You need to understand what a debt collector CAN and CANNOT DO!

Make no mistake, it is a scary time when someone knocks on your door and says something like, "Are you....You've been served!"

Sometimes, the delivery person is a police officer and that even makes it worse!

Someone has said that FEAR is:

• False
• Evidence, that
• Appears
• Real

So true!  We often get "freaked-out" because we think something is what is not.

Let me try and help you get over the fear of receiving a summons!

I/we've been helping people with DEBT, basically UNSECURED DEBTS, for many years.

When you have too much debt to keep up with the payments due, they may be charged off by the original creditor or placed with a collection agency in an effort to collect on the delinquent debt.

If you've ever been in that situation, you know that you get letters and calls and calls and calls.  By the way...hears how to put a stop to collection calls:

If the collector cannot get you to pay the debt, they may decide to FILE A COMPLAINT. This is a legal technique whereby an attorney, licensed in your state, is hired by the debt collector or creditor to file an official complaint with your county court.

Next, you will receive a SUMMONS.  And this is when it gets scary!

We're located in Portland, Oregon and in the County of Multnomah.  A client recently sent us a SUMMONS and this is what it said (you can understand why they were upset!):

"YOU ARE HEREBY required to appear and defend the complaint filed against you in the above-entitled action within thirty (30) days from the date of service of this summons to you.  In case of your failure to do so, for want thereof, Plaintiff will apply to court for the relief demanded in the complaint."

"You must "appear" in this case or the other side will win automatically.  To "appear" you must file with the court a legal paper called a "motion" or "answer".  The"motion" or "answer" must be given to the court clerk or administrator within 30 days along with the required filing fee.  It must be in the proper form and have proof of service on the Plaintiff's attorney or, if the Plaintiff does not have an attorney, proof of service on the Plaintiff.  If you have any questions, you should see an attorney immediately."

       WOW, NO WONDER PEOPLE GET SCARRED!!!

OK, let's calm down and look closely at the SUMMONS.

First, in the case of UNSECURED DEBTS (Credit cards, medical bills, personal loans, Store Cards, private student loans, etc.), the Plaintiff (this is the creditor or who you owe the money to) cannot:

• Put you in jail
• Take other belongings
• Cause you any harm, etc.

In fact, there are limits and protection for consumers by the Fair Debt Collection Practices Act that you should be aware of.

Next, the SUMMONS seems to say that you are going to have to GO TO COURT!

NO IT DOESN'T!  (Remember, FEAR...False Evidence that Appears Real?)

If you don't believe you owe the DEBT=CLAIM, then you must file an "Answer", which not only costs (about $165 last I heard in Multnomah County) but it must be in the proper, legal format which may require an attorney to prepare...more costs!

BUT, since you owe the debt (not the time to talk about the outrageous fees and interest tacked on), then you won't be filing an ANSWER.

SO NOW WHAT???

You should contact the attorney for the Plaintiff (creditor) and try to work out a repayment plan.

If you are employed (receive W-2 income), then you are not going to have very much leverage at this point.  But, you should be able to negotiate a reduced settlement (if you have a large sum of funds to offer) or a repayment plan of the entire debt balance.

If the Plaintiff is awarded a judgment (which most likely they will win), then they can file a WRIT OF GARNISHMENT and your employer would have no choice but to deduct 25% of your net income (most states) and send it to the Plaintiff until the entire balance is paid!

Think about that for a minute.  Let's say that you usual bring home pay (after taxes are withheld) is $2,500/month.  At 25%, that's an additional $625 per month that would be deducted, leaving you with only $1875 to pay bills!  Ouch!

Remember when you ignored those letters and calls?  Well, this is one of the results that can happen.  It is always better to try and negotiate with the creditor or collection agency than let the account go to this.

If you are self employed, you may have a little more leverage in that your "salary" may be low enough (if you are using a good accountant) to be exempt from garnishment.  To see what this exemption amount is, check with your state's attorney general's website.

In Oregon, go to: State of Oregon Garnishment Forms.

If you are retired and are living solely on Retirement or Social Security, then those funds are protected from Garnishment or even a Bank Levy.

If you are SELF EMPLOYED or RETIRED, or receiving only DISABILITY INCOME, you should be able to negotiate a pretty decent settlement at 50% or less of the balance.

We've prepared a very good booklet that will explain how Debt Settlement can work:

 OK, I hope you are starting to understand that just because you receive a SUMMONS, you are still going to be OK, BUT YOU HAVE TO TAKE ACTION...AND I MEAN IMMEDIATELY!!!

If you are not sure you can deal with debt collectors or the attorney for the Plaintiff, we can help:

Photo credit:  Kevin B3 at www.milwaukieemakerspace.org/2012/fear/

Want to learn a method to become DEBT FREE?  Here's a recap of a real life success story you don't want to miss!

I had to comment on an article I read in the 4/2/14 edition of The Oregonian newspaper.

The title was:

           "Couple put strategy into action, paid off $127,000 in debt"

Here's a recap of what they did:

Had over $127,000 of debt:

• Student Loans
• Credit Card debt
• Auto loans
• Personal debt

It took them a little over 4 years, but they were able to pay off all of their debts and are now living DEBT FREE!

            HOW'D THEY DO IT (HOW YOU CAN TOO):

Find ways to save money/increase net funds. Here are some things you can do:

1. Adjusting your tax withholding.

If you are getting back a large TAX REFUND each year, consider changing the number of dependents/withholdings.  This alone generated about $100/month extra to put towards debts.

2.  Cut your household budget by trimming unnecessary "luxuries" (you can add them after you are DEBT FREE!)

Using grocery coupons. Become a "coupon expert".  This alone could help save you 20%-30% off your grocery bill each month!

Do you really have to have a "Starbucks" coffee each morning?  At an average of $4-$5 per day, that adds up to $100 -$150 each month!

Take a hard look at additional monthly expenses that you could "live without"...

• Gym membership (you rarely use)
• Magazine subscriptions
• Too many "premium cable channels"
• Going out-to-eat several times a week

I know...but think about this...

As hard as giving some of those things up seems,

HOW GOOD WOULD IT FEEL TO BE 100% DEBT FREE?

OK, you get the idea.  So now you've found an extra $100 -$200 per month.

3.  What now?

List all of your debts showing:

• Account
• Balance
• Interest Rate (not as important as you think at this point)
• Minimum payment

Sort by the smallest balance first (don't worry about interest rates).

You are going to make all of the minimum payments, but you are going to add the extra (let's say $150/month) you found by making sacrifices, etc. to the smallest balance.

Once that one is paid off, you are going to add the extra $150 plus the minimum payment required on that smallest balance and add that to the minimum payment you are required to make on the second smallest balance.

For example:

Let's say you had several cards, but the Visa Balance was $1000 and the Discover Balance was $2500.

The minimum payment for the Visa was $30/month and the Discover was $65.

You are going to make a payment of $30 plus $150 to Visa until it is paid off.  At the same time, you are making the $65 to Discover as well as all of the other minimum payments required.

Once the Visa is paid off, you are going to take the $180 ($30 + $150) and add that to the $65 due on Discover.  Now you ar making $245/month to Discover (and all of the other minimums as well). 

Once the Discover card is paid off, you take that $245 and add it to the mimium on card # 3.

Get the idea?

Can you imagine how excited you will be when you start seeing those balances down to $0!

Yes, it won't happen over night, but before you know it, you are going to be 100% DEBT FREE!

This is not a new idea.  This is a Snowball Debt Reduction Plan.

If you are serious as this couple was, get your Snow Ball Calculator today!

This all sounds great, you say, but what if you can't keep up with the minimum payments despite making cuts trying to find extra funds, etc.?????

That is a very real problem that anyone that has had:

• Loss of employment
• Death in the family
• Illness or Disability
• Divorce

...can attest to.

If you cannot afford a Snow Ball Debt Reduction Plan, then you should consider a...

               DEBT SETTLEMENT PROGRAM

Debt Settlement is for those who are doing and trying everything they can to keep from seeking bankruptcy protection.

Basically, funds are deposited in a bank account until there are sufficient funds available to begin negotiations with your creditors/debt collectors.

Depending on several factors, your debts may be settled for 50% or less.

Regardless of your financial circumstances, there is a solution! 

For more information about the couple who paid off the $127,000, visit their website at:

                 QueenOfFree.comQueenOfFree.com

Photo credit:

www.lendingmemo.com

Are you a victim of the "Credit Card Trap"?  Too much debt?  No end in sight?  If you are, here are some ways to free yourself.

I've been helping people become Debt Free for over 10 years.  The average person that seeks help for getting out from under too much debt,  got into trouble by falling victim to the traps set by the credit card industry!

I saw this sign (above) yesterday in the parking lot of a major retailer and took a picture.

"Shop now, pay later"...pretty much says it all, doesn't it?

Years ago (many,many years ago), a credit card was not easy to get.  You had to have excellent credit, above average income and employment history...basically, you didn't really need one.

The idea of using a credit card was for convenience.  Rather than having to carry a lot of cash or write a check, you could just whip out the credit card.  Then, when the statement came, you paid it off...100%.

The credit card industry charged a reasonable interest rate, demanded a minimum payment of around 3% or more, and made zillions of dollars.

One day, someone in the credit card industry looked at the numbers (profits) generated by these cards and realized that they actually made more profit from fees, such as:

• Annual fees
• Late fees
• Over-the-Limit fees

...than they did by the interest rates they charged!!!

Again, years ago, most credit card account holders paid off the account each month.  Then, someone got the bright idea that if an account got paid off, then there would not be little, if any, profit from interest rates and fees.

                                    What to do????

They came up with the idea to only charge a very small monthly minimum payment so that more and more people could charge their accounts to the limit and only have to pay 2% or so each month based on the balance.

Let's say you had an account with a $5,000 credit limit and so far, your balance is only $2,000.  $2,000 x 2% = $40, but you send in the $50.

Before I get into the details of how much this will cost you over time, let's talk about the really dangerous CREDIT CARD TRAP....

Have you ever thought (or done):

"Since I have a limit of $5,000 and I only owe $2,000 with a $50 a month payment, I'll charge another $1,000 and my payment will only go up $25 or so."

This is where most people start getting into real trouble.  Before you increase your debt, check out what your credit card company is really charging you:

OK, let's say you didn't increase the balance.  Next month, you get your bill and as you start trying to understand it (right!), you notice that there was an interest charge of $35!!! How can that be?

You also notice that the Annual Percentage Rate (APR) is 21%.  Although there are various methods different companies use to calculate the interest due, for simplicities sake:

        $2,000 balance x 21% = $420 (annual interest based on $2,000)

        For this month, you divide $420 by 12 (months) = $35

        Now you see the account summary and notice:

        Previous Balance                 $2,000

        Interest charge                    $    35

        Payment                             ($   50)

        New Balance                       $1,985

     That's right, your balance was only reduce by $15!   

Now, you don't have to be a genius to figure out that at that rate, you are going to be paying on that debt for a long, long time to pay off that credit card.

Think about that for a minute... 

When you finally pay off that debt (at the small minimum monthly payment), you will have paid at least 2 to 3 times as much as the original balance!

And, don't forget about those fees!

                         THERE IS A BETTER WAY!

Depending on several factors such as:

• Your employment (self or W-2)
• Income
• Marital status
• Health (disabled?)
• Age (retired?

...you would most likely qualify for one of the following programs:

• Debt Management

• Debt Settlement

• Snowball Pay-off plan

Rather than get into each plan, I've attached links (above) to previous blogs or more information you can access for FREE.

Credit Cards are a very dangerous trap and should be avoided and/or managed at all costs!  Please proceed with caution!

Looking for Debt Relief in Portland, Oregon?

Dealing with the stress of too much debt can be overwhelming.  

But, GOOD NEWS, YOU HAVE OPTIONS that can help you become DEBT FREE once again!

DEBT MANAGEMENT

If you have accumulated too much credit card debt or other unsecured debts such as:

• STORE CARDS
• PERSONAL BANK LOAN
• PRIVATE STUDENT LOANS
• REPOSSION DEFICITE JUDGMENT
• MEDICAL BILLS

In a Debt Management Program, a Debt Management Company will contact each of your creditors and set up agreements to repay your entire balance. In most cases, your interest rate will be lowered or eliminated and late fees and over-the-limit fees will be stopped or forgiven.

You will have ONE MONTHLY PAYMENT which will be distributed to  each creditor according to the agreements.  This payment is approximately 2.5% - 2.7% of the total balances of all of your accounts.

For example, let's say you have a total of $20,000 of unsecured debts.  Your monthly payment in a Debt Management Program would be approximately $500 - $540.  This includes the monthly Debt Management Program fee.

Not everyone can handle this payment.  If this is your case, them you should check out and investigate a:

DEBT SETTLEMENT PROGRAM

Debt Settlement is for people who have had a serious financial setback due to a number of factors including:

• UNEMPLOYMENT
• ILLNESS
• DISABILITY
• DIVORCE
• DEATH OF SPOUSE OR PARTNER

There are several factors to consider before enrolling in a Debt Settlement Program, but see if some of these describes you:

• Missing or unable to make all of the minimum monthly payments required by your creditor.
• Taking cash advances to be able to pay basic monthly bills.
• Some or all of your accounts are 60 -90 days past due.
• Some or all of your accounts have been charged off and placed with Debt Collectors.
• You are getting numerous DEBT COLLECTION CALLS!
• You have received a SUMMONS.

BANKRUPTCY

 Photo by:

http://www.flickr.com/photos/89463094@N02/

If you have had a debt settled for less than the total balance, you may receive a 1099-C.  You may or may not have to pay any additional tax.

When you settle a debt for less than the full balance due, and this is for $600 or more, the creditor or debt collector may report this to the Internal Revenue Service.  I say "may report" because they don't always report a settled or "forgiven" debt. 

Over the past decade that we have been helping people get out of debt, it seems that in the last year or so, more and more creditors and/or debt collectors are reporting settled or forgiven debt.

I have to start out by stating that I am not a CPA or licensed professional tax consultant, so any advice here should only be used to help point you in the right direction.  If you do receive a 1099-C, please seek the help of a professional tax consultant!

So what should you do if you receive a 1099-C?

                             DON'T IGNORE IT!!!!

Let's say that you had a Credit Card that had a balance of $10,000 and because of circumstances beyond your control, you just couldn't make the minimum payments.

Most likely, this account was sent to a collection agency after the original creditor made numerous attempts, such as annoying and often harassing phone calls and many collection letters.

The debt collector may have sent you an offer to settle for less than the full amount due or perhaps you or a Debt Settlement Company were able to negotiate a good settlement.

Using our $10,000 example, let's say that the settlement was for $4,000.  The debt collector was willing to "forgive" (in IRS lingo) $6,000.  The debt collector reports this to the IRS in order to write that amount off as a loss and you are sent an IRS form 1099-C.

At first glance, it may look like you owe $6,000 of additional tax, but this is not so!

You will need to file the proper forms with your tax return to have the settled or forgiven amount EXCLUDED from being added back in as additional taxable income.

As usual, the IRS seems to have complicated the process, but in reality, it is not that difficult to file properly.

The basic and most important question that you must answer and prove to the IRS is:

"At the time of the settlement or forgiveness of the debt, were you insolvent?"

What is "insolvent"?

If, AT THE TIME OF THE SETTLEMENT, you had more debt than you had in assets, then you were insolvent. (Sounds terrible, but that's just their terminology.)

So, how do you find out or prove if you were insolvent or not?

It is really not difficult.  Take a piece of paper (or use your computer if you want) and one side list all of your assets, such as:

• Net equity of your home (Current value less amount you owe = net equity)
• Cash or money in the bank
• Net DEPRECIATED value of things such as furniture, appliances, tools, etc.  remember, even though you paid $2,000 for that refrigerator a few years ago, today it probably would sell for only $200-$300!
• Net value of your autos, boats, campers, etc.  Same thing, NET, DEPRECIATED VALUE!

Total all of these up.

On the other side of your sheet, list all of your DEBTS OR LIABILITIES, such as:

Since you've used the NET VALUE (Depreciated Value less Balance still due) on the ASSET SIDE, were probably talking about:

• Credit cards
• Store cards
• Student loans
• Medical Bills
• Personal loans
• Possibly Home Equity loan or 2nd you forgot to list before!

Add all of these up.

Subtract the total of all of your LIABILITIES (DEBTS) from your NET ASSETS. Which is greater?  If your Liabilities are greater than your Net Assets, you were insolvent at the time of settlement and therefore, the amount forgiven WILL NOT be included as taxable income.

The next part seems a little difficult, but it's not.

You are going to complete:

• IRS Form 982
• A copy of your ASSETS VS. LIABILITIES worksheet
• A copy of the 1099-C

You are going include these along with your normal tax return.  By the way, don't be surprised if your tax preparer seems a little confused as to how to handle a 1099-C.  I've had clients pay tax that they didn't need to because the tax preparer didn't file the proper forms.

We have prepared a FREE 1099-C PACKET that you can download and use. 

It includes:

• Instructions
• Examples
• IRS Forms

Get yours by clicking on the button below:

You are going to need the help of a qualified, tax consultant or preparer.  You still should be able to exclude a large percentage of the forgiven debt, but there may be other ramifications, so I advise you to get help.

Photo credit: www.lendingmemo.com

If you are considering enrolling in a Debt Settlement Program, you may be asking yourself, "Does Debt Settlement really work?"

There are several options available to help you get your debt under control, including:

• Debt Management Program
• Debt Settlement Program
• Consolidation of Debt

While a Debt Management Program may be just the program you need, if you are having a tough time just keeping up with the minimum payments, you should consider a DEBT SETTLEMENT PROGRAM.

Some of the adantages of a Debt Settlement Program:

• ONE monthly payment that is typically much less that what you are paying now.
• Most debts can be negotiated at 50% or in some cases, much less.
• A typical Debt Settlement Program will be about 36-48 months, depending on a number of factors.

So, the question you may be asking is, "Does Debt Settlement really work?"

Yes, if you fit the criteria for a Debt Settlement Program.  Many so-called "Debt Settlement Companies" only offer...Debt Settlement as the answer to anyone with debt problems.

Everyone should know that "one size does not fit all"!

Before you decide, it is critically important that you explore all of the options that are available to you.

But if after discussing your situation with a qualified, experience debt relief specialist, you deteremine that a Debt Settlement Program is what you need, you might want to ask for some proof of actual settlements.

Check out some of the actual settlements we have been able to negotiate for our clients:

Successful negotiation of unsecured debt depends on several factors. 

For example, if you are retired and living on Social Security and/or a retirement income, both are 100% exempt from any garnishment or levy by a debt collector.  For these clients, settlements below 50% are possible.

Debt Settlement is really for those who are in a very bad financial situation.  Most prospects for a debt settlement program have had something happen in their lives that has caused them to get over their head with debt, such as:

• Unemployment
• Illness or disability
• Death of a spouse or partner
• Divorce

If you find yourself with too much debt and just not enough income, then you owe it to yourself to look into how debt settlement works and see if would work for you.

 photo by: Eleaf

When faced with too much credit card and other unsecured debts, you really have only a few options. 

Here's some tips how to determine your best option?

I'm talking about credit card debt as well as other unsecured debts such as:

• Personal loans
• Private student loans
• Store cards
• Medical bills
• Repossessions

Next to a very large consolidation loan (personal or home equity type), borrowing money from family and friends, withdrawing money from your 401(K) or other retirement plans, you really only have 3 basic options.

• Debt Management (or in some cases using a Snowball Debt Reduction Plan)
• Debt Settlement
• Bankruptcy

Notice I didn't mention using the creditor's offer of a Hardship Plan as this is only a temporary, short term fix, that only delays the inevitable repayment of the debt!

And also notice that I didn't mention the so called "Pay-Day" loans.  Stay clear of those at all costs!!!

Do you qualify for a Debt Management Program?

If you are only able to make the minimum payments required of all of your credit cards and other unsecured debts, you should know by now that it may take you many years (anywhere from 10-15, depending on which article your read) and 3-4 times the original amount borrowed to repay those debts!

If you enroll in a Debt Management Program (formerly and sometimes still referred to as a Credit Counseling Program), here's what usually happens:

The Debt Management Company will contact each of your creditors.  Most of the hundreds upon hundreds of creditors usually have an agreement with Debt Management Companies to:

• Lower or eliminate interest rates
• Forgive or reduce late or over-the-limit fees
• Re-Age your account (make it look like it you are not behind on payments)

You will make ONE MONTHLY PAYMENT to the Debt Management Company.  Although some of the Ads you see or hear seem to say that they can reduce your monthly payment, that is not usually the case.

Credit card companies figured out many years ago that they could make more money by NOT HAVING THE CONSUMER PAY OFF THE CARDS!  That's right, the credit card industry actually makes more profit from late fees, over-limit-fees, annual fees and low minimum monthly payment requirements, than they do on the high interest rates they charge.

For some shocking insight into what credit cards companies are doing, click here.

I don't want to get lost in the various calculation methods the credit card companies use to calculate the minimum monthly payment, but most credit card companies only charge 2% of the balance/12.

In most Debt Management Programs, the total or single monthly payment you will be required to make is about 2.7%.  This includes the payment to the Debt Management Company.  Did you really think they worked for free because they are incorporated as a "non-profit"?

Example:  Let's say you have a total of $20,000 of credit card debt.  (BTW...the average consumer has 8 cards with an average total balance of $9,000!)

$20,000 x 2% = $400 minimum monthly payment required now

In a Debt Management Program, $20,000 x 2.7% = $540 per month or $140 more!!!

If you are barely making the minimum payments now, how can you increase it by $140?

But before I move on to the second option, if you could make increase your monthly payments each month, why not check out a SNOWBALL DEBT REDUCTION PLAN?

A Snowball Debt Reduction Plan is a great way to reduce your debts more quickly and avoid paying the cost to a Debt Management Company.

However, not everyone has the discipline to set up, monitor and track a Snowball Debt Reduction Plan.  If you're like this, maybe you could use a little help...

But what if you don't have any extra money at the end of the month?  In fact, you are not  making the minimum payments and some or all of your accounts are "past-due" or in collections?

Then you should consider a Debt Settlement Program.

Or, perhaps you have fallen behind because of:

• Small fixed retirement income
• Disability
• Unemployment
• Divorce
• Death of spouse or partner
• Too little income...too much debt!

A Debt Settlement Program may be just what you need!

• One monthly payment (customized to fit your existing budget)
• Most debts will eventually be settled for 50% or more
• Avoid seeking bankruptcy
• Become DEBT FREE in 36-48 months 

Want a complete overview?  Download our FREE BOOKLET:

What about Bankruptcy?

If your financial situation is such that you not only cannot afford extra payments required of a Debt Management Program, a Snowball Debt Reduction Plan or a Debt Settlement Program, then you need to consult an attorney about BANKRUPTCY.

There are differing opinions about bankruptcy, but regardless, if you have accumulated so much debt that realistically you will never be able to repay, you owe it to yourself to check out your bankruptcy options.

Other questions?  Let us help.

New year, new year's resolutions. Don't you think it is about time for you to consider Debt Relief?

Sure, you say, but what is "Debt Relief"?

I'm talking here specifically about finally starting to take control of your unsecured debts...mainly credit card debt.

You've heard or read the statistics about how many individuals have too much credit card debt based on their income and living circumstances.

With credit card interest rates anywhere from 12%-24% or higher, if you are just making the minimum payments required, it could take you 10 years or more to finally pay off those debts!

Wouldn't it feel great to be DEBT FREE? OK, here are some tips that can really help if you will apply:

FIRST:  Do you know exactly where you are financially?  I mean, can you account for almost every dollar that comes in and for every dollar that goes out?

Most people have a vague idea, but have never taken the time to do a complete, thorough Financial Worksheet.

After completing a Financial Worksheet, I've had people say, "WOW, I had no idea that I was spending so much money on stuff like Starbucks, movies, burgers, etc."

Until you get a clear picture (and you may not like it) of where you really are, you cannot possibly make a plan to become Debt Free.

Here is a simply, easy-to-use Financial Worksheet that you can download:

SECOND: Now that you have a clear, honest (it won't help if you are not honest with yourself!) picute of where you are, it's time to get an up-to-date CREDIT REPORT.

You can get a FREE CREDIT REPORT annually that will tell you how much debt is being reported to the 3 Major Credit Bureaus (Equifax, TransUnion, Experian).

Not only will this report tell you to whom and how much debt you have, you may also discover that there are errors on the report.  I've read reports that 1 out of 4 people have errors on their report.

If you find errors, you can file a challenge to each of the bureaus on line or you can mail a challenge.

The following links will help:

Equifax disputes

TransUnion disputes

Experian disputes

There is a very good site from the Federal Trade Commission that will give you some good points on for do-it-yourself credit repair.

OK, but how about all of the legitimate debts that is being reported?

Break them down into two basic groups:

Secured debts, such as:

• First Mortgage loans
• Second Mortgare or Equity Line of Credits
• Auto, boat, RV loans
• Government Student Loans

There is not a lot you an do about these except keep paying.

But on the other hand, all of the UNSECURED LOANS, such as:

• Credit Cards
• Store Cards
• Personal loans
• Mecical bills
• Pay Day loans
• Private Student Loans

You do have options as to how to repay these...read on.

NEXT... List all of the unsecured loans like this:

             Creditor, Interest Rate, Payment (minimum), Balance

Here is where the Financial Worksheet is so important.

After completing the Financial Worksheet, you will be in one of the following groups:

After all bills (including all debts) are paid, I have $100 - $200 extra each month that could be used to start paying down unsecured debt.

You find out that you are basically even at the end of the month.  You are paying all bills (including all debts) and you have basically $0 left over, but not negative.

Finally, if after completing a thorough Financial Worksheet, you realize that you are coming out negative at the end of the month. 

You probably alreaday knew this, as you have been "robbing Peter to pay Paul" for a long time.  In fact, some, if not all of your unsecured debts are 30,60 or 90 days late and some, if not all, have been charged off and gone to a Debt Collection Agency.

Here are your options, based on your personal financial situation (revealed from the Financial Worksheet and Credit Reports):

Group One... Those of you who can put an extra $100-$200 towards paying down unsecured debts.

You should use a SNOWBALL PLAN to pay off those unsecure debts a lot sooner and at the same time, save you thousands of dollars in interest!

Basically, you break down your unsecured debts and start paying extra to the one with the lowest balance. 

After this one is paid off, you use the same extra, plus the minimum payment just paid off plus the minimum payment due  on the second and put all of that towards that second debt.

For a more complete overview, click here.

But what about Group 2?  You are making all of your payments, but there is just not anything left over?

You should be able to qualify for a DEBT MANAGEMENT PROGRAM.

• In a Debt Management Program, you will have one monthly payment that will be disbursed to each of your creditors by a Debt Management Company.
• Your interest rates should be reduced significantly.
• Late fees and over-the-limit fees should be stopped or forgiven.

In short, a Debt Management Program can not only help you become Debt Free in a shorter amount of time (usually about 48 months), but save you thousands of dollars in interest and fees.

Finally, what about Group 3?  Those of you who have too much unsecured debt and are not only not getting anywhere but really can't afford your payments...here are your choices:

• DEBT SETTLEMENT
• BANKRUPTCY

Debt Settlement is a great way to pay off/settle your unsecure debts without having to resort to bankrutpcy.

Debt Settlement will allow you to have:

• One Monthly Payment (usually much lower than the required total minimum payments now)
• Your Debt can be settled at 50% or lower (depending on several factors)
• You can be DEBT FREE in about 48 months.

To receive a FREE REPORT called DEBT SETTLEMENT FOR BEGINNERS, click below:

But if you cannot even afford the reduced payment of a Debt Settlement Program, then you should consider BANKRUPTCY as a way to not only cancel your unsecured debts, but relieve the constant finacial pressure and worry that comes from such a severe financial condition.

You should consult a Bankruptcy Attorney who specializes in Bankruptcy.  You should be able to schedule a Free Consultation to deteremine if you qualify.

Regardless of your situation, there is a way to not only become Debt Free, but stop the collection calls and relieve the constanct pressure that comes with too much debt.

Photo By: Eamon Curry

2014 is just around the corner and here are a few tips on how you can live DEBT FREE!

If you are like millions of consumers, you probably have taken on too much debt this last year. 

This could be due to just too much spending or because of circumstances beyond your control, but either way, carrying too much debt creates all kinds of stress!

Here's a few tips that can help you live debt free in 2014:

If you don't know exactly where you are financially, then it's time to find out!  Many people have no real idea of what they are spending money on.  If this is you, it's time to do some homework and complete an honest (that's right...list everything coming in and going out!) budget worksheet.

Once you know where you stand, it's time to decide what the best plan of attack on those debts should be.

If you are just making the minimum payments on all of your unsecured accounts, then you know it could take many years to finally repay those debts.

You may be qualified for a DEBT MANAGEMENT PROGRAM.

Advantages of a Debt Management Program:

• ONE Monthly Payment
• Reduction or elimination of your interest rate
• Forgiveness of over-the-limit or late fees
• Usually DEBT FREE in approximately 48 months (varies)

Click here to learn more about a Debt Management Program.

But, if you are not making the minimum payments, and have had some or all of your accounts going to collections, you should consider a DEBT SETTLEMENT PROGRAM.

Advantages of a Debt Settlement Program:

• ONE Monthly Payment which is usually about half of what your total payments are now!
• Eliminate Debt Collection calls
  
• Settle many of your accounts at 50% or less (varies)
• Usually DEBT FREE in 36-48 months (this will also vary with the amount of debt)

But, what if you just are so far behind that you do not have any discretionary income (money left over after all the major bills are paid)?

If that is the case, then you may need to consider BANKRUPTCY PROTECTION.

Notice I said "Bankruptcy Protection".  Bankruptcy allows someone who is just too far in debt to ever recover, keep a very large portion of their assets (home, car, etc.) and have most or all of their debts dismissed.

There are different types of bankruptcies, and you should consult a BANKRUPTCY ATTORNEY to decide which one would be best for you.

You can be DEBT FREE, but you have to take action.

If it seems overwhelming, we can help.

It is possible to settle your debts on your own, but you need to prepare yourself for dealing with debt collectors!

Here's some tips for Do It Yourself Debt Settlement:

If you have tried unsuccessfully to keep up with all of the required, minimum payments on your unsecured debt, then you should definitely consider Debt Settlement.

Although I have been helping people deal with the financial pressure of having too much debt for over 10 years now, and have helped hundreds of people settle their debts, I do believe it is possible for someone to settle debts on their own, but you need to "buckle up for a bumpy ride!"

You need to be prepared to spend a lot of time (many times very frustrating, emotionally) dealing with professionally trained debt collectors. 

These debt collectors are usually paid a commission or percentage of how much they can get from you, so you know they are not going to give in, willingly!

My point is that you need to understand that the Debt Collection Industry and Debt Collectors specifically are in business to make a profit and they are not going to settle without using every method (legal and border-line legal) to get you to pay as much as possible.

Since you are considering trying to settle your debts for less than the full balance you owe, I'm guessing that you fit one or more of the following criteria:

• You have been laid off or lost a job, and therefore your income has been dramatically reduced.
• You may have had a loved one or spouse become extremely ill or possible die which affected your ability to work.
• Divorce is usually a financial challenge.
• A long term or permanent disability will not allow you to earn what you used to earn.
• Retirement on a fixed income that is barely or not able to keep up with the bills.

But, if you are ready to give it a try, then here's some tips to help:

Understand the basic debt collection process.

Typically, when an unsecured account (not a "secured loan", which is backed by property or other collateral) becomes delinquent, it is usually charged off and turned over or sold to a debt collector.

This debt collector may be an attorney/law firm, that specializes in the collection of debt.

It takes time for a delinquent account to be considered for a settlement. 

Most debt collectors will not consider a settlement until the account has gone 120 - 180 days without any payments.  By the way, please be wary of a HARDSHIP PROGRAM the creditor offers!  Usually, they only barely pay the interest and ultimately you will have to start repaying the payments as before!  Basically, you are just delaying the inevitable of having to repay 100% of the debt you owe with interest.

The best settlements are usually negotiated when you have a lump sum or one-time payment saved up to offer.

After you have carefully prepared a BASIC HOUSEHOLD BUDGET, and know exactly what you can set aside each month to go towards negotiating a settlement, you must be very consistent and disciplined to actually put that money aside.

Set a goal of being able to offer at least 25% - 50% of the balance on at least one of your accounts. 

You'll also find out that the smaller the balance, the harder it is to get a decent settlement reduction!  The debt collector believes that if you ow $300 - $500 or so, then you should be able to come up with $200 -$400 and they may give you up to 6 months to do it!

However, if you owe $5,000, then they may be willing to take a settlement of 50% or less as you are a risk of seeking bankruptcy protection on larger amounts of debt.

Don't answer the phone unless you know who it is!

If they haven't started calling several times a day, they will!

I'll show you how to stop the calls in a minute, but in the meantime, DON'T ANSWER THE PHONE, unless you know who it is.

Debt collectors are trained to intimidate and get you to pay! PERIOD!  If they can engage you in a conversation, they will try to use what you reveal to help them collect more money!

Suppose you have realtives that may be able to help you. DO NOT SAY ANYTHING ABOUT THAT! 

They need to think that you are really in financial trouble and that if settlements cannot be negotiated, then you will be forced into bankruptcy.

I'm not advocating lying, but just don't say too much! It's OK to briefly...I said BRIEFLY, explaine your financial hardship, but don't go into too much detail.  You may think it helps, but it doesn't.

You can put a stop to the collection calls.

You will need to write a letter to each collector demanding that they stop calling you.

For a FREE SAMPLE LETTER, CLICK BELOW:

You'll usually get better settlements during the last week of the month and toward the last week of a quarter.

Debt collectors have their budgets and target collection numbers to meet and are usually a little more willing to deal as the end of the month or quarter is getting close.

Always ask the debt collector what is the best settlement they can offer you.  Remebmer, in negotiating, usually the one who mentions a dollar amount first, loses!

When you finally agree on a settlement, GET THE AGREEMENT IN WRITING!

Don't trust a phone conversation, period! If they will not email, fax or mail the agreement, then you don't have a legitimate, professional debt collector...move on!

Make a copy of the check you mail and keep the agreement.

I've seen several cases over the years when a debt that had been settled a long time ago, showed up again at another debt collector's company.  These are usually debt buyers and have purchased a list of debts for pennies on the dollar.

Many of these so-called "debts" have no paper trail to substantiate or prove that the debt is legitimate.

Providing the settlement agreement and copy of the canceled (they cashed your check) check is proof enough that this debt had been settled.

One final thing...

Depending on your situation, you may be able to have a debt canceled and/or removed from your credit report if the debt collector cannot VALIDATE the legitimacy of the debt!

If you feel like you paid the debt off years ago, but have no proof, try sending a VALIDATION LETTER.  The debt collector must stop collection activity and provide proof that you really owe the debt. This will help:

OK, so there you go!  If you are persistent and follow through, it is certainly possible for you to settle your debts on your own.

But, as you can see, Do It Yourself Debt Settlement can and will be very TIME CONSUMING and challenging. 

If you try to settle your debts on your own and are unsuccessful or tired of the process, let us help.