What Can Debt Collectors Do to Me?

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


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

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

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

  •         False
  •         Evidence, that
  •         Appears
  •         Real


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

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



What happens when you start missing the minimum payments due?

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

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

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

And then the calls start.  Lots of calls!

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


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

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


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

These profits come from:


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


OK, then what happens next?

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

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


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

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

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

STOP Collection Calls Free Sample Letter


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


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

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

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

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

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

What Can You Do to Improve Your Credit Score?

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

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


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

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


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

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

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

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

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

Good time to give disclaimer:

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

"Appear and give and Answer":

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

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

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

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

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


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

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

NO,         NO,        NO ! ! !

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

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


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

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



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

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



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

This is usually done by using your social security number.

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

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

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

Bank Laws Concerning Levies and Garnishments



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

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

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

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

What does this mean?

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


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

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

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


OK, let's review:

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



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



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



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



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

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

No ! 


Hope this helps.


Personalized  Program Comparison Click here!



Pic Credit

pic 2 credit







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

How to Improve Your Credit Score After Debt Settlement

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

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

As an example, I received this email yesterday:

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


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

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


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


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

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

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

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

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

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

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

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

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

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

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


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

  • Experian
  • Equifax
  • TransUnion

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

What you are looking for are ERRORS. 

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

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

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

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

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

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

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

Now what?

Time for you to go to work...

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

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

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

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

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

John Doe

123 Street

City, State Zip

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

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

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

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

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

Thank you,

_____________________________________ (sign here)

John Doe

Phone: 555-555-5555

Email:  JDoe@ internet.com

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

The credit bureaus should correct the error within 45 days. 

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

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

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

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

If you would like more information, click below:

How to Dispute Errors  on Your Credit Report



Photo Credit


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