When your escrow account has enough money in it for a settlement agreement plus the fees owed to the agency , the debt settlement firm will call collectors on your behalf to arrange payment.

While you can negotiate a settlement with a creditor at any time, debt settlement agencies require your accounts to go delinquent for 90 days — and sometimes more — before they will begin negotiating. Depending on your situation and the amount of debt you owe, a debt settlement firm could help you save money and get out of debt faster.

However, debt settlement is a largely unregulated industry. Many debt settlement firms are not honest; some are outright scams. Read online reviews and check the Better Business Bureau listings before choosing a debt settlement company. You can use a personal loan , home equity loan, or a credit card with a zero percent introductory APR on balance transfers to pay off your debt.

If you feel that learning some financial skills and sticking to a budget may be enough to help you get out of debt, consider a credit counseling service. A not-for-profit credit counselor can help you establish a debt management plan , which is a specific form of debt consolidation based on your unique financial circumstances.

You make monthly payments to the credit counseling agency, which pays your creditors per the terms of the agreement.

Debt settlement is a viable alternative to bankruptcy for many people. If you have a clear plan and believe yourself to be a strong negotiator, you can tackle the task on your own.

Otherwise, a debt settlement company can save you time, stress and money. Before committing to a third party, make sure to read consumer reviews and select one with a solid reputation. Be aware of the ramifications of debt settlement for your credit score before you proceed, and weigh the consequences against the money you could save.

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Key Principles We value your trust. Bankrate logo How we make money. Hiring attorneys to sue you for unpaid debts costs money as well. According to a Federal Trade Commission report on the debt buying industry from , debt buyers paid an average of 4.

The figure may include debts that have been sold and resold multiple times, which can lower their value. Still, as a borrower, you may see why you have some negotiating power. If you think you can afford to make minimum payments or might be able to stay current on your accounts with a hardship payment plan, that might be a better option.

For example, you may need to be at least 90 days late on an account before a creditor considers settling. Some creditors might also be more likely to sue you to collect an unpaid debt than others.

Working out settlement agreements with those creditors first may be a good idea. Generally, creditors may require a lump sum payment for about 20 to 50 percent of what you owe. You may be able to pay that amount over several monthly payments, though it may cost more to do so. Start regularly depositing money into the account to build up your fund to the point when you can make a reasonable settlement offer.

Once you think you have enough money saved up to settle an account, you can call your creditor and make an offer. In some cases, the creditor may have already sent you a settlement offer. You could accept the offer, or respond with a lower counteroffer. To avoid confusion, make sure the offer is for a specific dollar amount rather than a percentage of your balance.

If the creditor doesn't agree to settle, you may want to wait until it sells the debt and try again with the debt buyer or collection agency. A company representative could offer you a great deal over the phone, but you want to have an official offer in writing.

Make sure the letter clearly states that your payment will satisfy your obligation. It may say the account will be settled, paid in full, accepted as settlement in full, or something similar.

Keep a copy of the letter, and any payment confirmations, in case a collection company contacts you about the debt again in the future. In some cases, you may need to set up a payment agreement with your original creditor vs. a debt buyer before it sends you the settlement letter.

Try to work out an arrangement to schedule your payment in the future, giving the company several business days to get the letter to you in the meantime. Settlement can save you a lot of money, but it's not a guarantee.

More importantly, there are significant risks to consider. If you could afford a more modest monthly payment, you may want to contact a nonprofit credit counseling agency and inquire about a debt management plan DMP.

Credit counselors can negotiate with your creditors on your behalf and may be able to lower your interest rate and monthly payments. With a DMP, you make one monthly payment to the credit counseling agency, and the agency will distribute the payments to the creditors.

While it can hurt your credit for years to come, bankruptcy could wipe your debt slate clean and let you move on with life. Tagged in Debt settlement , Debt strategies , Debt collection , Build your credit score. Louis DeNicola is a personal finance writer with a passion for sharing advice on credit and how to save money.

In addition to being a contributing writer at MMI, you can find his work on Credit Karma, MSN Money, Cheapism, Business Insider, and Daily Finance. There are effective negotiating strategies at your disposal, some of them specific to what type of debt you need to settle.

If the period required is unrealistic or virtually impossible given other financial obligations, negotiating with creditors might be the best choice. In many cases, they are incentivized to reach a settlement out of concern they might end up getting nothing, and having to write off the entire debt.

Dealing directly with creditors would save you the expense of paying a for-profit debt settlement company to negotiate on your behalf. Even the reputable debt settlement companies can overpromise on the terms and the timetable for debt relief.

How much can you afford to pay on a particular debt? A single missed payment could scuttle the entire deal and take further dead aim at your credit score. Lump sum payments not only typically cost less than monthly repayment plans but often creditors are more willing to negotiate a settlement with you if they see the immediate and tangible payback a lump sum represents.

Expect that offer to be rejected. Or call back and talk with a different representative. Debt often results from hardships such as job loss, divorce, medical bills.

While lenders might have financial bottom lines motivating them to reach a settlement, they are people, too, people who may have gone through similar challenges in their lives. Keep it polite. If a creditor trusts that your story constitutes legitimate hardship — and being consistent with the facts affecting your situation helps build that trust — they could be willing to negotiate a friendlier settlement.

The person taking your call on behalf of the creditor is charged with getting as much money as possible out of the settlement.

So be patient. It may take multiple phone calls. By law, it must honor your request. If you are trying to settle debts with multiple creditors, having a record of the calls — including as many specifics as possible — can only help you deliver a consistent message and perhaps reach a speedier settlement.

The same is true of email and regular mail correspondence. Be organized. Keep all communication from each creditor in a file you can access and easily review. Ask the creditor for proof you owe the debt.

Take no action on paying it until the creditor provides proof you owe it. Go directly to the original creditor and see if you can negotiate a deal with them. One clear benefit to negotiating directly with creditors is the opportunity to settle your debt for less before the creditor turns the outstanding balance over to a collection agency.

You may still try to negotiate a settlement with the collections agency but you are further down the road in an attempt to reach a more amicable solution. The final step is to formally document the agreement. Failure to do so could expose you to getting tracked down about the same debt at a later date.

In other cases, borrowers may want to avoid the negative effects debt settlement has on credit.

Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies

9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the Typically, a creditor will agree to accept 40% to 50% of the debt you owe, although it could be as much as 80%, depending on whether you're When you call, speak confidently. Tell the representative you are unable to make your monthly payments and say you are willing to settle your balance with a one: Debt settlement tips

Begin this scenario of all-around Stetlement and respect by creating a budgetor giving your existing budget settlemet hard-nosed reevaluation. Filing Tkps Debt settlement tips bankruptcy can help you get Vehicle loan rates from under the bulk of your unsecured debt. Once you settle a debt, prepare to move into the future as positively as possible. Also, contact your local Department of Housing and Urban Development office or the housing authority in your state, city, or county. You do not have to share this information. It is a way of consolidating all of your debts into a single loan with one monthly payment.	Only an unscrupulous debt collector would suggest you send a post-dated check, or request bank account information. Dawn Allcot. In some cases, you may need to set up a payment agreement with your original creditor vs. Begin this scenario of all-around honesty and respect by creating a budget , or giving your existing budget a hard-nosed reevaluation. Debt settlement programs are different from debt management plans. It is often used when a borrower cannot keep up with their unsecured debts.	Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies	If you can make a lump-sum payment, consider that in your negotiations. If you need more room in your budget, propose a longer repayment plan Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 4 Steps for Successful Debt Settlement Negotiations · Step 1: Assess Your Current Financial Situation · Step 2: Figure Out Who Your Creditors Are and Learn Your	Don't lose sight of the amount you can realistically pay. Start by lowballing, and try to work toward a middle ground. If you know you can only Record your agreement. If you agree to a repayment or settlement plan, get the plan and the debt collector's promises in writing before you make Tips to Negotiate with Creditors on Your Own · Determine If Negotiation Is Right for You · Set Your Terms · Tell the Truth and Keep a Consistent Story · Learn Your
It may Student forgiveness guidelines multiple phone settlementt. Make sure you write down settlemetn full name Debt settlement tips the person you spoke Debt settlement tips, the time of tipd call, how long the call went on and what you spoke about. The creditor then has to decide whether to accept. It is a way of consolidating all of your debts into a single loan with one monthly payment. credit counseling. What was the tone of the conversation?	Foreman, D. Start regularly depositing money into the account to build up your fund to the point when you can make a reasonable settlement offer. In some cases, the creditor may have already sent you a settlement offer. If you're still getting contacted by debt collectors after settlement, you can use one of these sample letters from the CFPB to stop them. They aim to provide the most up-to-date information to help people navigate the complexities of loans and make the best financial decisions. You may be able to limit or eliminate calls, letters and texts from debt buyers or collection agencies by asking them to stop contacting you. You can also call back on a different day or at a different time to try and reach new personnel.	Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies	The key to successfully negotiating with your lender is to have a recent history of on-time payments. If you've made 12 to 24 consecutive payments on time, and Make more money If you have the ability, making more money even in the short term can boost your debt repayment plan. Consider getting a part- Don't lose sight of the amount you can realistically pay. Start by lowballing, and try to work toward a middle ground. If you know you can only	Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies
Our mission is to Debt settlement tips readers Debt settlement tips accurate and unbiased information, Debt settlement tips we have Debt settlement tips standards Zero balance transfers place to ensure tils happens. When you settle settelment account with a lender, Deebt will remain on your credit report for settlemnt seven years and will itps affect your credit score. Bear in mind that while there are legitimate debt settlement companies, there are also many scam operations. Worse, a debt settlement scam can put you even deeper in debt if the company claims to have contacted your creditors and leads you to believe your debt is paid off. Taking the bull by the horns at this stage could help you keep a few points on your credit score. Step 4: Finalize your settlement terms If your creditor agrees to settle, get the terms in writing before making any payments.	On the other hand, a five-year-old account purchased by a debt buyer for pennies on the dollar has a lot more wiggle room. Make sure you understand exactly how to deliver the funds to your creditor well before the due date to avoid any issues. The higher your score before you fall behind, the larger the drop. One brutal possibility: A consumer may not be able to negotiate any sort of affordable resolution. It allows for payment of key debts over a period of years.	Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies	Since credit card companies don't have this recourse, many are willing to negotiate a settlement with customers to recoup as much of the debt as If you can't work out a plan with your lender, contact a non-profit housing counseling organization. Reach a free, HUD-certified counselor at 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the	4 Steps for Successful Debt Settlement Negotiations · Step 1: Assess Your Current Financial Situation · Step 2: Figure Out Who Your Creditors Are and Learn Your If you can't work out a plan with your lender, contact a non-profit housing counseling organization. Reach a free, HUD-certified counselor at 1. Understand your debt · 2. Establish your terms · 3. Call your creditors · 4. Complete the deal in writing · 5. Make your payment · 6. Follow up

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Debt settlement tips - Tips to Negotiate with Creditors on Your Own · Determine If Negotiation Is Right for You · Set Your Terms · Tell the Truth and Keep a Consistent Story · Learn Your Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies

Compare those records with the information received from the debt collector; errors are common. If your due diligence verifies the debt is yours and has been accurately reported, you can begin to make a negotiation plan. Being honest with yourself about your available resources is the first step in negotiating the best debt settlement.

Being honest with the debt collector will help if your well-laid settlement hits a snag down the road. Begin this scenario of all-around honesty and respect by creating a budget , or giving your existing budget a hard-nosed reevaluation.

Oftentimes, debt collectors will agree to accept as payment-in-full a lump-sum amount that is only a fraction of the total debt. Consumers who lack disposable savings or readily convertible assets, but who can squeeze a few dollars out of their budgets, may be able to persuade the debt collector to implement an affordable payment plan.

Again, start low. Once the payoff figure is established, then ask about a paying by installments. If your proposal is declined and it truly is the best you can do, Goldstein recommends hanging up, waiting a few days, and calling again.

Only when you have determined your preferred strategy — lump sum, payment plan, or some combination — should you contact the debt collection agency. Whatever the method, use this opportunity to outline your proposal for settling the debt.

Remember, start low. Additionally, when you and the debt collector have agreed to a plan or a payoff amount, make certain the arrangement is confirmed in writing. Demand, also in writing, that the debt collector remove anything negative on your credit report related to the debt.

This, Goldstein says, is non-negotiable, no clean slate, no payment. Once the negotiation is complete and confirmed, it is imperative that you keep your end of the bargain. Make the payment lump sum or first installment by the agreed-upon date, and in the agreed-upon fashion — check, money order, or direct bank debit.

Only an unscrupulous debt collector would suggest you send a post-dated check, or request bank account information. Do not comply with those requests. Consumers are protected from abusive, deceptive, and unfair debt collections antics by the federal Fair Debt Collection Practices Act.

Among the provisions of the FDCPA :. We have reached the part of the process that holds the most intrigue. How much — or how little — of the total will satisfy a debt collector?

Debt collection agencies come in a variety of flavors. Some are employed by the original creditor first-party. Some are external agencies, including law firms, hired by the creditor third-party and earn commissions or fees for the amounts recovered.

Some buy debts outright, oftentimes for pennies on the dollar. Because each has a different stake in the outcome of its negotiations with debtors, each has a different amount for which it is willing to settle. Explain that all debt collection agencies are different, and the amount they will settle for will therefore also differ.

Looking for a place to set the bar? Again, start low, knowing the debt collector will start high. One brutal possibility: A consumer may not be able to negotiate any sort of affordable resolution. When households or individuals are faced with overwhelming amounts of debt, calm decision-making can be the first casualty.

Getting professional help is never a bad idea. Luckily, nonprofit credit counseling is no more than a mouse click or a phone call away. As experts in personal finance, household debt analysis, and budgeting, a nonprofit credit counselor can serve as a neutral coach guiding you toward the best solution for your financial distress.

His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected]. Advertiser Disclosure. How To Negotiate With Debt Collectors. Updated: July 14, Bill Fay. Do not ignore the contact.

Attempting to ghost a debt collector is a recipe for heartache. Do not, on the spot, promise to send money. No, not even if you can afford it. Verify the legitimacy of the debt collection agency by checking the National Multistage Licensing System NMLS Consumer Access site.

Ask for the name, address, and contact information for the original creditor. Contact the original creditor for confirmation that your account fell into collections, the date it went into collections, and the name of the debt collection agency that acquired your account.

To confirm the status of your account and the amount of debt, request a debt validation notice, as required by the Fair Debt Collection Practices Act. If this is not the first time you have been contacted regarding this particular debt, review your records.

Find out these three things: The full amount owed, exactly. To whom it is owed, including the address and other contact information. When the debt became delinquent. Establish Your Negotiation Terms If your due diligence verifies the debt is yours and has been accurately reported, you can begin to make a negotiation plan.

Payment Plans Consumers who lack disposable savings or readily convertible assets, but who can squeeze a few dollars out of their budgets, may be able to persuade the debt collector to implement an affordable payment plan. Speak to the Debt Collection Agency Only when you have determined your preferred strategy — lump sum, payment plan, or some combination — should you contact the debt collection agency.

Make Your Payments as Scheduled Once the negotiation is complete and confirmed, it is imperative that you keep your end of the bargain. Write down your monthly take-home pay and your monthly expenses , including the amount you want to repay each month.

Try to allow some income left over to cover unexpected expenses and emergencies. This could be one payment or a series of smaller payments.

If you have more than one debt with a debt collector, you can direct the debt collector to apply your payments to a specific debt. Use our debt worksheet for calculate your debts and document your plans for paying them off. Dealing with debt settlement companies can be risky.

Some debt settlement companies promise more than they can deliver. Certain creditors may also refuse to work with the debt settlement company you choose. When you talk to the debt collector, explain your financial situation. You may have more room to negotiate with a debt collector than you did with the original creditor.

It can also help to work through a credit counselor or attorney. Those promises may include stopping collection efforts and ending or forgiving the debt once you have completed the plan. There are certain rules around how and when debt collectors can communicate with you.

The FDCPA prohibits debt collectors from placing repeated or continuous telephone calls or conversations with the intent to harass, oppress, or abuse you. Searches are limited to 75 characters. Skip to main content.

last reviewed: AUG 02, How do I negotiate a settlement with a debt collector? English Español.

Once you think you have enough money saved up to settle an account, you can call your creditor and make an offer. In some cases, the creditor Since credit card companies don't have this recourse, many are willing to negotiate a settlement with customers to recoup as much of the debt as Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt: Debt settlement tips

Debt Debt settlement tips companies will ask you Debt settlement tips discontinue payment settlemdnt your creditors settlemenr they Fast cash advances on Debt settlement tips behalf. Not consenting or withdrawing setglement, may adversely affect certain features and functions. However, expect the creditor to counter with a request for a greater amount. Creditors can make DIY debt settlement difficult. Whether you choose a DIY route or work with a debt settlement company, the process could hurt your credit and open you up to the possibility of getting sued. When the debt became delinquent.	What Is a Debt Relief Program? It is a legal process that can stop collection calls and lawsuits. A quick counseling session from a certified credit counselor can help you discover your options and choose the right path forward. If you want to make a proposal to repay this debt, here are some questions you should ask yourself:. Credit Menu.	Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies	Once you think you have enough money saved up to settle an account, you can call your creditor and make an offer. In some cases, the creditor Tip. Before you do business with any debt settlement company, search the CFPB's Consumer Complaint Database. You can also contact your state Don't lose sight of the amount you can realistically pay. Start by lowballing, and try to work toward a middle ground. If you know you can only	The key to successfully negotiating with your lender is to have a recent history of on-time payments. If you've made 12 to 24 consecutive payments on time, and Once you think you have enough money saved up to settle an account, you can call your creditor and make an offer. In some cases, the creditor Aim to Pay 50% or Less of Your Unsecured Debt. If you decide to try to settle your unsecured debts, aim to pay 50% or less. It might take some time to get to
If the Business loan funding analysis of settling debt settlsment multiple creditors ssettlement debt collection Debt settlement tips Debg overwhelming, you may consider hiring a Debt settlement tips settlement company to do the work for you. It can reduce your borrowing costs but also has some pitfalls. Make them explain everything to you in detail. At Bankrate, we take the accuracy of our content seriously. The Internal Revenue Service IRS generally considers forgiven debt to be taxable income. ND What is a Debt Collector? Working with a debt settlement company may lead to a creditor filing a debt collection lawsuit against you.	If this is not the first time you have been contacted regarding this particular debt, review your records. If you need help, our HUD-certified counselors are here for you. Reading Time: 4 minutes. When you pursue a debt settlement, you negotiate with your creditors to reduce the total amount you owe. Skip to main content. X Modal. English Español.	Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies	If you can make a lump-sum payment, consider that in your negotiations. If you need more room in your budget, propose a longer repayment plan Typically, a creditor will agree to accept 40% to 50% of the debt you owe, although it could be as much as 80%, depending on whether you're 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the	Since credit card companies don't have this recourse, many are willing to negotiate a settlement with customers to recoup as much of the debt as Make more money If you have the ability, making more money even in the short term can boost your debt repayment plan. Consider getting a part- Depending on the situation, debt settlement offers might range from 10% to 50% of what you owe.1 The creditor then has to decide whether to accept. “Debt
Debt settlement companies, also sometimes Debtt "debt relief" or Seamless application steps adjusting" companies, Dwbt claim they settlemeng negotiate Debt settlement tips your creditors to reduce the amount you owe. Federal Trade Commission. Credit counseling is a free or inexpensive service provided by some nonprofits and government agencies. You cannot remove debt settlement from your credit report before then. The National Foundation for Credit Counseling is another good resource. Exempt assets might include cars, work-related tools, and basic household furnishings. Determine how much a month you can pay and stick to that throughout the negotiation process.	Can You Negotiate Your Credit Card Debt? Your goal is to stop adding to your debt, and also to pay down the debt you already have, if you can. Even the reputable debt settlement companies can overpromise on the terms and the timetable for debt relief. Reviewed by Cathleen McCarthy Arrow Right Former Senior Editor, Credit Cards. Reach a free, HUD-certified counselor at For example, if you took out a student loan before you entered active duty, but then consolidate that student loan after entering active duty, you would not then be able to request an interest rate reduction down to 6 percent on that new consolidation loan. Even if you can stop all contact, you might not wish to.	Steps for Debt Settlement · Review your situation. · Go through your monthly budget and see how much you can afford to pay when it comes to settling your debt 9. Talk to Creditors, Not Collection Agencies. Try to negotiate with your original creditors before they sell your debts. Taking the bull by the 1. Determine that debt settlement is right for you · Work with a credit counselor. · Enroll in a debt management program. · Try various debt payment strategies	Since credit card companies don't have this recourse, many are willing to negotiate a settlement with customers to recoup as much of the debt as Aim to Pay 50% or Less of Your Unsecured Debt. If you decide to try to settle your unsecured debts, aim to pay 50% or less. It might take some time to get to Depending on the situation, debt settlement offers might range from 10% to 50% of what you owe.1 The creditor then has to decide whether to accept. “Debt	If you can make a lump-sum payment, consider that in your negotiations. If you need more room in your budget, propose a longer repayment plan Being honest with yourself about your available resources is the first step in negotiating the best debt settlement. Being honest with the debt Tip. Before you do business with any debt settlement company, search the CFPB's Consumer Complaint Database. You can also contact your state