Pacific Debt Blog

How to deal with debt collectors when you can't pay

How to Deal With Debt Collectors When You Can’t Pay

If one of your debts has gone to collections, you will hear all sorts of things from the person on the other end of phone call. Not everything they are telling you is true. Here is what happens if you don’t pay a collection agency and some of your options to end the constant calls.

Ending Up at Debt Collection

If you have not been able to pay your debt for the last three to six months, the creditor may sell your debt to a collection agency. At that point, you no longer deal with that original creditor and your credit report will note that you have been sent to collections.

You still owe the entire amount. If you absolutely can’t repay the entire amount, the collections agency would rather collect some money than nothing. This may allow you to negotiate a deal.

Will it hurt your credit to negotiate? Yes, but so will defaulting on a debt.

Chat with one of our debt experts today to find out more about our debt relief program.

What to Expect If You Don’t Pay

If you cannot pay a debt collector, the following may happen:

  • You’ll be reported to credit bureaus, damaging your credit and ability to get loans
  • Someone will write or call you regularly
  • Assets may be repossessed or a lien placed on it – home, car, rent-to-own items, etc.
  • You may be sued – always respond!
  • You may be reported as in default or delinquent
  • You may end up at a different collections agency

Working with A Collection Agency or Debt Collector

The first and most important thing to know is that you have federally guaranteed rights and many states have similar rights. Here is what a debt collector cannot do under the Fair Debt Collection Practices Act (FDCPA):

  • Contact you between 9 p.m. and 8 a.m. without your permission
  • Threaten violence or using profanities when speaking to you
  • Contact third parties (family, friends and employers) about your debt or otherwise embarrass you
  • Speak to your employer except under limited conditions
  • Pretend to be a government official or an attorney
  • Send letters that look like attorney or governmental letters but that are not
  • Send derogatory messages about you to a credit reporting agency
  • Send information on a postcard or via social media
  • Attempt to collect an expired debt
  • Hire an unlicensed credit collection agency
  • Communicate with you if you are represented by an attorney

There are a few things that you SHOULD NOT do:

  • Make a good faith payment. This payment can restart the expiration clock
  • Be rude to a collector. It can work against you if the phone calls are replayed in court
  • Let your contact information get out-of-date (the debt collection agency can contact third parties to track you down)
  • Admit that it is your debt or promise to pay – it can be construed as a contract
  • Give out financial information like your social security number or the value of a property

There are things you SHOULD do:

  • Take notes when you speak to a debt collector. Write down date and time, debt collector name, which debt, and what the debt collector says
  • Keep all mail, copies of texts, etc
  • Tell the collector if you legitimately can’t pay. They may try to work with you
  • Tell the collector if the debt is not correct
  • Give them your current contact information
  • Consider telling the collector to stop contacting you. If you want to work towards a settlement, you may not want to take this step

Speak to one of our debt experts right away to find out more information

What Steps Can You Take Once in Collections?

There are several options to get a debt collector to go away.

Ignore the debt and calls. You may end up in court or the collectors may give up. This is not a good option.

Set up monthly payments – Because the debt collector bought the debt for less than it is worth, they may be willing to negotiate. If you want to try this, offer to pay 40 to 50% of the total amount. Make sure the get the following in writing:

  • The amount you agree to repay and what you are repaying – are you paying against what you owe or settling the bill once you pay
  • The name of the debt – make sure you are paying off what they think you are paying off.
  • The collection agency should have the name of the original creditor and account number.
  • The exact day the payment is due.
  • The exact name of the collection agency since debt can be sold
  • The effect on the account after payment. Will it be reported to a credit agency, etc.

Debt consolidation requires you to take out a loan to pay the original debt. It may not be possible to get a loan if you are in collections.

Debt management includes working with a credit counseling agency to learn to better manage money and pay off debts

Bankruptcy is a last resort to handle your bills. It is expensive and you need legal advice and representation.

Debt settlement includes signing up with a debt settlement company like Pacific Debt, Inc. If you qualify, a debt settlement company with negotiating with your debtors while you build a fund to begin repaying debts. You can also do this on your own, but it takes determination.

Pacific Debt, Inc.

Pacific Debt, Inc offers a free consultation. Our debt specialists will perform an in-depth analysis of your debt and advise you on your options. They ensure that you understand all options and all the program details.

Depending on your financial situation, Pacific Debt, Inc works with you to have you debt free in one to two years. We do not make money unless your debt relief program works for you. You have nothing to lose and every to gain by contacting Pacific Debt for your free consultation.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

How to Manage Debt during the Holiday Season

How to Manage Debt during the Holiday Season

Entering the holiday season with a mountain of debt is a terrible experience. It’s made even worse with the added weight of an abysmal debt-to-equity ratio.

For parents, the weight of responsibility to provide for your children is multiplied during the holidays — one of the few times other than birthdays when the kids expect to receive gifts.

For children, the excitement of past holidays and the expectations of opening presents on Christmas day can create a crushing experience if they feel disappointment. So, what does this mean for parents?

Are you expected to get deeper in debt just to avoid disappointing the children?

Should you buy just a few good gifts or many small gifts?

Is there a way to satisfy your kids’ expectations and avoid more debt?

Believe it or not, there are many ways to avoid getting deeper into debt during the holidays and it all begins with expectations.

The Root of the Holiday Debt Problem

Is it wrong to spend money during the holidays?

No, it isn’t.

But it can do damage in the future if you aren’t careful with how you spend. That’s why you need to cultivate a habit of smart gift giving. Smart gift giving is different from normal gift giving, because you focus on needs over wants and completely cut out holiday overspending habits.

To begin your path to smart gift giving, you’ll need to identify your overspending habits. There are two culprits when it comes to holiday overspending: avarice and love.

Parents/family either love their children so much that they hate to see them disappointed on Christmas — resulting in overspending on Christmas gifts — or they’re so preoccupied with “having nice things” that they willingly fall deeper into debt.

Debt and gift-giving have gone hand-in-hand for far too long — it’s time to break up these two highly unlikely lovers and forge healthier holiday spending habits.

Check out these great ways to avoid going deeper in debt during the holidays.

Contact us today and chat with a debt specialist free of charge.

The Gift of Giving

Yes, it’s cliche. But constant repetition hasn’t made this any less true — giving will always trump getting. And luckily for all of us, giving doesn’t necessarily mean paying.

There are important, fundamental financial lessons to be learned and developed through giving:

  1. A focus on needs over wants
  2. The true meaning of value
  3. How material things and money affect wellbeing

Through giving, you can actually learn how to save money when buying things for yourself.

Think about it.

If you approach every purchase with a budget in mind, a healthy perception of value, and a focus on your needs, your purchases will become smarter, saving you money in the long run.

Learning to give smart gifts can actually teach you to save money.

Most gift giving involves spending. But you can also give time, knowledge, experience, and care. For example, if you know how to play the piano, you can offer to hold free lessons for the kids in your neighborhood. This is both a gift of time and knowledge.

Whichever type of giving you decide to adopt this Christmas, you’ll likely need to be more outgoing and social than you were before. Opportunities for giving don’t just show up on your doorstep — you have to learn about other people to identify what they need.

I had a friend growing up who celebrated Christmas, but not like the rest of us. He didn’t wake up on Christmas to a mountain of presents under a tree. He wasn’t ever home during the holidays.

Every Christmas, my friend’s family would do charity work in neighboring towns and sometimes different countries. He made new friends and lasting memories of helping those much less fortunate than himself.

Though an expensive excursion may be out of the question for parents struggling with finances, the idea is the same and it doesn’t have to cost money.

Here are some great ways to give without spending too much money (or none at all):

  • Host a dessert swap with neighbors
  • Grow and give away fruits and vegetables
  • Get a charity-focused credit card
  • 12 days of Christmas; acts of kindness
  • Employer gift matching
  • Fundraising for local charities
  • Organize a neighborhood food or gift drive
  • Donate your old clothes, toys, and goods
  • Donate blood
  • Host a cooking day with your friends; make dinner for random families

More than getting gifts, your kids deserve the valuable lessons that come from giving. Yes, random acts of kindness can make a big difference for those on the receiving end. But just imagine the nurturing effect giving will have on your kids.

In time, your children will become givers instead of receivers. You will spend less money on Christmas gifts and more time on learning the meaning of Christmas.

The Gift of a Brighter Financial Future

Sometimes, gift giving is made even more difficult when choosing a gift for those suffering from financial troubles. After all, would you buy an Apple watch for someone who struggles to pay their bills?

There are some great ways to actually improves the lives of those you are giving to, without removing the spirit and festivity of the holidays.

Parents can educate their kids to live or at least desire to live a financially savvy life. Though financial wellness gifts may not make much immediate difference, they will relieve the stress of future holiday debt.

Use the best budgeting apps to manage your expenses during the busy spending season. An good budgeting app can save you some valuable dollars here and there that will make a difference in the end.

By Christmastime, you should at least have a bit of your tax refund set aside for smart gift-giving. When it comes to teaching your kids about taxes, it’s important to lead by example. Plan a family tax prep night, to teach your growing kids about the importance of keeping receipts and records of transactions.

Professional Preparation for the Holidays

In the months leading up to the holidays, offer to work extra hours to impress your superiors. Your hard work leading up to the holidays could lead to a bonus or a promotion.

You can even express your desire to your superiors to earn some extra money to save up for the holidays. You may qualify for a pay increase if you accept extra responsibilities at work.

Besides working extra hard in your chosen career path, you also have the option to make money on the side to save up for the holidays.

Spending the next month as an Uber or Lyft driver will put some extra cash in your pocket for those added holiday expenses.

The Motley Fool reveals that you can make between $371 and $1,853 per month by driving for Uber. Of course, it completely depends on the time you put into it, but you can actually make enough money to pay for Christmas.

Other possible side gigs include:

  • Freelance writing
  • Dog walking
  • Social media manager
  • Caregiver
  • Airbnb
  • Garage sales
  • Donate plasma
  • Party planning
  • Research study participant
  • Become a tutor

No matter how much money you have or how much debt you’ve accumulated over the years, there is always a way back. Yes, the holidays are a time of giving, but they don’t have to be a time of going into debt.

Practice smart gift giving by focusing on needs over wants, saving up money beforehand, making extra efforts at work, sharing good financial practices with your kids, and by focusing on the real reason for the holidays: family.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.

What is a good debt to equity ratio?

What is a Good Debt to Equity Ratio?

Debt ratio is one of those terms that get thrown around when looking for loans. What is debt ratio and what does it mean for you and your debt? There are a couple ways to look at debt ratio, but first, we need some definitions of what actually is a good debt to equity ratio.

Equity

Equity, for people, is what you have that is worth money or that has grown in value. Homes are the most common types of equity. If you have a mortgage of $150,000 and the house is valued at $200,000, you have $50,000 in equity.

Cars and boats generally don’t have equity as they lose value over time. Stocks, jewelry, artwork, and similar items may or may not have equity. It depends on how much you bought it for and how much someone is willing to pay for it.

If you are would like more information on what a good debt to equity ratio is, contact us for your FREE consultation today. See how much money you can save with our debt settlement program.

Assets

An asset is like equity but includes your after-tax income. We are going to use asset and equity to mean the same thing.

Debt

Debt is what you owe. Loans, credit cards, mortgages, student loans, and similar items feed into debt.

Debt to Equity Ratio

A ratio compares one value to another. The debt to equity ratio compares how much debt you have to how much equity you have. The formula is below. Feel free to use the equation to find what your good debt to equity ratio is.

what is a good debt to equity ratio image

If you owe $100,000 and have total assets of $200,000, you have a debt ratio of ½ or 0.5 or 50%. If you have total debts of $200,000 and equity of $100,000, you have a debt ratio of 2 or 200%. The lower the debt to equity percentage, the better you are situated.

Debt to Asset Ratio

Most lenders use debt to asset ratio as a clearer look at debt to equity ratio. This adds in your after-tax income for a better idea of how easily you can repay your debts.

You can figure out debt to assets two ways. The first is all debt except mortgage. The second is with a mortgage. Let’s break it down with some numbers.

Without mortgage: Add together all debts (loans, credit lines, credit cards, etc.) and divide by after tax income. Let’s say you have $10,000 in debts and an after-tax income of $59,000 (the median US income). Your debt ratio is 0.17 or 17%.

With mortgage: Add together all debts plus the total of 12 monthly mortgage payments and divide by after tax income. Now you have $10,000 in debt plus $12,360 (based on US averages) in mortgage payments. Your debt ratio is now 0.38 or 38%.

What is a Good Debt to Equity Ratio?

Now that you have some numbers, what do they mean? The ideal debt to equity ratio, using the formula above, is less than 10% without a mortgage and less than 36% with a mortgage.

If you exceed 36%, it is very easy to get into debt. Most lenders hesitate to lend to someone with a debt ratio over 40%. Over 40% is considered a bad debt equity ratio for banks.

High and Low Debt Ratios

When you look at debt to equity ratios, a high ratio means you probably don’t have enough equity to cover your debts. A low ratio means you can take advantage of your equity to take out loans if you want.

How to Improve your Debt Ratio

Possibly the easiest way to improve your debt ratio is to pay off debt. If you have credit card debt in excess of $10,000 and are having trouble paying it down, Pacific Debt, Inc may be able to help you out.

Contact one of our debt specialists for a free consultation.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.

Refferences

https://www.investopedia.com/terms/d/debtratio.asp
https://finance.zacks.com/personal-finance-debt-ratio-6256.html
https://www.cnbc.com/2017/10/27/what-average-or-middle-class-american-means-matters-more-than-ever.html

What are community and common property states?

What Are Community and Common Property States?

Different states view assets and debts acquired during marriage and who exactly owns that property differently. There are two different types of state, community property, and common law property.

What is a Community Property State?

In a community property state, all money earned, assets acquired, and debts incurred during the course of a marriage are equally owned by both husband and wife. At death, all assets go to the surviving spouse unless there is a valid will directing otherwise.

A spouse or member of a couple can own separate assets and dispose of those assets as they wish. Gifts and inheritances are not considered community property.

One of our debt specialists can help you with any questions you might have. Get your free consultation today.

Community Property States

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is on “opt-in” community property state where both parties can, in writing, make their property community or keep it separate.

What is a Common Property State?

In a common property or equitable distribution state, property acquired by one spouse belongs 100% to that spouse unless the asset is in both names. All other states are common property.

What is the Advantage to Living in a Community Property State?

The biggest advantage to living in a community property state is in estate taxes and tax planning. In a community state, the surviving spouse receives, tax-free, 50% of the decreases spouse’s separate assets and 100% of commonly held property.

What is Marital Property?

Marital property is any property acquired by either spouse during the marriage. Non-marital property is property acquired before marriage, as a gift or inheritance after marriage.

What is a Spousal State?

Spousal states affect mainly people taking out loans or mortgages. Spouses must sign a document acknowledging the loan, but not taking responsibility for it.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

Disclaimer

This is a complex area and this information just the tip of the issues. If you have questions about community and common property, moving states, or debt, contact an attorney.

References
https://www.legalzoom.com/articles/do-you-live-in-a-community-property-state
https://www.meridianhm.com/resource/blog/spousal-states-community-property-states/
https://www.investopedia.com/exam-guide/cfp/property-titling-transfer/cfp2.asp
https://tomorrow.me/trust-worthy/planning-ahead/7-things-you-should-know-if-you-live-in-a-community-property-state/
https://www.myfloridalaw.com/asset-debts/marital-property-vs-non-marital-property-florida/

What Happens to Debt When You Die

What Happens to Debt When You Die?

What Debts Are Forgiven at Death?

Once you die, what happens with your debt? It depends on the type of debt and if there are cosigners. Basically, all debts pass into the estate along with assets and other liabilities. Even if you have very little, you still have an estate in the eyes of the law.

Most people have wills (and if you don’t, you should). A will determines how assets are distributed. However, before anything is distributed, creditors are given a chance to claim part of the estate.

Talk to one of our debt specialists today to learn more about our debt settlement program.

What Are Different Types of Debt?

  • Secured Loans

  • Unsecured Loans

  • Student Loans

  • Taxes

Secured debt, like mortgages, are passed along with the asset. If you are given a house in a will, you also get the mortgage. If you are unable to pay the mortgage, the bank can seize and sell the house.

Unsecured debt, like credit cards, must be paid as long as there are enough assets in the estate. If the debt is in the name of the deceased and no one else, the debt must be settled with the estate.

If there is a co-signer, the debt passes to the co-signer.

Student Loans

Generally, student loans die with the borrower. In some cases, the debt also dies if the parent(s) of the borrow die. You will have to provide proof of death to the school or lender, which is referred to as a death certificate, or proof of death certificate. A proof of death certificate has to be signed by a funeral director and can be presented to companies and organizations to inform them of the deceased.

IRS Taxes

IRS Taxes never die. In fact, they may even increase because you will still have to pay income tax on anything earned up to the date of death.

Disclaimer

All these categories are very complex, particularly taxes.

You should have the guidance of an accountant or attorney.

Is Family Responsible for Deceased Debt?

This is another complex area. It depends on the type of debt and on the state where the deceased was a resident.  If you live in a community property state, the laws can be extra confusing, so talk to an attorney.

If your deceased loved one has debts,

talk to an accountant or attorney before agreeing to pay anything.

Can Collections Agencies Call You?

Absolutely. They can and will. However, once the estate is probated, all debts owed by the estate are gone. They may call you while the will is in probate. Refer callers to the personal representative (executor) named by the court to handle business on behalf of the deceased.

Remember, generally, and unless, your attorney/accountant says otherwise, you DO NOT owe anything.

Do not make promises or payments to collectors. Do not give the collector personal information including bank account numbers or social security numbers. The collector is not necessarily a collector but could be a scam artist who reads obituaries.

If the callers violate the Fair Debt Collection Practices Act (FDCPA) or your state’s FDCPA, report them.

What if the Primary Credit Card Holder Dies?

It depends on the status of the secondary credit card holder. If the secondary was only an authorized user, the secondary is not liable for the debt, the estate is.

Hint: don’t use the card after the primary dies, or you may end up with the debt. Credit card use after death can also be considered fraud.

If the secondary is a co-signer, the secondary is responsible for the debt of the primary cardholder.

Are there Deceased Credit Card Collectors?

Yes and no. They are either regular debt collectors or scam artists. Again, talk to an attorney or an accountant before agreeing to pay anything to anyone.

What Happens with Credit Card Debt after Death?

If there is not enough money to cover debts, the creditors will be notified as to that fact. They should write off the debt as part of the cost of doing business.

If there is money, the credit card company must stop adding interest and fees while the will is being probated.

In most cases, debt is not inheritable.

Again, talk to an attorney BEFORE agreeing to pay any debts.

Stopping Credit Cards After Death

The personal representative should contact the credit card companies. They may require a death certificate. Some credit card companies can be unpleasant about canceling cards. Keep at them until you get the cards canceled.

Do everything in writing and keep records of who you talk to, what you send, and what response you get.

If you are not the personal representative, refer everyone to the personal representative. You have no legal standing in the deceased’s business.

We can’t stress enough that you should talk to an attorney and/or accountant before settling debts. Debt after death can be a complex issue and you will probably need expert guidance.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

References

https://www.nerdwallet.com/blog/finance/debts-after-death-life-insurance/

https://www.creditcards.com/credit-card-news/credit-card-debt-death-1282.php

https://www.cardratings.com/what-happens-when-someone-dies-with-credit-card-in-th…

https://www.creditcards.com/credit-card-news/6-steps-when-credit-card-holder-dies.php

Is Debt Settlement A Good Idea?

Is Debt Settlement A Good Idea?

When you are in debt, you have several options. Bankruptcy, consolidation, settlement, credit counseling, and ignoring the whole mess are all options. What is the best one for your situation? In this article, we’ll take a look at debt settlement.

What is Debt Settlement?

In debt settlement, you and your creditors reach an agreement in which you pay less than you owe. A debt settlement company like Pacific Debt can help you to settle your credit card debt and learn to live debt free.

How Do I Settle?

Debt settlement works best if you are NOT current on your payments. If you are making payments on time, creditors may assume that you are capable of paying back your debt.

Once you convince them that you are unable to pay your debt, they may be more willing to reach a debt settlement agreement. Pacific Debt has an excellent track record of settling accounts and knows which creditors are most like to settle.

Some creditors will insist that you settle in full. Others will settle for far less than you owe.

You will make lump-sum payments to eliminate each debt.

I Don’t Have Money for a Lump Sum Payment

Most people don’t have a savings account large enough to cover their debts. If you did, you’d pay off your debts upfront. Pacific Debt has a solution.

Pacific Debt will set up an escrow account that you deposit money into regularly. Since you will not be paying on your debt, you take that money and set it aside. As it builds up, you settle each debt as you have funds.

How Long Does Debt Settlement Take?

Depending on how much you owe and how much you can set aside, debt settlement can take between 2 and 4 years.

How Much Debt Do I Have to Have?

Pacific Debt requires you to have $10,000 in unsecured debt, generally credit cards, and be unable to make more than minimum payments.

Many people panic when they hit a $15,000 credit card debt amount. Since that is more than most Americans earn in 3 months, a $15000 credit card debt is frightening. Pacific Debt can help.

Can I Settle Student Loan Debt?

Yes, you can settle student loan debt. However, it is not easy. Federal student loans have three options to settle student loans. All three come with a big catch.

  • Option 1 – pay off current balance plus accrued interest
  • Option 2 – Pay the total principal and half of the interest balance
  • Option 3 – Pay 90% of the total principal and balance owed

What is the catch? You must make a lump sum payment within 90 days.

Pacific Debt can work with you or refer you to a trusted partner who can help settle student debt. Get your free debt settlement consultation today.

What are the Drawbacks to Debt Settlement?

If this sounds too good to be true, good for you for thinking about the drawbacks! There are several and these should play into your decision making.

When you stop paying on your debt, your credit score will take a hit. It generally recovers as you pay back your debts. The fact that you settled will show up on your credit report. It can take up to seven years to remove a debt settlement notation from your report.

You may be sent to collections. This comes with its own set of annoyances, from phone calls to letters. Once you have convinced creditors that you are serious about settling, creditors generally settle.

What are Pacific Debt’s Settlement Steps

First, you need to enroll and get a free consultation. You will be given options that may work for you. Choose the best solution for your unique situation.

Next, stop making payments on your unsecured debt. Pacific Debt will help you set up an FDIC insured Special Purpose account. You will make deposits into that account every month.

While the balance grows, Pacific Debt negotiates with your creditors. Your account manager will be in contact every few weeks. As your account grows, your settled debt will be paid off.

It takes about 24 to 36 months.

If you only want to improve your credit scores or lower interest rates, debt settlement is not the way to do it.

If you have questions, contact us today.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.

BBB accredited business

"My dealings with the Pacific Debt representatives was a most pleasant experience. I started the program in October of 2012, my goal being to pay off all my credit card debt as quickly as possible."

Cathy

"I just wanted to thank you for work you did for us on settling our credit cad debts. You were honest and explained everything you were doing in detail. I had a lot of confidence in you. I felt that I did the right thing in contacting your Pacific Debt and you to do by right by us."

Shirley

"I just wanted to send a quick thank you for all you have done! It wasn't an easy couple of years financially, but I made it through! Thanks to you, Pacific Debt, I can now make a fresh start."

Denise
BACK
Free Consultation
close slider

See How Much You Can Save


Start saving today! Get a personalized plan from Pacific Debt, the leader in debt relief with an A+ Rating from the BBB.


How much debt do you have?

Click to estimate

See Savings

100% free savings estimate and will not affect your credit