able to get a WRIT OF GARNISHMENT or a BANK LEVY!

The best thing you can do is to negotiate with the debt collector for a reduced SETTLEMENT!

Recent Settlements See what we have  done for our clients!

Dealing with debt collectors is not always easy or friendly:

  • They are professionals who specialize in getting you to pay as much as possible!
  • When you are "emotionally" involved, it is harder to negotiate.
  • With little experience, many people end up paying way to much.

Yes, you can put a stop to the collection calls, but you'll still need to deal with the debt.

COULD YOU USE A LITTLE HELP OR ADVICE?

FREE  Debt Elimination Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tags: fair debt collection practices act, debt settlement, debt, stop creditor calls, debt collector

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

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

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

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

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

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

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

1099-C

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

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

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

Here's what she did:

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

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

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

Something like this:

                      Assets:                                           Liabilities:                                  

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

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

         Savings:                 $    250                      Student loan:      $ 10,000

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

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

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

NEXT:

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

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

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

That's all on the Form 982. 

NEXT.....

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

Something like this:

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

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

 

Finally....

You have:

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

 

Now....

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

 

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

FREE DOWNLOAD 1099-C PACKET

 

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

Debt Control: 4 Programs That Work!

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

controlling debt control

Are you having a hard time with any of these?

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

 

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

DEBT ACCELERATOR PROGRAM

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

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

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

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

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

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

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

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

Hypothetical Credit Card:

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

$7,000 x 2.5% = $175

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

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

Previous Balance                      $7,000.00

Interest charge                         $  110.81

Payment received                    -$   175.00

New Balance                            $6,935.81

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

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

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

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

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

Then, a DEBT SETTLEMENT PROGRAM may be the answer!

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

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

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

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

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

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

STOP Collection Calls Free Sample Letter

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

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

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

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

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

FEDERAL STUDENT LOAN FORGIVENESS PROGRAMS

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

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

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

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

877-492-4109

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

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

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

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

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

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

So, there are 4 Programs to control you debt:

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

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

 

 

Photo credit:

Jason Rogers

 

 




 


 

 



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

Tips on the Best Ways to Deal with Debt Collectors

dealing with debt collectorsDealing with debt collectors is not easy, but it can be done.  Here are a few tips on how to deal with debt collectors.

Debt collectors have one purpose: To get you to pay up...period!  Many debt collectors are paid a percentage or commission based on how much they can get you to pay, so you need to be prepared when they call.

As you probably already know, the first tactic a debt collector will do is to call, and call, and call!

Oh sure, there are laws that are supposed to protect us from harassing debt collectors, but they don't seem to worry about them.  So what can you do?

The Fair Debt Collection Practices Act (FDCPA) spells out what a debt collector can and cannot do.  Here are just a few of the limits a debt collector can take:

A debt collector is prohibited from calling you at inconvenient times or places, such as your place of employment or business.  They are not to call before 8am or after 9pm.

Contrary to popular belief, not all debt collectors are mean, nasty or uncaring people.  Many are very professional and even courteous, but as with any group, there are some who are very disgusting individuals.

After many years of helping people deal with debt and debt collectors, I've found that it rarely helps to talk or try to explain your situation to a debt collector.  Remember, they are going to try to get you to either send money or OK a check-by-phone payment or payments.

If you know the address of the debt collector, they you can mail a letter stating that they are to cease calling you.  By law (FDCPA), once the debt collector has received the letter, they must cease calling or face some hefty fines!

While writing the letter to a debt collector usually works fine, there are some who ignore the letter and continue to call (most via a computerized dialer).  If they do, start a log of the date and time they called.  Mail your letter via Priority Mail or Certified Mail in order to have a record of it being delivered. 

Next, contact your state's attorney general's office to file a complaint.  The best way is to go online.  For example, if you live in my state of Oregon, you would go to:

Oregon Department of Justice...Consumer Protection

You could also file a complaint with the Federal Trade Commission as well.

Need help with what to say in the letter?  Click below:

STOP Collection Calls Free Sample Letter

One more thing...as long as the account is with your original creditor (say Visa or Master Card), they can call on delinquent accounts.  It was somewhere all of the fine print when you signed up for the card!  But, you don't have to take their calls and after a couple of months they will most likely farm your account out to a collector.

There are many other UNLAWFUL PRACTICES that a debt collector cannot do.  A debt collector cannot...

  • use threats of harm or violence
  • use obscene language
  • falsely claim to be an attorney (if in fact they are not)
  • misrepresent the amount you owe
  • threaten with legal action if in fact they do not take legal action
  • threaten or try to scare you into believing they can take property that you own when in fact they have no claim
  • falsely represent themselves as a government official

 

What can a debt collector legally do to collect the debt?

After the debt collector has sent numerous letters and has received the cease calling letter, you may not hear from them for many months.  Don't assume that the debt is going to go away! 

You may get a knock at the door one evening and a police officer or someone employed by the court will serve you a summons.  Yes...very scary, but don't panic.

I've written several articles about what to do if you receive a summons, but here are the highlights:

  • 1.  Don't ignore the summons. It will not go away on it's own.
  • 2.  Contact the attorney who filed the claim for the creditor and find out if they are willing to negotiate something on the debt.

Not sure how to do that? 

Trying to negotiate a settlement for a lower amount for less than the current balance is not a simple matter.  For a few tips to help, click below:

FREE EBook Debt Settlement  Basics

 

Depending on several factors, you may be able to get a sizable reduction of the balance due.  If you could use some help, let us know.  We've been helping clients resolve debt issues for many years.

Yes, dealing with debt collectors can be annoying and frustrating, but you can put a stop to the calls and possibly negotiate a settlement for less than the amount you owe. But, there are times when a debt collector may decide to go after a JUDGMENT in order to get a WRIT OF GARNISHMENT.

If you are employed and receive W-2 income, a debt collector and/or creditor can receive a garnishment of your wages.  In most states, they can garnish 25% of your net, take-home pay.  Let's say you bring home $2,000 a month.  Your payroll officer must send them $500 each month until the entire debt is repaid!

YOU DON'T HAVE TO LET THAT HAPPEN!


Most of our clients who call us AFTER they received the notice of garnishment from their employer admit that they just didn't do anything about the summons.


If this is you, we may be able to help stop the garnishment, but time is of the essence.  Once a garnishment is in place, many debt collectors and/or creditors are not willing to accept a settlement or repayment plan as they feel they have your "cornered".

Of course, if all else fails, you may need to consider seeking BANKRUPTCY PROTECTION from your creditors.  Losing 25% of your income is just not possible for most people who have already suffered a severe financial setback.  Bankruptcy may be your best option.

 

 

Photo credit:  I actually took this photo myself outside a major retailer. Kind of says it all, doesn't it!

 

 

 

 

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

Dealing With Debt, Part 2, Debt Settlement

If you cannot qualify for a Debt Management Program, then you should consider a Debt Settlement Program.

In my last blog, "Dealing With Debt, Part 1, Debt Management", I explained about how the traditional Credit Counseling Program or what we refer to today as a Debt Management Program works.

As with about anything in life, there are pros and cons with any program, so you want to make sure that if you are looking for answers concerning what is the best way to deal with debt, you look at all of your options before making a decision!

look at all of your options

 

When dealing with too much unsecured debt, you really only have a few options:

  • A Debt Management Program
  • A Debt Roll Up or Snowball Program
  • A Debt Settlement Program
  • Bankruptcy

 

What is a Debt Settlement Program?

When you accumulated too much debt unsecured debt and cannot keep up with the minimum payments due or cannot qualify for a Debt Management Program, then a Debt Settlement Progam may be your best option.

Most people who chose a Debt Settlement Program have had some, if not all of their accounts become very delinquent.  Once you miss 3 or 4 monthly payments, these accounts most likely will be charged off by the original creditor and placed with a collection agency.

Sometimes, the collection agency is actually an attorney or Law Office that only deals with debt collections. 

As you may know by now, once you miss a payment or two, the letters and calls start coming more frequently!  In fact, most consumers are taken advantage of by debt collectors because they do not know their rights.

Under the Fair Debt Collection Practices Act, debt collectors are forbidden to:

  • Call you too many times in a day
  • Say things that are vulgar or might indicate they could take your belongings
  • Make statements or suggestions that you are going to be sued, if, in fact, they do not file a claim and start the legal process.
  • Call you at your place of employment.
  • Any many other acts that you need to know.

You can find some very helpful information called:

Fair Debt Collection Practice Act – Guide for Consumers

OK, so you've looked at your options and Debt Settlement is the way to go...

Although you can attempt to settle your debts on your own, not only does debt settlement takes a lot of time, but you are also going to be going up against trained debt collectors who:

  • Are trained professionals
  • Don't care about your financial circumstances
  • Don't want to hear your story about how you got into this financial trouble
  • Are usually paid based on the amount of money they can get you to pay!

A quality Debt Settlement Company will:

  • Take the  time to conduct a thorough interview with you (by phone or in their office) as to your financial circumstances.
  • Go over you debts and basic household budget to help determine what you can reasonably afford to contribute to the debt settlement program.
  • Not try to pressure you into "signing up" quickly, but be willing to not only answer all of your questions, but will also mail, fax or email you a summary of how the program could work for you.
  • Be registered (if required by law) in the state in which you reside.
  • Maintain a very high rating with the Better Business Bureau.

If it is determined that a Debt Settlement Program is your best option, then:

  • You will stop making payments to your creditors (if you haven't already)
  • You will make a payment/deposit to your Client Reserve Account through the Debt Settlement Company.  This account is with an Insured Bank located in the state of registration.
  • The Debt Settlement Company will contact each of your creditors/collectors in order to stop the collection calls and to begin to negotiate on your behalf.

By the way, you cannot stop the original creditor from calling you about a missed or unpaid account.  They have a right to do so.

But, you can certainly stop the collection calls from debt collectors!

STOP Collection Calls Free Sample Letter

Once your reserve account has sufficient funds, a settlement will be negotiated.  Sometimes this settlement is a lump sum for approximately 50% or less of the balance.  Sometimes this settlement can be paid out over a number of months.

Recent Settlements See what we have  done for our clients!

Each settlement, and the subsequent reduction in principal of the settlement, depends on many factors, such as:

  • Your employment status (working, W-2 wages or self employed)
  • Retired
  • Disabled
  • On unemployment, etc.

After a settlement has been negotiated, a SETTLEMENT AGREEMENT is faxed, emailed, or mailed. 

If you are going to try and settle your debts on your own, DO NOT SEND OR AUTHORIZE ANY PAYMENT WITHOUT A WRITTEN SETTLEMENT AGREEMENT!

Once the settlement has been completed (according to the terms of the settlement agreement), a letter will be mailed out stating that this account has been:

  • Settled-as-agreed
  • Settle-for-less-than-the-full-balance, (and sometimes)
  • Paid as agreed or Paid in full

The Debt Collector or original creditor if you are dealing with them, should notify each the three top Credit Bureaus that your account has been closed and settled.

HOWEVER, it is a good idea to follow up by running a FREE CREDIT REPORT (after about 45-60 days) to make sure that this account is not showing a balance, etc.

Most Debt Settlement Programs run about 36 -48 months or maybe longer, depending on your financial circumstances.  Once each account has been settled, you're credit scores should start going up!

Debt Settlement is a noble way to do the best you can to repay debts that you owe instead of seeking bankruptcy protection. 

Bankruptcy, in my opinion, should be considered as your last and only option, and I will be blogging about that next time.

For more information about Debt Settlement, click below:

FREE EBook Debt Settlement  Basics

 

 

 

 

 

 

 

 

 

 

 Photo credit to Betsssssy

Tags: fair debt collection practices act, debt settlement, Bankruptcy, debt collection in oregon, debt collector, debt relief in Portland Oregon, debt management, credit cards

Dealing With Debt Collectors Can Be Frustrating!

If you have ever had to deal with a deal collector, you know how frustrating and stressful it can be!

  • First you get the letters from the debt collector.
  • Then, you get the phone calls.
  • From then, you get a combination of angry and sometimes threatening letters and calls!
  • If you chose to ignore all of this, you may get a knock on your door and be served a summons!

Yes, very stressful and frustrating.

But, here are some tips to make this process somewhat bearable:

You must understand the basics of the DEBT COLLECTION PROCESS:

Let's say you have several (unsecured for the sake of this blog) accounts including:

  • Credit Cards
  • Store Cards
  • Medical Bills
  • Private Student Loan
  • Personal Bank Loan

Not that unusual for the average person to have $7,000 - $15,000 of unsecured debt these days.  As long as you are making at least the minimum payments, everyone (your creditors) are happy.

But, miss a payment or two and the DEBT COLLECTION PROCESS starts.

Once your account gets a couple of months behind, it will most likely be transferred to  the "collection or recovery" department within the company.  They send letters and start making calls.

By-the-way...here's a link to show you how to stop collection calls from DEBT COLLECTORS.

But, as annoying as the calls are, as long as the account is with the the original creditor (not transferred to a debt collector), they have the legal right to call you.  Now, once that account is transferred, sold, written off, etc. and lands with a Debt Collector, you can request/demand that they stop calling.

STOP Collection Calls Free Sample Letter

If your account is still with the original creditor, you may be able to get a settlement (reduction in the total you owe), but most likely they are going to offer you some sort of HARDSHIP PROGRAM...but, BE CAREFUL!

In most "hardship programs", the original creditor offers to let you lower your monthly payment for 6 months or so and then "reconsider".  While this may cut your overall payments, inevitably, you will have to go back to making the larger payments.

So now you are late on your payments, the calls and letters are still coming, but there's not a lot you can do about it due to your financial circumstances.  What happens to your debt now?

In most cases, the creditor will hire a Debt Collection Company to try and get as much money from you as possible.

Dealing with debt collectors can be very intimidating for the average person.  They call several times a day and leave messages (for anyone and everyone to hear) that says that you need to return their call right away.

So, you call them back, and here is where it gets frustrating.  Debt collectors are trained to do one thing...GET AS MUCH MONEY OUT OF YOU IN THE SHORTEST PERIOD OF TIME they can!

You try and explain your situation, thinking that the debt collector will actually "care".  While it is true that not all debt collectors are bad people, it has been my experience over the last decade of dealing with them for my clients that the average debt collector has just gotten (for lack of a better word) "calloused".

You owe their client (the creditor) money...their job is to get it....period.

The debt collector will tell you that you must pay this much in this period of time and there is nothing else available.  But, that is usually not true.  In most cases, some sort of settlement can be negotiated.

The problem with trying to negotiate on your own for your own debts, is that you are (obviously) emotionally involved, stressed out, frustrated and scarred of what the debt collector can and cannot do to you!

If you are going to try and negotiate and/or work out agreements with debt collectors, I strongly advise you to learn about what your rights are as a consumer in dealing with them.

The Federal Trade Commission has some very good information on their sight that you should investigate. 

                    Go to: Consumer Information about Debt Collection.

The more prepared you are, the better your chances are that you can negotiate a good settlement or repayment plan.

If you are unsuccessful in coming to a mutually agreeable settlement, the debt collector may take the final drastic step and file a complaint against you.

They will hire an attorney who is licensed in your state to file a claim in your county's courthouse.  Next, you will be served a summons.  A lot of people try to avoid accepting the summons, but eventually you will be served.

unfortunately, a lot of people who are served a summons choose to ignore the summons.

                   BAD MISTAKE!  Please, DO NOT IGNORE A SUMMONS

                    Check out a recent blog on this that will be very helpful.

The goal of the claim and summons is to either:

  • Scare you into sending them money
  • Being awarded a "default judgment" so they can pursue wage garnishment.

But, the are EXCEPTIONS!  Basically, only W-2 wages can be garnished and each state has it's own variation of how much, etc.

The basic guideline for garnishment is 25% of your net take-home pay!  Wow!  Suppose you are bringing home a modest $2500 per month.  At 25%, that's $625 they can get and there's little to nothing you can do about it.  That is why you can't ignore a summons.!

Debt collection in Texas is a little different in that there is no wage garnishment for residents of Texas! However, your bank account could be garnished or better, levied in Texas, so be careful.

Their are more protections and/or exemptions that would prevent a debt collector form being awarded a wage or even a bank garnishment.  Again, if you are going to try and go it alone with debt collectors, you have to know what type of income is and is not available for garnishment!

I live in Oregon, and debt collection in Oregon can be very, very stressful and frustrating!  It seems that the smaller debt collection companies are tougher to work with than the larger ones.  Some debt collections companies are actually attorneys who only deal with debt colletion.  However, they can and will work out settlements, depending on your various circumstances.

Finally, if you decide to DIY and deal with the debt collectors on your own...good luck!

worry rocking chair

It is a frustrating and stressful situation to be in.

  • Know your rights
  • Know the debt collectors rights
  • Know the process

FREE EBook Debt Settlement  Basics

 


Photo credit: www.flickr.com/photos/kitby/4883787012/

 

 

 

 

 

 

 

 

 

Tags: settlements, wage garnishment, debt collection in oregon, hardship plans, debt collector, credit cards, debt collection in texas

Everything is Bigger in Texas, Including Debt Settlement!


If you live in Texas, you have special protection under the law concerning debt collection.  Debt Settlement in Texas has advantages!

texas flag at longhorn game

 

 When a debt collector decides that they cannot collect on a delinquent debt, they may decide to FILE A CLAIM and a SUMMONS will be issued to the DEFENDENT, the person who owes the debt.

In most cases, the DEFENDENT (you), owes the debt, so there is no need file an ANSWER or to appear in court.

An "ANSWER", is a legal statement that you do not owe the debt and why the CLAIM is invalid.  Sure, you object to the outrageous interest, fees and penalities tacked on the original balance, but you agreed to that when you signed that credit card application...sorry!

So, if you don't do anything about the SUMMONS, and I certainly DO NOT ADVOCATE THAT, then the PLAINTIFF (the filer of the claim and owner of the debt), will be awarded a JUDGMENT.

NOW WHAT?????

If an agreement (SETTLEMENT or STIPULATTED AGREEMENT) cannot be negotiated, then the PLAINTIFF most likely will apply for a WRIT OF GARNISHMENT.  In most states, this will force an employer to send 25% of your net "take-home-pay" (after any state, federal or other withholdings have been deducted from your paycheck).

While this is true in most states, the good news for all of you Texans is that Texas has laws that prohibits most creditors from any wage garnishment!

Notice I said "most creditors" and not "all creditors. 

Texas does allow for wage garnishment for debts such as:

  • Unpaid income taxes
  • court ordered alimony and child support
  • defaulted student loans

One more thing, if you earn wages from an "out-of-state" employer, these wages most likely WILL NOT be exempt from wage garnishment.

For more information about Texas Law and Wage Garnishment, visit:

                                Debt Collection in Texas

So now you understand that for most unsecured debts, Texas will not allow wage garnishment.

                       WHAT ABOUT A BANK LEVY IN TEXAS?

In other words, can a debt collector levy (get the bank to send them your money!) your bank account for unpaid debts???

YES!

Just because a creditor who has been awarded a judgment cannot apply for a writ of WAGE GARNISHMENT, doesn't mean that they cannot (and most likely will) apply for WRIT OF LEVY from your bank!!!

Therefore, you should be making every attempt NOT TO HAVE A JUDGMENT GRANTED in favor of you creditor (or debt collection agency)!

How can you do that?

Contact your creditor(s) as soon as you are having a problem keeping up with your payments.  They may help you get caught up or arrange for you to lower your payments for a while until you get back on your feet financially.

If you know that because of loss of employment or some other catastrophic financial issue that you not only cannot keep up with your payments and it is unlikely that you'll be able to make any payments for a long time, then you need to try and negotiate a SETTLEMENT.

DEBT SETTLEMENT is a method whereby you and the creditor agree on an amount (usually much less than the balance that you owe) that will be paid either in a lump sum or in payments.

DEBT SETTLEMENT is possible to do on your own, but after helping people for over 10 years now, it is very TIME CONSUMING and can be EMOTIONALLY AND PYSICALLY EXHAUSTING!


Please download our FREE e book below:

FREE EBook Debt Settlement  Basics

If after reading the basics about DEBT SETTLEMENT, you feel that you could use some help, just let us know.  We'll be glad to talk with you to see if you qualify for the DEBT SETTLEMENT PROGRAM, and this consultation is...

FREE, with NO OBLIGATION WHATSOEVER!

To summarize:

  • Your wages are exempt from garnishment in Texas
  • Other debts, such as, income taxes, alimony, child support and Federal Student Loans are not
  • You BANK account IS NOT EXEMPT from LEVY after a JUDGEMENT has been awarded, but,
  • YOU CAN AND DO HAVE OPTIONS

 

 

 

photo by Tiffany

 

Tags: wage garnishment, debt, Texas, debt settlement in Texas, debt collector, exemptions, bank levy