Debt relief programs are rapidly increasing in popularity. When creditors are breathing down your back, you need someone to help you take care of the problem.  However, you want to make sure that you actually owe those debts before you pay them. This is when the process of Debt Validation becomes extremely important. Debt validation, in simple terms, is the process where a debt collector proves that you owe the debt they are trying to collect.

When a creditor is unable to collect the money owed to them, they will usually hire a collection agency to collect the money for them.  Often, the debt is actually sold to agencies and is considered “junk debt.” Junk debt is purchased by third parties for pennies on the dollar. These collectors often do not have the correct documentation to prove that the debt is really owed. This is why debt validation is important.

If these collection agencies cannot prove that you owe the debt, then you don't have to pay it.  You may have already paid off the debt, but the orriginal creditor did not notify the collection agency. Other times, the orriginal creditor has simply charged the debt off.

To complete a validation, you must ask a debt collector for proof of debt. This is done after a collector informs you of the debt. You have 30 days to request proof of the debt or the collection agency will assume that it is valid and continue in their collection efforts.  However, you can request a validation of the debt at any time. This process is designed to keep honesty in the debt collection industry.

Before you pay a debt that you are unsure of, complete the debt validation proccess. If the collection agency cannot provide proof that the debt is yours, you will not have to pay it! 

The proccess of Debt Validation is simple, and you can definitely do it yourself.  Use our FREE GUIDE to DIY Debt Validation by clicking on the link below, and get started today!

 

Bankruptcy should always be a last resort (see our Debt Relief Options for bankruptcy alternatives). However, if you have decided to file bankruptcy but have not done so yet, take your time and don’t rush the process – it is more important to ensure that all your bases are covered rather than make a mistake that may cost you later.

Obtain Credit Reports

You need to obtain your credit reports from the three major credit-reporting agencies (Experian, Equifax, and TransUnion). Fortunately, you can conveniently obtain all three of your reports online in only minutes at www.annualcreditreport.com

• With these three reports, you will have access to a file number and a phone number needed for accessing customer service.
• You will see the addresses for each creditor on the credit report. If it is not there, then you can call customer service to ask them to provide you with the missing information.
• When you call the bureau you can ask them to provide you with the phone numbers for each of the companies showing on the credit report.

Get Updated Information

• Call each creditor and ask them how much is owed and for the address where payment should be sent.
• If they don’t handle the account, then ask them for the name and address of the collection agency that will take payment.
• When dealing with creditors and collection agencies don’t let them bully you or upset you over outstanding balances. Just collect the information you need. All you have to say is, “Thanks. I will call your company back soon regarding this matter.” Don’t give them time for a rebuttal – just hang up. If they push the matter, then only as a last resort tell them you will be filing bankruptcy. Give them the name and number of your attorney and end the call.

Make a list of accounts

Your attorney will need the name, addresses, balances, and account numbers for eachcreditor to complete the bankruptcy papers.

If there are creditors that you want to continue paying, then it is very important at this time to tell your attorney that you want to offer reaffirming on the debt. The attorney will then send the offer to the creditors you have selected who must accept it. Then the judge must accept the offer too.

The creditors will continue reporting the balance owed and show the status “reaffirmed” on your credit report.

Once the Bankruptcy is complete

Creditors have the means and responsibility to manually update account information with credit reporting agencies. However, at this point no one is requiring creditors to do this.

When creditors don’t update account information with the credit reporting agencies, then you get an incorrect credit report that still shows you owe on the accounts in question, and that they are currently in collections or charge off status when in fact they are not.

The clear, quick way to fix this problem is to:

• Obtain a copy of your bankruptcy and discharge papers from your attorney or the courthouse. This may include a copy fee.

• Make three copies of the section of papers that list all of the creditors and collection agencies that were included in the bankruptcy – usually this is called the Schedule F.

• Forward these documents along with the discharge to all of the credit-reporting agencies requesting that each creditor included in the bankruptcy be updated to properly reflect a zero balance with the status included in bankruptcy.

• Be sure when mailing correspondence to the credit reporting agencies to include a copy of your driver’s license and mail “certified return receipt requested”. This will ensure disputes are processed with little delay.

Finally, if you have a creditor or collection agency which is not honoring your bankruptcy and continuing collection efforts, then be sure to contact your bankruptcy lawyer. Give your lawyer the name and address of the company bothering you so that he or she can send them official notice. Follow up with the lawyer if the creditor persists in harassing you. It is a violation and they can be held accountable if they don’t cease after notification of the bankruptcy.

As with all consumer issues, knowing your consumer rights throughout the bankruptcy process is essential. Taking a proactive approach at the onset of the process will help you on your “road to credit recovery”.

Here you are again.  You just deposited your pay check and it is time to pay the bills.  As always, you are just barely getting by.  You are juggling your bills, your due dates, and your grace periods each and every month.  You have so many balls in the air, you can't keep them straight.  Sooner or later, one of the balls will drop and your financial "plan" will come toppling down.

In desperation, you start calling your creditors to see if there is anything they can do to help, and they offer you a Hardship Program. 

What is a Credit Card Hardship Program?

If you have tried in the past to enroll in a Hardship Program with one or more of your creditors, you may have been disappointed to find our that they are not eager to help out when you are current with your payments.  However, if you have fallen behind on your monthly payments, your creditors will be more receptive to offering you a deal. 

The plan that your creditors will offer you will differ depending on the bank and  how far behind you are.  Here are some examples of what a hardship plan might look like:

• Temporary Hardship Program - Your monthly payment is reduced to around 2.5 percent of your balance, usually for anywhere from 6 to 12 months. Your interest rate is reduced, and penalties and fees are often waived. When your temporary hardship program expires, your account will go back to the pre-plan arrangement.

• Long Term Hardship Program - With this type of plan, your accounts are generally closed and the interest rates are reduced.  You will most likely be put on a payment plan to get the full balance paid off within 5 years.  If you default on any payments while in a Long Term Hardship Program, your interest rate, payment, and fees will go back to the pre-plan arrangement.

Are Credit Card Hardship Programs a Good Idea?

These Hardship Programs might be just what you need to get you over your financial hump.  However, never forget that the goal of the credit card industry is to make money!

When your creditors offer you a Hardship Plan, keep in mind the saying...

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

• First, there is no guarantee that you will be able to enroll in your creditors Hardship Program.  Once your lender finds out that you are struggling, they may decide to reduce your credit limit or even close your account all together.

• Next, enrolling in a Hardship Program will usually be noted on your credit report as "Hardship Payment Plan". This could cause problems and even increase your interest rates with your other credit card accounts.

• Finally, these Hardship Programs are just short term solutions to what is most likely a long term problem.  If you default even once during your Hardship Program, you interest rates and payments will go up to the same or even more that before you got "help".

Enrolling in a Hardship Program with your creditors should always be a last resort. If you don’t want to go it alone, look for a Debt Relief Company, which can help you develop a debt payoff plan. Trained Debt Solutions Specialists can negotiate with lenders on your behalf to lower both your interest rate and monthly payments and even the total amount of debt that you owe.

Picture it.....

Black Friday 2011.....

Not only have you paid off your credit card(s), you got an increase in your credit limit?  Awesome!  Uh-oh, there goes the evil laugh.  Oh, no--there goes the hands slapping together and rolling around while you contemplate what kind of shopping you could really do.  Yeah, you can just picture it now--remember that flat screen t.v. your spouse has been salivating for?  What about those earrings your mom has been wanting?  And Aunt Sally wanted that  purse she saw at Nordstrom's?  O, your daughter wanted a gift card to Victoria's Secret--be sure to add enough money on it because what girl can buy just one item from there.  You grab your wallet and car keys. . .Wait!  Don't walk out that door with your credit cards, you will develop a permanent foul taste in your mouth as it becomes Debt Friday when next month's bill comes.  Here are some ways to enjoy this holiday tradition without breaking the bank.

Envelope Method

In order to keep on top of your debt--no matter how small or how big the breathing room is--you must leave your credit cards at home.  Banks know how temptation works, and that is why they increase your credit limit; they hope to keep you under their thumb for years.  To keep Black Friday from becoming Debt Friday, use the envelope method to figure out how much to set aside for each bill--including gas for your car(s) and food--and put that money in their respective envelopes.  The rest can be used for Black Friday.

Christmas List

Everyone writes down what they want on a Christmas list.  While many people are very conservative because of our economy, you don't have to be stingy.  Your daughter wants a Victoria's Secret gift card, your spouse wants that flat screen, your mom wants those earrings, your aunt wants that purse from Nordstrom's, and so on. . . .Make it happen in your family:

• Get family to pool money together--each person can contribute a little in the pot for that one really cool item each person wants.  
• Stick to your budget--if pooling your money is not an option, than consider your gift giving carefully.  You don't want to buy something that is just going to sit in the back of someone's closet.

Black Friday or Debt Friday?

You don't have to have a coronary next month if you keep your credit cards at home.  Keep your money close as you enjoy Black Friday.

 

photo by: gadgetdude

Remember Spy Kids 2: Island of Lost Dreams?  There is a part that shows two inanimate skeletons fighting over a necklace. Juni, one of the main characters takes the necklace for his own, and the skeletons wake up to find it.  When they finally get the necklace back, you see them fighting over it once more, each trying to prove, "It's mine!"  Money can be a person's favorite toy, even diamonds are a girl's best friend, but when you get married, sometimes the line becomes blurred as each spouse wonders what is mine, yours, and ours.  Money does not have to be a statistic for divorce, and here are some ways debt and marriage can work for you.

Pooling Debt

You have grown close to your money, and you want to keep it safe, and be responsible with it, so you opened up a bank account.  Now that you are married you wonder whether you should have a joint account or keep your accounts separate.  You can do both, and here is what each account will do for you.

• Separate accounts-Before you got married, you both accumulated debt.  Now that you are married, you can both decide which debt you can help each other with, and which should remain your own.
• Joint accounts--Set this account up for the debt you have accumulated together, and the debt that you decided that you can help each other with.

Savings Accounts

Life happens when we least expect it, so setting aside money--no matter how small--will add up quickly to deal with these issues.

• First account--This can be used for car repairs, medical bills, sudden funeral costs, home repairs and replacements, and any other issues that might happen.
• Second account--We all like to have fun, buy things like clothes and jewelry, and go places whether it is a vacation, to the movies, or out for dinner.

When you think of marriage things like love, a house, and children come to mind. Unfortunately, few people ever think of debt in the same equation. Debt and marriage requires work to be successful, and when you both put in the time, you will be one step closer to financial freedom and a long and happy marriage.

There is nothing more stressful than being in debt. Every morning people in debt wake up and think about what they can do, and they go to sleep at night worrying about it as well. They aren't alone. According to the Washington State Department of Financial Institutions, 40 percent of American families live beyond their means and the average household with debt has about $10,000 to $12,000 in revolving debt and about nine credit cards. Getting out of debt can be very difficult, especially if people are putting all their income toward paying off the interest alone. But stressing about debt doesn't help; action does. Here are three steps that will help you learn how to cope with financial stress. 

#1 Talk to an Expert

You don't have to do this alone. There are financial experts waiting to help. They work with you to provide debt counseling, consolidate your payments and come up with a plan to pay off your debt. If nothing else, talk to a trusted family member or friend who is good at managing money. Tell them you are not asking for money, you just need to get the stress off your chest. Perhaps they will share a great idea for getting out of debt or help you develop a plan, which is the second step to learning how to cope with financial stress. Talking to someone helps you feel like you're not alone.

#2 Develop a Plan

Look at your debt and your income and come up with a plan to pay it off, even if just a tiny bit at a time. Write down the plan; this is the most important part of this step. Hang the plan in an easily visible place, one where you will see it every day. Ideally, the plan should include an action for each day, such as "sell old camping gear and use it to pay debt A" or "clip coupons for grocery store and then use saved money to put toward debt B." Of course, the plan will have larger goals as well, such as putting a small percentage of your paycheck toward paying off a larger debt.

#3 Reward Yourself for Small Successes

Give yourself a pat on the back for any small successes. Cross items off your action plan that you have completed. Instead of allowing yourself to stress about the debt, remind yourself every day that you are working toward a better future.

 

photo by: eamoncurry123

If you’re struggling with debt, you likely feel like the weight of the world is resting on your shoulders each and every day. Whether it is due to student loans, mortgages, credit cards or other financial struggles, the clutches of debt are enough to make anyone feel trapped and helpless. Luckily, no matter how bad your debt may seem, there are techniques for living debt free.

By taking five easy steps, you can begin eliminating your debt, cleaning up your credit and enjoy financial independence fast.

 

#1 Lock Up Your Credit Cards

The first step is to lock up your credit cards and make all purchases using only the money in your wallet or checking account. Often, people feel that purchasing on credit is simply buying them time before they have to pay up. In reality, you’re only digging yourself a deeper hole.

#2 Make a List of Your Financial Goals

Secondly, make a list of all of your financial goals and set a timeline toward living debt free. Your goals may include buying a home, taking a vacation or purchasing a new vehicle. Keep in mind that these types of goals cannot be accomplished until you eliminate your debt. Your goals can serve as incentive to pay off your debt as fast as possible.

#3 Create a Budget

Third of all, create a budget. Calculate all of your monthly bills and living expenses and decide the minimum amount of money you can live off of while you work towards living debt free. Consider eliminating unnecessary bills such as health clubs or downgrade your cable plan. The extra money you save can be used to reduce your debt.

#4 Hold Yourself Accountable

The fourth step to living debt free is to hold yourself accountable. Debt is a slippery slope and often it is hard to determine the “wants” from the “needs.” Keep a list of your expenditures and post it on your refrigerator. If you share an account with another person in your home, ensure that they also track their spending so you can determine where you overspend and where you can cut back.

#5 Get Help

Finally, be sure to seek professional advice. Our Solutions Specialists are experienced in debt elimination and can advise you of the best methods for your unique situation. While some people can eliminate their debt by using our Debt Consolidation program, others may need to go with Debt Settlement. Whichever method you end up choosing, our debt specialists can help you take the next step to living debt free.

photo by: woodleywonderworks

All too often, individuals who are struggling with their debt fall victim to debt collector tricks and scams—all because they aren't aware of the laws that exist to protect them.  The Fair Debt Collection Practices Act (FDCPA) was enacted to protect people from the unfair, deceptive and abusive tactics that many companies were using in their attempt to collect outstanding debts.  Under this law, you have specific rights that protect you from the worst debt collector tricks.

Think about your last interaction with a debt collector.  Did any of the following occur?

• Calls made before 8:00 a.m. or after 9:00 p.m.
• Calls made to your workplace
• Calls made so frequently as to become an annoyance  
• Use of abusive or obscene language
• Threats of bodily harm or pending arrest
• False statements made regarding the amount of your debt
• Misrepresentation on the part of the debt collector (for example, pretending to be an attorney or the police)
• Contact made only by postcard (vs. a phone call or letter)
• Attempt to collect interest or another fee that is not a part of the original contract for the debt
• Contact made to you rather than the attorney who is representing you in the matter

While we've listed some of the most frequently occurring abuses here, that doesn't mean there aren't other practices that are illegal.  The most important thing that you can do to avoid these and other issues is to educate yourself on your rights under the law. The Federal Trade Commission's website offers a detailed summary of FDCPA and is a great place to get started.  

Keep in mind that most states also have their own version of the Fair Debt Collection Practices Act.  You can contact your state's Attorney General office (www.naag.org) to learn more or to report a violation by a particular debt collection firm.  The Federal Trade Commission (www.ftc.gov), which enforces the FDCPA, has extensive information about consumer rights in general, as well as an online complaint form.

If you feel that you've been the victim of unfair practices or debt collector tricks, take the time to research your rights. Then, take action to protect yourself. 

 

photo by: stevendepolo

Debt has the power to overwhelm your life. When the bills start mounting and the collectors start calling, you may feel powerless, disheartened and as though you're in a sinking ship without a life boat. But we at Debt Relief NW, Inc. want you to know there is help out there so you're not left drowning in your debt.

There are several debt relief options available to you when the bills become overwhelming. For many, Debt Settlement is the best choice to get out from under debt, pay off loans and credit cards and come out whole on the other side.

Here's how debt settlement works

When you choose Debt Settlement, Debt Relief NW, Inc. assigns you a personal Debt Solution Specialist to go over your options, work with you to create a budget and establish a monthly payment that fits into that budget. 

Next, you will be assigned a personal Debt Negotiator who will use the funds available from your monthly payments to settle your debts for about half of what you owe. You save thousands on both the balance and the interest and can pay off your debt in two to three years.

Debt Settlement has the power to stop your financial ship from going down entirely.  Debt Relief NW, Inc. has built a reputation for quality debt management solutions and we have maintained an A+ ranking with the Better Business Bureau. When we say we can help you through debt settlement, we mean it.

You don't have to face the storm on your own. Debt Settlement can bring you in to a safe harbor and get you back on track.

 

Guest Blogger: Andrea from Portland, OR

photo by: foxypar4

Bankruptcy should always be a last resort (see our Debt Relief Options page for bankruptcy alternatives). However, if you are determined to file bankruptcy, then please take your time and don’t rush the process. It is more important to ensure that all your bases are covered than to make a mistake that may cost you later.

FIRST: Obtain Your Credit Reports

You need to obtain your credit reports from the three major credit-reporting agencies (Experian, Equifax, and TransUnion). Fortunately, you can conveniently obtain all three of your reports online in only minutes from www.annualcreditreport.com.

• With the reports direct from each bureau you will have access to a file number and a phone number needed for accessing customer service.

• You will see the addresses for each creditor on the credit report. If it is not there, then you can call customer service to ask them to provide you with the missing information.

• When you call the bureau you can ask them to provide you with the phone numbers for each of the companies showing on the credit report.

NEXT: Get Updated Creditor Information

You need the most up to date information you can get when filing for bankruptcy.

• Call each creditor and ask them how much is owed and for the address where payment should be sent.

• If they don’t handle the account, then ask them for the name and address of the collection agency that will take payment.

• Call the collection agency and ask them how much is owed and for the address where payment should be sent.

• When dealing with creditors and collection agencies don’t let them bully you over outstanding balances. Just collect the information you need. All you have to say is, “Thanks. I will call your company back soon regarding this matter.” Then HANG UP!

Finally: Make a List of accounts for your bankruptcy attorney

Your attorney will need the addresses, current balances, and account numbers for all of your accounts to complete the bankruptcy papers.

• If you don’t see a creditor or collection agency on the credit report, but you know for a fact you owe money, then you need to find any billing statements or collection letters you may have received. These statements and letters will have necessary address information and phone numbers along with amounts still owed.

• If there are creditors that you want to continue paying, then it is very important at this time to tell your attorney that you want to offer reaffirming on the debt. The attorney will then send the offer to the creditors you have selected who must accept it. Then the judge must accept the offer too. The creditors will continue reporting the balance owed and show the status “reaffirmed” on your credit report.

Once the bankruptcy has been discharged, your balances will show as zero on your credit report. 

When creditors don’t update account information with the credit reporting agencies, then you get an incorrect credit report that still shows you owe on the accounts in question, and that they are currently in collections or charge off status when in fact they are not.

If you find that any of your creditors listed in your bankruptcy are still showing outstanding balances or if any of your creditors continue their collections efforts once the bankruptcy has been discharged, there are are a few steps your can take to resolve the issue.

1. Obtain a copy of your bankruptcy and discharge papers from your attorney or the courthouse. This may include a copy fee.
2. Make three copies of the section of papers that list all of the creditors and collection agencies that were included in the bankruptcy – usually this is called the Schedule F.
3. Forward these documents along with the discharge to all of the credit-reporting agencies requesting that each creditor included in the bankruptcy be updated to properly reflect a zero balance with the status included in bankruptcy.
4. When mailing correspondence to the credit reporting agencies, include a copy of your driver’s license and mail “certified return receipt requested”. This will ensure disputes are processed with little delay.

If you have completed these 4 steps and you still have a creditor or collection agency which is not honoring your bankruptcy and continuing collection efforts, then be sure to contact your bankruptcy lawyer. Give your lawyer the name and address of the company bothering you so that he or she can send them official notice. Follow up with the lawyer if the creditor persists in harassing you. It is a violation and they can be held accountable if they don’t cease after notification of the bankruptcy.