Most retirees ask me "Can my retirement income be garnished?"

For the most part, the answer is NO when you are dealing with unsecured debts, such as:

• Credit Cards
• Personal Loans
• Medical Bills
• Store Cards
• Etc.

However, if you have delinquent taxes or other secured debts, you should definitly check with your tax advisor or attorney.

If you have accumulated too much unsecured debt then your RETIREMENT INCOME IS EXEMPT FROM GARNISHMENT! According the the federal Trade Commission, not only is your retirement income exempt, so are:

• Social Security  Benefits
• Supplemental Security Income (SSI)
• Veteran's Benefits
• Civil Service and Federal Retirement and Disablility Benefits
• Military Annuities and Survivor Benefits
• Student Assistance
• Railroad Retirement Benefits
• Merchant Seaman Wages
• Longshoremen's and Harbor Workers' Death and Disability Benefits
• Foreign Service retirement and Disability Benefits
• Federal Emergency management Agency Federal Disaster Assistance

Can a creditor garnish my bank account to get at my retirement income?

Sometimes they can.  It's extremely important to NEVER CO-MINGLE FUNDS from retirement sources with any EARNED INCOME your bank account!

Let's say you are retired, but working a part-time job to make ends meet.  If a creditor is awarded a judgment (and this would be only after you had received a SUMMONS), and you have CO-MINGLED your funds, your bank may be forced to FREEZE YOUR ACCOUNT!

It is a very good idea to keep separate accounts (and I recommend SEPERATE BANKS just to be safe) for income from your part-time job.  Or, you could always just CASH YOUR PART-TIME CHECK to be safe.

If you are receiving calls from collectors, we can help!

If you have delinquent, unsecured debts, we may be able to negotiate a reduced settlement by up to 50% or more! Click on the following link for more information -->

These days, more than ever, consumers are worried about their credit history and seeking credit help. It’s no wonder with up to 70% of credit reports containing very serious errors.

A bad credit history doesn't have to be a life sentence. If you educate yourself in how the credit reporting system works, you can work to remove issues caused by a divorce, bankruptcy, collection account or judgment. Bad or good credit has one thing in common. It must be verifiable. Fortunately for us, credit inaccuracies can be removed.

DIY credit repair is possible if you follow these 5 simple steps:

1. Get a complete copy of your credit report.

There are three national credit bureaus:  Experian, Equifax and TransUnion. You can get a completely free copy of your credit report once per year from www.annualcreditreport.com. Once you have your credit reports, go over each one with a fine tooth comb. Scour the reports for errors such as inaccurate account information, incorrect home addresses, duplicate accounts and false information. Many times you will find small errors like credit limit, balance, date opened/closed and payment history and fixing those errors can make a huge difference on how your credit looks.

2.  Dispute the errors.

Once you determine the errors, highlight each one and attach a credit repair letter and a copy of the credit report explaining the nature of your dispute. Send off the letter and a copy of the report to the corresponding credit bureau. Wait about 30 days to get a response from the credit bureau reflecting the correction and continue this process until you have cleaned up all inaccurate, false or outdated or unverifiable information. Credit bureaus can only report a negative credit history for 7 years from first serious delinquency or charge off so be careful to look for outdated information.

Equifax
(equifax.com)
PO Box 740241
Atlanta, GA 30374-0241
(800) 685-1111

TransUnion
(transunion.com)
760 W. Sproul Rd.
Springfield, PA 19064-0390
(800) 888-4213

Experian
(experian.com)
PO Box 2104
Allen, TX 75013-0949
(888) 397-3742

Keep a paper trail of everything! Your proof of all your hard work will be in your documentation so be sure to keep copies of everything. Send your credit repair disputes by certified mail so that you get a receipt back showing the dispute was delivered to the credit bureau. Credit bureaus receive millions of pieces of mail so don't think your dispute won't get lost in the shuffle. You may need all that documentation later if you find the bureau being resistant.

3. Go directly to the source

Sometimes you may find that the credit bureau has determined your information to be timely and accurate. You may feel differently about it and may even have a good argument. That is when it is time to turn your attention to the creditor who is reporting it. The creditor holds all the power in how they report your accounts and ultimately they are the one who can remove a negative mark.

Some strategies to dealing with the creditor is to provide them with a written history of what you believe happened. Maybe they charged a late fee inappropriately or maybe they agreed to re-age a late payment but did not follow through or possibly you had an agreement with them to remove a negative mark in exchange for settling a debt. Follow the same strategy as above getting everything in writing and keeping good records of exactly who you spoke to and where you mailed your credit repair letters.

4.  Validate the remaining debt

Use your rights under the Fair Debt Collection Practices Act to question the validity of the debt. If they cannot prove it- they cannot collect or report it- simple as that! Do not forget to check the Statute of Limitations - you may not even have to pay it.

5.  Negotiate the debts that you owe

Once you have completed all the steps above you will probably be left with a few accounts that you do need to pay off such as outstanding credit card debt and collections that you legitimately owe.  By dealing with the collection agency in writing you can begin to negotiate a reduced payoff in exchange for a better rating or a deletion of the negative account. This can be very effective in wiping out negative credit. A collection agency is more interested in getting your money than reporting the debt. They only report it as a tool to get you to contact them because they know eventually that bad mark will be in your way of getting a car, home loan or job.

As always, Keep Everything! Get everything in writing especially settlement offers. If you don't they may cash your check and leave the nasty mark on your credit. Move onto someone else within the agency if the person you are dealing with is impossible. Ask for a superior. Never let the debt collector know that you are paying off the bill because you are trying to get a loan. They will have you right where they want you if you do.

A client called us the other day and asked, "Do you have to pay tax after settlement?"

In most cases, the answer is NO.

When you negotiate a settlement on a debt you owe, let's say a credit card with a $10,000 balance is settled for $4,000 (yes it is very possible!), the amount that is FORGIVEN may be added back into your taxable income for that year.

At the end of the year, you will receive a 1099-C in the mail that states that the creditor has reported the $6000 of forgiven debt to the IRS (any amount forgiven over $600 may be subject to IRS reporting).

What do you do when you receive a 1099-C?

First, if your accountant or tax preparer tells you that you will have to pay tax on that amount, you probably need to find a new accountant!

Why?  It has been my experience that most accountants and tax preparers are not aware or experienced in how to treat 1099-C for settlements or forgiveness.

IRS Form 4681 explains that certain amounts of "forgiven debt" may be excluded from taxable income.  Basically, if AT THE TIME OF FORGIVENESS, you were INSOLVENT (your debts were greater than your assets), then the forgiven amount IS NOT included as taxable income.

List all of your assets:

• Any equity you have in your home
• Net or depreciated value of your cars, boat, etc.
• Net value of your jewelery, stocks, bonds, etc.
• Cash

Now list all of your debts:

• Mortgage (First and Second) on your home
• Lines of credit
• student loans
• credit cards
• medical bills
• personal loans

Subtract the DEBTS YOU OWE from your ASSETS.  If the number is negative, then you are "insolvent" according to the IRS. Complete IRS Form 982 and check the appropriate boxes to show that this amount should be excluded.

The moral of this story, don't think that just because your accountant or anyone else tells you that you must automatically pay tax after settlement, that it is always true.

photo by: Alan Cleaver

How much of your income is exempt from garnishment?

For the sake of this blog, let's walk through a hypothetical example of how a wage garnishment is calculated by your employer.

Let's say you had financial problems (layoff, divorce, illness, etc.) and could not make the required minimum payments.

• The account becomes delinquent
• After numerous calls from the creditor (HOW TO STOP CREDITOR CALLS)
• Account is charged off and sent to a DEBT COLLECTOR
• Process repeats (Need to STOP THESE CALLS ALSO)

If an agreement cannot be reached between you and your creditor/collector, the creditor may instruct the collector to retain an attorney (many collectors are attorneys) to file a CLAIM or LAWSUIT for the debt you owe.

You would then receive a SUMMONS.

Again, if an agreement (usually called a STIPULATED AGREEMENT), cannot be reached, then a court date is set and the PLAINTIFF or CREDITOR would be awarded a JUDGMENT.

Now the plaintiff can apply for a WRIT OF WAGE GARNISHMENT.

Your employer is legally bound to honor the WRIT and uses a WAGE EXEMPTION or CALCULATION GUIDE to determine how much of your wages must be sent to the court.

In Oregon, ORS 18.385 says basically that the MAXIMUM subject to GARNISHMENT is 25% of an employee's DISPOSABLE INCOME (AFTER-TAX, TAKE-HOME).

Unless the employee is left is less than $218 per week!

So, if your net, disposable income is $218 x 4.2 weeks or $915.60 per month, you would not be subject to garnishment.

But, let's say you are earning $15/hour and working 40 hours x 4.2 weeks per month or $2,520 GROSS (BEFORE DEDUCTIONS).

Again, let's say your net deductions are 27% of your gross income, leaving you with a net take-home income of $1,839.60.

In Oregon, 25% of the net take-home (most states are 25%, but be sure to check your state's code) must be garnished.

$1,839.60 x 25% = $459.90 per month!

For most people, that would be financially devastating!

Before you let your delinquent accounts go this far, give us a call or contact us right away!

We may be able to arrange a repayment or settlement plan to avoid wage garnishment.

If you have ever shopped around for car insurance, you probably already know that there are a number of factors that affect the rates you will be paying. Age, experience, and the type of vehicle you drive all seem like reasonable criteria, but what about your credit score? Whether you are aware of it or not, your credit rating in most cases does affect your insurance rates; knowing your credit rating and what it means for your rates makes it easier for you to get the best deal.

How Does My Credit Score Affect My Insurance?

We all know that your credit rating can affect your ability to get a loan or purchase a home, but how your credit score affects your skill as a driver may not seem apparent—because it does not. The use of credit ratings as criteria for insurance premiums is a controversial topic, and the decision of insurance companies to include them is not fully understood. Your best strategy in determining what role your credit score has on your rates is to contact your insurance company and ask them for information.

How Do I Find My Credit Score?

If you are concerned about the effect of your credit score on your car insurance rates, you can easily determine your credit score. You can obtain your credit score from the three main credit bureaus such as Equifax, Experian, and Trans Union.  Each of these agencies will charge you a small fee to see your credit score when getting your FREE Annual Credit Report.  If you don’t need to see your credit report, you can check Credit Karma for your FREE CREDIT SCORE.  Having an up-to-date and accurate breakdown of your credit rating before contacting your insurance company will give you the power of knowing whether or not their evaluation is a fair reflection of your credit rating.

What Can I Do If I Have A Bad Credit Score?

If you do have a low credit score, repairing your credit is your best strategy in eliminating this negative factor in your insurance company's calculation of your premiums; this will not reduce your rates in the short term, however. If your credit score has a considerable effect on your rates, your only real option in the short term is to shop around for a new policy at renewal time.

Though the fairness of insurance companies in using credit scores as criteria for evaluating the risk of insuring a particular individual is arguable, at this point it cannot be changed. Arming yourself with information about how your rates are calculated—and remembering that as a consumer you have the right to shop around—will help reduce the impact of this factor.

photo by: jcrakow

We all know that "Money Doesn't Grow on Trees", right?  When we work hard all week long, we want to be able to see the fruits of our labor.  When creditors garnish your wages, it can be devastating.

Is there anything you can do to stop a wage garnishment?

Yes you can.  Here are 3 things you should know to stop wage garnishment:

1.  Your wages can't be garnished if you take home less than your state's minimum.

Usually, when your employer receives a NOTICE OF WAGE GARNISHMENT, it usually has your state's formula for determining how much or if, your income is subject to garnishment.

If you are employed for example in Oregon, and our NET AFTER TAX or TAKE HOME IS $218 or less, then your wages are exempt from garnishment!

2.  If your income is subject to garnishment, you may be able to work out a repayment plan with your creditor that is less than what the garnishment would be.

If your income is greater than $218/week, then 25% of your NET INCOME would be withheld by your employer and sent to the creditor per the Writ of Garnishment.

You should contact the attorney for the creditor (it is on the summons or writ of garnishment you received) and see if you could negotiate an amount for less. Some creditors may be willing to work with you.

We have had great success in the past helping people with wage garnishments, and working out a STIPULATTED AGREEMENTS in lieu of garnishment.

3.  Your income may be EXEMPT FROM GARNISHEMENT if it comes from one of the following sources:

• Social Security
• Retirement Income
• Unemployment
• Disability Benefits
• Worker's compensation
• Spousal Support or child support
• Elderly rental assistance (ORS 310.6355)

If you are not sure if your income is exempt, we may be able to help.  Give us a call today at   1-877-492-4109 or simply click on the link below for more information!

If you have too much debt and not enough income to service the minimum payments, it is time to take action before bankruptcy is your only option.

Here are 3 tips that will help you find debt relief

#1 Take a close look at your finances

You need to find out exactly where you are in your finances. In other words, you must know how much you have coming in each month and how much must go out.  One of the best things you can do is to sit down and complete a BASIC BUDGET.

BE HONEST WITH YOURSELF!

NET INCOME means this is what you have left to spend after mandatory state and federal taxes are taken out of your paycheck. If you are self employed...don't kid yourself...you are going to have to PAY UP, so deduct those taxes (including payroll if you have employees).

#2  Evaluate your debt

How much unsecured debt (credit cards, store cards, personal lines of credit, medical bills, etc.) do you have and more important, how much is the minimum payment required to meet all of them?

If you must have $500 a month just to cover the minimum payments required, and you honestly only have $350 a month after all mandatory expenses, YOU'VE ONLY GOT A COUPLE OF CHOICES.

#3  Review Your Options with an Experienced Counselor!

Don't give up and just seek bankruptcy.  Bankruptcy may end up being the best choice for you, but before you jump in, make sure you know all of your options!

• A DEBT MANAGEMENT PROGRAM

• A DEBT SETTLEMENT PROGRAM

In order to determine which program is best for you, you will need to spend a few minutes with an experienced counselor.  This service is FREE and you are under NO OBLIGATION.

If you are wondering if you can negotiate a second mortgage after a short sale, I've got good news for you...YES YOU CAN!

If your property had a first and second mortgage and you chose to do a short sale rather than allow a foreclosure (usually the best choice in my opinion), then here's what happens:

The real estate agent or broker usually negotiates an amount in a short sale to satisfy both the first and second mortgage holder.

In most cases, the second mortgage holder receives a lot less than the first mortgage holder.

Depending on the agreement, language, etc. of the documents, whatever the 2nd mortgage holder receives is all they get.

However, in some cases, when the 2nd mortgage is very large, the 2nd mortgage holder may have the right to make a claim for the remaining (called deficiency balance) due.

The 2nd has now become an unsecured debt, just like any other unsecured debt and can be negotiated.

The creditor will follow the same procedures and any other debt collectors...calls, letters, unlawful threats (violating FDCPA) in an attempt to collect on the remaining balance.

What should you do?

1) Make sure the sale documents give the collector the right to pursue the remaining balance.

When you signed the short sale documents, there was something in there that spelled out how the proceeds were to be distributed to the creditors (1st and 2nd mortgages).

If you are not sure, check back with the real estate agent or broker (they were paid for this!!!)

If it is determined that whatever the 2nd mortgage holder did not agree to a "full settlement for less than was due" (or something to that effect), then you may be liable for the balance.

2) If the collector is calling several times a day, send them letter demanding them to stop immediately!

You don't have to put up with harassment from any collector!

The Federal Trade Commission has very specific rules for what a collector can and cannot do.

3)  Try to negotiate an amount that is much lower than they claim. 

In these types of negotiations, it may be possible to get a reduction of 25%-50%, depending on your specific circumstances.

This might be the time to seek professional help, and we can help!

Have you or someone you know been a victim of Credit Card Skimming?  Skimming is a method by which thieves steal your credit card information, and all it requires is a little technology and a lot of criminal intent by those who handle your credit card.

Unfortunately, this is becoming a bigger and bigger problem across the country. You need to understand how Credit Card Skimming works and what you can do to protect yourself.

Here's how it works

The bad guys buy magnetic card readers (readily available online) and attach them to legitimate card readers at ATM machines, gas station pumps, movie rental kiosks, or anywhere they think they can get away with it.

The counterfeit card reader captures the credit card information of everyone who uses the machine. (On ATM machines, crooks also attach tiny video cameras to steal PIN numbers.)

They then remove the phony device and use the stored information to buy stuff online or write the data onto new magnetic strips to make counterfeit credit cards or ATM cards.

Counterfeit Credit Card Trends

Portable skimmers (small enough to fit in a palm) can be used by anyone who handles your credit card, such as a waiter. All they have to do is get your card out of your sight for a second. That's enough time to swipe it through the device, and steal your information without you suspecting a thing.

Follow these tips to protect yourself from Credit Card Skimming:

• Don't let your credit card out of sight. Watch carefully anyone who handles your card.

• Keep track of receipts and check your credit card statements regularly to make sure you authorized all purchases.

• Report any unauthorized purchases immediately to your credit card companies.

• Don't use a credit card reader if there are any signs of tampering. Don't swipe your card through devices that offer to clean the magnetic strip. Those are scams designed to capture your credit card information.

Have you been a victim of Credit Card Skimming? 

• Call the police. When your identity or credit card is stolen, it's just like having a car stolen. Make a police report and hang on to the police report number.
• Contact your bank or credit card issuer immediately and tell them your card was stolen. If you don't make a report quickly, you may be liable for some or all of the unauthorized charges.
• If you report swiftly, federal law caps your liability at $50. Most credit cards voluntarily go further, and won't charge you at all -- again, if you report quickly. "If you end up being a victim, it's probably not going to cost you any money," Brewer says. "If you notify your bank quickly, they'll return the money. Don't get hung up about the fact that someone might drain your bank account. The most you will probably spend on it is wasted time and lots of aggravation, since it can be a long process to get everything worked out."
• Contact the three major credit bureaus -- TransUnion, Equifax and Experian -- to request a security freeze, which prevents new credit authorizations without your consent. Brewer suggests visiting the website www.annualcreditreport.com. "It's an institution created in response to a large number of identity theft victims and the cost incurred to them," Brewer says. Through the site, which was mandated by federal law in response to consumer outcry, you are entitled to receive one free credit report each year from each of the three major credit bureaus.

Need help eliminating your credit card debt?

Our Debt Consolidation and Debt Settlement programs can get you out of debt fast and save you money.  Give us a call, or click on the link below to get your FREE Debt Elimination Summary or talk to one of our Debt Solutions Specialists today!

photo by: akpoff

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.