Several years ago, my wife and I faced one of the darkest times of our lives.  Although we were in a financial mess, we found a way to work through it.

Hopefully, our story may help someone else. 

Here goes...

I never dreamed that I would ever be in a situation where I could not pay my bills!

With a good job that paid me a better than average income and my wife earning a good salary as well, we were  living the "good life", until.....

Our lives dramatically changed!

I had been working for the same company for about 10 years, was in charge of a large area of the country, and my sales and sales team usually led the company.

This meant that I was getting a nice bonus each year as well as my large salary!

Like I said, "Life was good!"

Although I had heard the rumors about a possible sale of the company to a larger competitor, I was told "Don't worry, even if this happens, you'll be OK".

Right!

One afternoon, my supervisor called me into his office and I could tell that something was up.

After a few minutes of chit-chat, he finally came out with it and let me know that the sale was going to happen, and that the new company was going to terminate my position and replace me and my team with their own people!

I just stood there...in shock, thinking...

            "What was I going to do?"

So, here I was:

• Unemployed (for the first time in my life!)
• Have a mortgage (nice, large home!)
• Family (2 kids, ages 8 and 10)
• A little over 40
• No real job prospects in a bad economy!

I knew I was in trouble and I was starting to panic!

JOB SEARCH, BILLS, and STRESS

I sent out dozens of resumes and went on several interviews, but no luck.

One night, my wife and sat down and completed a "Home Budget Worksheet".

Even though I kinda had an idea of what came in and what went out, I really hadn't ever taken the time to track it carefully. 

After all, we were making great money and really had nothing to worry about.

Boy, was I shocked to see the real numbers!

We found out that we were spending a lot of money on things we really didn't have to have, such as:

• Starbucks coffee
• Athletic club membership (that I rarely used)
• Internet and TV Service that included about 1,000 shows and channels we rarely watched!
• Going out to dinner a couple of times a week
• You get the picture...

And then....

The hot water heater stopped working.  

The plumber said that there was nothing he could do to repair it as it was just too old.

With our savings just about gone, I had to use one of my credit cards to buy a new one and pay for the installation.  

Even though the total was about $1,000, it really only increased my minimum monthly payment by $25 or so.

And the spriral started...

It was better than nothing, but the final take home pay was just not enough to cover everything.

I was really beginning to stress out!

CREDIT CARDS TO THE RESCUE?

We had no choice but to pay only the absolute essential bills like the mortgage, utilities, groceries, etc. and let the credit card bills, medical bills, and yes, even the car payment get behind. 

I mean, what else could we do?

Sure, there was a little equity in our home, but with our bad credit rating, we wouldn't qualify for a second mortgage or refinance.

Over time, I had to use the cards to make up the shortage we faced each month.

As the total credit card debt was increasing due to late fees and over-the-limit fees, we had to use a CASH ADVANCE once in a while just to pay a utility bill or buy groceries!

The crazy thing was, even though we hadn't made a payment in 3-4 months, and were getting nasty letters from our creditors, we would still get an OFFER from a credit card company for another card or to consolidate all the others with a BALANCE TRANSFER!

We actually had three cards from one company!  Made no sense!

Sure, this "rob Peter to pay Paul" action was holding them off, but we knew that a"day of reckoning was coming!"

DECISION TIME!!!

One evening, after the kids were asleep, we sat down at the kitchen table and took a long, honest look at our situation.

There just wasn't enough money to cover all of our expenses and bills.

It looked like BANKRUPTCY was our only option.

As we discussed this, my wife told me that she had a friend who had gone through a similar financial situation and had prevented choosing bankruptcy by going through a Debt Settlement Program.

I called the company she had used, but after a few minutes talking to the rep on the phone, I just didn't have a good feeling.

It seemed that all he wanted to do was to get us to "sign up" right away and that he really wasn't listening to our particular situation.

Tried the DIY method to negotiate settlements

I tried to contact the debt collectors myself, but soon learned that they did not care about our situation and were not very sympathetic and usually very rude.

Sure, they were willing to settle the account for a little less than the full balance, but they wanted the money in a lump sum!

I lost my temper and told one guy, " You %%#@*&^%, if I had that kind of money, I wouldn't be in this situation!"  He seemed as if he could care less.

I was angry and embarrassed!

CHOOSING THE RIGHT DEBT SETTLEMENT COMPANY

After several frustrating attempts like this, I went online and checked out a couple of debt settlement company's Better Business Bureau reports.

There weren't very many that were accredited and had an A+ rating with no complaints!

It was very evident that not all debt settlement companies were the same!

Since they all seemed to offer the same services, we decided to narrow the field by using the following tests....

• Their Better Business Bureau record
• Registration with our proper government divisions
• Examples of actual settlements for their clients
• Positive testimonials from satisfied clients
• They had to REALLY LISTENED AND WERE SYMPATHETIC TO US!

After calling a few, we decided to go with a company that seemed to meet the criteria we wanted.

THE PROCESS

Once we enrolled, the first thing they did was to put a stop to those annoying and basically harassing calls from the collectors!

I can't tell you how great it was to have someone "in our corner" now!

We had stopped sending payments to the creditors (just didn't have the money!)for about the last 3 or 4 months and some of our accounts had already been turned over to a Debt Collector.

We started making monthly deposits (what little we our budget would allow) into an FDIC insured account for future settlements.

This monthly deposit was a little less than half of what the total minimum payments would have been, so this really helped!

Over time, the company was able to settle each of our debts!

Some of them were settled at less than 50%, saving us a lot of money!

I really appreciated the service we received.  It helped calm us during the whole process.

Well, it took about 4 years to get all of our debts settled (we had enrolled about $40,000 of various unsecured debts), but it was well worth it.

When we had questions or concerns, we were always able to talk to our representative and/or the negotiator.

Not only did we save thousands of dollars through the settlements, our CREDIT SCORES started to improve!

TODAY

Here we are, still in our home, no creditors calling, all of our credit cards have a $0 balance (we actually cut them all up!) and we FEEL GREAT!

Even though we could have, we are very glad we didn't turn to Bankruptcy Protection.

Hope this has been helpful!

Debt Settlement is not for everyone, but for us, it worked better than we expected:

 Photo Credit

Now that you've made the decision to enroll in a debt settlement program, what happens next?

Once you have looked at all of your options and decided to enroll in a debt settlement program, you cannot just sit back and do nothing. 

Here is what you need to be doing:

Debt Settlement is the best option for those who have accumulated too much debt and cannot keep up with the minimum required payments.

In a nutshell, most (if not all) of your unsecured accounts will ultimately be turned over to a collection agency.  This unusally occurs about 120-180 days from your last payment.

At first, you will get several calls and letters from the debt collector.

These calls can be very frustrating and annoying, so you should take advantage of a law from the Fair Debt Collection Practices Act (FDCPA) that says that if you make a written request to the debt collector to stop calling you, they must stop or face very serious fines from the Federal Trade Commission!  Here's how to do that:

If the calls do not stop, then you should contact your state's attorney general's office to file a complaint.  If you live in Oregon (as we do), here is the link:

How to File a Complaint with the Oregon

You will continue to receive letters from the debt collector.

It is VERY IMPORTANT that you send the latest letter (s) to the Debt Settlement Company you have retained to negotiate settlements for you.

The easiest and fastest way to do this is by email or fax.  But, if you cannot email or fax, then you can mail the letters.

When you enrolled in the debt settlement program, you stopped making payments to your creditors (most likely, you had done so already) and began making a payment to a FDIC Insured Settlement Reserve Account through your debt settlement company.

As your fund grows, the negotiator will begin contacting your creditors to work out a reasonable settlement.

Depending on a number of circumstances, your settlement should be somewhere around 50% of the current balance.

If your reserve account has enough funds, the settlement may be paid in a lump sum.

But, if not, a good negotiator can still negotiate a very good settlement and pay it over a period of time (with no additional interest or fees).

Here are a few examples of actual settlements we have negotiated for our clients:

Once a settlement has been completed, the creditor/debt collector is supposed to report that the account has a $0 balance and was "settled-as-agreed" to the three major Credit Reporting Bureaus.... Equifax, TransUnion and Experian.

Unfortunately, not all debt collection agencies follow through and your credit report may be showing incorrect information.

About 2 months after the settlement is completed, you should request a FREE Credit Report to make sure it is being reported correctly.

Click on this link to request a Free Credit Report:

ANNUAL CREDIT REPORT

Your debt settlement company will provide you with proof of payment and help you open and complete a dispute.

Sometimes, a debt collector may decide to FILE A CLAIM with your county court about your debt.

If this happens, you will receive a SUMMONS.

Please DON'T PANIC!

The summons will state that you have a limited time to APPEAR AND ANSWER the claim against you.

It sounds like you will have to go to court, but this is not so. 

An ANSWER is a legal response to the CLAIM that you can prove that you do not owe the debt.

Most of the time you know you owe the debt and therefore you will not need to do anything.

Again, and this is VERY IMPORTANT, if you receive a summons, contact your debt settlement representative right away!!!!

The debt settlement company will contact the attorney for the debt collector and most likely will still work out a reasonable settlement.

I can't stress enough how important it is NOT TO IGNORE a summons.

After helping people for 15 years, the only time a client has a WAGE GARNISHMENT or BANK LEVY is that they failed to inform us that they had received a SUMMONS!

A quality, professional debt settlement company should welcome and answer any questions or concerns you may have.

You should be able to contact them via phone or email and receive a reply in a short period of time.

Here are some things to look for in a Debt Settlement Company

As time goes by, one by one, your debt will be settled.  Depending on the total amount of debt you had and how much you could afford to deposit into your settlement reserve account, your program may take anywhere from 36 - 60 months.

Remember....

The goal of debt settlement is to...

• protect you from wage garnishments or bank levy
• prevent you from having to resort to bankruptcy
• help get you out of debt

Yes, getting settlements that substantially reduce the balances is great, but not necessarily the main goal.

FINALLY:

A good communication line between you and your debt settlement representative is critically important to a successful program.

Although it may seem like it is taking a long time, ultimately you will be debt free and your credit scores will begin to improve...but it just doesn't happen over night!

Here is what some of our former clients have said:

A FEW TESTIMONIALS

If you are just beginning your search for information about debt settlement, we can help. Just click on the button below:

Photo Credit

You have several options for improving your credit score. 

Take a few minutes to see what you can do!

It seems like everywhere you turn you see an ad about your credit score. 

Some of don't just offer to get your credit score (for Free or small monthly fee), but also may claim to be able to improve your credit score dramatically in a short period of time.

Although there are several companies that will provide you with a Free Credit Report, did you know that we all can get a FREE CREDIT REPORT annually?

So, you don't have to go through a third party company or pay for this service if you don't want to.

But let's say that you already have your credit report and not only is your credit score a little lower than you thought it was, you also see some errors on what is being reported.

What can you do to improve your credit score?

Before we get started, you must understand that a credit report is nothing more than a snapshot of you credit history at a particular point in time.

Lenders rely on the information contained in a credit report to determine if and how much money they are willing to loan you.

I wrote an article/blog recently addressing the concept of "Pay for Deletion" on a credit report.  Basically, you offer a creditor or debt collector a sizable settlement to not only settle the account for less than the balance, but also to delete the account from your credit report.

I'm not going to get into that here, but if you'd like more information, click on my blog link above.

There are several factors that go into calculating our credit scores:

Payment History, which accounts for about 35% of your credit score.

The first thing any lender wants to know is whether you've paid past credit accounts on time or are late or just have not made any payments in a long time!  Your payment history is very important!

How much Credit are you paying on now?

Just because you have credit accounts now doesn't necessarily mean that you cannot get more credit.  But, if you have $25,000 of available credit and have used up $20,000 on various credit accounts, you are using 80% of your available credit now and may not be able to get more.

How long have you been using credit?

To a lender, the longer you have been using credit, and more importantly, how you have handled your credit in the past, gives them a pretty good idea of how you are going to handle the credit you are applying for now.

What type of credit are you using?

Your credit score takes into account the various "loans" you have, such as:

• Mortgage
• Auto
• Student
• Revolving, etc.

New credit, or actually, too much new credit, may hurt you credit score.

Beware of opening and/or applying for too many new credit accounts in a short period of time!

Many people believe that opening several credit accounts (store cards, credit cards, etc.) will help them get better scores.  Actually, this is a negative!

If you have a couple or even a few cards or accounts, don't try to get too many more in short period of time.

OK, so you check out your credit report and are disappointed with the score and see errors as well.

Each of the 3 major credit reporting bureaus allow you to DISPUTE legitimate errors on your credit report. 

Items such as:

• An account showing a balance that you paid off a long time ago.
• An account that was in collections that you paid off or settled but there is still a balance showing.
• An account with a balance that you have not (or been unable to make any payments on) for longer than your state's Statue of Limitations for collection of credit accounts.
• A judgment that you had paid off or settled.

Although creditors and debt collectors are supposed to report that an account has been paid off, settled or satisfied to the 3 major credit bureaus as well as to the court where the judgment had been recorded, many time they do not follow through!

First, you MUST HAVE PROOF that shows that there is an error and you are requesting that it be corrected.

I know that there are many so-called "debt repair" companies that claim to be able to remove negative information and improve your credit score dramatically.

BE VERY CAREFUL OF THESE TYPES OF CLAIMS!

The Federal Trade Commission has some great information for consumers!  They have an article entitled, "Credit Repair: How to Help Yourself", where it states:

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

I agree 100%!

Once you have copies of canceled checks, a statement from the creditor or debt collector show a $0 balance or that the account has been "settled-as-agreed", then you need to turn them into a .pdf document.

In a minute, you are going to go online to open your dispute. (Yes, you can mail or fax your dispute, but I don't recommend it.)

You want to be able to clearly show where the error is by making a copy of the page with the disputed item circled. 

PLEASE DO NOT SEND YOUR ENTIRE CREDIT REPORT!

The credit bureaus deal with thousands of disputes daily and what you want to provide to the agent who is reviewing your dispute is clear, easy to understand documentation that there is an error and they will correct it right away!

So, BEFORE YOU GO ONLINE TO OPEN YOUR DISPUTE....  you need:

• Brief, concise explanation of why you are disputing this error.
  
• Clear, easy-to-understand proof that the account has been paid as agreed.
• Or, proof of your last payment showing that the statute of imitations has expired and therefore the item or account should be removed.

Once you have all of this saved as a .pdf document (if you don't know what that is...get some help!), then go online. 

Here are the links to the 3 major credit reporting agencies:

Equifax Dispute

TransUnion Dispute

Experian Dispute

If you have followed these instructions, you should get a letter or see online that the disputed item has been corrected.

If not, then contact them until it is!!!!

Good luck!

Photo Credit

Debt Settlement is an excellent option for dealing with debt.  But, after you have settled all of your debts, you need to do some work to make sure your credit report and score is being reported correctly!  Here's what you need to do....

We have been helping people deal with the stress of have too much debt for many years.  Once one of our clients has successfully completed the debt settlement program, they are not sure what they can do to improve their credit score. 

As an example, I received this email yesterday:

"I'm so glad we've finally wrapped everything up!  Do you have any advice for me, with regards to building back up my credit score?" 

It is very important to understand the "basics" of how your credit score is determined. 

According to the Fair Isaac Corporation, your score is determined from the following:

• Payment History (35%) 
• Amounts you Owe (30%)
• Length of Credit History (15%)
• Types of Credit Used (10%)
• New Credit (10%)

As you can see from the breakdown above, at least 65% of your credit score is determined by how you have handled credit (History) and how much outstanding credit you are carrying now.

Our credit reports are used by lenders, insurance companies, potential employers, etc. to get a snapshot of how you have dealt with and are dealing with credit and debt.

When someone enrolls in our Debt Settlement Program, they have usually gone through (or are going through) a very emotional and stressful time in regards to debt and debt management.

Once the balances and the subsequent "minimum payments required" get too large to manage, most people choose a debt settlement program rather than bankruptcy protection.

When accounts have been delinquent for 5-6 months, they are usually charged off and/or sold or turned over to a debt collection agency.  Most of the time, the debt collector will accept a settlement of 40% -60% of the balance, sometimes more or less, depending on circumstances.

Click below to see some actual settlements we have negotiated for our clients:

Once an account has been settled, the debt collector is supposed to report the settlement to the major credit bureaus, but many times they don't.

This is where spending a little time and effort can pay off tremendous benefits as regards to your credit score.

FIRST, you need a copy of your credit report to see what is being reported.

All of us can received a FREE COPY of our credit reports annually.

There are several companies you can find online that offer credit reporting services, but I've found the easiest to be:

www.annualcreditreport.com

Just follow the instructions and get a copy from all 3 of the Major Credit Reporting Agencies:

• Experian
• Equifax
• TransUnion

Once you have it or them printed, take some time to go over the report.  These reports are not that easy to understand, but with a little effort, you can determine what is being reported.

What you are looking for are ERRORS. 

Let's say, for example that you had your XYZ Credit Card account settled last year.

The balance was $14,875, but the debt collector, Atlas Collection Corp (not real)., accepted $7,000 to settle this account.

As you are checking your credit report, you see that the balance of$14,875 was charged off from XYZ Credit Card and the notation says that it has been "placed for collection" or something like that.

Several pages further back in your credit report, you see that Atlas Collection Corp. has the account and is reporting the balance at $14,875 (might be more or less, depending on additional interest and fees.)

Atlas Colletion Corp. never reported the settlement, or reported the settlement, but the Credit Reporting Agency never changed the reporting to read....

    Balance $0     "account settled-as-agreed" or in some cases, "settled-in-full"

As long as this account is showing a large, unpaid balance, your credit score will suffer!

Now what?

Time for you to go to work...

You are going to go online and open a DISPUTE with each credit reporting agency that is not reporting this account as $0 balance and/or "paid-as-agreed".

To do so, click on the links below and follow the instructions. 

Going on line is far easier and quicker than trying to send in by mail, but either way will work.

You will need to be able to show proof that the account was settled, so you will need:

• Copy of the Credit Report page showing the error (you want to circle the error and make it easy for the agent to see what you are disputing)
• Copy of the settlement agreement
• Copy of the cancelled check or check-by-phone or debit card you used from your bank statement
• Brief letter of explanation, such as:

John Doe

123 Street

City, State Zip

Social Security # (they have it anyway) xxx-xx-xxxx

I am opening this dispute to correct an error on my report.  I've included the page showing the error along with proof that it should be a $0 balance now.

I negotiated a settlement for this account and it was paid as agreed on X/XX/2015.

I've enclosed not only a copy of the settlement agreement, but also a copy of the cancelled check as proof of payment.

Please correct the error to reflect a $0 balance and that the account was paid-as-agreed.

Thank you,

_____________________________________ (sign here)

John Doe

Phone: 555-555-5555

Email:  JDoe@ internet.com

You will need to copy all of your documents and proofs in a .pdf format, not only for your records, but also to attach when you go online.

The credit bureaus should correct the error within 45 days. 

You can go back online, login and check the progress.

If they do not honor your dispute, then do it again.  DO NOT GIVE UP!

Most of the time, if you have demonstrated a legitimate error and have provided proof, the credit bureau(s) will make the correction.

As your credit report starts to reflect $0 balances, your credit score will increase.

If you would like more information, click below:

Photo Credit

I've heard this question hundreds of times over the years. 

The simple answer is "NO", but there's much more to it!

The very question shows a misunderstanding of how credit scores are determined and also how the collection process general plays out.

First of all, if you are a prospect for a debt settlement program, then your credit scores have already been damaged.

If you have had or are going through a severe financial hardship/challenge, then most likely you've either raked up too much debt to be able to make the minimum payments due, or you have fallen behind.

A legitimate, professional debt management company would take the time to go over your individual situation, explore and explain your various options and then (and only then) recommend the solution.

What I am saying is that even though there has been legislation over the past few years to help protect consumers from fraudulent debt settlement companies, there are still some out there...SO BE CAREFUL!

The question is..."Does Debt Settlement Hurt My Credit Score?".

Once you can't keep up with the minimum payments or have fallen behind to the point where some or all of your accounts are being turned over to collection agencies, your credit score has already taken a big hit!

Your credit score is determined by several factors:

• Payment History                             35%
• Amount of Debt                               30%
• Length of Credit History                  15%
• New Credit                                      10%
• Type of Credit                                  10%

As you can see, your payment history and the amount of debt you owe account for 65% of the factors in determining your score!

If you've been late or missed payments on a regular basis, your credit score is going to be hurt.

If you have "maxed out" most or all of your cards or accounts, then you are not a very good credit risk (in the eyes of a new lender and the credit bureaus) and therefore, you credit score will suffer.

My point is that if you are a prospect for debt settlement, then your credit score has already been declining.

Once you start (or have the help of a professional debt settlement company) negotiate settlements, your credit report will start showing ZERO BALANCES.

After some time, as you continue to "settle" and/or "pay off" those balances, your credit score will start to improve!

It may not seem reasonable or make sense, but if you understand a little about the mindset of a credit card company or other lenders, then you'll understand.

The credit card industry makes billions of dollars on consumers by offering credit cards to almost anyone!

Several years ago, they discovered that they made more profit from fees, such as:

• Late payment fees
• Over the Limit fees
• Annual fees

These "fees" actually made them more profit than the interest rates!

In a nutshell...THE CREDIT CARD INDUSTRY NOT ONLY WANTS TO EXTEND CREDIT, BUT DON'T REALLY WANT YOU TO EVER PAY OFF YOUR CARDS!

Carefully examine your credit card statement and you'll be in for a shock!

So, if a debt settlement program does not hurt your credit score, then why doesn't everyone that has debt choose debt settlement?

Because not everyone is a prospect for debt settlement!

If you have accumulated too much debt and are really having a hard time making the minimum payments, you may or may not be a prospect for debt settlement.

Photo Credit

There is a term being used by some credit repair and settlement companies called "Pay-to-Delete".  Does this really work or is it just a scam?

I've been helping people resolve credit issues for almost 15 years. I am not a "credit repair" specialist, but having been in and around this industry for a long time, I've seen a lot of things come and go.  Some good....some bad.  Not sure about this "pay-to-delete" idea, but here are my thoughts:

What does "Pay-to-Delete" mean?

When a person runs into trouble keeping up with the payments on their credit accounts, all kinds of things start to happen!

If you've ever been in that position, then you know that as soon as you are 30 days or so late, you will start getting letters and/or calls from your creditor.

If you are able to get back on track, then fine.  But if not, and your accounts start approaching 90 - 120 days late, then most likely you're account will be charged off, assigned or sold to a debt collection company.

Here's where things start to get serious!

Debt collectors earn money by getting you to pay....period.  If they cannot get the job done, then the account may be pulled and placed with another collector. 

So, it should not be a surprise if they are VERY AGRESSIVE in their collection efforts.

I've written many articles and blogs over the years on how to deal with agreesive and abusive debt collectors and while I'm not going to get into that in this blog, you might want more information, so click here:

"How to Stop Debt Collector Harrassment!"

When you have "past due" and "delinquent" accounts, you really only have a few options, such as:

• Debt Consolidation Loan (very hared to get when you are in this situation)
• Home Equity Loan (be careful...very dangerous!)
• Debt Management or Counseling Program (fine if you can afford the monthly payments)
• Debt Settlement Program (for those who cannot qualify for Debt Management)
• Bankruptcy (most people want to avoid unless there are not other options)

For the sake of this blog, let's focus on the Debt Settlement Program as this is where you might be introduced to the PAY-TO-DELETE idea.

In a Debt Settlement Program, the debt collection companies (and sometimes even the original creditor) may be willing to accept a reduced amount rather than the full balance due. This is called a "settlement".

Often, these settlements range from 30% -50%, depending on circumstances.

Once the settlement has been completed (according to the settlement agreement), the debt collector is supposed to report it to the major credit bureaus a $0 balance with a notation something like:

• "paid for less than full balance"
• "paid as agreed"
• "settled in full"

Although your credit report and score will start to improve with a $0 balance and the fact that you took care of this bad debt, the history of the action will still be reported for up to 7 years according to the Fair Credit Reporting Act.

The fact that you got yourself into credit/debt trouble and were not able to meet the payments/agreement you made with the creditor when issued credit are to be reported and thus, will negatively affect your credit score.

Yes, getting the account paid off via a settlement helps, but the history remains.

Here comes the new term...."PAY-TO-DELETE".

If that "history" could be deleted before the FCRA guideline of 7 years, it would help improve your credit score more quickly....or at least what the proponents of this method claim.

Rather than make a settlement offer of say, 50% of the balance to settle this account, you offer to pay 100% (or maybe a little less) if....(and here's the point....)

If the debt collector will agree to contact the major credit bureaus and have the account COMPLETELY REMOVED...just as if this had never happened.

Let's say you get an official agreement from the debt collector saying they will honor this "pay-to-delete" plan and it is signed and looks very "official" and "legal".

You make the payment (cashier's check to expedite the process) to the debt collector according to the agreement.

The agreement stated that within 15 days of receipt of the payment the debt collector would contact the major credit reporting bureaus to have the account removed.

You check your credit report after 20-30 days and guess what.....

The account was not removed!

Now what?

Of course, you contact the debt collector, but are told that the agent who made the agreement did not have the aurthority and therefore they will not honor the deal (or some other excuse).

Your recourse....

I suppose you could contact an attorney and file a lawsuit, but that is going to take a lot of money and time!  And, there is no guarantee that the attorney will be successful! 

• Maybe the "agreement" was not a "legal contract" after all.
• Maybe it is ILLEGAL for a Credit Bureau to remove an account, insinuating that the BAD DEBT never occurred!  This is a very "grey" area as far as honest credit history reporting goes. 

I'm using the word "maybe" because, not being an attorney, I just don't know.  But, in my opinion, the credit bureaus (FOR PROFIT companies) are in business to sell CORRECT credit information to lenders that accurately shows the person's credit history in order to determine if they should or should not loan the money.

Think about this....

Let's say I'm a car dealer, and I run a credit report on a prospective buyer.  The credit report comes back and looks good, but in reality, this prospect had had a couple of cars repossed in the last 3-4 years that are not being reported as they were removed via a "pay-to-delete" agreement.

The repossessed car(s) were sold at aucuion and the difference between the selling price and the total balance due at that time was awarded to the dealer/debt collector as a "deficientcy judgment".

The dealer/debt collector hires an attorney to go collect on the judgment and contacts the orginal owner.

The orignial owner offer a PAY-TO-DELETE deal.  The deal/agreement was struck between the debt collector and the origninal owner of the car, and the payment was made and the credit bureaus removed the history of this repossesion(s).

Am I getting an honest credit report?

Of COURSE I'M NOT!

But, based on the information contained in the credit report, I grant the loan for the car.

Later, the purchaser runs into financial trouble again and does not make the payments.

I'm forced to pay the legal and repossession fees to get the car. 

IS THAT RIGHT?    Don't think so....

In fact, I believe I would file a claim and sue the credit bureau for their FALSE CREDIT HISTORY REPORTING.

Would I win?

Don't know, but I think you can see my point.

A Pay-to-Delete agreement may be completly legal, fair and ethical.  But for now, until there is more proof, I'd be wary.

Rememeber the old addage....

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

Debt settlement is an option that can not only help you not only pay off debt, but will also work to improve your credit score.

Studies have shown that 1 out of 5 of us have errors on our credit reports!

In fact, the Federal Trade Commission released a study recently that also reveals that many consumers who attempted to dispute those errors with the major credit reporting bureaus were unsuccessful.

Your credit report and more importantly, your credit score. is a reflection of all of the information that is being reported.  

That is why is so very important that you not only know what is being reported, but also to know what to do about inaccurate information.

Of course, you want to make sure that your personal information is correct, such as:

1. Your name with correct spelling
2. Social Security Number
3. Current address
4. Date of Birth

After that, inaccuracies on accounts, balances, etc. are common.

For example....

Let's say you went through a tough time, financially a couple of years ago.  If you were not able to keep up with your minimum payments on your credit cards, then one or more may have been turned over to a collection agency.

But, when things changed, you replied to one of the debt collector's letters or calls and paid the account off.

The debt collector should have reported it to the credit bureaus, but many times they don't.

So, when you go to get a loan and are denied, the credit report (if denied, the lender must provide you with a copy of the credit report they used and explain why) showed that account with an outstanding balance!

Now you have to contact the credit bureau and open a DISPUTE.

Many people just don't know that there are mistakes and inaccurate information being reported on their credit report and therefore, they are paying the price...literally!

If you find errors on your credit report, click on the button below and you will see exactly what to do:

Just a word about so-called "credit repair" companies...

While you should dispute any legitimate errors on your credit report, opening a frivolus dispute is not only dishonest, but also could get you into trouble!

Using a Credit Repair company to challenge or dispute legitimate errors is fine, beware of those types of companies who make outrageous claims, such as:

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

The Federal Trade Commission has a good article about this that you should check out:

"Credit Repair...How to Help Yourself"

But what about legitimate accounts that you forgot about or neglected to pay off?

If that account has been with a collection agency for more than a year or so, you should be able to negotiate a SETTLEMENT for less than the full balance.

Once the account has been settled, the debt collector should (there we go again!) report it to the credit bureaus as "settled-in-full" or "settled-as-agreed" and the balance should be $0.

Once you have taken care of old accounts via debt settlement, your credit report will start to improve as your debt-to-available credit ratio improves, and thus, you are a better credit risk.

Finally...

Yes, Debt Settlement is a great way to not only pay off old, outstanding accounts, but also a great way to improve your credit score!

Photo Credit

Three years ago we were facing bankruptcy.  We decided to use a Debt Settlement Company.  Now we are Debt Free, our Credit Score has improved and are in control of our financial lives again!

BACKGROUND....

My story is probably much like anyone who has had to face the prospect of bankruptcy!

I had been employed with a fairly large company for about five years.  The pay was decent and although I can't say that I "loved" my job, I didn't "hate" it either.

Rumors had been circulating about a possible sale of the company to a larger competitor for about 6 months, but I was told "Don't worry, you'll be OK".

Well, one Friday afternoon, my supervisor called me into his office and let me know that the sale was going to happen and that the new company was going to close down my division.

Then I heard those dreaded words..."I'm really sorry, but we are going to have to let you go."

Talk about a shock!  All I could think of was...

NOW WHAT?

I'm married with two kids (ages 6 and 8).

My wife doesn't work because her net take-home pay would barely pay for day care, so why bother?

So here I am:

• Unemployed (for the first time in my life!)
• Mortgage
• Family
• No real job prospects!

The company had some counselors available for job searches, etc., but after my session, I knew I was in trouble!

I signed up for unemployment and hoped that I'd find a job before the benefits ran out....wrong!

We had very little savings.  Well, I probably shouldn't call it a "savings account" because we really just transferred some money from checking just to keep it "out of reach" until an emergency came up.  Seems like those "emergencies" always came up!

JOB SEARCH, BILLS, and STRESS

At first, I wasn't really worried because I thought I would be able to find another job rather quickly.  Boy, was I wrong!

I sent out dozens of resumes and went on several interviews, but no luck.

We had used the "savings" up a couple of months ago when the hot water heater stopped working.  The plumber said that there was nothing he could do to repair it as it was just too old, had rust, and parts where very hard to find!

So, I used one of my credit cards to buy a new one and pay for the installation.  

Even though the total was about $800, it really only increased my minimum monthly payment by $25 or so.

The unemployment finally ran out and I had to take a job at just a little over minimum wage.  It was better than nothing, but the final take home pay was just not enough to cover everything.

I was really beginning to stress out!

CREDIT CARDS TO THE RESCUE?

As time went by, I continued to not only send out resumes and work at my job, but the bills started piling up.

My wife and I decided to pay only the absolute essential bills like the mortgage, utilities, groceries, etc. and let the credit card bills, medical bills, and yes, even the car payment get behind.  

As the total credit card debt was increasing due to late fees and over-the-limit fees, we had to use a CASH ADVANCE once in a while to pay a utility or grocery bill.

The crazy thing was, even though we hadn't made a payment in 3-4 months, we would still get an OFFER from a credit card company for another card or to make consolidate the others with a BALANCE TRANSFER.  We had three cards from one company!  

Made no sense!

Sure, this "rob Peter to pay Paul" action was holding them off, but we knew that a "day of reckoning was coming!"

DECISION TIME!!!

The total credit card and other unsecured debts was now so high that we knew we couldn't keep up.

It looked like BANKRUPTCY was our only option until we learned about DEBT SETTLEMENT.

We weighed our options and decided to give Debt Settlement a try and use Bankruptcy as our last resort!

At first, we tried to contact the debt collectors ourselves, but soon learned that they did not care about our situation and were unsympathetic and rude!

Even though they were willing to discount the total amount due, they wanted it all in lump sum by the end of the month!

Right.... We can't keep up with our payment now and yet we have two or three thousand dollars laying around to send them!

We realized that since we were dealing with professional debt collectors we should consider retaining a professional debt settlement company.

CHOOSING THE RIGHT DEBT SETTLEMENT COMPANY

We did the normal "searches" online and soon found out that there were a lot of debt settlement companies out there!

Since they all seemed to offer the same services, we decided to narrow the field by using the following checks....

• Their Better Business Bureau record
• Registration with our proper government divisions
• Examples of actual settlements for their clients
• Positive testimonials from satisfied clients

It was very evident that not debt settlement companies were the same!

They ranged from being very pushy, trying to rush us to make a decision, to those who seemed to have very inexperienced reps who obviously had not much experience with our problems.

We finally found a company that seemed to not only really know what they were doing, passed the criteria we mentioned above, but demonstrated empathy for us and our situation.

THE PROCESS

Once we enrolled, the first thing they did was to put a stop to those annoying and basically harassing calls from the collectors!

Even though one or two collectors still tried to call, our company contacted them and those calls stopped immediately.  It felt so good to not have to deal with those debt collectors any more!

As time went by, the monthly deposits we made to our reserve account began to grow.  At the same time, the debt settlement company was negotiating our accounts.

One by one, they accepted a settlement agreements that averaged around 50% or less that the current balance.

THE RESULTS

The total debt settlement program took a little over 3 years, but it was worth it.

Through the debt settlement program we accomplished our goals:

• We were able to stop worrying so much about our debts
• We did not have to file for bankruptcy
• We avoided wage garnishments or a levy on our bank account
• Our credit scores are starting to increase

As I said before, debt settlement is not for everyone, but for us, it worked better than we expected and now we are DEBT FREE!

Photo credit 1

Photo credit 2

photo credit 3

Debt Settlement is an option to clear old debts and improve your credit score.

When you find yourself faced with a very stressful financial situation, there are only a few options:

     Consolidation Loan

     Debt Management

     Debt Settlement

CONSOLIDATION LOAN

A consolidation loan may be:

• Second Mortgage on your home or other property
• Personal loan with your bank or credit union
• Balance transfer from a credit card offer

Getting a second Mortgage or even what's called an "Equity Line of Credit" through your bank or another lending institution, may be possible with lower than normal credit scores.

Just be very careful and do your homework and math to make sure that the lender is not charging you such a high rate of interest or fees that this type of loan makes no sense in the long run!!!

But, a Consolidation Loan will not really change your credit scores right away!  Here's why:

The calculations to determine a credit score in fairly complicated, but one of the most important or "weighted" portions of that calculation is the ration of current debt to the total available debt you have.

For example:

Let's say you have 5 credit cards with a total available credit of $20,000.

You have maxed-out 4 of the 5 for a total of $15,000 of debt.

You "Debt Ratio" looks like this...

                   $15,000 divided by $20,000 equals a 75% debt/available debt ratio

That's high as far as the Credit Bureaus evaluate your "credit worthiness" with a credit score!

For more information, check out:

How Are Credit Scores Determined?

So, even if you do qualify for a Consolidation Loan, your credit score may not improve quickly!

DEBT MANAGEMENT

Debt Management is what we used to be referred to as Credit Counseling a few years ago.

In a Debt Management Program, each of your creditors agrees to lower you interest rate and may forgive or bring current late fees, etc.  Each creditor is a little different.

But, consider this:

1. Your total monthly payments on all of your debts may not be less!
2. But, being enrolled in a program like Debt Management, will not quickly improve or change your credit scores!
3. If you miss a scheduled payment, you may void the agreement and you are right back where you started. 

Before you enroll in one of these programs, you might consider and even do much better by looking into a DEBT ACCELERATOR PROGRAM.

DEBT SETTLEMENT

If you qualify, a Debt Settlement Program may give you all of the results you are looking for:

• ONE Lower Monthly Payment
• Total Balances of you debt reduced by 50% or more!
• Debt Free in about 3-5 years, depending on your particular circumstance
• Ultimately Improve your Credit Score!

A Debt Settlement Program is for someone who is going through a very tough time, especially in the financial area!

• Loss of employment or cut in pay
• Divorce or other family upheaval
• Death of a spouse or loved one
• Limited income after retirement
• Disabled or suffering from severe illness

Most of your accounts are either delinquent or about to become severely "behind".

You've probably had one or more of your accounts turned over to a Debt Collector and are enduring the constant phone calls and letters.

By the way....you can put a stop to those calls now:

Rather than continuing to make minimum monthly payments on your accounts, you will be making a monthly payment that FITS YOUR BUDGET into a FDIC insured bank account.

As these funds are growing, negotiations with your creditors and debt collectors begin to arrange a SETTLEMENT AGREEMENT.

The final settlement amount varies, depending on a number of circumstances, but settlements of 50% or less are not uncommon.

But, will Debt Settlement Improve your credit score?

Yes, but over time!

It may be hard to understand, but a potential lender is looking for a couple of key items in a credit report, such as:

• How much credit are you carrying now?
• Length of employment?
• Credit History...not just late payments, but how long and how have you handled your credit payments over time?
• What is your "credit worthiness"...If a loan is granted, what is the likelihood that you can and will repay as agreed?

Just because you have fiancial trouble now or in the past IS NOT an automatic DECLINE OF CREDIT!

When you have had all of your accounts settled with a ZERO BALANCE, you will be offered NEW CREDIT as your Credit Scores will have improved.

Photo Credit