What Can a Debt Management Company Really Do For Me?

I'm often asked a question that goes something like this, "What is a Debt Management Company?" or "What can a Debt Management Company do for me?"  So, let me briefly tell you...

Recently, I had to testify in a trial involving one of our past clients.  And, just like I'd seen on TV or at the movies, I was sworn in, sat in the witness box and the attorneys for both the prosecution and defense asked me a few questions.

The first attorney started off by asking, "Mr. Fontaine, what is a Debt Management Company?"

As co-founder and owner of Debt Relief NW, LLC, I've been asked that question hundreds of times.

I had been told to keep my answers brief and to the point if asked to explain, etc.

So I replied...

"Debt Relief NW helps people with severe debt issues find the best solution to deal with their debt."

Short and to the point....yes.  But, there's a lot more to it!

What people really want to know is, "What can a Debt Management Company really do for me?"


First, it is very important that you only deal with a reputable debt management company that is registered in their state.

As with any profession or business, there are always a few "rotten apples in the barrel".

We have had many clients come to us over the last 15 years or so after they had been taken advantage of by crooked debt management/settlement companies!

Here in Oregon, each debt management company is required to be registered and comply with the statutes governing such companies.

They have some very good insight into looking for a reputable debt management company that you should check out at Debt Management/Managing Your Debt.

In the article, they advise you to make sure the company you are considering is in fact, registered.  To check, click here.

OK, so now that you've done a little homework and made sure that the company your thinking about enrolling with is legit, again, let's see what a debt management company can (and cannot) do for you:

Those who need help with having accumulated too much debt (mainly addressing unsecured debt in this article) have done so because of one or more events that were or are beyond their control, such as:

  • Unemployment
  • Divorce or loss of spouse or partner
  • Serious illness or disability
  • Too little income after retirement!

When this happens, people will use credit cards to help with the intention of "paying them off" when things get better.

But, sometimes, those balances and the corresponding minimum required payments are just too much to handle....NOW WHAT!

We do not believe that "One size fits all" when it comes to dealing with too much debt!

Even though every situation may seem similar, in most cases, there are always several circumstances that have to be taken into consideration BEFORE we can recommend the right solution.

When faces with so much unsecured debt that you cannot (or are starting to fall behind) with the minimum payments required, there are only a few, legitimate options:

  • Credit Counseling Program
  • Debt Settlement Program
  • Bankruptcy

Again, the first step into finding the proper solution to your particular situation is to take the time to find out exactly where you stand in regards to your income/outgo....ie. a monthly household budget!

When someone contacts us for answers, we walk them through a basic budget.  9 times out of 10, they will say something like...

" I had no idea I had this much debt and/or had this little money left over!"


Budget Worksheet FREE Download here!


Once we/they can see exactly where they are, then we can start to find the best solution.


Credit Counseling (or today called Debt Management)

If you have been making the minimum required payments on your credit cards and other unsecured accounts, but the balances are barely coming down, then it may be time for you to enroll in a credit (or debt management) counseling program.

These accounts have not been turned over to a debt collection company....yet.

If you qualify (there are several hoops to jump through), this type of program can help.

The Debt Management Company will contact each creditor and arranged a plan to get your accounts paid off, usually in about 48 months or so.

Most of the major creditors will usually agree to:

  • Lower the interest rate
  • Forgive or eliminate late fees and other charges

You will make ONE PAYMENT to the Debt Management Company and it will be divided and paid out to each creditor per the agreement.

The problem with such plans is that sometimes the total monthly payment required may be the same or in some cases, a little more than the total of the current minimum payments!

If you are having trouble making the minimum payments now, most likely you will not be a candidate for a Credit Counseling/Debt Management Program.




A Debt Settlement Program may be the best solution.

Most prospects for a Debt Settlement Program have missed or stop making payments altogether to their creditors.

Their accounts have been turned over to a Debt Collector (or are about to be) and you have been getting calls and nasty letters.

If an original creditor feels like they will not be able to get you to keep up/catch up with the payments due on your account, they may charge that account off as a loss and sell or transfer that account to a debt collector.

Again, depending on your circumstances and particular situation, you may be a candidate for a SETTLEMENT on your account.


  • You will be making a monthly payment into an FDIC Bank account that will be used to negotiate settlements in the future. 
  • This payment will be much less than the total minimum required payments due now.
  • Your payment will fit into your particular budget.

The debt collection company (or in some case the original creditor) may be willing to take less than the full amount to "settle" this debt.  This could be 50% or less, again, depending on circumstances.

Here's an idea of what an actual settlement agreement looks like:

Once the account has been settled, it will be reported to the major credit reporting agencies as:

  • "settled as agreed", or
  • "settled for less than the balance", or
  • "settled in full"

Either way, your account will now show that you did something about it and now it has a $0 balance!

As each of your accounts are settled, your credit score will start to improve/increase.


But, what is the only option if you simply have too little or nothing to contribute towards either program?



Bankruptcy, in my opinion, should be the last solution after all other solutions are examined and/or tried.

When I am negotiating with a debt collector for one of my clients, I will have to remind them that we are attempting to negotiate settlements rather that having our client seek BANKRUPTCY PROTECTION.

That is what the bankruptcy laws were intended to do...protect a person's property from absolute ruin and detestation!

We do everything we can to help a client with finding the best solution/program to help with their debt problems, but in some cases, bankruptcy is the best solution.

Make sure you interview at least a couple of bankruptcy attorneys to make sure you feel comfortable with them and their experience.


FINALLY...  What can a Debt Management Company do for you?


  • Help eliminate the fear and stress that comes with having too much debt!
  • Help find the best solution to fit your particular situation.
  • Help get you back to being DEBT FREE once again!


Personalized  Program Comparison Click here!




Photo Credit



Tags: debt settlement, debt, credit counseling, debt management, credit cards

What to Look for in a Debt Settlement Company

Not all Debt Settlement Companies are alike. In fact, most do not offer the personal and professional service you will need.  

Here are the most important things to look for:



Most people will experience a time in their lives when due to circumstances beyond their control, they fall victim to the easy access of credit card debt!

Just to name a few, these circumstances may include:

  • Death of a spouse or loved one, cutting your income dramatically
  • Trying to survive on a fixed income after retirement
  • Too little income after a serious illness or disability
  • Divorce
  • Unemployment
  • The ever increasing rise in the price of rent and products and services!

After helping people examine their options when faced with too much debt for almost 15 years now, I've noticed some common patterns that led to this situation:

At first, a credit card is used to make up the gaps or shortage of income.

There are certain things that you just have to have.... such as...

  • Gas for the car
  • Groceries
  • Unexpected repair or replacement of a major appliance

So, you use the credit card, planning on paying it off as soon as your financial circumstances change.

But, when they don't or you can't, then your may be forced to use another credit card to help make the minimum payment on the first card.

Or, you may need help paying the utility bill or another necessary expense. (sound familiar?)

This should be the most obvious warning sign that your are in serious financial trouble!

What can you do now?

Although your options are limited, YOU DO HAVE OPTIONS:

Credit counseling or a Debt Management Program

If you qualify (it may be too late), a Debt Management Company will contact each of your creditors and arrange a repayment plan that may include a reduction in interest rates and possibly the minimum required payment.

The problem with the Credit Counseling or Debt Management Program is that if you could not keep up with the minimum required monthly payments before, you most likely will not be able to meet the minimum monthly payment required now.

So now what?

Debt Settlement

In a Debt Settlement Program, rather than continuing to "rob Peter to pay Paul" as they say, you stop using your credit cards.

Most likely, you have stopped making minimum payments, but if not, now you are going to.

You make a monthy deposit into an FICD Insured bank account that will be used to negotiate settlements with your creditors and/or debt collectors.

A professional, top ranked Debt Settlement Company will spend time going over your particular circumstances to determine the best program and course of action you need.

There are several very important factors that must be considered before enrolling with a Debt Settlement Company.  Such as

  • How long has the company been in business?
  • Are they registered with the state?
  • Are they accredited with the Better Business Bureau?
  • BBB        A+        Accredited Click here!
  • What is their record of complaints?
  • Can you speak with the same representative each time?
  • Does the representative seem knowledgeable, patient and understanding?
  • What about "testimonies"  from clients?
  • Can you see some actual settlements?
  • If you change your mind after enrollment, can you not only opt out, but also receive a refund of your net reserve account?


A qulified,BBB accredited Debt Settlement Company will provide ALL OF THE ABOVE!

If not....keep looking!

But, what if you cannot qualify for a Debt Settlement Progam?

It may be time to consider Bankruptcy.

Yes, I know it sounds terrible, but in the right situation, it may be the fresh start you need!

But, be careful when looking for a qualified bankruptcy attorney!  

Make sure that bankruptcy is their only specialty and that they are willing to meet with you for an initial consultation, FREE OF CHARGE!


Dealing with the stress of a financial hardship requires information and help.

A qualified Debt Settlement Company may be just what you need, but you need to do a little homework first!

Personalized  Program Comparison Click here!



 Photo credit






Tags: credit card debt, debt settlement, debt management, bankruptcy attorney, better business bureau

Can Debt Settlement Improve My Credit Score?

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

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



     Consolidation Loan

     Debt Management

     Debt Settlement





A consolidation loan may be:

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

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

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

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

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

For example:

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

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

You "Debt Ratio" looks like this...

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

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

For more information, check out:

How Are Credit Scores Determined?

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



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

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

But, consider this:

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

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



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

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

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

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

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

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

By the way....you can put a stop to those calls now:

STOP Collection Calls Free Sample Letter

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

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

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

But, will Debt Settlement Improve your credit score?

Yes, but over time!

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

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

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

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


Personalized  Program Comparison Click here!


Photo Credit








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

Looking for a Debt Settlement Company?

When you are looking for a Debt Settlement Company in Oregon, be careful!


Not all Debt Settlement Companies are the same.  

What are the characteristics of a professional, reputable Debt Settlement Company?


Because of a few bad apples, all debt settlement companies have been forced to meet very stringent standards and qualifications.  

I do not necessarily agree with all of the rules and restrictions, but I understand.

Here in Oregon, any debt settlement company must be registered as a Debt Management Company

If not, then you need to keep looking!  Failure to do your homework and due diligence could end up costing you thousands of dollars!


The Better Business Bureau (BBB) is a For-Profit Organization that ranks or scores companies.  

Companies that receive complaints due to unprofessional business practices or government sanctions or fines will receive a poor grade.

Companies that are proud of their business and have a very good record of customer service can choose to apply for "Accredidation" by the BBB.  


A reputable debt settlement company will not only offer to discuss your situation for FREE, but will help you explore all of your options before making a decision.

If they representative pressures you into "signing up" immediately, beware!

Personalized  Program Comparison Click here!


Let's face it, dealing with debt problems is stressful!  

The debt settlement company you deal with should have ONE AGENT or REPRESENTATIVE assigned to you and each time you call, you can speak with the same representative.

You should feel comfortable that the representative is understanding and sympathetic with your personal situation.

If you call or email your representative, do you get a reply or return call in a reasonable time?  If not...BEWARE!


It should be "given", but if a company is doing a good job for it's customers, then the customers should give a recommendation or referral!

For example:

What our customers have to say...

6.  What about RESULTS?

Its one thing to make claims about what you can do, but another to show results!

A good debt settlement company should be able to help you by not only negotiating settlements for less than the account balance, but they should also be able to help in areas such as:


Looking for a good/great Debt Management/Settlement Company can be a little frustrating, but well worth your time.

Take your time....

                       Do your homework....

                                               Let us know if we can help!












Tags: debt management

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

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

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

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


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

Let's briefly look at the various options:

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

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

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

Some of the more common forms of UNSECURED DEBTS are:

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

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

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

Budget Worksheet FREE Download here!

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

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

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

For example...

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

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

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

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


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

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

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

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

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

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

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

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


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


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

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

STOP Collection Calls Free Sample Letter

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

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

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

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

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

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

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

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

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


Photo by: DRNW



















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

Dealing With Debt, Part 3, Bankruptcy

If you find yourself unable to pay your bills, about to lose your home, or in a financial hole so deep that you can't climb out of, then it is time to look into filing for bankruptcy protection.

This is the final blog about DEALING WITH DEBT.  There are basically 3 ways to deal with debt:


BankruptcyIn a bankruptcy, you will eliminate most of your debt or you will be able to schedule a repayment plan that will fit your budget, given your dire financial circumstances.

But, bankruptcy comes at a cost of your credit score and possibly some of your assets.

Yes, after you complete your bankruptcy, you can still get credit, but usually the interest rates are higher and the credit limits are lower.

This is why it is so important to gather as much information you can from an experienced bankruptcy attorney.  The initial bankruptcy consultation should be free and most bankruptcy attorneys will work with you as to payment of their services and fees.

Individuals filing personal bankruptcy will generally be able to file a CHAPTER 7 or a CHAPTER 13 bankruptcy.

Under normal circumstances, a Chapter 7 bankruptcy will take about 90 to 180 days to complete.  A Chapter 13 bankruptcy will take about 3 - 5 years, depending on several factors.

Good news!!!!  Once your bankruptcy attorney starts the process, the debt collection calls will stop.  If you are not sure if bankruptcy is the best choice for you and would like to put a stop to the debt collection calls, click below:

STOP Collection Calls Free Sample Letter

Individuals or couples with few assets and are looking for a FRESH START, tend to file a Chapter 7 bankruptcy. This type of bankruptcy is basically a liquidation bankruptcy in which a debtor trades all of their non-exempt assets as payment for all of their dischargerable debt.  Many, if not all, personal possessions are protected by exemptions and most consumer debt, such as:

  • Credit Cards
  • Store Cards
  • Personal Loans

Individuals or couples looking to catch up on mortgage payments, get rid of 2nd mortgages, or who are ineligible for Chapter 7 bankruptcy, can file a Chapter 13 bankruptcy.  A chapter 13 bankruptcy involves making a deal with the court to pay a certain amount of your income to the court each month in return for getting rid of all of your dischargerable debt. 

People will choose a Chapter 13 Bankruptcy because there are certain types of debt that only go away in a chapter 13 bankruptcy and, there are certain advantages that can only be had in a chapter 13 bankruptcy.  This type of bankruptcy can be used to catch up on mortgage or child support payments.  However, there is a danger of not completing your plan and thus not getting a discharge.

Filing bankruptcy does not mean that you will lose your home or your car. 

In fact, in some situations, filing bankruptcy will even allow you to keep a car or home that you were about to lose.  This is because bankruptcy allows you to protect some or all of your assets with exemptions.  These are set amounts of personal property that you can protect during a bankruptcy.  Retirement accounts are generally protected as are certain support payments that you may be receiving.

Filing for bankruptcy does not mean that everyone you know will find out!

Only the necessary parties are inform of your bankruptcy filing.  Individuals who receive notice of your bankruptcy filing are creditors, co-debtors, and co-owners of shared assets. 

A bankruptcy will stay on your credit report up to 8 years, but it will have less effect with each passing year.  Filing bankruptcy may hurt your credit score in the short-term, but it allows you the chance to start rebuilding it right away.

Still not sure how to deal with your debt?  Get answers by clicking below:


Blog article written by: Noah Bishop of BishopBankrutpcyLaw.com


Photo by: www.stockmonkeys.com







Tags: debt settlement, Credit Score, Bankruptcy, debt management, debts, chapter 7 bankruptcy, chapter 13 bankrutpcy, bankruptcy attorney, credit cards

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.

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:











 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, Part 1, Debt Management

Does Debt Management really work?  Will I improve my credit score with Debt Management?  Will debt collectors start leaving me alone?

These are just a few of the Frequently Asked Questions about Debt Settlement.  We get them all the time, even though we have numerous blogs about all of the aspects of debt management.

Confused about credit card statement

The truth is, anytime someone gets into trouble having accumulated too much debt, fear of the unknown and misunderstanding about what debt collectors can, and can't do, takes over.

Almost everyone in America has some form of debt. Many people use debt wisely and are OK.  But many people (people just like you and me) have gone through, or are going through a very tough time, financially. 

  • How do you deal with to much debt?
  • What are your options?
  • What can debt collectors do to me?
  • Can they levy my bank account or garnish my wages?
  • Will I have to file for bankruptcy?
  • To be honest, I'm scared!

Over the next three series of blogs about Dealing With Debt, I hope I can answer most of your questions and help alleviate some of the fear and misunderstanding associated with having too much debt.

For this series, I will be addressing UNSECURED DEBT, such as:

  • Credit Cards
  • Store Credit Cards
  • Personal Bank Loans
  • Private (not Federally backed ) Student Loans
  • Repossessions (specifically "deficiency balance", which is the remaining balance after your car, boat, etc. was sold at auction)
  • Pay Day Loans

SECURED DEBT, such at your home, auto, Federal Student loan, etc. have to be dealt with differently.  I will address these in later blogs. 

There are really only a few options when it comes to dealing with too much unsecured debt:

  • Debt Management (or Credit Counseling) Program
  • "Debt Roll-Up" or "Debt Reduction Snowball Plan"
  • Debt Settlement Program
  • Bankruptcy


In the "old-days", well, not really that long ago, when a consumer got behind on their credit card payments, A non-profit, credit counseling (a tax entity title...yes they do make a profit...a lot of profit!) program was created to help people get back on track.

Basically, in a Debt Management Program , instead of making minimum payments to each of your creditors with high or very high interest rates and fees, if you qualify, you will make ONE PAYMENT to a Debt Management Company.  They have established guidelines with all of the major creditors to usually:

  • Lower your interest rate
  • Re-Age or forgive late or over-the-limit fees
  • Stop creditors from calling
  • And, a Debt Management Program IS NOT A FACTOR when calculating your credit score.
  • Most Debt Management Programs last about 4-5 years, depending on how much debt you have, etc.

Although a Debt management Program can help reduce the total amount of interest and fees you will end up paying until these debts are paid off, your required monthly payment may be more than you are making now!

The Credit Card Industry realized several years ago that the worst thing that could happen to them, from a profit stand point, was to have their consumers actually pay off their credit cards.

In the early days of credit cards, the minimum payment could be as high as 4%-5%, depending on each company's policies.

Think about that... 

Let's say you had a balance of $10,000 on your XYZ Credit Card, with an Annual Percentage Rate of 19% and a minimum monthly payment of 4.5% of the balance.  

I know the credit card contracts are almost impossible to understand, so let's keep this simple:

On a balance of $10,000 at 19%, your annual interest charge would be about $1,900!

Divide the 19% interest rate by 12 (12 months in a year) and you get a Monthly Interest Rate of 1.5833%.  $10,000 multiplied by 1.5833% equals $158.33, but's let's round off to $158.

Add the $158 to the $10,000 and you have $10,158, which is the NEW BALANCE.

Multiply that by the Minimum Monthly Payment Percentage of 5%, and you get $507.90 or $508 as a minimum payment.

So, you send in the $508 payment.  Next month, you get your statement, and it shows $10,158 less your $508 payment leaves $9,650. 

But wait...there's that interest charge again!

$9,650 multiplied by 1.5833% equals $152.79 or $153.

Add $9650 plus $153 and you get $9803 as your New Balance (assuming you didn't make any more more charges!)  Multiply that by 5% and you get $490.15 as your minimum monthly payment. Wow!

Yes, in the "old days", your were forced to pay off your credit cards sooner (if you could afford the minimum monthly payment) and therefore saved more money in the long run.

But, the Credit Card Industry got wise and decided to only charge 2% or maybe 2.5% as a minimum monthly payment. 

Without taking a lot of time repeat the above process, you should be able to see that on a balance of $10,158 if you only had to make a 2% minimum monthly payment, your payment would only be $203 instead of $508!  That's $305 less!  Good deal, right?

Well, here's what happened:

For the credit card industry, it was a very, very good deal! But, for those of us who didn't think the process through, we thought, "Wow, I could barely afford the $508 miniumum monthly payment, but at $203, I can CHARGE UP ALMOST TWICE AS MUCH  and still make the payment!" 

So, charge, charge, charge!!!  And we know what happens.  Now you have $20,000 of total unsecured debt at an average annual interest rate of say, 19%.  But, you only have to pay 2% of your "new monthly balance" each month.

OK, $20,000 multiplied by that annual interest rate of 19% divided by 12 or 1.5833% equals $317 of interest.  Add that to the $20,000 and now you have $20,317.  At 2%, that's a minimum monthly payment of $406.  Cool!  Your monthly payment on $20,000 is actually less than it would have been (back then) on $10,000.

Watch out! We all know where this is heading! 

All kinds of calculations are out there on the web that show that if you only make the small minimum payments on your credit cards until they are paid off, you will end up spending 3-4 times as much as you originally borrowed! On $20,000, you could end up paying back $60,000 - $80,000 over many years!

Good deal?  Only for the Credit Card Industry!

So, you call a Debt Management Company.  They go through all the financial consultation (free and if not, hang up!) and determine that your Debt Management Program will be approximately $550/month, which includes their montly fee as well as an enrollment or set up fee to get started!  

But,  if you have an extra $150 (that you could use to qualify for the Debt Management Program), you would be debt free in about 48 months and save thousands of dollars in interst and fees.

Not bad at all, but there is another option.

Debt Roll-Up or Snowball Plan

If you have the extra money, and the self discipline to set up and follow a Debt Roll Up/Snowball Plan, then you should consider doing this instead of using a Debt Management Company.

Why?  Well, of that $550 required in this hypothetical Debt Management Program, $50 (or maybe a little more) may be going to the Debt Management Company to administer the plan.  Now, that's not outrageous, and if the program ends up not only saving you a lot of money in the long run and giving you peace of mind, then go for it.

But, if you are like me, I like to do things myself if at all possible and, I don't like spending a dime more than I have too!

I've written an entire blog about a Roll Up/Snowball Debt Program. Click here.

But what if you are in deep financial trouble?

Maybe you have:
  • Lost your job
  • Went through nasty divorce
  • Lost a spouse, loved one or partner
  • Been Disabled and are permanently Disabled and only receive Disablility Income
  • Are retired and the fixed income from your Social Security and/or Retirement Plan is just not enough to keep up!

Then you should check out a Debt Settlement Program.

I will be writing about that in Part 2, but if you'd like to know more now, click below:

Is a Debt Management Program for you?  It depends on many factors.


Photo credit:

Jason Rogers



Tags: credit card debt, debt snowball, debt, credit counseling, debt management, credit cards, credit card debt help portland or, snowball plan

What is the Best Way to Improve Your Credit Score?

If you have ever tried to check and/or improve your credit score, you know it can be pretty confusing.  Here are some tips on how you can improve your credit score.

You've probably seen an ad or had a "pop-up" appear on your computer by a so-called "Credit Repair" company offering to increase your credit scores almost "over night"!

My advice...RUN!  You've heard the old saying:

"If it sounds too good to be true, it probably isn't true."

Although there are many legitimate companies that will help you improve your credit over time by correcting errors and helping you maintain a disciplined approach to using your credit, there is just no "quick fix" when it comes to improving a bad credit history and therefore a poor credit score.

I have been have been helping people settle and manage outstanding credit debt for over ten years now and I believe that one of the most helpful sites you can use can be found at:


While you cannot improve your score quickly,  YOU CAN IMPROVE YOUR CREDIT SCORE over time, by following the following tips:

If you haven't done so already, get a FREE copy of your Credit Report.

We all can get a free copy once a year, so take advantage of this by annually checking your credit report...and it's FREE!

According to Fair Issac or FICO, there are 5 areas that affect your credit score the most:


FICO Credit Score Breakdown

Paying your bills on time is one of the most important things you can do to maintain a good credit score.  Being just a few days late will hurt you score.

If you have had accounts go to a collection agency, then that obviously will hurt you score.  By-the-way, if you pay off or settle an account with a collection agency, it will remain on your credit report for up to seven years, but the fact that you paid the debt will ultimately help  your credit score.

Using a Debt Management Company to help you get control of your debt can be very helpful.

No, your credit score will not be affected by using or not using a Debt Management Company, but in the long run, the professional help and guidance will help reduce or pay off all of your debt and therefore, improve you credit score.

Next, notice that at least 30% of your credit score is determined by the AMOUNT OF DEBT you owe.

A lot of people think that just because they have never been late on a payment they should always have a great score.  But, if they have a very large amount of debt in relation to their income and total available debt, they will be disappointed with their score.

Here's basically why:

Let's say that you are a credit card company and are considering offering or issuing credit to these two prospects:

Prospect #1 has a good job and employment history.  She in never late on making her payments for her mortgage, car and all of her credit accounts.  But, even though she is earning a "better-than-average" income, she has accumulated over $30,000 of unsecured debt in addition to her mortgage and auto payments!

She would need to be making minimum payments of $750-$850 per month on her unsecured debts (credit cards, store cards, etc.) and that equates to about 25% of her net monthly take-home income just for these unsecured debts.  When you add in a $1200 mortgage and a $400 car payment, that's about $2,400 per month going out to service her DEBT!

Even with her "better-than-average" job and income at say, $75,000 annually, when you take out 30% for taxes and other deductions, that gives her a net monthly income of about $4,375.  With $2400 going out to just meet the minimum payments on all of her debt, that equates to almost 55% of her net income!

One "hick-up" such as long illness, loss of job, or any other hardship would make it almost impossible for her to meet your debt payment obligations.  If you were a credit card company, would you loan her more money?  Hence her credit score is not as high as she though it would be.

How about Prospect # 2:

He had a good job and earns about $4,000 per month.  Not that much really, but he is doing OK.  He isn't buying a home and so is paying about $800 per month in rent.

His old truck (not too old...maybe 8-10 years) is paid for.  Although it doesn't get great gas mileage, at least he doesn't have a big payment each month.

He has a good credit history and although maybe late a couple of times in the past, he has maintained a steady, on-time history for several years now.

He has about $10,000 on 3 credit cards which demands that he makes at least a minimum payment of $215 each month, which he does and sometimes adds a little more than the minimum.


The ratio of credit being used to the availability of credit to you.

He has paid off several accounts in the past and actually has about $40,000 of available credit (credit limits on all of his accounts) that he could use if need be.

He is only using $10,000 of the available $40,000 or only 25%.  This is considered a good use of available credit and so he would be viewed as a better credit risk.

Are you starting to get the idea?  It's not just about paying your accounts on time (although that is certainly important), but more about USING AND MAINTAINING YOUR CREDIT WISELY!

You will notice that the LENGTH OF CREDIT HISTORY makes up at least 10% of your credit score.  If you are just starting out and have not established much of a credit history, DO NOT MAKE THE MISTAKE OF OPEINING A LOT OF ACCOUNTS IN A SHORT PERIOD OF TIME!

Opening too many accounts too fast doesn't look good to the credit bureaus.  In fact, it could do more harm than good!  Just open an account or two, make some small charges and pay them off promptly.

How long will this take?  It depends on some and/or all of the other factors we've been talking about.  The point is that establishing good credit doesn't happen quickly.

One more thing...

Closing accounts doesn't help improve your score!  In fact, it will probably hurt your score.


Again, you want to show that you are a responsible user of credit over a long period of time.  If you close too many accounts (assuming a $0 balance on them), you are reducing your "credit-use-ratio" as we discussed before.

Pay off and/or settle old accounts the best you can.  Sometimes it makes sense to seek the help of a professional Debt Management Company to settle old debts that have been around for a long time.

Sometimes these can be removed (using the proper procedure) from you credit report if they have gone past your state's statute of limitations.

Debt Settlement can help if you are in over your head!

To summarize, the best way to improve your credit is too:

  • Manage your credit wisely...not too much...too fast!
  • Make your payments on time.  Being a day late hurts more than you know.  Try using "auto-payments".
  • Check that Credit Report for errors!  All three credit bureaus will let you go on line to dispute errors.  You don't have to pay someone else if you will take a little initiative.
  • Finally, although I don't suggest closing credit card accounts, I do believe that you should only use one card for emergencies only!  Pay cash or don't buy! Saw this sign in the parking lot of a major retailer the other day and it really says it all:

shop now pay later

The best way to improve your credit score????  Use credit wisely.



Photo credit:  http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx



Tags: credit report errors, debt collection, Credit Score, debt, credit repair, credit report, debt settlement in oregon, credit card, debt management, credit cards

Beware of the Credit Card Trap!

Are you a victim of the "Credit Card Trap"?  Too much debt?  No end in sight?  If you are, here are some ways to free yourself.

I've been helping people become Debt Free for over 10 years.  The average person that seeks help for getting out from under too much debt,  got into trouble by falling victim to the traps set by the credit card industry!

shop now pay later  

I saw this sign (above) yesterday in the parking lot of a major retailer and took a picture.

"Shop now, pay later"...pretty much says it all, doesn't it?

Years ago (many,many years ago), a credit card was not easy to get.  You had to have excellent credit, above average income and employment history...basically, you didn't really need one.

The idea of using a credit card was for convenience.  Rather than having to carry a lot of cash or write a check, you could just whip out the credit card.  Then, when the statement came, you paid it off...100%.

The credit card industry charged a reasonable interest rate, demanded a minimum payment of around 3% or more, and made zillions of dollars.

One day, someone in the credit card industry looked at the numbers (profits) generated by these cards and realized that they actually made more profit from fees, such as:

  • Annual fees
  • Late fees
  • Over-the-Limit fees

...than they did by the interest rates they charged!!!

Again, years ago, most credit card account holders paid off the account each month.  Then, someone got the bright idea that if an account got paid off, then there would not be little, if any, profit from interest rates and fees.

                                    What to do????

They came up with the idea to only charge a very small monthly minimum payment so that more and more people could charge their accounts to the limit and only have to pay 2% or so each month based on the balance.

Let's say you had an account with a $5,000 credit limit and so far, your balance is only $2,000.  $2,000 x 2% = $40, but you send in the $50.

Before I get into the details of how much this will cost you over time, let's talk about the really dangerous CREDIT CARD TRAP....

Have you ever thought (or done):

"Since I have a limit of $5,000 and I only owe $2,000 with a $50 a month payment, I'll charge another $1,000 and my payment will only go up $25 or so."

This is where most people start getting into real trouble.  Before you increase your debt, check out what your credit card company is really charging you:

OK, let's say you didn't increase the balance.  Next month, you get your bill and as you start trying to understand it (right!), you notice that there was an interest charge of $35!!! How can that be?

You also notice that the Annual Percentage Rate (APR) is 21%.  Although there are various methods different companies use to calculate the interest due, for simplicities sake:

        $2,000 balance x 21% = $420 (annual interest based on $2,000)

        For this month, you divide $420 by 12 (months) = $35

        Now you see the account summary and notice:

        Previous Balance                 $2,000

        Interest charge                    $    35

        Payment                             ($   50)

        New Balance                       $1,985

     That's right, your balance was only reduce by $15!   

Now, you don't have to be a genius to figure out that at that rate, you are going to be paying on that debt for a long, long time to pay off that credit card.

Think about that for a minute... 

When you finally pay off that debt (at the small minimum monthly payment), you will have paid at least 2 to 3 times as much as the original balance!

And, don't forget about those fees!

                         THERE IS A BETTER WAY!


Depending on several factors such as:

  • Your employment (self or W-2)
  • Income
  • Marital status
  • Health (disabled?)
  • Age (retired?

...you would most likely qualify for one of the following programs:

Rather than get into each plan, I've attached links (above) to previous blogs or more information you can access for FREE.

Credit Cards are a very dangerous trap and should be avoided and/or managed at all costs!  Please proceed with caution!




Tags: credit card debt, debt settlement, debt management, credit cards, credit card debt help portland or, snowball plan