What is a Garnishment?

When your wages are garnished, a percentage of what you make is automatically routed towards paying off a debt. You wages can be garnished if you fail to repay a debt, taxes, court settlement, child support or any other debt that a judgment has been granted against you by a court of law. Only a few states restrict wage garnishment, they are Texas, South Carolina, North Carolina and Pennsylvania. This would be for state and federal debts only. Usually the limit of the garnishment is 25% of what a persons paycheck would be. It is not legal to hide assets to avoid the garnishment. You may be prosecuted for fraud if you try.

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What is a Charge Off?

A charge off is a debt that a company has written off as noncollectable. Once they have written the debt off they can take off the loss on their tax returns. That is not where it ends for the person who took out the loan however. For the borrower they will have a charge off or a collection account on their credit report. This is not a good thing for your credit score. One charge off can drop your credit score over 100 points. The only want to take care of it is to pay it off. You will need to speak with the company that is handling the collection of the old debt. That's right, the old company may have written it off, but that doesn't mean that you are out of the woods on paying it back. A collection agency may buy the old debt for pennies on the dollar and try to collect on it. They have a legal claim to collect from you and will not remove the bad mark on your credit until you pay up.

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What is a collection agency?

Collection agencies are companies that collect on past due bills. They collecting is either done by the original company that made the loan with you or they have an outside company do the collecting. Typically a third party collection company will often work on commission. They will receive a percentage of the amount of debt that they collect. Usually a debt collector is paid a small salary with a large commission incentive. This is why they may be very aggressive with you. They want to get paid. Typically you are going to get phone calls and letters which most likely will not be of a friendly tone. Their job is to scare you. The more they can scare you, the more money they can collect from you.

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What does BK mean?

BK is short for bankruptcy. It is a widely used acronym in the United States culture for the term bankruptcy. Not much more to say about this one.

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What is Debt Negotiation?

Debt Negotiation is a process of paying off your collection accounts by using a third party. You can either hire a debt negotiation company or an attorney to handle paying off your debts. It is considered to be an effective alternative to bankruptcy. Debt negotiation can save you 40-60 cents on the dollar while paying off your collection accounts. Once the debts are paid off your credit will begin to improve. The unpaid collection accounts will now report as paid collections. A paid collection will report as a positive mark with the credit bureaus.

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What is a debt management company?

A debt management company is a third party company that assists consumers in their repayment of debt. Many companies that do this kind of service is called credit counseling or consumer credit counseling. Consumer credit counseling is referred to as CCCS as well. They will also help you work out a budget so you can save more and allocate more money to getting out of debt. Often times they will lower interest rates and get over the limit and late fees to stop accumulating. It used to be that signing up with a debt management company was like doing a chapter 13. Those days are over, you can actually buy a home while you are still in the program.

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What is a secured debt?

Secured debt must have collateral behind it. Homes and cars are secured debt. If you quit paying on them, someone will come to your door and take the stuff back. The best test if a debt is secured or unsecured is if you stop paying on it. If you stop paying your bills and your get to keep your stuff, it would be unsecured debt.

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What is an unsecured debt?

If you are in conversation with a debt negotiation company, they will tell you that they only work with unsecured debt. What is unsecured debt? Unsecured debt is money that is loaned and is not secured by any property. Cars and real estate are typically secured debts. They have collateral behind the loan as security. If you stop making the payments on these loans they come and take back the asset or collateral. Credit cards are unsecured. If you quit making your payments, nobody is going to come and take your stuff.

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Educate yourself and fight back with your creditors

If you are feeling anxious in dealing with your creditors, what you may be lacking is education. The more you know about the process the more peace of mind you will have. Creditors work on you by trying to put fear in your brain. The more scared you are of them, the better chance you they have of collecting money from you. If you are committed to getting out of debt, you need to educate yourself and take control back in you debt negotiation process.

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Can I get sued while in a debt negotiation program

If you thinking about enrolling in a debt negotiation program and the company is telling you that only a small percentage of the clients get sued, they are lying. Over half of the clients get sued. A good debt negotiation company will know how to negotiate with the creditors so you wont end up in court. Debt Negotiation is a great option to settle your collection accounts. You just need to be informed about what will be in store for you in the future. It can be a bumpy ride, but if you are committed to being debt free, debt settlement is a great option. Anything you can do to avoid a BK is your best option. Just know that debt negotiation will take some effort on your part. Don't expect the debt negotiation company to do everything for you.

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How to check out a debt negotiation company

Are you looking at hiring a debt negotiation firm to handle your unsecured debt. You may want to do a back ground check before you sign up with them. The first thing to do is to check the BBB and see if they have a clean record. If there Better Business Bureau record is shaky pass and look for another. There are reputable firms out there. The second thing you want to do is to see if they have you set up your own trust account or do they want to hold your money. If they want to hold your money I would pass. The only way that I would do a debt negotiation program is with them setting up my own trust account that I control. Some of these companies are just too flaky to hand over my money to. If a company does not have at least five years of experience I would keep shopping. Debt settlement is a complicated business. New companies are popping up all the time and want to cash in on the credit crisis. Some of them will just take your money and run. If they say that they can do it in four to five years, they may just want to get you up front retainer fee. Most creditors wont wait past three years to make a settlement. Going longer could have you wind up in court.

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Are you feeling harrassed by collection agencies?

You may be feeling harassed by collection agencies if you have fallen behind on your bills. If you are serious about paying your creditors back, you may have nothing to fear. Sometimes the bark is worse than the bite when it comes to collection companies. If you understand the tactics of a collection agency, you will regain the upper hand when going up against them. A collection agency uses fear as a tool. They know that fear motivates people and they can use that fear to get what they want. What they want is money out of you. If you understand that they will follow through on their threats less than 1% of the time you can gain your peace of mind back. They don't want to go to court it's expensive and even if they win it can still be hard to collect on it. If they garnish your wages and you get a new job, they have to start the process all over and it gets expense. If you understand this you can do your own negotiating with them and save yourself some money in the process. They may say that they want to do all of these bad things to you, but the truth is they would really prefer not to spend the money. If you don't want to deal with the negotiation, you can hire a debt negotiation firm to represent you and they will handle all of this for you. Typically a debt negotiator can save you anywhere from 40-60 cents on the dollar.

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Should I stop paying my credit cards?

If you are considering debt negotiation and your are still current on your credit cards, technically you can't do it. You are still contractually obligated to pay your bills back. Be wary of the debt negotiation firm that just outright tells you to stop paying your bills and join the program. A debt settlement company that is operating within the limits of the law wont tell you to do that. The only person that can make the determination to stop paying your bills is you. Debt negotiation is only for hardship and not because you spent to much and don't feel like paying it back. What it is for is an alternative to a bankruptcy.

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8 Major Misconceptions About Filing a Personal Bankruptcy

Bankruptcy is a big step and can be quite helpful in the process of restoring your credit. Not filing a bankruptcy because of untruths about it can be a mistake. Read about some of the misconceptions of bankruptcy in this article. There is also great information about alternatives to bankruptcy as well.

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Tips for Debt Relief

There are many ways to get out of debt. In the heat of the battle options are not always obvious. This article lists some effective ways to manage your current credit accounts or obtain new ones. Getting out of debt is tough, but it does not have to be painful. Debt Negotiation, debt consolidation and debt settlement are great options. Knowing the right debt option to pick can be hard. These tips will definitely make your debt free journey much easier.

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Debt consolidation loan – Things to think about when deciding

There are many ways to get out of debt. One option that is only available to a homeowner is a home equity loan or line of credit. This article is written from the perspective of a homeowner. For a renter, an equivalent debt consolidation loan would be a personal loan from a friend or family member or even a consumer finance company. Remember that a debt consolidation loan is still a debt. Like any debt it must be chosen wisely.

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5 Old-Fashioned Ways of Digging Yourself Out of Debt

In some respects, digging out of debt is not so glamorous. We have grown to love our modern conveniences, but these things have taken their toll on our pockets. For most of us, solving our debt problems requires no secrets, perhaps only some common sense and a reminder of what some of these conveniences cost us. Life does have a way of training us. Hopefully we can learn from our past mistakes that we have made with our money.

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Credit Cards Are Convenient - But Using Them Can Hurt Your Credit Scores

Buying gifts for friends and family during the holidays can either be fun or stressful. I tend to fall on the side of stressful and overspend. I also tend to put a little more on my credit cards than I should, so this year my wife and I are waiting until after the holidays to get each other presents. This gives us the chance to see what we get from other folks, and allows us to catch up on our bills. This might be an option for you. It might not, but here is another options to use to get out of ...


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How Does Debt Consolidation Work

To consolidate your debt or not? Debt negotiation or debt settlement reduces the amount you will have to payback because your creditors agree to take lower your balances. In debt consolidation, your creditors agree to freeze and possibly lower your interest rates and any fees and penalties you might be accruing as a result of being late, over limit, etc.

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Debt Consolidation As An Alternative To Bankruptcy

There it is again, the phone. You know that it is a bill collector, you just know it. It is dinner and they always call during dinner. You are at your wits end. You think that your next step is filing for Bankruptcy. Before you do, consider debt consolidation.

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How To Get Out of Debt - Suze Orman Versus Dave Ramsey

Is there a "right" way to get out of debt? Who knows, but there are many who publish ways to get out of debt. Two of the most famous in our recent times are Suze Orman and the other is Dave Ramsey. While their methods might not be the best, they do work. My conclusion is whatever works for you is the best method to use to get out of debt.

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An Overview of Student Loan Debt Consolidation

Student Loan Debt Consolidation is one method for reducing your monthly debt which could help you qualify for a mortgage, or a refinance. Debt consolidation will also reduce the number of monthly payments you have to remember to pay each month.

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Student Loan Consolidation Rates - Helpful Tips

There are many things to consider when qualifying for a mortgage. One consideration for qualifying is your debt ratio. If you have student loans, consolidating them could help you qualify for a mortgage. Here are some valuable tips on consolidating your student loans.

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Consumer Credit Counseling for Good Credit, Debt Settlement for Bad Credit

With many alternatives for getting out of debt, you need to do your homework before you choose a method. Typically, consumer credit counseling or CCCS is a great alternative for someone with great credit. But, debt negotiation is probably better suited for paying off bad credit accounts.

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Help for a Foreclosure - 8 tips for how to avoid losing your home

Even though it may seem like you have no options when you get behind on your mortgage payment there are many options available to you. Your lender does not want your home. They want you to keep it. My advice first and foremost is to call them and work out a repayment plan, or at the very least let them know you are having problems and what you are doing to correct them.

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Bankruptcy or Debt Negotiation - Both Explained - What To Do To Get Out Of Debt

Filing Bankruptcy got a little harder to do in 2005 when the US Bankruptcy laws changed. The laws changed to ensure that people who file legitimately have no way out. This article explains some of the highlights to filing a Chapter 7 bankruptcy in today's environment. Instead of Bankruptcy, Debt Negotiation might be an alternative.

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I Am Getting A Divorce - What Will Happen To My Assets and Debt?

Save yourself from filing bankruptcy when getting a divorce by using an attorney who understands how to split up your assets and debt. This article serves some basic guidelines about how your marital, or community property might be divided in the event of a divorce.


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Will my credit score go up after Debt Negotiation program

If you are in a debt negotiation program and are wondering if your credit score will go up while you are in the program, the answer is that it will. Each time that you settle an unpaid collection account your score will go up. It will be at its highest point once all of the unpaid collections have been settled and paid. Even though it will report as an unpaid collection it is still looked at by the credit reporting agency as a positive mark. Your credit score will always go up when you go from an unpaid collection to a paid collection.

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Beware of third party debt negotiation companies

If you are considering signing up for a debt negotiation company, you may want to consider using lawyer and not an unlicensed entity. An attorney is held to a higher standard. Their are many stories of debt negotiation companies disappearing in the middle of the night. If you don't believe me just Google Jubilee Financial. This kind of thing goes on all the time. An attorney has to answer to the state bar if there are any complaints. They don't want to loose their license to practice law.

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Had a Bankruptcy - 4 Critical Steps To Good Credit Scores

Bankruptcy is not the end of your borrowing of money. It does provide a clean slate. However, to get back on track there are some critical steps to take following your bankruptcy which you need to take right away after your process is complete.

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8 Major Misconceptions About Filing a Personal Bankruptcy

Bankruptcy is a big step and can be quite helpful in the process of restoring your credit. Not filing a bankruptcy because of untruths about it can be a mistake. Read about some of the misconceptions of bankruptcy in this article.

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I don't want to file bankruptcy, what else can I do? Debt Negotiation

It has gotten harder to file bankruptcy. Given the changes to the bankruptcy laws in 2005, it is more difficult to file and discharge a bankruptcy. Debt negotiation is a possible alternative to explore instead of bankruptcy.

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Consumer Credit Counseling - Is it right for me?

Consumer Credit Counseling or CCCS can be a great way to get out of debt. Beware however as there are some things you need to know before you start a counseling program. Don't get surprised once you are in the program because it will be too late to back out.


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Insider Tips - Why use a debt negotiation company?

Given the recent changes in 2005 in the bankruptcy laws, it has gotten tougher for us as consumers to file for bankruptcy. What else can we do, if we get in over our heads with debt and its getting old treading water every month? One alternative is debt negotiation.


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Tips on Negotiating your Debt with Collection Agencies

Settling your debt with a collection agency can be a rough experience. With some knowledge of how the system works you could save yourself a lot money and heartache.

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The Fair Debt Collection Practices Act, What Are My Rights If I Owe Money?

Let's face it, most consumers owe money and at some point, we miss a payment, get ourselves into a jam because we disagree with something we were billed for, or something catastrophic happens and our bills suffer. Even though you either legitimately or illegitimately owe money, you have rights. Knowing these rights could save you a lot of hassle, time and money.

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10 Tips for Negotiating with Collection Agencies, Bill Collectors and Debt Collectors

The phone rings and there is this feeling, it is a debt collection call. It is upsetting to get these calls. But how do you handle them? It is important to handle these calls properly or else you will continue to get harassed until you give in to what they want. They want your hard earned money.

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Tips for Consumer Credit Counseling - Should I Do It? Finding the Right Company

The benefits of a Consumer Credit Counseling program can be great. However, before you start a program take a look at all your options for getting out of debt, and do you homework. There are many companies out there to stay away from. This article covers things to look for in choosing a company.

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I Am In Debt. How Do I Get Out Of It? Start With How You Got There!

For most of us, getting into debt did not just happen over night. While there are a few exceptions about how someone gets into debt (like a sudden illness or death of a spouse), I suggest that the root of our debt problems in the United States is due to us listening to our wants instead of our needs. The good news, to get out of debt we have to listen to ourselves saying discipline and strategy will get you out of debt.

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Re-Aging A Credit Account - What Is It? How Do I Do It?

There are many tips and techniques for improving your credit and your scores. This technique called "Re-Aging" demonstrates to your creditor your intention to pay them as you agreed when you borrowed (charged) their money.

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Debt Negotiation aka Debt Settlement, What It Is Not, Is It Right For Me?

There is much written about debt settlement or debt consolidation, both pro and con. Critics of debt negotiation have a valid point with respect to bad debt settlement companies. This article spells out what debt consolidation is not.

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Debt Settlement, Bankruptcy, Debt Consolidation - Which Solution is Right For You?

There are many ways to get out of debt including: debt negotiation, bankruptcy, and debt consolidation. Each solution has its merit. If you are already behind on your bills you may consider debt settlement. (click for Full Story)

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How Do Debt Negotiation or Debt Settlement Programs Work?

Debt Settlement Companies stand between you and the collectors who keep calling. Debt settlement is all about settling your debt for less than you owe. If you are tired of getting calls at all hours of the day then this information is for you. (click for Full Story)

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How do debt negotiation companies make money?

The dumb answer is debt negotiation companies make money by settling debts. A good firm will make a percentage of what they save you rather than a flat fee. The savings rate percentage can be anywhere from 15-25 percent of what they save you. I like that they have an incentive like this. The more they save you, the more money they make. This way you know that they will do their best to negotiate a good deal for you. Most firms charge you an up front fee which can be paid over a period of a few months. Most companies realize that you are having a hardship, this is the business that they are in. Typically you can be in a program up to 36 months that will have you totally out of debt.

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Can I settle my debt myself or do I need a lawyer?

If you have collections accounts you can settle the debt yourself. You better have a strong stomach, dealing with creditors can be very frustrating if not scary. If you have a fair understanding of the Fair Debt Collections Practices Act you will be in better shape than most. Just remember that it is a process that you need to stick to. The reality is that if you deal with an attorney that does debt negotiation you will probably end up in the same position. They usually deal in bulk and can get deals from the creditors for that. There is no right answer, you do want to check out your options.

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How do I get creditors to stop harassing me?

The simplest answer to get creditors to stop calling you is to hire an attorney that specializes in debt negotiation. Once your hire the lawyer all calls by the creditors must be directed to the attorney and not to you. Typically the attorney will send out a letter to the credit that the law firm is taking over the case. Legally they are notified and must comply with the letter. If they do not comply they may be violating the Fair Debt Collections Practices Act and could be subject to a fine.

If you do not want to settle your debts yourself you may want to hire an attorney to do your debt settlement.

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How much will my credit score go up if I pay my collection accounts off?

If you pay your collection accounts off your credit score can go up as much as 200 points. It can take a few months to report properly in your credit report. Typically once all the collection accounts are paid off your credit score should go back to normal in about six months. You can negotiate paying off your collections as well. You don't have to pay back dollar for dollar what you owe. You might want to start our negotiating your debt at 25 cents on the dollar and see where you end up. You may have to play with them for awhile however. They usually don't just roll over on the first offer. You may have to back an forth a few times before you will be able to reach a settlement.

If you have any questions about debt negotiation please let me know.

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Why would a creditor be willing to settle a debt with me?

I am often asked why a creditor would settle old debt for pennies on the dollar. The answer is simple really, millions of dollars of debt every year go uncollected and probably would never be collected. Something is better than nothing. Often the debt has already been written off and is owned now by a collection agency. They probably bought the debt for pennies, so if they get 25 cents they may be happy. That would be a big profit to them. If they make your an offer, you don't have to take it. You can negotiate with them. See if they would take less. I have been in the debt negotiation business for nearly 9 years. It only seems like they have the power. If you know how to play the game with them you can save yourself thousands. They may threaten you and say that your credit will be ruined. This is not the case. Once you settle the debt with them it will not be reported negatively anymore. Be sure to get documentation form them that the debt has been satisfied. If you notice that your credit bureau has not been updated you will have your documentation to fall back on. If you send it in to the credit repositories they have to change the notation from unpaid to a paid collection. A paid collection mark on your credit is ok. It is actually a positive mark in your credit.


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Buy Now Pay and Pay Later

Credit Card companies are not your friend. They are in business to make money off of you. If you can't pay cash don't use them. Emergencies can be the exception. Buying expensive cars that you have to devote a huge amount of your time to pay back doesn't make much sense. Do you really need it or do you want it? I would rather be debt free and not have to go to bed every night and worry about how I can pay for all of the things that I owe. As a former loan officer I don't know how many people that I met with that could not buy a home because they were driving big expensive cars. It just is not worth it to drive a fancy BMW and not own a home.

It's sad but I remember talking to one couple that made less than $4000 a month and had a truck payment of nearly $1000. This didn't take into account gas and insurance. They couldn't figure out why they were broke every month. I couldn't figure out why they thought they could buy a home when they were barely making it as it was. I drive a 10 year old car with 95000 miles on it. It's paid for and runs. I'm happy. New cars are fun when you drive them off the lot, the first payment letter will cure you of that.

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Can creditors harrass me?

If you owe a creditor money, they can call you. They cannot harass you or be inappropriate with you. Read this article on the Fair Debt Collections Practices Act to learn more about your rights. Once you know the rules you can turn the tables.

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Debt Negotiation is an alternative to Bankruptcy

Many Americans are finding themselves in financial trouble with the credit crunch tightening its grip on the country. You can settle your debt through a negotiation company for 40-60 cents on the dollar. Doing a debt negotiation program has no adverse effect on your credit like a bk would.

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