If you are considering filing for bankruptcy, you may be wondering…

How does filing bankruptcy affect my credit?

That is a great questions, and one that we get asked all the time.  The simple answer is, filing bankruptcy will significantly impact your credit score.  However, the question is not really that simple to answer.  If your credit score is high, a bankruptcy will drastically lower it.  On the other hand, if your credit score is already low due to late payment and large unpaid debts, bankruptcy may have a slight negative effect, but the benefits may outweigh the cost.

What to expect when you file for bankruptcy

1.   Bankruptcy will stay on your credit report for a long time.

If you decide to file, you will likely file a Chapter 7 or Chapter 13 bankruptcy. A Chapter 7, which essentially wipes the slate clean and eliminates all of your debt, will remain on your credit report and potentially affect your credit rating for 10 years; a Chapter 13 will remain for seven years.

2.   Bankruptcy will lower your credit score

Once you file for bankruptcy, you may see your credit rating drop anywhere from 80 to 220 points.  I know that is a big range, but as I explained before, bankruptcy does not affect everyone the same. The higher your score is before the bankruptcy, the more points you will lose.

Another surprising fact is that, your credit score is not only affected by what you do.  When determining your credit score, your information will be compared against others who have filed for bankruptcy.  It’s crazy but true!

If you don’t know what your credit score is, you can check it for free at www.creditkarma.com

3.   You will be stuck with some of your debt

Even if you file a Chapter 7 bankruptcy, some debts are still protected.  Except in extreme circumstances, you will still be required to pay student loans, child support, and tax debt. If you are behind on these payments, your credit rating may drop an additional 70 to 120 points.

4.   You can improve your credit score

Within a year or two, you may be able to get your credit rating above 700. Paying all bills on time will greatly help to improve your score. Another suggestion is to use a secured credit card to build your credit.  Apply for a secured credit card, use it regularly and pay off the balance each month.  This will add positive marks to your credit report to start balancing out the negative. 

The bottom line is, bankruptcy should only be used as a last resort.  If you are overwhelmed with debt, there are programs out there to help you such as Debt Consolidation and Debt Settlement.  Both of these options will help you get out of debt fast and save you money in the long run. 

If you have questions about whether bankruptcy is the right choice for you, give us a call at 1-877-492-4109 or click on the link below for a FREE CONSULTATION with one of our Debt Solutions Specialist. 

If you are late or behind on your credit card payments, you may receive a call from your creditors offering you a Hardship Plans. 

Are Hardship Plans a Good Idea?

If your hardship is short and temporary, a hardship plan can be just the help you need to get by.  However, never forget that the goal of the credit card industry is to make money...lots of money!

The collections agent on the other end of the phone line doesn't care:                  

• about you
• about your family
• if you lost your job
• have had major illness

They make a commission when you agree to make payments.  So BEWARE when they offer a hardship plan.

If it sounds too good to be true, it probably is!

A typical hardship plan will usually waive or reduce interest rates and fees for 6 - 12 months.  The pitch is that this will give you a little breathing room and you can renegotiate your payments or plan later.

• They will want you to set up automatic deductions from your bank account or send them 6 months of post dated checks. 
• By giving them your banking information, and authorization to withdraw funds, you will have a difficult if not impossible time getting them to stop the automatic payments once the 6 months has passed. 
• Unfortunately, when they take these future payments, they are generally much higher than the amount of the hardship payment.

Let's take a look at what your Hardship Plan might look like.

• Your balance is $5000
• You current minimum monthly payment is $150
• They offer you payments of $100/month for 6 months at a reduced rate of 6% and no fees.

After six months:

• you've paid $600
• $150 went to interest 
• $450 went to reducing the principle 
• your balance is $4550

That sounds like a pretty good plan.  However, what they didn't bring to your attention, and what you failed to read in the fine print is that all of the interest and fees that you were not paying during that 6 months will now be charged and added into the balance!

WHAT?  That makes no sense right.  WRONG!  At the end of most Hardship Plans, you end up owing the same if not more that what you started with. The only thing the Hardship Plan did was allow you to remain current for six months of temporary hardship due to the reduced payment.   

When you call to renegotiate your payment and interest rate, more often than not, you'll be back to high interest rates and fees which means it will take you several years and thousands of dollars in interest to pay off your card.

Consider a Debt Consolidation Program

If your hardship is not temporary, you may want to consider a Debt Consolidation program instead.  Through a Debt Consolidation program, your interest rate will be drastically reduced for the life of the debt or as long as you remain in the program. (whichever comes first).  Not only that, if you have already fallen behind, your creditors will "Re-Age" your accounts to bring them back to current status. 

Debt Consolidation programs will help you to eliminate your debt in a short amount of time while saving you thousands of dollars interest.  For more information, please feel free to give us a call or click on the link below.  One of or Debt Solutions Specialists can help you determine which option is best for your situation. 

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

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

How can you PREVENT WAGE GARNISHMENT?

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

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

BE PRO-ACTIVE

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

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

CREATE A CRISIS BUDGET

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

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

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

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

CALL YOUR CREDITORS

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

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

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

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

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

WE CAN HELP YOU TOO!

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

#1 DON'T PANIC!

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

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

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

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

#2 DON'T IGNORE THE SUMMONS!

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

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

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

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

For Example:

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

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

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

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

#3 REMEMBER THESE IMPORTANT STEPS!

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

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

How to Improve Your Credit Score

When many people think of credit reports and credit scores, they see them as important if you want to apply for a loan. And of course they are important when you apply for a loan. But your credit report and score are also absolutely critical to getting rid of debt. With a good credit score, you qualify for lower interest rates that can help bring down your total interest charges. With bad credit, you’re stuck paying double digit rates. So let’s look at some tips and tools that can help you:

#1 Understand Just How Important Your Credit Score Is!

As I explained above, your credit score is an important tool in getting out of debt as quickly as possible. Don’t believe me?  Check out these statistics from myfico.com for individuals with a FICO score of 660 (fair credit) versus 760 (excellent credit):

• Mortgage: The average interest on a home loan today is about 4.766% for excellent credit, but 5.379% for fair credit.
• Car Loan: With a credit score of 760, you can expect a car loan interest rate of about 6.3%. With a score of 660, the rate increases to about 9.8%.
• Home Equity: Excellent credit can expect a rate of around 8% or lower, while fair credit borrowers will pay as much as 11% or higher.

As you can see, your credit score matters!

#2 Get Your Free Credit Report!

The starting point is to get your FREE CREDIT REPORT and check it for errors.

#3 Get Your Free Credit Score!

Next you should get your FREEE CREDIT SCORE. You can get this from annualcreditreport.com., but you will have to pay for it.

#4 Pay Your Bills On Time!

There are a number of factors that go into a credit score, but one of the most important is paying your credit bills on time. (such as credit cards, mortgage, and car payments) Do whatever is necessary not to forget a payment, and make sure you make the payment far enough in advance of the due date so that there is no chance it will be late.

#5 Don't Close Credit Accounts!

As a general rule, don’t close credit card and other revolving accounts. One of the factors in determining credit score is the amount of debt you have in comparison to the amount of available credit. The greater the available credit, the better. You can always cut up some of your cards if you don’t want to risk using them, but don’t cancel them.

Is it possible to stop a wage garnishment in Oregon?

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

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

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

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

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

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

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

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

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

DON'T FREAK OUT!!!

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

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

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

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

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

You cannot be garnished if you receive income from:

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

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

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

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

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

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

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

Can anything be done about debt collector harassment?

YES!

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

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

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

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

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

WHAT SPECIFIC PRACTICES ARE PROHIBITED BY THE FDCPA?

A debt collector may not:

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

A debt collector may not make false statements such as:

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

A debt collector cannot make threats such as:

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

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

WHAT CAN YOU DO WHEN A COLLECTOR BREAKS THE RULES?

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

For example, in Oregon, CLICK HERE.

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

photo by: chmeredith

Credit Repair... Is it really possible?

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

MYTH # 1:

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

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

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

MYTH # 2:

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

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

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

MYTH # 3:

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

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

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

MYTH # 4:

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

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

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

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

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

• Experian
• Transunion
• Equifax

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

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

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

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

HOW DOES DEBT SETTLEMENT WORK?

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

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

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

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

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

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

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

Click here for some ACTUAL SETTELMENT EXAMPLES.

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

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

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

How can you Stop Debt Collector Calls?

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

Do any of these situations sound familiar?

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

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

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

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

A Debt Collector is PROHIBITED FROM HARASSMENT, such as:

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

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

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

Ok, but How do you STOP debt collector calls?

1) Send a letter like this:

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

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

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

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

Sincerely,

(Print and sign your name)

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

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

Either way, now the calls should stop.

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

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