Texas is one of only a couple of states that DOES NOT ALLOW WAGE GARNISHMENT!  But, that doesn't necessarily mean that your assets are 100% protected!

In Texas, a creditor that has been awarded a judgment for non-payment of a debt CANNOT apply for a writ of wage garnishment!

However, your wages can be garnished for:

• Child Support
• Alimony
• Taxes you owe
• Federal Student Loans

It is important that you understand the potential

WAGE GARNISHMENT process:

Let's say that you are going through a financial crisis due to:

• Loss of employment
• Death of a spouse or loved one
• Severe illness or disability
• Limited Fixed Income after retirement
• Or many other potentially financial devastating circumstances beyond your control

Once you start to become late or miss scheduled payments on your accounts, you start getting calls and letters from your creditor. 

Although I will show you how to stop the calls from DEBT COLLECTORS, it is often misunderstood that as long as your account is with the ORIGINAL CREDITOR, that creditor has the right to call you. 

Now, having said that, they cannot violate the FAIR DEBT COLLECTION PRACTICES ACT that prohibits abusive debt collection practices.

If the original creditor cannot get you to start making payments again, they may decide to charge your account off and either turn it over or sell to a DEBT COLLECTOR.

Now, the debt collector will start calling and they are usually much more aggressive in their attempts to collect than the original creditor.  In fact, they may call many, many times a day and/or leave upsetting voice messages!

The good news is that now that the account has left the original creditor and has gone to a debt collector, you can put a stop to the calls:

But, that doesn' mean that the funds in your BANK ACCOUNT are necessarily protected!

In Texas, your wages are exempt (except for those listed at the start of this blog), but your bank account is not UNLESS, the source of those funds/benefits are from:

• Retirement or Social Security
• Unemployment
• Workers Compensation
• SSI
• VA
• Civil or Foreign Service Retirement
• Disability
• Proceeds from Life, Health or Accident Insurance

Although those sources of funds in your bank account are exempt, I STRONGLY RECOMMEND that if you receive notice of a judgment against you, that you CONTACT YOUR BANK and make sure they "FLAG YOUR ACCOUNT" to be EXEMPT FROM LEVY!

And here's another very important thing to remember...

Let's say you are retired and your retirement check and/or your social security check is automatically deposited in your bank account.

You want to transfer some of the funds over to another account (like a savings account) to keep a little "something for an emergency" fund.

ONCE THOSE FUNDS ARE TRANSFERRED, THEY MAY BE SUBJECT TO GARNISHMENT AND/OR LEVY IF A WRIT IS PRESENTED TO YOUR BANK AFTER A JUDGMENT ! ! !

Again, IF YOU RECEIVE OR HAVE RECEIVED a judgment, notify your bank immediately to see if they are aware your funds are exempt.

Living in Texas does give you some very special protection from creditors, but don't just ASSUME your safe....make sure!

Need help?  We've been helping people through the frustration and anxiety of too much debt for many years.

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If you have received a Notice of Garnishment, DON'T PANIC!  You may be exempt, but you must do your homework and act FAST!

Although there are various types or reason for a garnishment, for the sake of this discussion, I'm talking about a garnishment as a result of not paying or being unable to pay the unsecured debts you may have, such as:

Now, just because you have fallen behind or even missed a few payments, the creditor CANNOT garnish until a judgment has been awarded.

But, before that happens, here is what usually happens:

1.  You start falling behind or have already fallen behind on the minimum payments due on your credit accounts.

2.  You will most likely start getting phone calls and/or "nasty" letters from the creditor.

3.  If the creditor does not receive any payments for approximately 3-4 months, they may decide to:

      A.  Charge the account off as a total loss.

      B.  Assign the account to a Debt Collector.

      C.  Sell the account to a Debt Collector/Debt Buyer

We have been helping people, like you, deal with all of the various issues that come from facing a financial circumstance that makes it very hard or impossible to keep up with your bills.

The most common mistake people make is to ignore the calls and/or letters.  I certainly understand how frustrating and depressing it is to get a call from an over-due bill or a debt collector and how the easiest thing to do is just not accept the call or respond to a letter.

WHY?

Although for the most part, creditors and debt collectors will act in a professional manner, sometimes they may go over line and break the law according to the Fair Debt Collection Practices Act.

It would certainly be worth you time to check out what a debt collector CAN AND CANNOT do when attempting to collect. 

The original creditor has the right to call you (as long as they comply with the FDCPA), so as long as the account is still with the original creditor, you cannot prevent them from calling.

However, you can stop them from calling you at your place of employment by telling them that youremployer will not allow any personal calls!

But, once that account leaves the original creditor, you can put a STOP TO THE CALLS!

Even though you may have put a stop to the calls, that doesn't mean that the debt collector will give up.  In fact, by not speaking with them, you may cause the original creditor to authorize the collector to FILE A CLAIM.

The many of the debt collection agencies are actually lawyers and if so, they will go to your county courthouse, pay the filing fee and file the claim.

A SUMMONS is issued.  This may be be certified mail, but most often, by someone in person.  VERY INTIMIDATING!

The CLAIM/SUMMONS is saying that you owe this debt unless you respond with an ANSWER, usually withing 20 - 30 days.  This "answer" is what you would do if you absolutely know (and have proof) that you do not owe this debt.

But, if you do, then there is no need for you to pay for and file an "ANSWER" with the court.

We help our clients AVOID A JUDGMENT by making sure they contact us as soon as they receive a SUMMONS.  Many times, in fact, most often, we can negotiate either a settlement or a STIPULATED AGREEMENT.

I'm not going to go into all the details here, but you should check out my blog:

"WHAT TO DO IF YOU RECEIVE A SUMMONS!"

If a settlement or stipulated agreement cannot be reached, the creditor or debt collector may decide to go ahead and seek a DEFAULT JUDGMENT.

Once the "default judgment" is awarded the creditor/plaintiff, then they may choose to seek a WRIT OF GARNISHMENT.

Now, the creditor or debt collector can go after your "property". 

But, YOU MAY BE ABLE TO PREVENT THE GARNISHMENT BY UNDERSTANDING WHAT IS AND WHAT IS NOT SUBJECT TO GARNISHMENT!

Each state has its own laws pertaining to garnishment, but basically they state that your wages can be garnished up to 25% of your net (after tax) take home wages.

And, they may be able to LEVY YOUR BANK ACCOUNT, unless you meet the EXEMPTIONS provided by law.

I'm not going to give every EXEMPTION here, but if you are subject to a garnishment, you most likely will receive a document that outlines these exemptions.

Some of the most common exemptions (in other words, they cannot garnish if...):

1.  You earn $218 or less per workweek.

2.  ALL of your Social Security Benefits are exempt!

3.  Retirement plans are exempt.

4.  Disability Benefits are exempt.

5.  And beside those, here are more:

• SSI
• Public assistance
• Unemployment benefits
• Workers' compensation benefits
• Spousal support, child support and other income from a divorce are exempt
• Your home's value!  Up to $40,000 for single and $50,000 of equity for jointly held property!
• And there are many, many more...you must check out!

Bottom line:

Attempt to "head off" a garnishment by responding to the SUMMONS immediately.

Contact us if you need help....

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Credit Card Debt...It seems like almost everyone has some or way too much!  So, what can you do about eliminating your credit card debt?  Here are several tips:

If you haven't done so, you should take a close look at your statement.  Check out the area where the company tries to explain how much of your payment is applied to interest, principal and/or late or over-limit-fees.

  It's not going to take you long to realize that if you only make the minimum  payment required, you may by paying on this credit card for many, many years!     

In addition, you could end up paying 3-4 times as much as you originally charged!!!!

So what is the best way to pay off or eliminate your credit card debt?

Well, it depends....

Many people (maybe just like you) have become over-extended with their credit card total debt to the point where just making the minimum payments is hard.

I'm going to share a secret that could help you completely eliminate all of your credit card debt in say...4 -5 years instead of 15- 20 years!

But, it's going to take a little sacrifice on your part.

You are going to start by taking an honest look at yourself and your budget.  In other words, you are going to write down everything you are spending money on besides the basic necessities and see if you can find a hundred dollars or so to put toward becoming DEBT FREE!

Of course, I bet you are thinking..."Is this guy nuts!  I don't have any extra money!"

Let's take a look:

If you are like a zillion other people and stop to get your favorite coffee drink daily (or sometimes twice a day), you are most likely spending $4 -$5 dollars per drink.

If you do that for an average of 30 days each month, using just the $4 drink, that is at least $120 each month!

What about that cable/internet service bill you pay monthly?

Do you really need a couple of hundred channels?  What if by taking a close look at your viewing habits you could save, oh, say $25 each month on your cable/internet bill?

Do you have to eat out for lunch each day?  Most people not only don't have to "eat out", but could stand to make a more healthy choice lunch they could bring from home.  Not only could you save $40-$50 each month, you may even eat better and feel better, etc.

                            You get the idea?  Just a little here and there adds up!

So let's say you can find at least an extra $100 each month. Now what?

You are going to list all of your credit card accounts and how much the minimum payment is for each.

At this point, you are not going to worry about the interest rates (unless, you have gotten yourself into one of those so-called "pay-day loans" and are paying 30% or more!)  If that's the case, you'd start with that one. 

But for this example, let's start with an account that has a balance of $1,000 and the minimum payment is $25.

You are going to add the $100 you saved (by making a few life-style changes) and add that to the $25 minimum for a total of $125.  And you are going to make all of the other minimum payments (ON TIME) as well.

This account should be paid off in 8-9 months or so.

Let's say your second account has a balance of $2,500 and you are required to make a minimum payment of $65.  Now that that first account is paid off (feels good, huh?), you are going to take the $125, add it to the $65 for a total payment of $190.

At $190/month, that second account should be paid off in about 14 months or so.  And yes, you are going to keep making the normal required minimum payments on the other accounts.

                                         STARTING TO GET THE IDEA?

Before long, you are going to be increasing your monthly payment on your credit card accounts and after just a few years, you are going to not only be DEBT FREE, but now you have an extra $300, $400, $500 or more for your budget!

We have helped many clients with this type of DEBT ACCELERATION PLAN.

Of course, the Debt Accelerator Plan is great if you not only can afford to the minimum payments required, but also can find some extra money to help "accelerate" paying off those credit cards.

If you are like millions of people who for several reasons beyond their control, find themselves unable to keep up with the minimum payments required on their credit cards, you only have a couple of options:

• A DEBT SETTLEMENT PROGRAM
• BANKRUPTCY

Let's leave the bankruptcy option for the very last as I believe you want to not only eliminate your credit card debt, but would also like to avoid bankruptcy and all fallout it brings.

What is DEBT SETTLEMENT?

Once an account has become delinquent and most likely charged off by the original creditor, it will show up with a debt collector.

These debt collectors may have taken the account on an assignment from the original creditor or they may have purchased this debt.

Either way, the debt collector is going to try and get you to pay as much as possible.

If you have ever had a debt collector call you, you know it is not usually a pleasant experience!

I have written numerous articles and blogs about how to deal with debt collectors and you really owe it to yourself to find out what your rights are under the Fair Debt Collection Practices Act or FDCPA.

Here's a link you should check out:

Debt Collectors, the FDCPA and Your Rights

If a debt collector cannot get you to pay 100% of the debt they claim you owe, they may be willing to accept a reduced amount called a SETTLEMENT to satisfy this debt.

Above, I used the phrase " the debt they claim you owe".  If you feel that you honestly DO NOT OWE THE DEBT they are claiming you owe, you can make the VALIDATE THE DEBT.

Usually, when you receive a letter/statement from the debt collector, it will state something like, "unless you dispute the validity of this debt within 30 days, it will be deemed valid....".

There are many so-called "CREDIT REPAIR" scam companies that try to challenge every legitimate debt you owe in an attempt to have it removed from your credit report and thus, improve your credit score.

Now while I am certainly in favor of challenging errors on a credit report, I do not believe in FRAUD and/or misuse of the system to get out of paying or negotiating a settlement on a legitimate debt you owe. 

But, if you truly know and CAN PROVE that you do not owe the debt the debt collector is claiming, click below:

OK, enough of that...

What about Debt Settlement?

Debt Settlement is where a negotiation takes place between you or a representative from a debt settlement company whereby the debt collector (or in some cases the original creditor) agrees to accept less than the full amount due.

How much of a reduction depends on several factors, such as:

• Are you employed?
• Retired?
• Renting?
• Have any extra funds to tap?

To get an idea of how a SETTLEMENT AGREEMENT actually looks, click below:

If you find yourself not even able to offer monthly payments in a settlement agreement or are facing wage garnishment and/or bank levy due to a judgment awarded the creditor, then you may be forced to seek BANKRUPTCY PROTECTION!

   As I stated earlier, I believe bankruptcy should be your last option after you have attempted

to pay off and/or settle your credit card or other unsecured accounts through the methods

   I've just outline

STILL CONFUSED?

                              We can help...

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Disputing an error on your credit report is not difficult. In fact, there is no reason for you to pay anyone as you can DIY!  Here's how:

Recently, I read an newspaper article from the Oregonian by Liz Pulliam Weston from "Money Talk" that was very good and I highly recommend that you check out her site!

In this article, she outlines how many (not all) so-called "Credit Repair Companies" that practice fraudulent tactics, such as:

• Flooding the credit bureaus with many disputes trying to get some legitimate accounts removed temporarily.
• Using borrowed or stolen identification in order to start a new credit history.

Both of these tactics are illegal and you could find yourself in real trouble!

The good news is that you do not have to pay someone to help you with errors on your credit report, you can Do It Yourself:

There are three major Credit Reporting Bureaus:

• Equifax
• Experian
• TransUnion

Each one offers instructions how to open a dispute about items on your credit report that are being reported in error.

I'll give you the links to each later, but before going online (BTW, this is the best way, in my opinion to open a dispute), you need to be prepared.

It is very important that you understand and keep in mind that these bureaus receive hundreds, if not thousands of "disputes" daily and what you want to do is to make it as easy as possible for the agent who is looking into your dispute to correct it!

Start by making a copy of just the page from your credit report that contains the error. 

Please don't attach and/or send the entire report!

CIRCLE the error on the report page.

Make a .pdf copy.

Next, Write a short, legible (better if you use word process) statement, explaining why you are making the dispute.

Here's an example:

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 removed.

In my state, the statute of limitations says that an item cannot be collectable if more than 6 years has passed since the last payment.

In my case, it has been almost 7 years and I am requesting that it be removed and that you send me a copy of my revised credit report.

Thank you,

_____________________________________ (sign here)

John Doe

Phone: 555-555-5555

Email:  JDoe@ internet.com

Make a copy of the letter and save in .pdf format.

Now you are ready to go online to open the dispute:

Here are the links (just click on the name) to the top three credit reporting bureaus:

Equifax Dispute

TransUnion Dispute

Experian Dispute

Again, I highly recommend using the "online dispute" process rather than mail or phone.  It has proven to be the most expedient method.

FINALLY...

Just because you have gone online and opened the dispute, you can't forget about it and/or trust that they will do what you have requested.

You will get a file number you can use to periodically go back online to check the status of your dispute.

They should correct and/or contact you for additional information or possibly explain why they are denying your dispute within 30-45 days, so, FOLLOW UP, FOLLOW UP.....

You may discover that there are some older debts that are being reported that the creditor or debt collector was granted a judgment.

Judgments can stay on a credit report for up to 7 years and can be renewed by the creditor for even longer.

We can help arranged a settlement to have this account listed as "paid as agreed" which will help improve your credit score.

PHOTO CREDIT LINK

Although it can be a little hard to understand, knowing what goes into determining a credit score can be very helpful!

Understanding a Credit Report and what goes into making up your Credit Score is very important!  Unfortunately, neither are very easy to do.

Basically there are 5 factors that are used to determine your credit score:

I have used and  highly recommend that you check out the free information available from MyFICO. 

FICO stands for the Fair Isaacs Company and was one of the first company to set up a standardized credit scoring system way back in the '70's.

Since then, the top 3 Major Credit Bureaus (Experian, Equifax and TransUnion) use one a type of credit scoring system based after the FICO model.  You may have seen names such as:

• Equifax BEACON Score
• Experian CE Credit Score
• FICO Score
• TransUnion TransRisk Score
• Vantage Score

There are others as well, but these seem to be the majority.

Before I get into some of the details, it is VERY IMPORTANT that you understand and keep reminding yourself of the basic concept of what or how credit bureaus come up with a "credit score" for you. 

A lender wants to know how likely it is that you will repay the debt that they are considering giving you.  Yes, sounds simple, but basically, that's what this is all about.

OK, so what goes into determine a "basic" credit score?

1.  Your Payment History

This is one of the most important factors used in determining your credit score.  According to FICO, it counts for 35% of your score.

If you have a couple or even a few late payments, that is not necessarily something that will dramatically lower your credit score.

However, if you have delinquent accounts, accounts that have been turned over to a collection agency, a bankruptcy, judgments, repossessions and/or foreclosures, then your credit score will definitely be negatively impacted.

If you have several accounts that are showing late payments of 90 days or more, that's not good.But, if most of your your accounts show a great payment record and only one or maybe two were a little late, that is not going to be as bad.

The good news is that as you go forward and demonstrate that you make your payments on time, pay your accounts in ful, l or even negotiate a settlement for less than you owe, your scores will start to improve!

2.The AMOUNT OF DEBT you are using.

This makes up 30% of your score, and here's why:

Let's say that you have been issued 5 different credit accounts, such as credit cards, store cards and an installment loan for your car.

The total amount of available credit on all of these accounts totals $50,000.  Your car loan is for $30,000 and you have charged up an additional $10,000 on the other sources of credit.  Let's see.....

You had $50,000 of available credit and are using $40,000 of it, so you are using 80% of the available credit!

To a lender, that seems like a very high (what I call) "CREDIT USE RATIO!"

There is no standard Credit Use Ration number, but most agree that keeping your use of available credit below 40% - 50% makes you a better CREDIT RISK than someone who just keeps charging and charging and charging!

HERE ARE A COUPLE OF IMPORTANT TIPS!!!!

1. Based on the Credit Use Ratio guideline, DO NOT CLOSE accounts that you have paid off!  That actually raises your ratio!
2. Don't open lots of new credit accounts to try and lower your Credit Use Ratio.

The third most important factor in determining your credit score is:

3.  The Length of Your Credit History

If you are just starting out applying for credit, then it may take you a while to establish a high credit score. 

Of course, if you keep in mind that the whole purpose of a credit score is to give a lender some kind of a guideline of how likely it is that you will repay the debt, then this will make sense.

Having said that, DON'T GO OUT AND SIGN UP FOR A DOZEN CREDIT CARDS just to start building your credit history!  If you do that, you will demonstrate that you are not a very reliable credit risk to a lender.

4.  New Credit

DO NOT MAKE THE MISTAKE OF OPENING NEW ACCOUNTS HOPING TO IMPROVE YOUR CREDIT SCORES!

I remember when my daughter enrolled for college around 1994, I saw dozens of credit card companies and lenders offering FREE GIFTS for applying for credit! 

I knew this was very dangerous and many, many young college students racked up hundreds if not thousands of dollars of credit card debt!

Fortunately, this has slowed down somewhat with the passage of the Credit Card Act in 2009.  One of the provisions of the act bans approvals to anyone that is under 21 years of age unless they have an adult co-signer or if they can demonstrate that they have enough income to make their payments!

I believe that the Credit Card Industry has to carry much of the blame for much of the estimated TRILLIONS OF DOLLARS of credit card debt carried by Americans by making credit so easy to get!

If you don't think we (as indiviuals and as a country) are in serious trouble, the you need to check out a  great article written by Tim Chen from NerdWallet .

Look at some of his summaries:

U.S. household consumer debt profile:

• Average credit card debt: $15,863
• Average mortgage debt: $156,584
• Average student loan debt: $33,090

In total, American consumers owe:

• $11.86 trillion in debt
  • An increase of 1.9% from last year
• $901. billion in credit card debt
• $8.17 trillion in mortgages
• $1.21 trillion in student loans
  • An increase of 8.5% from last year

Finally, the final factor used to determine your credit score is...

5.  The Various Types of Credit You Have

Although this makes up only 10% of your credit score "weight", it is important to the credit card bureaus that you have and used various types of creidt, such as:

• Credit Cards
• Store Cards
• Personal Bank Loan from a bank or credit union
• Mortgages
• Auto Loans, etc.

Again, just because you have one of each WILL NOT necessarily increase your credit score, but it will provide more information on your credit report and help a lender determine your credit worthiness.

BOTTOM LINE....

Of all of the factors used to determine your credit score, it is obvious that your PAYMENT HISTORY and the TOTAL AMOUNT OF DEBT YOU ARE CARRYING are the most important.

If you have gotten into trouble and are having a difficult time making or keeping up with your payments, it may be time to seek help.

Photo Credits:

MyFico

Woman Stressed Out!

I've been helping people deal with debt issues and more specifically, debt collectors for many years.  It still amazes me that some (not all) unscrupulous debt collectors are still violating the Fair Debt Collection Practices Act and yet, are not facing charges. 

If you have found yourself behind on paying your bills due to any one of many circumstances beyond your control, then most likely you have been called by a debt collector.

The debt collection industry serves a purpose in assisting creditors with collecting on unpaid debt that is legitimately owed by a consumer.  I say "legitimately" because many of these companies will purchase debt from creditors or other debt vendors in an attempt to collect. 

Most of the time, these debts have been written off 100% by the original creditor and these guys by up huge blocks of "debt" at pennies on the dollar.

Although I don't fault anyone or any company trying to make a profit, I do take serious issue with debt collection companies that prey on consumer's fear and lack of knowledge concerning their rights under the Fair Debt Collection Practices Act (FDCPA).

The first thing you need to do is to understand your basic rights or in other words, understand what a debt collector can and cannot do...legally.

The Federal Trade Commission is an agency of the United States Government that was formed to protect consumers rights and to enforce violations.  The FTC has published a short, yet very informative article that you should download and read carefully.  To get you copy, click here:

Federal Trade Commission...Facts for Consumers

In a nutshell, here is basically what a debt collector (yes, many debt collectors are in fact attorneys) can and cannot do:

They CANNOT:

• Call you before 8am or after 9pm (in your time zone)
• Use an automated dialer to call many, many times a day.
• Call you at your place of employment after you have verbally requested that they not call you there.
• Harass or abuse you by using threats of violence or harm as well as using obscene language.
• Falsely imply that you have committed a crime and will be prosecuted.
• Threaten that they will seize or garnish your property, income or bank account unless they intend to do so within a reasonable amount of time or have already obtained a judgment.
• Call your friends, family or co-workers and discuss your debt.  They may contact others, but only to attempt to get or confirm your contact information.
• Use "official" government looking stationery trying to represent that they represent the government or agency.

If you think that your rights have been violated, but are not positive, you have several options:

You can file a complaint with the Federal Trade Commission  Here is a link to that site:

FTC Complaint Assistant

You can contact your state's attorney general's office and file a complaint.  Just do a "Google search" for your state's attorney genera's site.  For example, here in Oregon, you would go to:

State of Oregon Consumer Complaint Form

If that doesn't help, there are numerous attorneys that specialize in defending consumer's rights that have been violated by debt collectors.  For example, I just did a search in Google ( you can use any search engine) using "debt collector harassment" and found dozens of sites by attorneys.

One of the most annoying practices used by debt collectors is to call you several times a day or week! 

Fortunately, you can put a stop to these calls!  Here is a link that will tell you what to do:

Most people who are dealing with debt collectors have gotten themselves into financial trouble due to one of several circumstances, such as:

• Loss of employment or reduced income
• Retired living on fixed income
• Divorce
• Death of spouse or partner
• Illness or disability

You may be in a position to offer a settlement on your debt.  Here is some information that you may find very helpful:

But, although you can negotiate and make settlement offers on your own, it is very time consuming and dealing with a professional debt collector can be a very trying experience.

We have been helping people like you since 2003 and would be glad to see if we could help.  For a FREE CONSULTATION, just click below:

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Debt Settlement is a viable option for many consumers who are faced with too much debt and are not able to meet the minimum payments required. 

I had written a blog recently that addressed the main aspects of debt settlement, but want to answer some more questions most people have when considering their options on how to deal with debt through debt settlement:

WHEN ARE DEBT COLLECTORS CONTACTED?

When a person decides that entering a debt settlement program is their best option, most of the time, he or she has fallen behind in making payments, has started receiving phone calls and possibly some threatening letters demanding that you pay at once...or else!

If you are a debt settlement company tries to contact the original creditor too soon, a good settlement (or a settlement at all) may not be obtained.

As long as your accounts are still with the original creditor (Visa, Master Card, Discover, etc.) and have not been charged, transferred or sold to a debt collector, they have the right to call you about your account.

After about 120 days or so, most creditors will assign your account to a debt collector.  When this happens, you will receive letters and calls from the debt collector.

Now you can make a written request for them to stop calling you and according to the Fair Debt Collection Practices Act (FDCPA), then must cease calling.  But, they will still continue to send demand letters.

Once the debt collector sees that you are serious and knowledgeable about your debt(s), they may be more willing to negotiate a settlement. 

Here's another question you may have...

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

There's a lot to this answer, but basically and unfortunately, the answer is "yes".

HOWEVER...

A debt collector can only attempt to inquire about your address and possible a contact number.  They are prohibited from revealing any information about your debt.

If you feel that your rights under the Fair Debt Collection Practices Act have been violated, you may take legal action against the debt collection company.

CAN A DEBT COLLECTOR CALL YOU AT WORK?

No!  If they do, all you have to do is inform (verbally) that you cannot receive calls at your place of employment and they must cease calling immediately.  Most collectors will abide by your request, but again, if you feel they haven't or your rights have been violated, you may want to seek legal action.

A debt collector and behalf of the original creditor may decide to seek a judgment against you.  If so, they must file a COMPLAINT through an attorney licensed in your state.  The complaint is filed at your county courthouse and once it is, a SUMMONS will be issued.

SO, WHAT HAPPENS IF YOU RECEIVE A SUMMONS?

The biggest mistake you can make is to ignore the summons!  Most often, the summons will state that you have 20-30 days in order to contest or dispute the claim that you owe the debt.  To dispute the claim, you will need to file an "ANSWER" with your court's clerk.  This "ANSWER" is a legally document that provides proof of why you do not owe the debt. 

If you are 100% positive that the CLAIM or SUMMONS is incorrect, then by all means file the ANSWER.  But, understand, that there is a fee for doing this and the court will not look favorably on you if you try to get out of a debt you actually owe!

OK, so you get the summons, know that you owe the debt, now what?

Contact the attorney or debt collector and attempt to negotiate a settlement or a repayment agreement.

Depending on your particular circumstances, you may be able to get a good deal and the summons/legal process will not go forward.

I've written several articles about this and it would be worth your time to out that information!

OK, I'm asked this one all the time:

HOW WILL A DEBT SETTLEMENT PROGRAM AFFECT MY CREDIT SCORE?

Your credit score is determined by several factors, such as:

• Payment history
• Type of credit used
• Amount of credit/debt
• How long you have had a credit rating
• Employment history
• How often you have applied for credit

A great site to learn more about your credit score can be found at MYFICO.

If you are a candidate for a debt settlement program, most likely your credit score has fallen over the last months or years.

I believe that one of the most important factors in determining your credit score is how many and how large are you debt balances!

Once these are settled and show a $0 balance, your credit score will start to improve.  We have had numerous clients complete the debt settlement program and have their scores go from say, 585 to 686-725 after all debts were settled!

It is really satisfying to see a client complete the program, become debt free and even qualify for a mortgage!

I hoped this blog has helped answer some of your questions about debt settlement.  If we can be of any service, please let us know:

Photo Credit:

Approximately 7 out of 10 consmers have one or more errors on their credit reports!  Here are simple instructions on how you can dispute them and have them removed.

Before I get started, just a word about "Credit Repair Companies".  The Federal Trade Commission has some very good information for consumers and I highly encourage you to do some research on their site.

Short quote from that site:

"You see the ads in newspapers, on TV and online.  You hear them on the radio.  You get fliers in the mail, email, messages, and maybe even calls offering credit repair services.  They all make the same claims:"

• Credit problems?  No problem!
• We can remove bankruptcies, judgments, liens, and bad loans from you credit file forever!
• We can erase your bad credit - 100% guaranteed.
• Create a new credit identity - legally.

The FTC goes on to say,

"Do yourself a favor and save some money, too.  Don't believe these claims."

Having said that, there are indeed good, quality companies that can assist you (although I'm going to show you how to DIY in this blog) in disputing and getting errors removed from your credit report.  Before you sign up with any of them, I encourage you to check out their rating and complaints at the Better Business Bureau site.

OK, here we go...

If you have found legitimate errors on your credit report, here is what you will need to do to dispute them and have them corrected/and or removed. (BTW, click here for a FREE Credit Report)

What you want to keep in mind is to keep your dispute as simple and easy for the agent who receives it to check out the dispute and correct it.  They look at hundreds of requests per day!

FIRST:  Make a copy of the page containing the error on your credit report.  You may, for example, find that Experian has an error and Equifax and TransUnion do not.  This is not unusual.  So, in this case, you would only be making a DISPUTE with Experian.

Once you have the copy of the page containing the error, CIRCLE THE ERROR, and make a .pdf scan.

NEXT:  Write a brief, legible explanation of why you are making a DISPUTE.

Again, make a .pdf scan of your explanation.

NEXT: Make a copy of your proof that this account is being reported incorrectly.

This could be:

• Copy of the canceled check(s) you used to pay off this account.
• If you paid online, a copy of your bank statement.  For security, make sure to block out your account number.
• A settlement agreement along with proof of payment(s).
• A 1099-C showing that this account was "written" or "charged" off by the creditor and now has a $0 balance.
• A letter of satisfaction after a judgment had been paid or settled.  If you do not have a copy of the letter of satisfaction, you should be able to either contact the debt collector and/or the court house for a copy.
• A statement from the creditor or debt collector stating that the account has a $0 balance.
• The Statue of Limitation for your State has expired and the item should be removed

Again, make a .pdf scan.

NOW GO TO THE APPROPRIATE WEBSITE OF THE CREDIT BUREAU THAT IS REPORTING INCORRECTLY.

I will provde you links to each site below.  Each bureau has a little different instructions on how they want you to open a dispute, but if you take your time and follow the instruction on the site, opening a dispute is not very difficult.

Once you open the dispute, you should be given a CASE or FILE NUMBER for future follow up and reference.  Make sure to WRITE IT DOWN!

Follow the instructions and submit your dispute.

The credit bureaus are usually very good at either investigating or just correcting the disputed account. Most disputes are corrected or denied within 30-45 days.

You can follow up the progress by going online and referencing that CASE OR FILE NUMBER you saved.

Links and information for each of the top 3 Credit Bureaus:

Equifax Dispute

Online:

https://experian.referral.equifax.com/CreditInvestigation/home.action

Mail:

Equifax

PO Box 740256

Atlanta, GA 30348

Phone:

(866) 349-5191

TransUnion Dispute

Online:

https://dispute.transunion.com/dp/dispute/landingPage.jsp

Mail:

TransUnion LLC

Consumer Dispute Center

PO Box 2000

Chester, PA 19022

Phone:

(800) 916-8800

Experian Dispute

Online:

https://www.experian.com/disputes/main.html

Mail:

Experian

PO Box 2002

Allen, TX 75013

Phone:

(888) 397-3742

Good Luck!  If you need help, let us know:

Photo Credit: Daniel Oines

When faced with too much debt, just making the required minimum payments may not be possible.  Debt Settlement may be your best option.  Just how does Debt Settlement work?

Let's say you are faced with several thousands of dollars of unsecured debt such as:

• Credit Cards
• Store Charge Cards
• Medical Bills
• Personal Loan
• Repossession Balance
• Private Student Loan

...and, because of one or more circumstances like:

Unemployment, illness or accident, divorce, death of spouse or partner, your income has been reduced and you just cannot meet your obligations.

NOW WHAT?

Most people in these circumstances do not have any additional funds to offer and may or may not qualify for a debt management or credit counseling program.
 

In my opinion, bankurptcy should only be considered after exploring DEBT SETTLEMENT!

SO, HOW DOES DEBT SETTLEMENT WORK?

First, you need to know what you can afford to pay into a Debt Settlement Program.  you will want to complete an honest (no use trying to fake it now!) by completing a Budget Worksheet. Once you know if and how much money you can contribute to a Debt Management Program, you will be making regular (ususally monthly) deposits into a Reserve Account established with an FDIC insured banking institution.  As these funds grow, they will be used as negotiations and settlements are ongoing for your debts.

Most people who choose a Debt Management Program have missed several payments or are about to.  When this happens, the creditor will most likely send out a letter reminding you that you missed a payment, or if your account is really delinquent, they may start calling.

Debt Collectors can be very annoying, calling several times a day and they may be guilty of violating the Fair Debt Collection Practices Act (FDCPA).  Yes, you can put a stop to these calls, but you need to be aware that as long as your account is still with the original creditor (Visa, Master Card, etc.) and has not be transferred to a debt collection agency, the original creditor does have the right to call you.

But, once that account is charged off, sold, or assigned to a debt collector, you can put a stop to those calls!

You will need to mail a letter to the debt collector (you most likely have the address as they will now start sending letters) to tell them to stop calling.  Here is a sample letter you can use:

If a debt collector continues to call after you have mailed the request to stop, you can file a complaint with your state's attorney general's office or the Federal Trade Commission.

As your reserve account is growing, negotiations are being made with debt collectors to settle the debt.  Depending on your particular circumstances, settlements are generally for 50% or so of the current balance.

Once an agreement has been reached between the Debt Settlement Company and the Debt Collector, a Settlement Agreement is faxed or mailed. 

Sometimes the settlement is for a lump sum and sometimes the settlement will be paid over several months.  Click on the button below to view some actual settlement agreements:

Once the settlement agreement has been completed, a letter or statement should be mailed or faxed.  You will want to keep this for your files in case this particular account is not being reported correctly on your Credit Report.

In my next blog, I will help answer some frequently asked questions about Debt Settlement, such as:

When are the debt collectors contacted?

What should I do if I receive a call?

Can a debt collector contact my family or neighbors?

Can a debt collector call me at work?

How will a debt settlement program affect my credit score?

What happens if I receive a summons?

It is estimated that approximately 70% of us have one or more errors on our credit report!  Here's how to dispute those errors and get them corrected:

Incorrect information on your credit report from Experian, Equifax or TransUnion can really hurt your credit score. It is estimated that more than 70% of all credit reports contain errors!

We all have the right to challenge inaccurate entries on our credit reports.

Just in case you do not have a copy of your FREE Annual Credit Report, go to:

 FREE ANNUAL CREDIT REPORT

You will need an account or credit report number when you dispute errors.

 When you find errors, here is what you do:

• 1. Circle the account and/or error on the page of your credit report. 
• 2. Make a copy of that page only. You DO NOT need the entire report.
• 3. Write a brief, neat explanation of why you are challenging this entry. 
• 4. Make copy of the proof of payment(s) you made to pay off this account.

This could be:

• canceled check(s)
• Bank statement showing a payment, date, etc.
• Settlement agreement with proof of payment of that agreement
• 1099-C showing this account was either written off completely
• Letter of satisfaction after a judgment has been paid off (“satisfied”)
• Letter or statement from the creditor stating or showing the account has a zero balance

 5. Make a .pdf scan/copy of all above. You’ll understand later.

Your goal is to make it very easy for the person at the credit bureau to review and see why your account is being reported incorrectly.

 OK, now that you have all of your documents, statements, “proofs”…what next?

Although you can mail to each of the bureaus, it is much easier, quicker and efficient to dispute errors online!

1. Go to the web site of the credit bureau making the incorrect report. (I’ve listed all of the sites below.)You are going to opening a DISPUTE concerning your report.

2. Follow the steps (each credit bureau is a little different). Take your time, because if you don’t follow the steps correctly and completely, they will not process your dispute, and you will just delay getting the error corrected!

3. When you open your DISPUTE, you will be given a case or file number. Write it down and keep safe. You will need to refer to this as you follow up.

4. Attach the “proofs” you scanned as .pdf files where indicated.

5. Submit The credit bureaus have about 30-45 days to correct the error or reply back to you for more information, etc. You can go online to view the status of your dispute.

Once the information has been corrected, they (the credit bureaus) should provide you with a corrected copy of your credit report.

As with anything these days….FOLLOW UP….FOLLOW UP….FOLLOW UP!!!

If you don’t hear from the credit bureau in 30 days or so, go online again and find out what is going on!

Although you can call the credit bureaus, I DO NOT RECOMMEND IT! It is very difficult to talk with a “live” person at the credit bureaus. You can imagine how many calls and requests they must get every day! I am not even going to list the phone numbers as you can find them online.

If you find the number, you will have to navigate through a maze of menu prompts that is not very easy. Don’t try calling unless all else fails! If you do not have a computer or don’t feel comfortable going online, then get some help. Call a friend or family member (if you trust them completely) and have them help or go online for you while you are on the phone.

The credit bureaus will ask several “security questions” to make sure you are the one requesting a report or disputing an error on your report.

OK, ready to go?  Have all of your "ducks-in-a-row" before going online. 

GOOD LUCK!    If you could use some help, let us know:

 Equifax Disputes

Equifax Credit Information Services, Inc
P.O. Box 105851
Atlanta, GA 30348-5281

When mailing to Equifax, you must include:

• Full name (including middle name or initial)
• Date of Birth
• Current and former addresses
• Social Security Number
• Copy of your Driver’s License or Current Utility Bill

Experian Disputes

Experian's mailing address for dispute requests is:

P.O. Box 4500
Allen, TX 75013

Experian says that you must include all of the following when requesting your dispute:

• Your full name including middle initial (and generation such as JR, SR, II, III)
• Your date of birth
• Your Social Security number (if you have never been issued a social security number, please note that in your request)
• All addresses where you have lived during the past two years
• One copy of a government issued identification card, such as a driver’s license or state ID card, etc.
• One copy of a utility bill, bank or insurance statement, etc.

• List each item on your report that you believe is inaccurate, the account number and the specific reason you feel the information is incorrect.
• There is no charge for submitting a dispute.

Send your completed dispute information to the address above. Only include copies and do not send original documentation. Experian cannot return copies from your mailed request.

TransUnion Disputes

Mailing a dispute to Transunion:

Before you can mail a dispute to Transunion, you must download their dispute form:

http://www.transunion.com/docs/rev/personal/InvestigationRequest.pdf

Follow the steps and then mail to:

TransUnion Consumer Solutions

P.O. Box 2000

Chester, PA 19022-2000

Review:

1. You’ll obviously need a copy of your credit report.

2. Going online is the easiest and most efficient way to make a dispute.

3. It may sound hard, but it is not!

4. Follow up, follow up, follow up…DON’T GIVE UP!

Photo credit to Betsssssy