People are always asking...

"Does Debt Settlement hurt your credit score?"

Although this is a simple question, the answer is not as simple.

According to the Fair Issac Corporation (FICO), there are several factors that go into determining your credit score:

• Payment History....................35%
• Amounts you owe.................30%
• Length of Credit History.......15%
• Types of Credit......................10%
• New Credit..............................10%

As you can see, 65% of your credit scores seems to depend on your Payment History and How Much You Owe.  In reality, there are several other factors that go into determining your credit score. 

                                     For example, FICO says:

Your FICO credit score is calculated based on these five categories. For some groups, the importance of these categories may vary; for example, people who have not been using credit long will be factored differently than those with a longer credit history.

The importance of any one factor in your credit score calculation depends on the overall information in your credit report. For some people, one factor may have a larger impact that it would for someone with a much different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO^® Score.

Therefore, it’s impossible to measure the exact impact of a single factor in how your credit score is calculated without looking at your entire report. Even the levels of importance shown in the FICO Score chart are for the general population, and will be different for different credit profiles.

If you are considering a Debt Settlement Program, let's assume that you have several unsecured debts and are behind or starting to fall behind on your monthly payments due to anyone of several circumstances.

And, if this the case, you can see from the information above that your credit score has already been affected.

Enrolling in a Debt Settlement Program and finally getting your delinquent account balances to ZERO will ultimately IMPROVE your credit score.

If you decide (or have no choice) but to file for BANKRUPTCY PROTECTION, then your creditors receive little to nothing.

But, once a settlement agreement has been negotiated and the agreement has been completed, your credit report will show a $0 BALANCE and state something like "paid-as-agreed" or "paid-as-agreed for less than the balance due".

In either case, once all of your debts have been settled and you have not charged up more credit, your credit score will begin to improve!

The WORST THING YOU CAN DO IS NOTHING! 

Debt Settlement may help you finally get back on the right track and avoid bankruptcy.

If you would like a FREE CONSULTATION with NO OBLIGATION, CLICK HERE.

Money doesn't grow on trees!  You work hard every day to bring home your pay check and support your family, so it can be devastating when your creditors can come and "PICK" your hard earned wages.

It is sometimes possible to stop a wage garnishment, but it is better to PREVENT a wage garnishment!

How can you PREVENT WAGE GARNISHMENT?

Once you have fallen behind in paying on your credit or store cards, medical bills, personal line of credit, private student loan and any other UNSECURED debt, your creditors will start to call.

Once they have made repeated collection calls and sent you numerous collection letters, your creditors will start to threaten all sorts of things including "Pursuing Legal Action".

BE PRO-ACTIVE

I know that it is scary, and it would be much easier to bury your head in the sand and ignor the creditors.  But, if you do, you may end up in a hole that you can't is too deep to get our of!  You need to be PRO-ACTIVE and CONTACT YOUR CREDITOR(S) IN WRITING stating that you cannot make payments at this time and plan on repaying this bill when you can.

This will not stop their collection efforts, but it will help slow down their options for filing a claim for the debt.  When you owe a debt, the creditor has the right to collect of course. However, they are supposed to do so within the laws stated in the Fair Debt Collection Practices Act (FDCPA).  Many unscrupulous collections agencies will ignore these laws, so it's extremely important that you KNOW YOUR RIGHTS, and stand up for your self throughout this process.  (Read More: "Know Your Rights When Dealing With Debt Collectors")

CREATE A CRISIS BUDGET

A CRISIS BUDGET is a short term budgeting tool that you can use when you have an unexpected income reduction or need to free up some money in your existing budget for an emergency.  I would say that this qualifies as an emergency! 

Take a close look at your budget, if you have one, and see how closely it matches to your ACTUAL SPENDING.  Most people create an ideal budget, but in reality their spending habits are significantly different. 

Once you have a clear picture or where your money is really going each month, look for areas of general improvement first.  Could you start making coffee at home a few days a week, or start bringing your lunch and eating out at work only once per week?  How about carpooling to work to save money on gas? These are goals that are realistic over the long run, but will usually not make enough difference in a state of crisis. 

Next, identify any areas in your budget that can be reduced for the next 6-12 months.  Can you live with basic cable instead of the premium cable TV package?    Is it possible to defer your student loan payments for a while?  Try calling your utility companies and see if they have a temporary hardship program.  Get creative.  After all, this is a CRISIS BUDGET.  You won't have to stick to it forever.

CALL YOUR CREDITORS

Now that you have re-evaluated your budget and freed up some money, you know what you have to work with.  This gives you power when you contact your collection agencies. 

The collector may accept a SETTLEMENT OFFER for less than you owe, or they may let you repay the debt over several months at a reduced interest rate.

Be strong, and stick to what you can actually pay.  Your creditors want your payments coming in each month.  They make money when they get to charge you interest, so it makes sense for them to work something out with you.  There is no point in working out a SETTLEMENT or REPAYMENT PLAN that you cannot pay!

• If you have delinquent debts, BE PROACTIVE! Don't just ignore the calls and letters.
• Create a CRISIS BUDGET that you can stick to while you are repaying your debt!
  
• Try to work out a SETTLEMENT AGREEMENT or a REPAYMENT PLAN with the creditor or collection agency, and make sure that the payments fit into your crisis budget!
  

If all of this sounds like "TOO MUCH", then give us a call.  We have been helping people settle debts and prevent wage garnishment for 10 years.

WE CAN HELP YOU TOO!

If you answer the door and are handed a summons, there are some things you must do:

#1 DON'T PANIC!

If you don't read the summons carefully, it seems like it says that you have 20-30 days before you have to go to court. But this is absolutely NOT TRUE!

The summons is stating that you have a brief time period to file an ANSWER.  This is a formal denial of that you owe the debt.  In most cases, the DEFENDANT (that's you) doesn't need to file an "answer" as you do owe the debt.  But if you feel that you have repaid the debt or that the debt does not belong to you, by all means file an "answer".

It may cost you a hundred bucks or so, but that is just the cost of the court.  You will want to contact your court to find out what you should do. In very rare cases, you may need to hire an attorney to help.

After the collectors called and called and called, (Click HERE to learn HOW TO STOP THE CALLS), they may decide to FILE A CLAIM against you...hence the summons. Which brings us to...

#2 DON'T IGNORE THE SUMMONS!

We had a client that received a summons several months ago and did not tell us about it.  She called the other day to say that her wages were going to be garnished and "what can you do about it?"

In most cases, there is not much that can be done once a Writ of Garnishment is issued.  A WRIT OF GARNISHMENT is issued after the creditor or PLAINTIFF, wins a DEFAULT JUDGMENT.

Since we had no idea about the summons and subsequent legal procedure that led to the award of the judgment, we were in a bind!

Once the Writ of Garnishment is issued in most states, 25% of your net (after tax) income will be withheld by your employer!  For most people, this would be FINANCIALLY DEVESTATING!

For Example:

Let's say you make $18 an hour.  That's about $3,000 a month gross earnings.  If your employer withholds normal income taxes, that would mean your take home would be about $2250. 

A garnishment of 25% would be about $562.50!  If it's hard to make ends meet now, how could you do it with $562 less?

If she had contacted us about the summons as soon as she received it, we most likely would have negotiated either a settlement (maybe 50% or so of the balance) or a Stipulated Agreement, whereby she would repay the debt (often at a slightly reduced balance) with a monthly payment her budget could handle.

In some case the creditor will accept a stipulated agreement AFTER a judgment is awarded, but not always.  Unfortunately, although her creditor was willing to take a little less that the $562.50, she could not afford it and she was forced to seek a bankruptcy attorney's services!

#3 REMEMBER THESE IMPORTANT STEPS!

• DON'T IGNORE A SUMMONS
• CONTACT THE ATTORNEY FOR THE CREDITOR/PLAINTIFF IMMEDIATELY
  
• OFFER A REDUCED SETTLEMENT AMOUNT OR
• OFFER TO REPAY AT AN AMOUNT YOUR BUDGET WILL ALLOW
  

If you have receive a summons and are still not sure what to do, WE CAN HELP. Give us a call AT 1-877-492-4109 OR click the link below!

Is it possible to stop a wage garnishment in Oregon?

Yes! But, you need to know how the process works.

When you have unpaid debt, and for the purpose of this blog, we're talking about unsecured debts, such as:

• Credit cards
• Store cards
• Medical bills
• Personal line of credit (not tied to your home)
• Private Student Loans

Your creditors have a right to collect monies that you promised to repay when you borrowed the funds.

If they cannot get you to start paying by calling and mailing nasty letters, they may decide to turn your account over to a collection agency.

As you know, debt collectors can be very annoying and most of the time, violate the Fair Debt Collection Practices Act or the FDCPA.

If you feel that they have violated the protection and rights you have through the FDCPA, you should contact your state's attorney generals office and file a complaint.

If the  debt collection agency cannot get you to pay, they may decide to file a COMPLAINT in your county court for the debt you owe.

If they do, you will receive a SUMMONS either personally delivered or by registered mail.

DON'T FREAK OUT!!!

The summons will state that you have about 30 days to provide and ANSWER to the court or the PLAINTIFF (the creditor filing the claim) may proceed with further legal action.

The ANSWER would be your argument that you do not owe the debt.  Most of the time there is no use in paying the fee or hiring an attorney to produce an ANSWER, but if you feel that you do not owe the CLAIMED DEBT, then you should challenge with an ANSWER.

If you do nothing (as most people do), the court will generally award the plaintiff with a DEFAULT JUDGMENT.  In other words, they win by default as you are admitting that you owe the debt.

If you do nothing, it is very likely that the attorney for the plaintiff will apply for a WRIT OF GARNISHMENT that will be sent to your employer.

Now, the Writ of Garnishment ONLY APPLIES TO THOSE WHO RECEIVE W-2 wages!

You cannot be garnished if you receive income from:

• Social Security benefits
• Supplemental Security Income (SSI)
• Welfare or public assistance
• Spousal support or child support
• Public or private pensions
• Veterans benefits and/or loans
• Disability proceeds of life insurance policies
• Cash surrender value of life insurance policies
• and many others

Click Here for a complete list of EXEMPT INCOME in Oregon.

But if you receive notice from your employer that you will be garnished (25% of your net check in Oregon!), you still may be able to STOP THE GARNISHMENT.

You will need to contact the attorney's office for the plaintiff and try to get them agree to let you make reduced payments (not the 25% of your net income) until the entire balance is repaid, including attorney fees and 9% (Oregon).

This is called a STIPULATED AGREEMENT, and if you are successful, the attorney may have you sign a copy of the Stipulated Agreement and file it with the court.

If you fail to make a payment according to the Stipulated Agreement, then the Stipulated Agreement is revoked, and you now will be garnished again!

If all of this sounds like TOO MUCH, we can help.  We have helped many, many people stop  wage garnishment. Give us a call at 1-877-492-4109 or Click on the link below:

Can anything be done about debt collector harassment?

YES!

A consumer is protected from debt collector harassment by the Fair Debt Collection Practices Act (FDCPA).  Here are some FAQs about Debt Collector Harassment:

CAN A DEBT COLLECTOR CALL AT ALL TIMES OF THE DAY?

NO, they are prohibited from calling before 8am or after 9pm (your time zone).  They may not call you at work if they are told that you are not allowed to get calls.

CAN A DEBT COLLECTOR CONTACT FRIEND, NEIGHBORS OR FAMILY ABOUT MY DEBT?

Yes and No... A debt collector may contact a third party, but only to inquire how to get in touch with you.  They ARE NOT permitted to disclose any information about your debt.

WHAT SPECIFIC PRACTICES ARE PROHIBITED BY THE FDCPA?

A debt collector may not:

• make threats of violence
• use obscene language
• call many, many times a day

A debt collector may not make false statements such as:

• claiming to be attorneys
• claiming to be a government official or representative
• claim that by failing to pay the debt you have committed a crime
• claim that you could be arrested unless you pay

A debt collector cannot make threats such as:

• you will go to jail if you don't pay
• they are going to seize your property or garnish your wages unless they intend to take action or follow through with legal action

These are just a few of the actions and practices that are forbidden to debt collectors.  Unfortunately, debt collectors habitually violate the FDCPA!

WHAT CAN YOU DO WHEN A COLLECTOR BREAKS THE RULES?

If you think your rights have been violated, contact your state's attorney general's office and file a complaint.

For example, in Oregon, CLICK HERE.

Bottom line...you have rights as a consumer and do not have to put up with debt collector harassment!  If you would like help, our Debt Solutions Specialists can answer your questions.

photo by: chmeredith

Credit Repair... Is it really possible?

There are several credit repair myths out there, but which ones are real and which ones are just plane untrue?  In this post, I will examine 4 common Credit Repair myths to shed some lite on the whole thing!

MYTH # 1:

If you have negative or derogatory accounts, a credit repair company can get them removed.

Although some negative or derogatory accounts can be removed from your credit report, a few of them cannot. Before you pay a fee to any company, make sure you "get in writing" their guarantees of what they can and cannot do for you.

If any company states that they can remove all negative items, RUN!

MYTH # 2:

If you are delinquent on an account and call the creditor to close that account, it will help your credit score.

Sorry, this one is not true either!  Inactivity and/or delinquency will damage your score.  FICO (Fair Isaac Corporation) has information that tells you what is in and not in a credit report.

Unfortunately, your PAYMENT HISTORY accounts for 35% of your credit score, and closing the account will not change your payment history.

MYTH # 3:

If you add a statement to your credit report (up to 100 words), it will raise your credit score.

If you cannot get the  three major credit reporting agencies to remove inaccurate information or mistakes, you can opt to add a statement on your credit report.

Unfortunately, FICO usually does not see or use it in determining your credit score. Even though adding a statement might make you feel better, the effort may not be worth it.

MYTH # 4:

You cannot do anything on your own about improving your credit score!

This myth is absolutely FALSE! There are several things you can do to improve your credit scores:

Of course, the most important is to PAY OFF YOUR CREDIT CARDS AND ACCOUNTS in a timely manner.  There are no shortcuts to living up to your responsibility to repair what you agreed to repay!

But, if you see errors on your credit report, you can make requests to have these removed.  If you provide the proper documentation to prove you either did not incur the debt or that you have repaid the debt, it will be removed.

To contact the 3 major credit bureaus, click on the links below:

• Experian
• Transunion
• Equifax

Want to read more about credit repair directly from the source, the Federal Trade Commission  has some good advice on How to Repair Your Credit. 

If you would like a FREE CONSULTATION about your situation, please let us know.  We have been helping people become DEBT FREE for many years, and may be able to help you too!

Can I use debt settlement in Oregon to clear up old debts?

YES! Debt Settlement is a viable option that creditors will consider when you are facing difficult financial times.

HOW DOES DEBT SETTLEMENT WORK?

After you have been delinquent in paying your accounts, usually those accounts go into an INTERNAL RECOVERY department within the company.  During the first couple of months, you will receive numerous calls and letters about your account.  These calls can be VERY ANNOYING, and in some cases, put your job in jeopardy if they call you at work!

THE GOOD NEWS is that you can PUT A STOP TO CREDITOR CALLS.

According to the FAIR DEBT COLLECTION PRACTICES ACT (FDCPA), once you have requested/demanded that the creditor stop calling you, they must stop!  If they continue, you can report them to the State Attorney General's office and they may be subject to a hefty fine!

After approximately 120-180 days, if the creditor has not bee successful in getting you to start paying again they may offer your a Hardship Plan. Before you agree to their offer of a "HARDSHIP PLAN", you need to read  BEWARE OF SO-CALLED HARDSHIP PLANS!

If you choose to decline the Hardship Plan, your account wil be CHARGED OFF, it will be placed with a COLLECTION AGENCY.  This agency may also be a law firm that only specializes in debt collection.

At this point, the calls and letters start again! Even though you requested that the original creditor stop calling, now your account has been placed or sold to a different company and you must send the demand-to-stop calling letter again!

Your account has now been delinquent for approximately 6 months, and depending on your circumstances, a settlement offer of 50% or less may be possible.  It takes a lot of time and effort to secure a good settlement, but settlements can and are negotiated all the time.

Click here for some ACTUAL SETTELMENT EXAMPLES.

If you are able to negotiate a good settlement (50% or less), before you send money or agree to a check-by-phone, GET THE SETTLEMENT AGREEMENT IN WRITING!

Many consumers have made a verbal agreement over the phone, authorized a settlement payment, and then find out that the company claims that the payment was just toward the ENTIRE BALANCE, and not a settlement-as-agreed.

Yes, DEBT SETTLEMENT IN OREGON as well as most all states is possible, but time consuming.  We have been helping people become DEBT FREE through DEBT SETTLEMENT FOR MANY YEARS  and may be able to help you also.

How can you Stop Debt Collector Calls?

Debt collectors are paid to collect money that you owe!  So, is it any wonder that they will use any and all methods (legal and illegal) to get you to pay?

Do any of these situations sound familiar?

• You are sitting down to relax after a long day and the calls start!
• You check your phone messages and you have 14 calls...ALL IN ONE DAY!
• You start receiving calls from creditors at work?

The Fair Debt Collection Practices Act (FDCPA) outlines what a debt collector can and cannot do.  If you are being harassed by collectors, you should click on the link above and print a copy!

The FDCPA says that debt collectors CANNOT do any of the following:

• Contact you before 8am or after 9pm (your time zone)
• Contact you at work if they are told that you are not allowed to get calls. This can be orally or in writing.)
• Contact third parties (including family or friends) other than to get information on how they can contact you.  They CANNOT DISCUSS YOUR DEBT!
• Contact you after you have sent them a letter stating that you do not owe the money and request verification of the debt.

A Debt Collector is PROHIBITED FROM HARASSMENT, such as:

• Making threats of violence or harm
• Using profane or obscene language
• Call over and over again, many times/day!

A Debt Collector is also PROHIBITED FROM MAKING FALSE STATEMENTS, such as:

• Claiming to be an attorney or a government representative
• Claim or insinuate that you have committed a crime
• Claim that they are going to take "LEGAL ACTION", when in fact, they do not.
• Claim that they will garnish your wages or levy your bank account.  They cannot even start to take legal actions until a claim has been filed and a SUMMONS is delivered to you.

Ok, but How do you STOP debt collector calls?

1) Send a letter like this:

Although I fully intend to repay this debt, it is impossible for me to do so at this time.  I am in a very desperate financial position and cannot pay the minimum payments required for my account.

According to the Fair Debt Collection Practices Act (“FDCPA”) 15 USC, 1692c(c), I am making an official request that you immediately terminate any telephone contact with me or any members of my family regarding any matter concerning the collection of the alleged debt.

You have repeatedly called me at home and at work which must stop!

If you do not, then I will be in contact with the attorney general’s office of my state and file a complaint.

Sincerely,

(Print and sign your name)

2)  Send the letter using REGISTERED MAIL, so you will have proof that they received it.

Once they have received your written notification to stop calling you, they may only call you one more time.  Usually they will be either very nice or very nasty.

Either way, now the calls should stop.

We have been helping people with debt issues for many years. 

If you would like a FREE EVALUATION of your situation, let us know!

As the Director of Settlement Services at Debt Relief, I am often asked...

"Is Debt Settlement better than bankruptcy?" 

I wish that this was a simple answer, but the correct answer is that is all depends.

In this case I am talking about unsecured debt such as:

• Credit Cards
• Unsecured Personal Loans
• Store Card Accounts
• Medical Bills

Your Options

When Unsecured Debt gets OUT OF CONTROL and you CANNOT AFFORD to continue making monthly payments, what are you options?

1.  In rare cases, you may be able to secure a 2nd mortgage or Equity Line of Credit to use to pay off all of your accounts.

While many feel like this is unwise, it may be to your advantage to combine or consolidate all of your high interest accounts into one loan that usually has a much smaller interest rate.

Of course, the danger is that if you default on this loan, your home could be in jeapordy!

Also, if your home is foreclosed on, the 2nd mortgage and/or equity line of credit may not be dismissed!

2.  If you qualify, a DEBT MANAGEMENT PROGRAM may be a good option. In a Debt Management Program, your creditors usually agree to lower your interest rate and take a fixed payment for approximately 48 months depending on the account.

Often a common missconception, A Debt Management Program is not a factor in determining your credit score.

The problem with a Debt Management Program is that, many times, the total payment may not be less (and is some cases more) than your current total monthly payments!

3.  DEBT SETTLEMENT is an option that you should consider if you cannot quailfy for or cannot afford the payment of a Debt Management Program and do not have or cannot qualify for a 2nd mortgage or equity line of credit.

In a Debt Settlement Program, your accounts will become delinquent and in most cases charged off by the original creditor and placed with a debt collector.  Once your reserve account has sufficient funds, a settlement of 50% or less can be negotiated and the debt is now classified as "settled-as-agreed".

Even though your credit report will show late payments, eventually all of your accounts will show a  ZERO BALANCE! At this point, your credit score will start to IMPROVE!

Many clients have enrolled in our Debt Settlement Program with $25,000, $50,000 or in some cases over $100,000 of combined unsecured credit and have completed the program, becoming totally DEBT FREE and saving 50% or more!

• If you have no access to home equity or cannot qualify for a consolidation loan...
• If you cannot afford the total monthly payment of a Debt Management Program...
• If you cannot afford a reasonable monthly amount for a Debt Settlement Program...

4. ...then BANKRUPTCY may be you only option.

Bankruptcy is a very serious decision and should only be considered after investigating ALL OF YOUR OPTIONS. However, qualifying for a Chapter 7 bankruptcy is not an option for most people after the Bankruptcy laws changed on 2005.

Most people will only qualify for a Chapter 13 bankruptcy and will pay into a plan for up to 5 years before their debts are discharged.

You may have heard that Debt Settlement Programa charge huge fees! While the debt settlement company will and should earn a fee, recent legislation has gone a long way in stopping bad debt settlement companies.

You should always check out a Debt Settlement Company (or any company) at the Better Business Bureau.

With a Chapter 13 bankruptcy, your creditors will get pennies-on-the-dollar and your bankruptcy attorney will earn a fee. This is usually calculated in the monthly payment you will be making to your bankruptcy court.

So, is Debt Settlement or Bankruptcy the best option for you?

Our Debt Solutions Specialist can help you determine which option is the best choice for your situation.  If you would like a FREE CONSULTATION WITH NO OBLIGATION to explore your options based on your particular circumstances, give us a call at 1-877-492-4109 or click on the link below!

The total amount of all student loan debt is almost $1 TRILLION dollars! That's an average of about $25,000 per loan or about 40 Million loans!  With our economy in a recession for the last few years, many of these loans are in default.

The Student Loan Forgiveness Act of 2012 or H.R. 4170, has been introduced in congress by Rep. Hansen Clark.  If this passes, how will it affect you and your student loan?

 BANKRUPTCY WILL NOT HELP!

The bill, introduced in March would create a new "10-10 standard" for student loan forgiveness:

• If you make payments equal to 10% of your discretionary income (take home pay) for 10 years, the remaining balance of your federal (not private) student loan would be forgiven.
• If you have been making payments on your federal student loans, your repayment period would likely be shorter than 10 years.  In other words, the amount you have already paid on your student loans over the past 10 years would be credited toward meeting the "10-10 standard".
• The bill would also cap interest rates on federal student loans at 3.4%
• The bill would allow private student loans to be converted to federal Direct Loans, and then enrolling their new federal loans into the 10/10 program.
• If you enter a public service profession like teaching, firefighting, law enforcement, etc., you would qualify for a 5 year Public Service Loan Forgiveness Program!

If you currently have a Federal Student Loan, there is little you can do but keep paying.  However, if you are unemployed or have a reasonable financial hardship, you may qualify for a DEFERMENT.

If you have a PRIVATELY FUNDED STUDENT LOAN, you may qualify for a settlement or forgivenss of 50% or more. 

To learn more, CLICK HERE.