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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

What about calling you at work?

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

What about calling your family or neighbors?

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

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

But, they may not discuss your financial situation!

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

They are prohibited from...

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

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

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

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

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

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

Oregon Department of Justice Consumer Protection

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

FTC Complaint Assistant

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

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

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

Need mor advice?  Let us help:

Photo Credit:

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

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

Are you having a hard time with any of these?

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

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

DEBT ACCELERATOR PROGRAM

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

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

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

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

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

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

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

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

Hypothetical Credit Card:

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

$7,000 x 2.5% = $175

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

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

Previous Balance                      $7,000.00

Interest charge                         $  110.81

Payment received                    -$   175.00

New Balance                            $6,935.81

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

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

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

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

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

Then, a DEBT SETTLEMENT PROGRAM may be the answer!

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

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

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

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

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

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

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

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

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

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

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

FEDERAL STUDENT LOAN FORGIVENESS PROGRAMS

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

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

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

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

877-492-4109

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

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

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

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

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

So, there are 4 Programs to control you debt:

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

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

Photo credit:

Jason Rogers

If you are having a hard time increasing your credit score, there may be some good news on the horizon!

Major credit reporting company Fair Isaac (FICO) has been pressured by Washington to change its credit-risk scoring model to give a break to consumers that have had debt turned over to collection agencies!

While this "change" to the basic credit score scoring model is still in the works, it could be a seen as a great idea to consumers, while at the same time, another dangerous, slippery slope by lenders.

Recently, I've reviewed a few articles recently about the changes may be coming to credit reporting agencies.  One of the best was from Paul Sperry for Investor's Business Daily.  I highly recommend you checking out Mr. Sperry's article.

For years, those unfortunate people who for reasons usually beyond their control, found themselves with too much debt and not able to make payments, saw their accounts charged off by the creditors and turned over to a collection agency.

If you've read any of my blogs in the past, you know what I think about most collection agents and agencies.

While there are a lot of debt collection companies out there that are professional and stay (for the most part) within the Fair Debt Collection Practices Act (FDCPA), as with any group or organization, there are always a few "bad apples".

It seems that the Consumer Financial Protection Bureau (CFPB), created by the Obama administration, has been in talks with the Fair Isaac company to "ease up" on some of the weight they give information about your credit to determine your credit score.

Currently, FICO uses the following guidelines (along with a lot of othe information) to produce a credit score:

 As you can see, your payment history is worth 35%, so if you have had debt issues in the past and have had some or all of your accounts  go to a collection agency, your credit score would suffer.

However, under the proposed new guidelines "suggested" by the Consumer Financial Protection Bureau, FICO would no longer penalize your credit score because of delinquent MEDICAL DEBT or ANY DEBTS THAT GO TO A COLLECTION AGENCY THAT GET'S REPAID!

To me, that is great news!

In dealing with people over the last dozen years or so, I would say that the greatest majority of people who wound up in a severe debt situation, did so due to circumstances beyond their control, with MEDICAL DEBT being one of the largest debt!

It's not unusual to see someone with $10,000, $20,000 or more of medical debts.  When you see the (in my opinion) OUTRAGEOUS MEDICAL FEES charged by some doctors and hospitals, it's no wonder that people get into trouble.

If these people can find some relief to their credit score by making some changes to the way a credit score is calculated, then I'm all for it!

I like what the article said, "Obama regulators argue that it's important to insulate consumer credit scores from medical debt, for one, because such bills are "unexpected".

Another important and much needed action by the CFPB was that they released a report (2012) that basically stated that less than 80% of credit reports were accurate.

Inaccurate information on your credit report can really hurt.  The good news is that you can challenge mistakes and get the credit reporting bureaus to change your report, thereby increasing your credit score and/or credit worthiness.

Click here to get a FREE COPY OF YOUR CREDIT REPORT.

If you find yourself with too much debt, or just overwhelmed by all of this, we may be able to help:

Photo Credit:  lendingmemo.com

Photo credit:  http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

Dealing with a debt collector can be one of the most frustrating experiences you will ever go through!  Here are a few tips that will help.

It's 5:30 PM, and you've just sat down at the table to finally relax and enjoy a meal.

You don't recognize the caller from your caller ID, but you know who it probably is. 

Yep, another call from that debt collector.

If you're like so many people these days who for one reason or another have fallen behind on your credit card or some other unsecured debt, you know how annoying it is to get these calls!

Let's put a stop to these calls!

If you do not know the address of the debt collector, then go ahead and answer the phone (just this time only!).  Tell the debt collector that you want to pay this bill, but cannot at this time.

Of course, the debt collector will try to get you to agree to some small amount to be paid as a check-by-phone or from your debit card. DO NOT DO IT!!!!

Instead, ask for the address (as though you intend to mail a check later).  If the debt collector will give it to you...great.  If not, then just hang up.  In a week or so, you should get (if you haven't already) a letter from the debt collector with the address you need.

According the the Fair Debt Collection Practices Act (FDCPA), if you write a letter demanding that the debt collector stop calling you, they must stop or face some very hefty fines!

Click below for a FREE sample letter to send:

By-the-way....

Make sure you send the letter either by Priority Mail with a tracking number or by Registered Mail.  You want to have proof that the debt collector received the letter.

OK, you've sent the letter, and since it will take a week or so for the calls to stop, what should you do the next time the phone rings?  Here is what I suggest:

TURN OFF THE RINGER ON YOUR PHONE AS SOON AS YOU GET HOME! 

If you do not have caller ID, GET IT!  You will be able to see who is calling and if you do not recognize the caller...DON'T ANSWER.  Your friends and family will leave a message. 

DO NOT RETURN ANY MESSAGE FROM A DEBT COLLECTOR...PERIOD!

Debt collectors are trained to do one thing and one thing only...get you to pay!  And although there are very clear laws that limits what they can and cannot do, some debt collectors are pretty low-down, and if you're not careful, they will get you to start paying. 

DON'T FALL FOR THE HARDSHIP PLAN OFFER!

Although a "Hardship Plan" may have it's place, once in a while, for the most part, they are not a very good solution to your problem.

In most hardship plans, you will agree to make a lower payment for about 6 months and then the creditor will re-evaluate your situation.  While this may help with your "cash flow" for a short term, in the long term, you will not be any better off.

OFFER A REDUCED AMOUNT AS A SETTLEMENT!

Believe or not, most debt collection companies will take a settlement on your account for much less than the current balance.  A 50% reduction is not unusual and depending on your circumstances, you may able to get an even better settlement reduction.

Check out some of the settlements we have done for our clients:

If you don't have a lump sum to offer, they will (in most cases) work out a TERM-SETTLEMENT plan.  Don't be afraid to ask!

Depending on how old your account is and your specific financial circumstances, the debt collector may have purchased your account from the original creditor for literally pennies-on-the-dollar, so they will usually take a settlement paid out over a 6-12 months, and in some cases longer.

What about a SUMMONS!

If you have received a summons, it is still not to late to work out a settlement or a repayment plan, but you need to take action quickly!  I have written many blogs detailing HOW AND WHAT TO DO IF YOU RECEIVE A SUMMONS.  Please take a few minutes to check out.

BOTTOM LINE:

Dealing with Debt Collectors is certainly not easy, but can be done.

Would you like some assistance?  Just let us know:

Photo Credit:   Sean MacEntee

Dealing with debt collectors is not easy, but it can be done.  Here are a few tips on how to deal with debt collectors.

Calls from debt collectors can be very annoying. For some, the calls are so bothersome that phone numbers have to be changed or disconnected to stop debt collection calls.

When Can Debt Collectors Call

The Fair Debt Collection Practices Act (FDCPA) is the Federal law that states what debt collectors can and can't do. For starters, they aren't to call you about a debt that you don't owe. When a debt collector first contacts you about a debt, you have the right to request them to verify the debt is yours. If the debt collector can't come back with proof that you owe the debt, they're not allowed to contact you anymore. DEBT VALIDATION

Even without sending a validation request, debt collectors have certain rules they must follow when it comes to contacting you over the phone. For example, they can't call you before 8 a.m. or after 9 p.m. your local time. They can't call you repeatedly, and they can't call you at anytime you've previously stated is inconvenient. For specific situations timing of debt collector calls check out.

Stop Debt Collection Calls

There's no law that says you have to communicate with a debt collector by phone. If you hang up on a debt collector there is nothing they can do about it. But, if the collector continues to call you repeatedly even after you have hung up on them, they are in violation of the FDCPA.

All you have to do to stop debt collectors from calling you is tell them that you prefer to communicate with them in writing. Written communication works in your favor because it gives you a record of everything that is said. If the debt collector violates the FDCPA, you have hard evidence that could lead to a lawsuit in your favor. Keep in mind that, by law, the debt collector does not have to honor this request.

The surest way to stop debt collectors from calling you is by sending what is known as a cease and desist letter. In the letter, state that the collector should cease and desist further communication with you. Note that the cease and desist letter only applies to debt collectors, not the original creditor.

Can Debt Collectors Contacting You About Someone Else's Debt?

People who've recently changed their phone numbers are often plagued with calls from collectors trying to reach that number's previous owner. You might have this problem even if you've had the same number for years. Unfortunately, telling the debt collector that they have the wrong number may not be enough to stop the calls for good.  If calls persist after the cease and desist letter, report the collector to your state Attorney General and the Federal Trade Commission.

Debt collectors might also contact you trying to locate another person, like a friend or relative. Somehow in their background check, your contact information has been liked to the debtor. The law does allow debt collectors to contact a third-party to get a phone number, address, and employment information, but the collector can only contact a specific third-party once and they can't reveal any information about the debt. A debt collector is violating the law if they continue to contact you for contact information even after you've told them what you know.

What Happens After the Cease and Desist

Once the collection agency receives your cease and desist letter they can communicate with you once more, via mail, letting you know one of three things:

• that further efforts to collect the debt are terminated,
• that certain actions may be taken by the debt collector, or
• that the debt collector is definitely going to take certain actions.

When you send the cease and desist letter to the debt collector, send it via certified mail with return receipt requested. This will provide proof that the letter was sent and received. If the debt collector communicates with you beyond the single instance allowed by law, this evidence will allow you to seek punitive action against the debt collector.

Summary:

Debt collectors earn their money from getting you to pay...period.  If you think they want to play fairly or show sympathy for your situation, well, as the saying goes...WAKE UP AND SMELL THE COFFEE!!!

You do not have to put up with Debt Collector Abuse, so  take action.

Finally, get help!  You don't have to "go-it-alone"!

Photo credit: www.flickr.com/photos/kitby/4883787012/

If you cannot qualify for a Debt Management Program, then you should consider a Debt Settlement Program.

In my last blog, "Dealing With Debt, Part 1, Debt Management", I explained about how the traditional Credit Counseling Program or what we refer to today as a Debt Management Program works.

As with about anything in life, there are pros and cons with any program, so you want to make sure that if you are looking for answers concerning what is the best way to deal with debt, you look at all of your options before making a decision!

When dealing with too much unsecured debt, you really only have a few options:

• A Debt Management Program
• A Debt Roll Up or Snowball Program
• A Debt Settlement Program
• Bankruptcy

What is a Debt Settlement Program?

When you accumulated too much debt unsecured debt and cannot keep up with the minimum payments due or cannot qualify for a Debt Management Program, then a Debt Settlement Progam may be your best option.

Most people who chose a Debt Settlement Program have had some, if not all of their accounts become very delinquent.  Once you miss 3 or 4 monthly payments, these accounts most likely will be charged off by the original creditor and placed with a collection agency.

Sometimes, the collection agency is actually an attorney or Law Office that only deals with debt collections. 

As you may know by now, once you miss a payment or two, the letters and calls start coming more frequently!  In fact, most consumers are taken advantage of by debt collectors because they do not know their rights.

Under the Fair Debt Collection Practices Act, debt collectors are forbidden to:

• Call you too many times in a day
• Say things that are vulgar or might indicate they could take your belongings
• Make statements or suggestions that you are going to be sued, if, in fact, they do not file a claim and start the legal process.
• Call you at your place of employment.
• Any many other acts that you need to know.

You can find some very helpful information called:

Fair Debt Collection Practice Act – Guide for Consumers

OK, so you've looked at your options and Debt Settlement is the way to go...

Although you can attempt to settle your debts on your own, not only does debt settlement takes a lot of time, but you are also going to be going up against trained debt collectors who:

• Are trained professionals
• Don't care about your financial circumstances
• Don't want to hear your story about how you got into this financial trouble
• Are usually paid based on the amount of money they can get you to pay!

A quality Debt Settlement Company will:

• Take the  time to conduct a thorough interview with you (by phone or in their office) as to your financial circumstances.
• Go over you debts and basic household budget to help determine what you can reasonably afford to contribute to the debt settlement program.
• Not try to pressure you into "signing up" quickly, but be willing to not only answer all of your questions, but will also mail, fax or email you a summary of how the program could work for you.
• Be registered (if required by law) in the state in which you reside.
• Maintain a very high rating with the Better Business Bureau.

If it is determined that a Debt Settlement Program is your best option, then:

• You will stop making payments to your creditors (if you haven't already)
• You will make a payment/deposit to your Client Reserve Account through the Debt Settlement Company.  This account is with an Insured Bank located in the state of registration.
• The Debt Settlement Company will contact each of your creditors/collectors in order to stop the collection calls and to begin to negotiate on your behalf.

By the way, you cannot stop the original creditor from calling you about a missed or unpaid account.  They have a right to do so.

But, you can certainly stop the collection calls from debt collectors!

Once your reserve account has sufficient funds, a settlement will be negotiated.  Sometimes this settlement is a lump sum for approximately 50% or less of the balance.  Sometimes this settlement can be paid out over a number of months.

Each settlement, and the subsequent reduction in principal of the settlement, depends on many factors, such as:

• Your employment status (working, W-2 wages or self employed)
• Retired
• Disabled
• On unemployment, etc.

After a settlement has been negotiated, a SETTLEMENT AGREEMENT is faxed, emailed, or mailed. 

If you are going to try and settle your debts on your own, DO NOT SEND OR AUTHORIZE ANY PAYMENT WITHOUT A WRITTEN SETTLEMENT AGREEMENT!

Once the settlement has been completed (according to the terms of the settlement agreement), a letter will be mailed out stating that this account has been:

• Settled-as-agreed
• Settle-for-less-than-the-full-balance, (and sometimes)
• Paid as agreed or Paid in full

The Debt Collector or original creditor if you are dealing with them, should notify each the three top Credit Bureaus that your account has been closed and settled.

HOWEVER, it is a good idea to follow up by running a FREE CREDIT REPORT (after about 45-60 days) to make sure that this account is not showing a balance, etc.

Most Debt Settlement Programs run about 36 -48 months or maybe longer, depending on your financial circumstances.  Once each account has been settled, you're credit scores should start going up!

Debt Settlement is a noble way to do the best you can to repay debts that you owe instead of seeking bankruptcy protection. 

Bankruptcy, in my opinion, should be considered as your last and only option, and I will be blogging about that next time.

For more information about Debt Settlement, click below:

 Photo credit to Betsssssy

If you have ever had to deal with a deal collector, you know how frustrating and stressful it can be!

• First you get the letters from the debt collector.
• Then, you get the phone calls.
• From then, you get a combination of angry and sometimes threatening letters and calls!
• If you chose to ignore all of this, you may get a knock on your door and be served a summons!

Yes, very stressful and frustrating.

But, here are some tips to make this process somewhat bearable:

You must understand the basics of the DEBT COLLECTION PROCESS:

Let's say you have several (unsecured for the sake of this blog) accounts including:

• Credit Cards
• Store Cards
• Medical Bills
• Private Student Loan
• Personal Bank Loan

Not that unusual for the average person to have $7,000 - $15,000 of unsecured debt these days.  As long as you are making at least the minimum payments, everyone (your creditors) are happy.

But, miss a payment or two and the DEBT COLLECTION PROCESS starts.

Once your account gets a couple of months behind, it will most likely be transferred to  the "collection or recovery" department within the company.  They send letters and start making calls.

By-the-way...here's a link to show you how to stop collection calls from DEBT COLLECTORS.

But, as annoying as the calls are, as long as the account is with the the original creditor (not transferred to a debt collector), they have the legal right to call you.  Now, once that account is transferred, sold, written off, etc. and lands with a Debt Collector, you can request/demand that they stop calling.

If your account is still with the original creditor, you may be able to get a settlement (reduction in the total you owe), but most likely they are going to offer you some sort of HARDSHIP PROGRAM...but, BE CAREFUL!

In most "hardship programs", the original creditor offers to let you lower your monthly payment for 6 months or so and then "reconsider".  While this may cut your overall payments, inevitably, you will have to go back to making the larger payments.

So now you are late on your payments, the calls and letters are still coming, but there's not a lot you can do about it due to your financial circumstances.  What happens to your debt now?

In most cases, the creditor will hire a Debt Collection Company to try and get as much money from you as possible.

Dealing with debt collectors can be very intimidating for the average person.  They call several times a day and leave messages (for anyone and everyone to hear) that says that you need to return their call right away.

So, you call them back, and here is where it gets frustrating.  Debt collectors are trained to do one thing...GET AS MUCH MONEY OUT OF YOU IN THE SHORTEST PERIOD OF TIME they can!

You try and explain your situation, thinking that the debt collector will actually "care".  While it is true that not all debt collectors are bad people, it has been my experience over the last decade of dealing with them for my clients that the average debt collector has just gotten (for lack of a better word) "calloused".

You owe their client (the creditor) money...their job is to get it....period.

The debt collector will tell you that you must pay this much in this period of time and there is nothing else available.  But, that is usually not true.  In most cases, some sort of settlement can be negotiated.

The problem with trying to negotiate on your own for your own debts, is that you are (obviously) emotionally involved, stressed out, frustrated and scarred of what the debt collector can and cannot do to you!

If you are going to try and negotiate and/or work out agreements with debt collectors, I strongly advise you to learn about what your rights are as a consumer in dealing with them.

The Federal Trade Commission has some very good information on their sight that you should investigate. 

                    Go to: Consumer Information about Debt Collection.

The more prepared you are, the better your chances are that you can negotiate a good settlement or repayment plan.

If you are unsuccessful in coming to a mutually agreeable settlement, the debt collector may take the final drastic step and file a complaint against you.

They will hire an attorney who is licensed in your state to file a claim in your county's courthouse.  Next, you will be served a summons.  A lot of people try to avoid accepting the summons, but eventually you will be served.

unfortunately, a lot of people who are served a summons choose to ignore the summons.

                   BAD MISTAKE!  Please, DO NOT IGNORE A SUMMONS. 

                    Check out a recent blog on this that will be very helpful.

The goal of the claim and summons is to either:

• Scare you into sending them money
• Being awarded a "default judgment" so they can pursue wage garnishment.

But, the are EXCEPTIONS!  Basically, only W-2 wages can be garnished and each state has it's own variation of how much, etc.

The basic guideline for garnishment is 25% of your net take-home pay!  Wow!  Suppose you are bringing home a modest $2500 per month.  At 25%, that's $625 they can get and there's little to nothing you can do about it.  That is why you can't ignore a summons.!

Debt collection in Texas is a little different in that there is no wage garnishment for residents of Texas! However, your bank account could be garnished or better, levied in Texas, so be careful.

Their are more protections and/or exemptions that would prevent a debt collector form being awarded a wage or even a bank garnishment.  Again, if you are going to try and go it alone with debt collectors, you have to know what type of income is and is not available for garnishment!

I live in Oregon, and debt collection in Oregon can be very, very stressful and frustrating!  It seems that the smaller debt collection companies are tougher to work with than the larger ones.  Some debt collections companies are actually attorneys who only deal with debt colletion.  However, they can and will work out settlements, depending on your various circumstances.

Finally, if you decide to DIY and deal with the debt collectors on your own...good luck!

It is a frustrating and stressful situation to be in.

• Know your rights
• Know the debt collectors rights
• Know the process

Photo credit: www.flickr.com/photos/kitby/4883787012/