If you have debts that are delinquent, you may get a summons.  Do you have to respond to a summons?

 

The simple answer is "no", but that doesn't mean you should ignore a summons!

If you have so much debt that you cannot keep up with the payments, at some point, some or all of these debts will become "past due", "delinquent", or "charged off" for non payment.

In some cases, the original creditor or the debt collector or debt buyer may decide to retain an attorney to file a claim against you.

Here's what usually happens:

When you miss a payment or two, you start to get the phone calls and letters.  This is the original creditor trying to get you to start making the payments again.  During the first 60-90 days, the account most likely stays with the original creditor as they continually try to get you to start making payments.

As annoying as the phone calls are, you cannot legally stop the calls as long as the account is still with the original creditor.  You can, however, choose to ignore the calls, but this is not your best tactic.

You can answer the phone and try to explain your situation, but this is usually a waste of time.  It would be better for you to write the original creditor and briefly explain your financial circumstances and that you fully intend to repay this debt, but cannot do anything at this time.

This may or may not buy you some time.  Most likely, the original creditor will offer you some kind of HARDSHIP PLAN, but BEWARE!  Most Hardship Plan offers only delay the inevitable...you will have to repay 100% of this debt plus interest, late fees, annual fees and possibly over-the-limit penalties!

If the original Creditor is unsuccessful in getting you to start paying, they may decide to place the account with a DEBT COLLECTOR.  Here where things are starting to get really serious.

At first, you'll receive some letters, telling you what you already know...

                                  THIS ACCOUNT IS PAST DUE!

It will explain that you must bring you account up to date or face serious consequences (or something like that).

Then, the phone calls start!  Although the Fair Debt Collection Practices Act has helped stop many ruthless and harassing debt collectors, they are still out there!

According to the FDCPA, you have the legal right to make them stop calling you!

Click below:

But now that the calls have stopped, the original creditor, the debt collector or debt purchaser may decide to take legal action.

A word about DEBT BUYERS:

When a debt goes unpaid for a long time and a debt collector (or several debt collectors) are unsuccessful collecting the debt, it normally will be charged off as "uncollectable".  There are thousands upon thousands of these debts out there and there is are companies who will buy large groups or lots of debt at pennies on the dollar, planning on getting paid on enough to make a profit.

So, if they decide to have a claim filed, they would retain an attorney (licensed in your state) to file a COMPLAINT in your county courthouse.

By-the-way...

It's not always logical when or why a debt collector or debt buyer decides to file a claim.

If you are retired, disabled, or unemployed, you are going to be exempt from wage or bank garnishment. 

Back to the process:

The court will prepare a SUMMONS, and it will SERVED or delivered to you.  This is usually done by a sheriff or company paid to serve the summons.  Some people think that they can avoid receiving the summons by not answering the door or by lying to the person or sheriff trying to serve the summons.

I don't advocate this tactic, as you could face legal charges for not telling the truth, and eventually, you will be served.  You may be able to "buy some time".

If you can come up with a lump sum of approximately 50%-75% of the amount of the claim, they may accept that as a settlement.  The amount they are willing to accept will depend on several factors, specifically your financial situation:

• employed (W-2 or self employed)
• unemployed
• retired
• disabled
• buying or renting

If you are exempt from wage or bank levy, but are a home owner (or have significant equity in your home), you may want to get this account settled to avoid a lien being placed on your property.

If you do not have funds available to offer a lump sum settlement, in most cases, you will be able to arrange a repayment of the debt by making monthly payments.  Sometimes, this will be called a STIPULATED AGREEMENT before or after a judgment.  As long as you complete the terms of the agreement, no further legal action will happen.

On the other hand, if you start such an agreement and miss a payment, they may deem the agreement "VOID", and start the legal process again!

BOTTOM LINE...

It is not in your best interest to ignore a summons! 

In fact, if you are in a stressful financial situation, take action before your account(s) go this far!  Your chances of successful negotiation are much better if you can get something worked out BEFORE a judgment is awarded!

 

Photo credit: Kevin B 3

 

 

 

 

Kevin B 3

If you live in Texas, you have some unique laws that make debt settlement a great way to eliminate old credit card or other unsecured debts.

Due to various circumstances such as:

• Loss of employment
• Illness
• Death of Spouse
• Divorce
• or many other of life's challenges

...you may find yourself with too much debt and without the ability to make regular payments. When that happens, it doesn't take long before the DEBT COLLECTORS begin to start calling!

If this has happened (or is happening) to your, click here to learn how to STOP THE CALLS.

The debt collector may try to get you into a HARDSHIP PROGRAM!  BUT BEWARE!

If it has been several months since you made your last payment, the debt collector may file a complaint and you would receive a summons.

DON'T IGNORE THE SUMMONS!

If you owe the debt and cannot negotiate a settlement, the CREDITOR OR PLAINTIFF will be awarded a DEFAULT JUDGMENT.

In most states, the CREDIOR can get a WRIT OF GARNISHMENT that would result in an average of 25% of your net income being withheld from each paycheck until 100% of the debt is paid!

BUT NOT IN TEXAS!

Texas does not allow garnishment of wages in order to repay unsecured debt! This gives Texas residents a tremendous advantage and leverage in negotiating a settlement of their debts!

After being awarded a judgment, many creditors place a LIEN ON YOUR HOME. 

This means that before you sell or transfer the property, the debt (PLUS INTEREST, FEES, ETC,) would have to be paid to release the title!

BUT NOT IN TEXAS!

Texas has the best HOMESTEAD LAWS in the United States.

Basically, your principle residence cannot have a creditor place a lien after a judgment for unsecured debt! This protects Texas Residents great protection and comfort!

With these two laws protecting your wages and homestead, residents of Texas can and should be able to negotiate very favorable settlements!

We have been helping Texas Residents for over 10 years and we can help you too!

Experienced Debt Settlement companies understand the advantages of debt settlement in Texas. Therefore, debt collectors are more willing to settle debts for less!

Actual Debt Settlement Examples: (Click on Link below to view)

• Wells Fargo
• Bank of America
• Chase

 

photo by: Calsidyrose

 

 

 

 

 

 

How much of your income is exempt from garnishment?

For the sake of this blog, let's walk through a hypothetical example of how a wage garnishment is calculated by your employer.

Let's say you had financial problems (layoff, divorce, illness, etc.) and could not make the required minimum payments.

• The account becomes delinquent
• After numerous calls from the creditor (HOW TO STOP CREDITOR CALLS)
• Account is charged off and sent to a DEBT COLLECTOR
• Process repeats (Need to STOP THESE CALLS ALSO)

If an agreement cannot be reached between you and your creditor/collector, the creditor may instruct the collector to retain an attorney (many collectors are attorneys) to file a CLAIM or LAWSUIT for the debt you owe.

You would then receive a SUMMONS.

Again, if an agreement (usually called a STIPULATED AGREEMENT), cannot be reached, then a court date is set and the PLAINTIFF or CREDITOR would be awarded a JUDGMENT.

Now the plaintiff can apply for a WRIT OF WAGE GARNISHMENT.

Your employer is legally bound to honor the WRIT and uses a WAGE EXEMPTION or CALCULATION GUIDE to determine how much of your wages must be sent to the court.

In Oregon, ORS 18.385 says basically that the MAXIMUM subject to GARNISHMENT is 25% of an employee's DISPOSABLE INCOME (AFTER-TAX, TAKE-HOME).

Unless the employee is left is less than $218 per week!

So, if your net, disposable income is $218 x 4.2 weeks or $915.60 per month, you would not be subject to garnishment.

But, let's say you are earning $15/hour and working 40 hours x 4.2 weeks per month or $2,520 GROSS (BEFORE DEDUCTIONS).

Again, let's say your net deductions are 27% of your gross income, leaving you with a net take-home income of $1,839.60.

In Oregon, 25% of the net take-home (most states are 25%, but be sure to check your state's code) must be garnished.

$1,839.60 x 25% = $459.90 per month!

For most people, that would be financially devastating!

Before you let your delinquent accounts go this far, give us a call or contact us right away!

We may be able to arrange a repayment or settlement plan to avoid wage garnishment.

Even though you are behind on your debts, your creditors do not necessarily have the right  to garnish your wages!  An Oregon wage garnishment can be stopped, but you must understand the process.

Once your account is delinquent 150-180 days , and you have received numerous calls and letters, your account will usually be turned over to a collection agency. If, after the collection agency has called you morning noon and night, they may decide to FILE A COMPLAINT.

After the collection agency files a complaint, you would receive a SUMMONS.  If you have received a SUMMONS, you can read more by clicking here -->>  "I Received a Summons".

Although it can be frightening to have someone knock on your door and serve you with a Summons, try to stay calm.  Most of the time, a STIPULATED AGREEMENT can be negotiated.  When a stipulated agreement is reached, the collections company will agree to accept payments and not apply for a garnishment.

A Stipulated Agreement can help if:

• You currently receive W-2 income from your employer.
  
• You usually keep a substantial amount of money in your bank account.

Why is a Stipulated Agreement better than a Wage Garnishment?

In a wage garnishment, an employer would be forced to deduct an average of 25% of your net take home pay each pay period! For most people, this would prevent them from paying their important bills like the mortgage or rent, food, and utilities.

By accepting a stipulated agreement, your monthly payment should be quite a bit less that the amount you would be garnished.

What types of income CAN'T be garnished?

• Pension
• Social Security
• Unemployment
  
• Disability
  
• Self-Employment Income (It is very difficult for a wage garnishment to be enforced as most self-employed people take a very small "income" and in most states, this would be exempt from wage garnishment.)

*If you have any income coming in other than those listed above, do not co-mingle the two income sources!  If you deposit your Social Security check into the same account that you deposit your paychecks from a regular job, ALL of the funds would be subject to garnishment.

Can you Stop and Oregon Wage Garnishment and settle the debt for less once you have been served the summons?

YES!  If you have access to funds that equal anywhere from 50% -70% of the balance, you may be able to negotiate a LUMP SUM SETTLEMENT.

However, once the judgment has been awarded, and the Writ of Garnishment has been applied, the collection agencies are not usually willing to take a low settlement.

KEY TAKEAWAY -  THE WORST THING YOU CAN DO  IS TO DO NOTHING!

If talking to your creditors and/or collection agencies frightens you, our professional and experienced Debt Negotiators can help!  Give us a call or click on the link below for more free information.

                                 

The doorbell rings and you are handed a summons regarding one of your past due credit accounts.

Now what?

First…DON’T PANIC!

• You are not going to jail!
• You most likely (about 99.9% of the time), will not go to court!
• They are not going to come take all of your belongings!

Next…DO NOT IGNORE THE SUMMONS!

For the sake of this article, we're talking about unsecured debts such as:

• Credit cards
• Personal loans
• Medical bills
• Personal line of credit
• Store cards, etc.

When a creditor cannot get a consumer to pay as agreed they may choose to start legal action in order to collect the debt.

A CLAIM will be filed in the county court where you reside.

Then, you will receive a SUMMONS. This is usually hand delivered.

The summons will state something to the effect that you have 20 or 30 days after receipt of the summons to APPEAR IN COURT TO ANSWER THE CLAIM.

An ANSWER is your side of the story if you feel you do not owe the amount of the claim.

Now, just because you don't like the additional interest, late fees and now court costs that have been added to the claim doesn't matter!

So, if you owe the debt, there is no reason to spend the time or money for an answer and NO, YOU DO NOT NEED TO GO TO COURT.

OK, THEN WHAT SHOULD YOU DO?

CONTACT THE CREDITOR OR COLLECTION ATTORNEY FOR THE CREDITOR!

If you are employed  and receive normal W-2 wages(not self-employed, we’ll  get to that later), then you should try to work out a repayment plan so that they don't proceed with legal action.

The Plaintiff is the Creditor and since the collection agency failed to get some kind of payment or repayment plan from you has decided to take the legal route in order to force your hand.

And, IT WORKS! You might have ignored the letters and calls up until now, but now they have your attention!

If a repayment plan cannot be agreed upon, then the creditor may decide to go ahead and apply for a court date.

They will win the judgment in favor of the plaintiff by default, as there is no need for you to show up as you have no defense…you owe the debt!

With a judgment entered in favor of the plaintiff, they can now seek to:

• Garnish your wages or
• Levy you bank account

But again, DON’T PANIC!

A wage garnishment is usually 25% of you net take-home pay, and your employer has no choice but to comply with the court order.

For most people, losing 25% more of your income would be devastating, and you would have to seek bankruptcy protection (Chapter 7 or 13).

But hold on… there is another option:

Most creditors will agree to a STIPULATED AGREEMENT.

It is an agreement (sometimes filed with the court) whereby you agree to pay $XXX.00 per  month until the entire balance (including court costs, attorney fees and back interest) is paid-in-full.

If you can and do get such an agreement, GET IN WRITING before sending any funds!

If you have a source of funds available (401(k), family, friends) so that you could get around 50% of the balance all at once, the creditor may accept that and close the claim.

Once again, GET IN WRITING before sending any funds!

 

BUT WHAT IF YOU ARE UNEMPLOYED, SELF EMPLOYED OR RETIRED?

Certain forms of income are exempt from wage garnishment:

• Unemployment income
• Social Security or Pension income
• Disability income
• Child support
• And in most states, net income

For more information about wage garnishment, visit: US DEPARTMENT OF LABOR.

If all of this is a little intimidating, you may need our help. We have been helping our clients settle accounts and avoid wage or bank garnishment for over 8 years and have the experience that you may need.

For a FREE, NO OBLIGATION review of your situation, click here.

 

 

 

If you receive a wage garnishment, knowing your rights may save you hundreds of dollars!

It is a common misconception that a creditor can automatically garnish your wages if you fail to pay your debts!

If a debt collector is unsuccessful in collecting for unpaid debts, they may decide to file a claim in your local county court.

You would receive a SUMMONS, which is usually hand delivered to you.

The summons basically states that you have 20-30 days (varies by state) to "answer" the claim.  An answer is what you would do if you disputed the claim.  To file an answer will usually cost you a court fee and is a waste of time and money if you owe the debt.

If you do not contact the collector and arrange a repayment plan, usually called a STIPULATED AGREEMENT, then a court date is set and the creditor or PLAINTIFF will be awarded a DEFAULT JUDGEMENT.

In other words, the creditor wins the judgment by default because there was no reason for you to contest the claim since you owe the debt.

So now that the creditor has the judgment, what can the creditor do?

If you have a job and earn normal, W-2 income, your creditor can apply for a WRIT OF GARNISHMENT. This will be sent to your employer and the employer has no choice but to comply with the WRIT.

DON'T PANIC! There are several sources of income that are exempt from garnishment:

If you receive any of the following types of income, they are exempt from wage garnishment:

• Social Security benefits
• Supplemental Security Income (SSI)
• Welfare or public assistance
• Spousal support or child support
• Public or private pensions
• Veterans benefits and/or loans
• Disability proceeds of life insurance policies
• Cash surrender value of life insurance policies
• and many others

For a complete listing see Oregon Garnishment Forms.

If you are working, only a certain amount of your W-2 income can be garnished.  Here's an example:

Let's say you earn $15 per hour and work 40 hours per week.

1.  Gross wages for this period (example 2 weeks):

     $15 x 80 hours =                                     $1200

2.  Total deductions withheld by law                $ 360

3.  Net Disposable Wage (2-1)                        $ 840

4.  Normal exemption (OR 75% of line 3)          $ 630

5.  Minimum exemption (OR $435 for 2 wks)      $ 435

6.  Greater of line 4 or 5 = exempt wages          $ 630

7.  Nonexempt wages (6-3)                             $ 210

In this example, $210 would be withheld from your BI-Weekly check to satisfy the garnishment until the entire amount of the debt is repaid!

In Oregon (and every other state has similar exemptions), you can use the WAGE EXEMPTIONS CALCULATION WORKSHEET to determine how much can be garnished.

If you are SELF EMPLOYED, receiving 1099 or commission income, is is unlikely that an attempt of wage garnishment by a collector will be successful.

Click below for FREE INFORMATION

How to Stop Wage Garnishment

How to Eliminate Your Debt for Less

How to Stop Collection Calls

If you have questions or would like more information, please give us a call!

877-492-4109

You recieved a summons, now what?

If you have past due accounts and can't afford to make any payments, sooner or later you will get a summons.

It may be delivered by a police officer or someone else, but regardless, it is not a pleasant experience.

What should you do?

DO NOT IGNORE THE SUMMONS!

For the sake of this article, we're taking about unsecured debts such as:

• Credit cards
• Personal loans
• Medical bills
• Personal line of credit
• Store cards, etc.

When a creditor cannot get a consumer to pay as agreed and attempts to work out a plan or even after collector intimidation (you know...10 phone calls a day!), they may choose to start legal action in order to collect the debt.

A CLAIM will be filed in the county court where you reside. 

Then, you will receive a SUMMONS.  This is usually hand delivered.

The summons will state something to the effect that you have 20 or 30 days after receipt of the summons to APPEAR IN COURT TO ANSWER THE CLAIM.

That means that if you wish to dispute the validity of the claim, you can follow your county's court procedure to give an ANSWER TO THE CLAIM.

The answer is your side of the story if you feel you do not owe the amount of the claim.

Now, just because you don't like the additional interest, late fees and now court costs that have been added to the claim doesn't matter! 

So, if you owe the debt, there is no reason to spend the time or money for an answer and NO, YOU DO NOT NEED TO GO TO COURT.

OK, NOW WHAT?

FIRST DON'T PANIC!

• You are not going to jail
• You most likely will not go to court
• Since we're talking about unsecured debt, no one is going to take your personal property
• Your not going to have to sell your home, car, boat, etc.

The creditor is hoping that you will call them and make arrangements for full repayment of the debt (plus all the interest, fees and costs) as you are afraid.

AFRAID OF WHAT?

If an arrangement or agreement cannot be reached, the creditor or PLAINTIFF, will be awarded the JUDGMENT.

With a judgment entered in favor of the plaintiff, they can now seek to:

• Garnish your wages or
• Levy you bank account

 

CONTACT THE CREDITOR OR ATTORNEY FOR THE CREDITOR! 

If you are employed (not necessarily self-employed) and receive normal W-2 wages, then you must try to work out a repayment plan so that they don't proceed with a writ of garnishment.

Most of the time the creditor or attorney will agree to a STIPULATED AGREEMENT OR JUDGMENT.

This says that if you make $XX.00 payments for some many months they will not continue with legal action.

If you get an agreement, MAKE SURE YOU GET IT IN WRITING!

You most likely will make a "check-by-phone" arrangement whereby they take the monthly payment directly from your checking account, so keep good records.

If you have access to make a one-time or lump-sum payment for 60%-80% of the balance, the creditor may accept that and remove the judgment.

Again, if you arrange this, GET IT IN WRITING!

BUT WHAT IF YOU ARE UNEMPLOYED, SELF EMPLOYED OR RETIRED?

Certain forms of income are exempt from wage garnishment:

• Unemployment income
• Social Security or Pension income
• Disability income
• Child support
• And in most states, net income

For more information about wage garnishment, visit: US DEPARTMENT OF LABOR.

If all of this is a little intimidating, we can help!

For a FREE, NO OBLIGATION review of your situation, click here.

HELP! I received a summons for my credit card.

What can I do?

First, don't panic! 

• You are not going to jail
• You most likely will not have to go to court
• If this was an unsecured debt, no one is going to come take your personal property
• The creditor is not going to garnish your wages...unless you ignore the summons
• For the time being, your bank account is OK

OK, so now what?

Somewhere on the first part of the summons it will tell you that you have 20 or 30 days from receipt of the summons to ANSWER the complaint.

To answer means that you file a reply with the court explaining why you don't owe the debt, THAT IS, IF YOU DISPUTE THE DEBT.

But in this case, you owe it, you just don't have enough money to make the payments.  To answer DOES NOT mean to explain why you are in a hardship position, financially.  So don't waste your time or money filing an answer.

Instead, contact the attorney who filed the claim for the creditor.  Ignoring the summons is not a good idea!

But before you do, take time to write down all of your net income and expenses so that you will be able to explain why you cannot keep up with the payments at this time.

It might be helpful to use a basic household budget. 

For a free copy, click here.

If you had about 50% of the balance somewhere, you could make a settlement offer and most likely they would accept it.

But, most people do not have that kind of money available or they wouldn't be in trouble in the first place!

So, let's say that your minimum payment was supposed to be $125, but you can only realistically afford $50.

Offer to pay $50/month if they will stop the interest and finance charges.

If the monthly interest and other charges (late fees, over-the-limit fees, etc.) are more than $50/month, it doesn't make sense to send them $50.  You wouldn't get anywhere!

If they accept the offer (most likely will come back at you with a counter offer), MAKE SURE TO GET IT IN WRITING.

This is critical to protect you in the future.  Many people agree with a service person, authorize a check-by-phone, make several payments, and when the check on the account, find out that nothing from the original account agreement was modified.

GET THE AGREEMENT IN WRITING, PERIOD!

Once the agreement is set, do not miss a scheduled payment.  This is usually grounds for voiding the agreement and you are back to square-one!

If you can't afford anything, then you may want to consider bankruptcy protection.

Although bankruptcy should be your last option, it is not the end of the world.

Seek the advice of a bankruptcy attorney (one who specializes in bankruptcy) before proceeding.

You may also want to consider other options such as Debt Management or Debt Settlement.

Remember, DON'T IGNORE THE SUMMONS, but DON'T PANIC!

Be proactive and most likely, you'll work something out.