You do not have to put up with debt collection harassment, but you need to know your rights under the Fair Debt Collection Practices Act in order to put a stop to it!

Our nation's consumer protection agency is call the Federal Trade Commission or FTC.  This agency enforces the Fair Debt Collection Practices Act or FDCPA.  The FDCPA was designed to put a stop to abusive and unlawful attempts by debt collectors to collect debt.

Debt Collectors are strictly prohibited from using unfair or deceptive techniques in their debt collection activity.

Not all debts are covered by the FDCPA.  The act covers basically all debts, such as:

• personal loans
• credit cards
• store cards
• medical bills
• student loans
• mortgages
• auto loans

The FDCPA does not include debts you may have incurred in order to operate a business.

So, what happens if you find yourself in a financial situation where you can no longer meet the terms of your loan or credit account?

Once your account has been charged off by the original creditor and placed with a collection agency, the telephone calls will start.  This is the most abused type of debt collection activity, but you have rights that you must not only be aware of, but take advantage of!

Unless you agree to it (and who would), a debt collector cannot call you before 8am or after 9pm.  They also are prohibited from calling many, many times during the day.  Many debt collection agencies use an automated dialer to make thousands of calls a day, hoping to catch someone.

Here is some good advice on how to deal with a debt collector's call:

If you have the address of the debt collector (from one of the many letters you have no doubt received by now), then don't answer.  Your caller ID should indicate an "unknown" number or a number that is certainly not one of your family or friends.

If you (or perhaps one of your family should answer by mistake), briefly tell the debt collector that you are working on the problem and will get back to them...then HANG UP!

REMEMBER...Debt Collectors are professionally trained to get you to agree to pay back your debt right away!  Trying to explain your circumstances hoping for some understanding and/or sympathy is usually a waste of your time.

If you don't have the address of the debt collector (I'll explain why in a minute), then ask for it from the debt collector or at least get the debt collector to identify the company.  Now, you can go on line to get the address...WHY?

Because the FDCPA specifies that once a debt collector has received a written demand to stop placing calls to you, they must stop!  They are allowed one more call to tell you they got your letter and will not call again or that they intend to take further legal action in an attempt to scare you into...yep...giving them money!!!

In most cases, the debt collection agency will honor your demand letter and stop calling you.  That doesn't mean that you are not still responsible for the debt, but at least they will stop call you.

What about calling you at work?

A debt collector is also prohibited from calling you at your place of employment if they are told orally or in writing that you are not allowed to receive calls at work.  Again, most of the time, they will honor your request.

What about calling your family or neighbors?

Yes, but only to find out a little information about you:

• Do you still live at....
• Is your phone number still....
• They may ask about your place of employment as well.

But, they may not discuss your financial situation!

I'll discuss what you can do if they are violating the FDCPA in just a minute, but here are some other basic practices or techniques that are also prohibited by debt collectors:

They are prohibited from...

• using threats of violence or harm (but, after a dozen years in dealing with debt collectors, I have never heard of this violation)
• using obscene or profane language
• making false statements, such as claiming to be an attorney or representing the government
• making statements such as "you may go to jail" if you don't pay!

threatening to garnish your wages or seize your property if, in fact, they have not been awarded a judgment after several months of legal efforts.

threaten to take legal action if, again, they don't follow through

OK, so what can you do if you feel that a debt collector has violated the Fair Debt Collection Practices Act?

First, contact your State's Attorney General's office to file a complaint.  Usually, the best way to do this is to go on line. 

For example, in Oregon, you can file a complaint at:

Oregon Department of Justice Consumer Protection

Next, you will want to file a complaint with the Federal Trade Commission.

FTC Complaint Assistant

Your state's attorney general's office as well as the Federal Trade Commission doesn't take abusive debt collection practices lightly!  In fact, you have a right to sue a debt collector in a state or federal court within one year of the violation.

If you plan to do so, you should consult an attorney.

Finally, dealing with debt collectors is no fun and is certainly not easy. But, knowing your rights can really help.

Need mor advice?  Let us help:

Photo Credit:

https://www.flickr.com/photos/sovietmole/

A recent newspaper article in Portland, OR from The Oregonian stated that as many as 33% of all consumers will be dealing with debt collectors!

Although dealing with a debt collector can be frustrating and annoying, there is really no reason to ever fear a debt collector.

Believe me, I certainly understand why most people who find themselves in a financial situation that has caused some or all of their accounts to be turned over to a debt collector are nervous.  The thought that you might lose your home, possessions and/or bank accounts would cause any sane person to be afraid.

Well, the good news is that in most cases, that FEAR is not necessary!

In this blog, I am talking about dealing with unsecured debts (credit cards, store cards, medical bills, etc.) and not secured debts such as a home mortgage or auto loan.

So, here are a few things to remember and tips on how to deal with debt collectors:

It rarely does much good to talk with a debt collector on the phone.

Once your account is 60-90 days past due, you can expect a call from either the RECOVERY DEPARTMENT of the creditor or from a DEBT COLLECTION COMPANY.

While your account is still with the original creditor, the Fair Debt Collection Practices Act or FDCPA laws that allow you to put a stop to collection calls do not apply...yet!

Most of the time, when the original creditor's agent calls, they are just trying to find out what your situation is and may offer a plan to help you get back on track.

BE VERY CAREFUL!!!  They may offer what is called a "HARDSHIP PLAN", whereby you agree to allow them to deduct a certain amount of money (usually less than the total amount your last statement DEMANDED) from your checking account for say, 6 months. 

At the end of the 6 months, they promise to "REVIEW" your case and get you started making regular payments again.  But usually, after you have paid the agreed upon amount for 6 months, your have barely made a dent in reducing your balance and are right back to where you started!

If you take the call from the original creditor, be very calm and simply say something like:

"I realize I've fallen behind on my bill and fully intend to get caught up soon. But, at this time, there is nothing I can do, so please stop calling me."

Yes, I know I just said that they have the legal right (at this point) to call, but they may honor your request and leave you alone for a month or so.

If the recovery department of the original creditor is unsuccessful in getting your to start making payments, the account most likely will be charged off and sold or transferred to a debt collector after about 120 days.

You most likely will get a letter from the debt collector and no doubt will start getting phone calls!

A Debt Collector's job is to get you to pay...period!  Although there are plenty of "decent" debt collectors who actually may show some empathy for you, there are many that are just the opposite.

These debt collectors will use all kinds of tactics to get you to pay up!  Although most debt collectors follow the laws and/or guidelines of the Fair Debt Collection Practices Act, there are always a few "bad apples".

Don't get into a dialog with a debt collector!

While I think it's OK to have one short conversation with the original creditor, it's usually a whole different story now that your account has been turned over to a debt collector!

If they have sent you a letter demanding payment, etc., get the address of the debt collector and write them a letter demanding that they cease calling you at home.

Here is a sample letter you can use:

If the calls don't stop (it will take a week or so) then you can file a complaint with your state's attorney general's office.

Usually, the debt collector will stop calling as they can be fined very severely!

NOW WHAT?

After a reasonable period of time (varies with each debt collector), if the debt collector is unsuccessful in getting you to start paying , the original creditor may:

• Recall the account and turn it over to another debt collector and the process will start again.  Yes, you will have to send another letter to the new debt collector to stop the calls!
• Turn the account over to a Law Firm that only practices debt collection.

If your account is placed with a Law Firm that practices debt collection, you will get the same letters and calls, but now, you need to be careful.

If the Law Firm decides to FILE A CLAIM for the debt you owe on behalf of the original creditor or the debt collector, you will get a SUMMONS.

I've written several blog articles over the years on what to do if you receive a summons, but in short:

• DON'T IGNORE THE SUMMONS
• DON'T PANIC!

Most people think that a debt collector and/or debt collection law firm can just garnish your income, levy your bank account and/or put a levy on your home or other property.

While it's true that they can AFTER they are awarded a judgment, they cannot do anything until then.  That's why it is so important to take action if you receive a summons!

In most cases, you can prevent the CLAIM from moving on to a JUDGMENT by contacting the attorney's office and working something out.

Most "judgments" are awarded to the creditor/debt collector/plaintiff because the debtor didn't take any pro-active steps.

If you are employed and receive regular W-2 income, then you can't let

If you...

• Are retired, with only Social Security and/or Retirement Income, or
• Disabled and receiving Disability Income only, or
• Are unemployed and receiving unemployment income, or
• Receive child support or alimony payments, then...

These sources of income are exempt from garnishment. Notice, I didn't say exempt from state or federal taxes you may owe, but from garnishment for unsecured debts.

The best way to put an end with dealing with debt collectors is to NEGOTIATE A SETTLEMENT of your account. That is, if you have some funds available to make an offer of 40%-60% of the balance. 

If not, you can still usually negotiate a settlement by agreeing to make monthly payments rather than a lump sum payment, but you may have to pay a little larger settlement.

Click here for some very useful information on how to negotiate a settlement:

One final thought...

If your financial circumstances are such that you have no ability to offer a settlement, either in a lump sum or payments, then you may need to consult a bankruptcy attorney.

Bankruptcy is a way to help those who qualify to put and end to debt collectors and get a fresh start.

If all of this sounds a little overwhelming, we can help:

Photo credit: 

Kevin B 3

milwaukeemakerspace.org/2012/12/fear/

Too much credit card and other unsecured debt?  Not able to keep up with the payments?  You may be a prospect for Debt Settlement.

But, before you decide, consider the following:

Debt Settlement is a very effective program to help people settle unsecured debts for less than the total balance due.

• The unsecured debts I'm talking about are:
• Credit Cards
• Store Cards
• Home Shopping Club accounts or cards
• Personal Loans
• Repossession Deficiency Judgments
• Medical Bills
• Personal Student Loans (although there are programs to help on Federal Student Loans as well)

When faced with too much debt and not enough income or cash flow to keep up with at least the minimum payments due, there are only a few options to keep the debt collectors at bay:

A Debt Management Program

A Debt Management Program used to be called a "Credit Counseling Program" and sometimes it is still called by that name.  In a Debt Management or Credit Counseling Program, a person signs up with a "non-profit" (only for taxable reasons, YES, you will be paying fees!), and they will have set up a program with each of your creditors.

Usually, the interest rates are reduced or sometimes eliminated, late fees and over-the-limit fees are usually forgiven after you have made a few payments, and your account is now classified as being paid as agreed or on time.

However, the problem with a Debt Management or Credit Counseling Program is that there is very little forgiveness if you miss or are late on a payment!  I've seen people who had been consistent for many months, and then, due to an emergency, just couldn't come up with the total due that month.  The Debt Management Program was canceled or voided and they were back to square one!

Also, in a Debt Management or Credit Counseling Program, the total monthly payment may be more that the total minimum monthly payment you are required to make now!  And, the company is charging you a monthly service fee as well!

So, if you go through the process of trying to enroll in a Debt Management Program and find out you cannot qualify, what now?

A Debt Acceleration Program

A Debt Acceleration Program (sometimes referred to as a Debt Snowball Plan) is perfect for someone who is making the minimum monthly payments on each of their debts and yet, due to high interest rates and annual fees, realize that at this rate, it will take 15-20 years to pay off those debts!

A person who should look into a Debt Acceleration Program also could add another $100 - $200 each month to help reduce or accelerate paying off these debts.

Most people in a Debt Acceleration Program are DEBT FREE in 48-60 months, saving thousands of dollars in interest and fees!

I prefer the Debt Acceleration Program to a Debt Management or Credit Counseling Program because as far as your credit report is concerned, you were a very consistent debtor and not only paid all of your payments on time, but actually did so sooner than required!

OK, but what if you are one of so many people that due to:

• Job loss
• Divorce
• Disability
• Death of loved one
• Major Financial Emergency

...just cannot meet the total minimum payments due on your unsecured accounts and cannot qualify for a Debt Management or Debt Acceleration Program?

Then, you should consider a:

Debt Settlement Program

Debt Settlement is designed for people who have a severe financial hardship, have tried to keep up with all of the bills, but some or all of their credit card accounts and other unsecured debts have been turned over to debt collectors.

These debt collectors are calling all day and even harassing you at work. But, before I explain how a Debt Settlement Program works and could help you, here's how to put a stop to those collection calls:

In a Debt Settlement Program, you will go through a thorough financial overview to determine several things, such as:

• Type of employment (self or W-2)
• Basic Monthly Budget
• Retirement status
• Type of income you are receiving (disability, social security, unemployment, etc.)
• Assets (mainly do you have equity in your home)
• Are you renting?

Once you know where you stand, you will have an amount (that you can afford) deposited into your Debt Settlement Reserve Account (FDIC insured bank) monthly.

The Debt Settlement company will be contacting your creditors and/or debt collectors to arrange settlements.  As you reserve account grows, each of your accounts should be settled for much less than the total balance due.

But finally, what if you just are barely making ends meet on your basic bills and have little or nothing left over to put towards a Debt Settlement Program?

Then, you should consider:

A Bankruptcy Program

There are basically two types of Bankruptcy Programs for individuals:

• Chapter 7
• Chapter 13

The Chapter 7 is not used as much these days as it is basically designed for someone to liquidate any assets they have (obviously, not very much) and that small amount is paid to each creditor, and the balances of your debts are "forgiven".

In a Chapter 13, a bankruptcy attorney will present a type of repayment plan to the bankrutpcy court based on your financial status.  Usually, a person will be making a monthly payment of $200-$400  (or whatever your bankruptcy attorney comes up with) for about 3-5 years.  Each of your creditors receives a small portion of the balance due.

At the end of the Chapter 13, the balances of your debts are forgiven.

Oh, by-the-way, if you receive a 1099-C, in most case, you should not be liable for any additional taxes due on the amounts forgiven.

Debt Settlement is a great program for the right person.

 Photo Credit:  Daniel Oines

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

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

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

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

Let's briefly look at the various options:

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

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

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

Some of the more common forms of UNSECURED DEBTS are:

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

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

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

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

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

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

For example...

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

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

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

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

A DEBT ACCELERATOR PROGRAM

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

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

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

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

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

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

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

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

SOUND GOOD, BUT...

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

THIS IS WHERE A DEBT SETTLEMENT PROGRAM MAY COME TO YOUR RESCUE!

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

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

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

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

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

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

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

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

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

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

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

Photo by: DRNW

According to an article in The Oregonian recently, about a third of Americans are facing debt collection!  If you are one of the three facing this debt crisis, here are a few tips on how to control your debt.

Why is that?  Why do so many people, according to the article...1 in 3...have debt issues.  Notice, the article didn't say they just had debt, the article stated that 33% of Americans have DEBT COLLECTION PROBLEMS.!

While I am not in favor of carrying too much debt, there is a difference between GOOD DEBT and BAD DEBT.

For example, for most people, it is almost impossible to buy a home without incurring debt.  Depending on where you live, a home will cost around $200,000 these days (some more, some less).  With so many of us just trying to pay the bills, much less save any money of significance, if you want a home, your going to go into debt...for a long, long time!

But I believe having a mortgage payment that you can afford (and that's another whole story) is not actually a bad debt but rather a good debt.  In the long run, most home will appreciate in value. 

Sure, we all are still coming out of the home mortgage fiasco over the last several years, where most home values in America plummeted.  But, if you look at the history of home values, for the most part, they go up over time.

So, when you send in your mortgage payment, yes, a very large part of the payment is going to interest and very little to the principal in the early years, but you are in part, paying yourself.

Let's say you have a home that had a purchase price of $185,000.  You were able to qualify for a loan and after 10 years, the balance on your mortgage was about $140,000. At year 20, the balance should be around $80,000.

But, if your home appreciated at about 5% (could be higher or lower) each year, your home could now be worth approximately $475,000! 

That's a good use of debt!

On the other hand, what about a automobile loan?

Most people rent homes and buy cars.  Sure, I understand that it is much easier to qualify and afford a car payment vs. a home mortgage, but let's think about that for a minute.

You see the ad on TV and convince yourself that you need, deserve, it "just makes sense" to go out and buy a new car.  Yes, your old "clunker" barely runs and needs a couple of thouands in repairs, but does it make sense to spend $2,000 to repair the PAID FOR car or spend $20,000 or so (of debt) for a brand new car)? 

Cars DEPRECIATE!  That simple means that every year you own the car (I'm not talking about exotic or collector cars), the value goes down.

If you haven't experience it, you probably know someone who bought a new car (they didn't buy it, they started making payments on it) and for whatever reason wanted to sell or trade it in.

While the original sales price was $20,000, and they had been making payments of, say $375 each month for the last 3 years (on a 5 year note), the loan balance is about $8,600, but the value of the car is only $10,000- $12,000.

Let's say they sold the car (usually much better than a trade in) for $11,000.  They had made 36 payments of $375 or $13,500:

Total of payments              $13,500

Sale price                        -  11,000

Net profit/loss                  - $ 2,500

That looks like BAD DEBT to me!

Now, I'm certainly not an expert and there are plenty of sites available to check out, but what do you think about this...

Rather than purchasing a new car at $375/month and seeing it's value go down, down, down... you saved $375 a month.  OK, try to stay with me on this:

You BORROW (friend, family, bank) $2,000 to repair you current car.

Pay back that loan at $375/month for about 5.5 months.

Now you start saving the $375/month towards purchasing another car 3 years from now.

At only 2% (now much paid in savings interest these days) after 3 years, you should have close to $16,000!

You sell the old "clunker" for at least a $1,000 and now you have $17,000 to pay towards another (most likely not new) car.  You will be amazed at what $17,000 can when talking about cars!

I don't even want to start talking about Credit Card Debt.

I've been helping people with too much credit card debt for over a dozen years now and I believe that there is only one instance I could recommend using a credit card.

If you are have your financial affairs in order, meaning that you have all of your bills paid on time with a reasonable amount left over, then you may be a candidate to take advantage of some of the offers from credit card companies.

If you like to travel, there are some credit card companies that will give you airline "points" or "mileage" by using their card.  The creditor estimates that for every "free" ticket they give a customer that pays the entire balance every month  (they lose money on this guy)they will be a "zillion" times compensated by the majority of credit users who only pay the minimum each month!

Here's what I mean...

I have a good friend who owns a small auto-repair business.  He pays for all of his parts orders with one credit card that offers great mileage and bonuses.  He then pays the entire balance off every month before any interest is charged! THAT IS THE KEY!!!!

Let me repeat...HE PAYS THE ENTIRE BALANCE OFF EVERY MONTH BEFORE INTEREST IS CHARGED!  He receives lots of ticket and bonus offer from his credit card company.  I'm sure they don't like a guy like that, but in reality, he is probably only one in a thousand anyway!

So, CREDIT AND DEBT...GOOD OR BAD?

It really boils down to how you use it!

Photo by:  TaxRebate.org.uk

Debt...although a necessary evil in today's economy, it can be devastating.  Here are 4 Debt Control programs that may work for you!

Are you having a hard time with any of these?

• Credit Cards
• Medical bills
• Utility Bills
• Personal Bank Loans
• Auto Loans
• repossession Deficiencies
• Judgments

If you do (and millions of people are just like you), you should consider one (or more) of these programs:

DEBT ACCELERATOR PROGRAM

There are all kinds of estimates or studies that have been done to try and calculate how many people are carrying debt loads that are becoming difficult to handle.

The average US household credit card debt is estimated to by around $15,000.  Now, some families are carrying very large amounts of debt and some have less, but the point is... we (most people) are carrying far too much debt. 

I  believe it was Dave Ramsey who either first developed or made popular the idea of the Debt Snowball Plan.  Sure, there are some critics of this type of plan, but usually those critics have not been dealing with people (and especially people's emotions) for very long.  While I don't agree with everything he promotes, the fact that he is helping people get control of their debt is admirable, and I applaude his teachings.

Basically, in a DEBT ACCELERATOR PROGRAM (my term for a Roll-Up or Snowball Plan) you are going to be paying a little more that the total required minimum payments of all of your accounts. Don't think you can find a "little more" money each month?

• How about making a few changes in your lifestyle?  For example:
• Daily StarBucks coffee = $5.00 x 30 days/month = $150 per month
• Fast food lunch at say $6 bucks x 30 days/month = $180 per month
• Health club membership you never (or rarely) use = $25/month

Get the idea??? If you are serious about finding some extra money to pay off your debt in a shorter period of time, you can do it!  OK, I'll get down from my "soap-box"! 

Let's say you have a total monthly minimum required payment of $500.  Although you have been paying consistently for several years, the balances are barely going down!

Of course, you know (or should know) why.  The credit card industry has tricked the average consumer into thinking that they are "repaying" their debt by making the minimum required payment each mont.  But, if you will take a close look at your next credit card statement, you're going to be shocked (outraged is better) to learn that your balance was hardly reduced at all.  Here's why:

Hypothetical Credit Card:

• Balance                                    $7,000
• APR                                             19%
• Minimum Payment is 2.25% of balance

$7,000 x 2.5% = $175

19% / 12 (months in a year) = 1.583% interest on $7,000 = $110.81 (THAT'S RIGHT...DO THE MATH)

So, when you send in your "minimum payment" of $175, here's what next month's statement will look like:

Previous Balance                      $7,000.00

Interest charge                         $  110.81

Payment received                    -$   175.00

New Balance                            $6,935.81

YOU GOT IT!  You sent $175 and your balance was only reduced by $ 64.81!!!

No wonder it takes peope 10, 15 or more years to pay off the average credit card (especially if you continue to only make the "minimum payment required"!

But, by making a few changes in your spending habits, you find an extra $100 per month.  By adding an additional $100 per month to the $175 (and not reducing the $175 as you balance goes down), you can pay off that credit card in just 33 months, saving you thousands in interest!

Now that you have that one paid off, YOU DON'T LOWER THE TOTAL MONTHLY PAYMENT, you just reallocate or add it to the next credit card, and so forth, and so forth until all of your credit cards are paid off!  DOESN'T THAT SOUND GREAT!

But, what if you not only can't afford the total minimum payments, you don't have any extra funds for a Debt Accelerator Program?

Then, a DEBT SETTLEMENT PROGRAM may be the answer!

So many people have run into some very difficult times, financially.  This may due to:

• Loss of employment
• Too little fixed income after retirement
• Death of a spouse or partner
• Disability
• Divorce
• And many other "financial challenges" that you may be facing

Does that mean that you can never recover or be DEBT FREE once again?

No, in fact, debt collectors are usually more than willing to SETTLE a debt for less than the total balance, depending on your particular circumstances.

When you fall behind on your payments to your creditors, as you know, the calls start becoming more frequent and frustrating! 

Did you know that once your account has been transferred to a debt collector, you can legally make them stop calling?

After you account is with a debt collector (may be a "debt purchaser"), you will need to make a SETTLEMENT OFFER of much less than the total balance.  Now, here's where it get's tricky.

A professional debt collector usually receives a bonus or commission depending on how much they can get you to pay.  In some cases, they start out very firm and tell you that they cannot offer a discount at all (not true).  Sometimes, they are willing to offer 70% or so, and you may have received a letter with the offer.

My experience with dealing with debt collectors over the last 12 years is that they are all working on different "numbers" (for lack of a better word), meaning that they have certain goals their bosses give them and they may or may not be able to go as low as you want.

If you get an offer that works for you, MAKE SURE YOU GET IT SENT TO YOU IN WRITING! I don't know how many times we get a client who made a "settlement agreement" over the phone, made all the payments as agreed, but found out that the debt collector denied ever making the agreement and demanded the remainder of the full amount!

For more information about "how" and "if" Debt Settlement really works, CLICK HERE.

FEDERAL STUDENT LOAN FORGIVENESS PROGRAMS

If you are like thousands upon thousands of current, former or parents of students with too much Federal Student Loans to repay, we have SOME GOOD NEWS!

Again, as with any "government" program, depending on your particular circumstances, you may qualify for one of these new programs. Basically, if you income falls within certain parameters, you may be able to have anywhere from NO PAYMENTS to maybe only a $100 or so.  Make these payments for 20 years, and the remainder of the balance will be forgiven! 

And, if you are in or go into some sort of "public service" career, you may only need to pay the reduced payments for 10 years!

Trying to determine not only IF YOU QUALIFY, but HOW MUCH YOUR PAYMENT WOULD BE, is not very easy (remember....government...). Let us help:

877-492-4109

Notice I said "bankruptcy protection", as in PROTECTION FROM YOUR CREDITORS!

If you ignore the collection letters and calls and are not able to work out a repayment plan or settlement, the creditor or debt collector may decide to FILE A COMPLAINT and then you would receive a SUMMONS.

If you ignore the summons (as so many people do), then the creditor (or PLAINTIFF), will most likely be awarded a DEFAULT JUDGMENT.

Now the credior has the legal right to apply for a WRIT OF GARNISHMENT, not only for your INCOME, but possibly your BANK ACCOUNT(S).

You should seek the cousel of a BANKRUPTCY ATTORNEY right away.

So, there are 4 Programs to control you debt:

• Debt Accelerator Program
• Debt Settlement Program
• Federal Studen Loan Forgiveness Programs
• Bankruptcy

You don't have to live in fear or frustration. Get some help today!

Photo credit:

Jason Rogers