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How to Settle Your Debts in Oregon

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In a Nutshell

Below, you will learn about what documents you will need to begin settling your debts. You will also benefit from a discussion about the fees associated with debt settlement and other debt relief options available to you.

Written by Upsolve Team
Updated February 24, 2020

If you feel as if you are buried in debt, you are probably riddled with overwhelming stress and don’t know where to turn. The first step you’ll need to take involves coming up with a plan to make your debt more manageable. There are many debt relief options available to help you get out of debt and improve your credit score. Debt settlement, bankruptcy, and debt consolidation are all different tools that can be used to help you get back on the right path. This article will focus on debt settlement, how it works and whether it’s right for you. At the end, there is also information about other debt management options that may be worthy of your consideration. 

The debt settlement process is a form of debt relief that allows you to pay your creditors less than what you owe. Essentially, you or a debt settlement company negotiates with your creditors to come up with a mutually agreeable amount to close your accounts for less than the full balance you currently owe. Keep in mind that debt settlement programs are only a good debt relief option if you have unsecured debt, such as credit cards and medical bills. Debt settlement companies are usually not willing to settle secured debts like mortgages or car loans because they are backed by collateral. Instead of negotiating, the creditor will probably want to repossess the collateral to satisfy the loan in the event of default. Moreover, student loans are also usually non-negotiable, especially if they are federal student loans.

There are many Oregon debt settlement companies in business that can help you enter into settlement agreements with your creditors. You can alternatively settle your debts without the help of a debt settlement company. If you want to hire an Oregon debt settlement company to help you negotiate with your creditors, you will first need to make sure your creditors are willing to work with an Oregon debt settlement company, as not all creditors are. Keep in mind that you may have tax consequences when you pursue debt settlement. If more than $600 is forgiven as part of the settlement, the IRS will include this as taxable income and you will have to note this development on your income taxes.

 Learn More Through Free Nonprofit Credit Counseling

Credit counseling is a good resource to take advantage of before taking part in a debt settlement plan. A nonprofit credit counseling agency will assign you a credit counselor who will review different debt-relief options suitable for your financial situation. This consultation is free. Your credit counselor will be able to help you decide which debt-relief plan is right for you. Credit counseling is available for anyone who wants to be educated about their finances. If you decide to sign up for a credit counseling session, a credit counselor will review your finances, assets and income. You and the credit counselor will also review your credit report, if you like. At the end of the session, you’ll be provided with a personalized action plan tailored to your unique circumstances and goals. To find a reputable company to work with, you can visit the National Foundation of Credit Counseling (NFCC) site and research member agencies operating in your area. 

How to Settle Your Debts in Oregon

Below, you will learn about what documents you will need to begin settling your debts. You will also benefit from a discussion about the fees associated with debt settlement and other debt relief options available to you.

Collect the Details About Your Debts 

Documents to have handy when preparing for your credit counseling session and for a possible debt settlement process include:

  • Copies of your most recent bills 

  • The last two months of your pay stubs 

  • A credit report 

  • Any records indicating the reason you fell behind on your bills (ie. medical, loss of income, layoff etc.) 

You will likely need to prove to your creditor that you need to settle your debts because you can’t afford to pay them in full. In doing so, you will need to paint a complete picture of your finances. You can pull a free credit report online from the credit bureaus to make sure you have the most up to date information available. If you have been delinquent for a long time, it is likely your debt has been sold to another company. Go through the report carefully and make certain you know who to contact with respect to your accounts. 

Collect Details About Your Ability to Settle Your Debts

While debt settlement can help a lot of people quickly pay down their debt, it can also be extremely harmful when approached in an uninformed way. Many people sign up for debt settlement programs who aren’t prepared to complete this process successfully. As your accounts continue to become delinquent, fees, penalties, and interest accrues. This means you will receive more collection calls from creditors and collection agencies. Once your accounts become past due, there is no turning back and you will be responsible for the amount due if your creditors don’t agree to settle. This process can also have a major impact on your credit score.

The following factors may suggest that you should contemplate an alternative debt relief option before signing up with a Oregon debt settlement company:

  • You can't make lump-sum payments. 

  • You don’t have access to money that you can save over a few short months to settle your debts.

  • A short-term improvement in your credit score is important to you. 

  • Most of your debt is secured debt (ie. taxes, mortgage, student loan, car loan).

Going over your income and expenses is a vital step to making sure a debt settlement program will work for you. You will want to figure out what you can and can’t afford so that you can offer realistic settlements. You should make a monthly budget for yourself so that you know exactly what you have available to settle your debts after accounting for your expenses. 

Learn About the Costs to Settle Your Debts in Oregon 

If you decide to hire an Oregon debt settlement company to help you settle your debts, there are fees that you will need to pay. These fees include late fees on your account and fees charged by your debt settlement company. Always inquire about how an Oregon debt settlement company’s fees are set up and when you will be charged. A company can charge you only a portion of it’s full fee for each debt it settles. If the company's fees are based on a percentage of the amount you save, it must tell you the percentage they are settling for and how much you will be charged.  

Decide Whether to Work With a Oregon Debt Settlement Company

Working with an Oregon debt debt settlement company can have some great benefits if you are unorganized and don’t have the time to settle your debts on your own. An Oregon debt settlement company can relieve stress as they handle your debts. However, not working with a debt settlement company can also have benefits, including saving money on fees you’d otherwise have to pay to a debt settlement company. If you want to settle your debts on your own to stay in control of your finances, you can do that as well. However, you should only consider settling your debts on your own if you are:

  • Highly organized 

  • Free to make multiple calls to debt collectors

  • Able to convey things clearly. 

  • Don’t want to pay the fees associated with the settlement company. 

Research Oregon Debt Settlement Companies

Before you sign up with an Oregon debt settlement company, the enterprise must give you specific information about their program. They must explain their price and terms and the conditions of their services. They must also tell you how long it will take for you to reach settlements with your creditors and how much money you will save before any settlement is accepted. 

Watch out for these red flags that suggest the company is running a scam: 

  • The debt settlement projects excitement about “new government programs” (there usually are none).

  • The debt settlement program makes guarantees - no one can guarantee a creditor will settle for a certain amount let alone, settle at all. 

  • The debt settlement company tells you to stop making your minimum payments.

Making sure that the Oregon debt settlement company you hire is reputable is vital. You can visit the attorney general’s website, and more specifically check out the consumer protection division to see if any complaints have been filed against any company you may want to work with. The Better Business Bureau will also allow you to research whether former clients were satisfied with their services. You can find a company’s BBB rating and see how they were scored by visiting the organization’s website. 

How to Make Your Debt Settlement Work

Making sure you have a good system in place to ensure the success of your debt settlement program is essential. Keep to your budget. Emergencies and unexpected bills pop up all the time, so make sure you leave yourself room to pay for these unexpected emergencies. Don’t open up new credit cards while you are settling your debts. You want to make sure that you stick to your budget to ensure that you have funds to pay your settlements. If you miss a settlement payment, your full balance may become due so make sure to stay on top of your finances. If you see yourself beginning to fall behind, call your creditors immediately and see if they are willing to help you remain on track. 

Alternatives to Debt Settlement

Many people don’t have extra funds available to make settlement offers to their creditors. If you are living paycheck to paycheck, debt settlement may not be the best option for you. However, there are alternative debt relief options available that may be worth exploring.

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Oregon Debt Consolidation

Oregon debt consolidation combines your debts from credit cards, loans, medical bills and other unsecured debt into a single account that is paid monthly. If you decide to go this route, you will need to either secure a debt consolidation loan (hopefully with a lower interest rate) to pay off your other debts or enter into a debt management plan. Having one lower monthly payment may allow you to more easily afford your other monthly expenses. To qualify for a debt consolidation loan, you will need to have good credit. If you own a home, taking out a home equity line can be a good place to start. If you have poor credit, you may want to consider entering into a debt management plan to consolidate your debt.

Debt Management Plan 

An Oregon debt management plan is a form of debt consolidation that is available to anyone, regardless of their credit score. Before you can enter into a debt management plan, your credit counseling advisor will work with your creditors to come up with agreeable terms. You’ll then make one monthly payment to the agency, which will distribute your funds among your numerous creditors. 

Oregon Bankruptcy

Many people are scared of the word “bankruptcy.” However, thousands of people file for bankruptcy every day. If you have heard myths that you will never be able to get credit again, or you will be financially ruined forever if you file for bankruptcy, know that these myths are just that - myths. A Chapter 7 bankruptcy can eliminate your unsecured debt and allow you to start over financially. It will also stop debt collectors from calling you. Once your total debt is erased, you can start putting money into savings and rebuilding your credit score. You can check out Upsolve's resources to educate yourself about the bankruptcy process. Upsolve has all the tools you need to file for bankruptcy for free and get on the path to a fresh start.

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