Don't Ignore Debt Collection Letters!

If you are having a difficult time keeping up with the minimum payments due on your credit cards or other unsecured debt, you are going to start receiving calls and letters from collectors!


These calls and letters are upsetting and cause stress and fear.

Most likely, you've never been in this situation before and feel helpless and...yes...afraid.

If this is you, then this blog will help!


The worst mistake you can make after receiving a call or letter is to "just ignore" it!

When we open a credit card account (or any other unsecured account), we are signing an agreement/contract that basically says that we agree to the terms the terms of the contract.

If we do not make the required payments when due, then we have broken our promise and the creditor has a right to contact you.

What can you do?

If you can afford to catch up and get back on track, then great, just send the balance due and start making regular minimum payments.

The problem is that most people who find themselves in a stressful financial situation just cannot do this!

There are several reasons you may have gotten into trouble:

  • Unemployment
  • Divorce
  • Serious Illness or Disability
  • Trying to make it on a fixed income of Social Security or Retirement Income
  • Or other reasons beyond your control

So, if you cannot get caught up and start making the minimum payments due, what options do you have?

Debt Management Program

These used to be called "Credit Counseling".

Basically in the Debt Management or Credit Counseling program, you will make a monthly payment to the company.

The past due balances, fees and interest rates will be modified, but you will end up repaying what you borrowed/charged.

The problem with these types of programs is that the monthly payment is about the same (sometimes a little more) than the previous minimum payment was!

If you can handle this...great!

If not, then you should consider a:

Debt Settlement Program

After 3-4 months of non-payment on your account, the account will most likely be transferred or sold to:

  • Internal Recovery Department of the creditor
  • Debt Collection Agency
  • Law Firm/Debt Collector
  • Purchased by a Debt Buyer

At this point, the Collector may be willing to accept a reduced amount called a settlement.

These can be as much as 40% - 80% of the balance, depending on several factors.

Here's a couple of examples:

Recent Settlements See what we have  done for our clients!

In a Debt Settlement Program, you will be making a monthly deposit (that you can afford) to a Settlement Savings Fund.

As this fund grows, the company will negotiate with the creditor, collector or attorneys for a settlement agreement.

By the way, there are many so-called Debt Settlement Companies that are NOT registered with the state and violate the laws of what they can charge, etc.


Accreditated and A +  by the Better Business Bureau 


If a settlement cannot be negotiated, then there is the possibility that the creditor or owner of the account my decide to retain an attorney in order to start legal action.



First, you will get a SUMMONS. 

The summons legal document stating that the Plaintiff (creditor) has made a legal CLAIM that you (the DEFENDENT) have not met the agreements of the contract.

It will basically say that if you cannot PROVE that you do not owe the CLAIM within 30 days (varies from state-to-state) and submit to the court your Proof called an "ANSWER", then the Plaintiff may petition the court for a DEFAULT JUDGMENT.

If this happens, then the attorney for the plaintiff can petition the court to issue a writ of garnishment or bank levy!

Certain assets and income are exempt, but you have to be very careful!

The point of this is...


Yes, even if you have a judgment awarded against you, there are ways to stop wage or bank garnishments, but prevention is the best way!

What if you cannot afford a Debt Management Program or a Debt Settlement Program...

Then you may have to consider Bankruptcy.

If you have a wage garnishment awarded, your employer will be legally obligated to send 25% (may be different in some states) of you net, after-tax income to the creditor!

Think about that...

Let's say your take-home, after-tax income is $5000/month.

If you are garnished, your employer would send $1,250 to the creditor per the garnishment order, leaving you only $3750 to pay all your bills!

A Bankruptcy attorney may be able to help.

Check around and interview several.

There should be "no charge" for the initial consultation.


If you're in a financial situation where you just can't keep up, DON'T "BURY YOUR HEAD IN THE SAND", reach out for help/options:

FREE  Debt Elimination Summary


Photo Credit


Tags: best way to eliminate credit card debt, oregon wage garnishment, how to pay off credit card debt, making just the minimum payments

I Don't Understand Why I Received a Summons?

A know on the door and someone hands you some papers and says...

  • "You've been served" how did this happen?
  • Why did this happen?
  • What can I do about it now?



If you have ever received a summons before, it can be a very stressful experience!

The Summons will say something like...

"You have 30 days to APPEAR and give an ANSWER..."

Sure sounds like you are going to have to go to court!



Before I get into the "why did i receive this...", let me tell you that about 99% of the time you will NOT HAVE TO GO TO COURT.

If you look at the summons carefully, you will see that the words APPEAR and ANSWER are italicized.

This is a legal term/phrase that basically means that if you can PROVE with WRITTEN DOCUMENTATION that you don't owe or have paid this debt (THE CLAIM), you have 30 days to file the proper forms with the court.

Since most of the time the CLAIM is correct, there is no need to do that.


The biggest mistake many people make is to IGNORE the summons!

If you do, then most likely the attorney for the PLAINTIFF (owner of the debt) will seek a DEFAULT JUDGMENT.

Now that a JUDGMENT has been awarded, the attorney can petition the court for a writ of GARNISHMENT (wages, bank or both).

In most states, this is about 25% of your NET TAKE HOME pay.

Your employer must comply with the WRIT OF GARNISHMENT or face severe penalties!

Think it was hard to pay the bills on you current take home check?

Now you have 25 %  less...


Contact the attorney for the plaintife and see if you can work out some kind of repayment agreement to stop the garnishment options.

This could be a:

  • Full settlement for less than the current claim
  • Monthly payments on the full balance
  • Or even a settlement for less than the balance paid in monthly payments

Once a wage garnishment starts, it is very difficult to get the attorney to accept a settlement!


After dealing with clients for almost 20 years, it still amazes me when one of them says that they never received any summons or had no idea they owed the debt.

I guess that is possible, but ....

Anyway, most likely, here's what happened.

Due to circumstances beyond you control, you just couldn't keep up witht the minimum payments due on your credit cards or other unsecured accounts.

And yes, you may have even used a cash advance on one to help pay the minimum due on the other!

I know, you fully intended to pay all this back, but your circumstances just haven't changed.

The Creditor sent letters and made phone calls, but they were not successful.

So, in some cases, they sell or assign your account to a Law Firm that specializes in debt collection.

Even so, if you had contacted the collector or attorney/collector, you should have been able to negotiate some sort of settlement that would not only save you some money, but stop any legal options!

Recent Settlements See what we have  done for our clients!

Each creditor/collector is different and so there are no set amount of settlements.

A SUMMONS doesn't just happen by accident.

The good news is that regardless of the circumstances, there is most likely an alternative to wage or bank garnishment.

FREE  Debt Elimination Summary



Tags: how to prevent wage garnishment, debt collector, making just the minimum payments, unsecured debt

Are you making just the minimum payments on your credit cards?

making just the minimum paymentsIf I just make the minimum payments due on my credit cards, will I ever pay them off?

Not likely!

The credit card industry has successfully created an "easy pay plan" for consumers that almost guarantees that they will never pay off their credit cards.


By charging a very high interest rate and only requiring a very low (too low) minimum payment.


  • Let's say you have a credit card with a balance of $3,000.
  • The Annual Percentage Rate is 21%.
  • The minimum payment this card requires is 2.02% of the balance, or in this case, ($3,000 x .0202) = $60.60.
  • You make a payment of $60.60 to XYZ Visa.

Next month, you get your bill and unlike most consumers, you take a closer look and discover:

Previous Balance                                           $3,000.00

Interest and fees (for this example, we won't add any late or over-the-limit fees)                                        $     51.78

You mailed in $60.60 as a minimum payment   -$     60.60

Only to discover that your NEW BALANCE is       $2,991.18

Your right! Your balance went down by only $8.82!

What happened?

You just fell prey to the credit card industry's "scam" of letting consumers think that if they just make the minimum payment on their credit cards, they'll be OK.

Let's take a closer look:

Most credit cards use a formula that calculates the Average Daily Balance (ADB) and Daily Periodic Interest (DPI) to determine how much of your payment goes to INTEREST and how much actually goes to the BALANCE. There are other methods, but this is normal.

To determine your ADB and DPI:

If your total balance was $3,000, to find the Average Daily Balance (ADB), divide the total balance by the number of days since your last payment was applied. In this case:

              $3,000 divided by 30 days = ADB of $100

Now determine the Daily Periodic Interest (DPI) they charged you:

Take the Annual Percentage Rate (APR) or .21 and divided by 365 (days in a year of course).  In our case:

               .21 divided by 365 = .0005753 = DPI

Now find the Average Daily Interest (ADI):

To find out how much interest you actually paid per day:

  DPI .0005753   X  ADB $100  X   30 days =  ADI or 1.7259

Finally, to determine how much interest you paid:

      ADI 1.7259  X  30 days = $51.78 

                      SHOCKED!           YOU SHOULD BE!

It doesn't take a rocket scientist to understand that at this rate, it may take a lifetime to pay of this debt if all you do is make the minimum payment!

For FREE information about how to pay off your credit cards in a fraction of the time and save thousands of dollars in interest and fees, please click here. making just the minimum payments






Tags: debt relief programs, best way to eliminate credit card debt, making just the minimum payments