GOOD NEWS!

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

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

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/

If you live in Texas, you have special protection under the law concerning debt collection.  Debt Settlement in Texas has advantages!

 When a debt collector decides that they cannot collect on a delinquent debt, they may decide to FILE A CLAIM and a SUMMONS will be issued to the DEFENDENT, the person who owes the debt.

In most cases, the DEFENDENT (you), owes the debt, so there is no need file an ANSWER or to appear in court.

An "ANSWER", is a legal statement that you do not owe the debt and why the CLAIM is invalid.  Sure, you object to the outrageous interest, fees and penalities tacked on the original balance, but you agreed to that when you signed that credit card application...sorry!

So, if you don't do anything about the SUMMONS, and I certainly DO NOT ADVOCATE THAT, then the PLAINTIFF (the filer of the claim and owner of the debt), will be awarded a JUDGMENT.

NOW WHAT?????

If an agreement (SETTLEMENT or STIPULATTED AGREEMENT) cannot be negotiated, then the PLAINTIFF most likely will apply for a WRIT OF GARNISHMENT.  In most states, this will force an employer to send 25% of your net "take-home-pay" (after any state, federal or other withholdings have been deducted from your paycheck).

While this is true in most states, the good news for all of you Texans is that Texas has laws that prohibits most creditors from any wage garnishment!

Notice I said "most creditors" and not "all creditors. 

Texas does allow for wage garnishment for debts such as:

• Unpaid income taxes
• court ordered alimony and child support
• defaulted student loans

One more thing, if you earn wages from an "out-of-state" employer, these wages most likely WILL NOT be exempt from wage garnishment.

For more information about Texas Law and Wage Garnishment, visit:

                                Debt Collection in Texas

So now you understand that for most unsecured debts, Texas will not allow wage garnishment.

                       WHAT ABOUT A BANK LEVY IN TEXAS?

In other words, can a debt collector levy (get the bank to send them your money!) your bank account for unpaid debts???

YES!

Just because a creditor who has been awarded a judgment cannot apply for a writ of WAGE GARNISHMENT, doesn't mean that they cannot (and most likely will) apply for WRIT OF LEVY from your bank!!!

Therefore, you should be making every attempt NOT TO HAVE A JUDGMENT GRANTED in favor of you creditor (or debt collection agency)!

How can you do that?

Contact your creditor(s) as soon as you are having a problem keeping up with your payments.  They may help you get caught up or arrange for you to lower your payments for a while until you get back on your feet financially.

If you know that because of loss of employment or some other catastrophic financial issue that you not only cannot keep up with your payments and it is unlikely that you'll be able to make any payments for a long time, then you need to try and negotiate a SETTLEMENT.

DEBT SETTLEMENT is a method whereby you and the creditor agree on an amount (usually much less than the balance that you owe) that will be paid either in a lump sum or in payments.

DEBT SETTLEMENT is possible to do on your own, but after helping people for over 10 years now, it is very TIME CONSUMING and can be EMOTIONALLY AND PYSICALLY EXHAUSTING!

Please download our FREE e book below:

If after reading the basics about DEBT SETTLEMENT, you feel that you could use some help, just let us know.  We'll be glad to talk with you to see if you qualify for the DEBT SETTLEMENT PROGRAM, and this consultation is...

FREE, with NO OBLIGATION WHATSOEVER!

To summarize:

• Your wages are exempt from garnishment in Texas
• Other debts, such as, income taxes, alimony, child support and Federal Student Loans are not
• You BANK account IS NOT EXEMPT from LEVY after a JUDGEMENT has been awarded, but,
• YOU CAN AND DO HAVE OPTIONS

photo by Tiffany