Home Credit Reports Table Debt Consolidation - Frequently Asked Questions

Debt Consolidation - Frequently Asked Questions

E-mail Print PDF

Debt Consolidation Frequently Asked Questions

1. Why should I use a Debt Settlement Plan?

Debt Settlement Plans will save you an enormous amount of money, and will also take the stress out of your life.

2. What is debt settlement?

Debt Settlement is the preferred debt consolidation method consumers and businesses take when delinquent on their payments but trying to get out of debt. Professionals help you with debt settlement by negotiating with your creditors to settle your debt for an average settlement of 40% of the current balance. By utilizing a professional service, consumers are able to eliminate up to 60% of their debt with our Debt Settlement plan.

For example: If you owe $10,000 on a credit card, our trained negotiators can typically settle the debt for $4,000; a savings to you of $6000.

A Debt Settlement plan will also consolidate your payments into one low monthly payment that will have you debt free in less than 36 months. Here is why. If you are behind, your creditors have added hundred if not thousands of dollars in frivolous fees on top of increasing your interest rates. If you were not able to maintain the original agreement I don’t understand why they would make it impossible for you to get back on track.

Get Peace of Mind with Business Credit Monitoring!If you are current on your payments, the creditor will not agree to settle your debts. Therefore, you must establish some leverage with your creditor by allowing the accounts to go delinquent for at least 120 days. At 120 days, we are able to negotiate your debt and we can typically reach at settlement for 50% of the balance. At 150 to 180 days of delinquency, settlements are usually obtained at 40% of the balance.

There is not any other debt consolidation plan that will get you out of debt faster and for as little money than hiring a professional as your debt settlement company. You will not pay any interest or frivolous fees tacked on by your creditors. In fact, you will pay an average of 60% less than what you owe. Not only does this get you out of debt but it also improves your credit score. It is a win – win option for consumers who have already fallen behind.
These are the type of bills/debts you can enroll into a debt settlement plan:

Medical Bills
Credit Card debt
Collections Accounts
Personal Loans
Charge Off Accounts
Any Unsecured debts

3. What is a Debt Management Plan?

A Debt Management Plan (DMP), is a program offered by a company that is owned or directly paid by the credit card company. This is a form of collection agency that claims that they represent you the consumer, but in reality have a conflicting interest with the relationship established with the credit card company.

Organizations that advertise credit counseling often arrange for consumers to pay debts through a debt management plan (DMP). In a DMP, you deposit money each month with a credit counseling organization. The organization uses these deposits to pay your credit card bills, student loans, medical bills, or other unsecured debts according to a payment schedule they’ve worked out with you and your creditors. Creditors may agree to lower interest rates or waive certain fees if you are repaying through a DMP.

You need to be aware that if payments to your DMP and creditors are not made on time, you could lose the progress you’ve made on paying down your debt, or the benefits of being in a DMP, including lower interest rates and fee waivers. Although creditors may have forgiven late payments that you made before you began the DMP, the creditors may be unwilling or unable to do so if payments are late after you have enrolled in a DMP. If you fall behind on your payments, you may not be able to have your accounts “re-aged” again (reported as current), even if you start a new DMP with a new counselor. That means your credit report will have “late” marks and you will rack up late fees, which, in turn, will lead to more debt that could take longer to pay off.

If payments are late because the organization handling your DMP has failed to make scheduled payments, the consequences can be just as devastating as if you failed to make payments to the DMP. If you do not act quickly to make arrangements with your creditors, you could incur late charges that increase your debt, lose the lower interest rates associated with the DMP, and have “late” marks on your credit report.

The balance will continue to accrue interest on your accounts but at a lesser rate, typically between 8-10%. The entire balance is paid in full plus interest and the length of time is usually between 5 to 7 years. You will pay an up front fee, along with a monthly service fee. Typically, your payments will stay about the same as your current payments but instead of taking 30-40 years to payoff, you should be completed in about 7. The average consumer will pay back approximately 130% of their debt with a moderate adverse impact on their credit score. If you believe debt management is your best solution, you may apply here and a Certified Financial Advisor will assist you with the process.

4. Is Debt Settlement the same as Debt Consolidation?

Debt settlement and debt consolidation are two different programs that we offer and the two can be combined together to get you out of debt immediately. Debt consolidation is a loan that takes the equity out of your home and is originated through a mortgage company. One of the requirements of the loan is that all of your debts are paid off with the equity check, and then you enroll in a debt settlement program with a professional so you can pay off your debts at roughly 40%. You will then receive the refund check after all of your accounts are settled. We can have this process completed in unless than 21 days, call us now to have an Debt Specialists begin this simple process.

Click here to request a Free Consultation

5. Is Debt Settlement the same as Consumer Credit Counseling?

No, a Debt Settlement program and Consumer Credit Counseling is not the same thing. The goal of debt settlement is to eliminate your debt by negotiating with your creditors a one time payment to settle the debt. With debt settlement, the consumer is able to eliminate about 60% of the debt with this type of debt consolidation plan. Consumer Credit Counseling does not try to eliminate debt, instead, Credit Counseling will setup a debt management plan to reduce your interest and lower you monthly payment.

The biggest downside to a debt management plan is the time that it takes too long to get out of debt. Over 70% of all consumers who enroll with a credit counselor cancel their plan before they finish. The Debt Management plan will have a lower payment compared to the minimum payments on your credit cards, but then you have to pay the credit counseling fees and your payment is typically higher than what you are currently paying. The average payment plan takes 5 to 7 years and the interest will continue to accrue on the credit cards the entire time.

Although Credit Counseling Services advertise they can reduce your interest rates, there is no guarantee that the creditor will agree to lowering your interest. When they are able to reduce the interest, it is only for 6 to 9 months and then the rates are raised back to the maximum allowed by law.

When you sign up for a Debt Management Plan, the company then has to put a negative mark on your credit report showing everyone that you had to get Debt Management help. This will remain on your credit report for 7 years after your last payment with the credit counseling service. This mark is looked at by creditors the same way they look at Chapter 13 Bankruptcy.

With Debt Settlement, you are able to set up a payment plan that will consolidate all of your bills and have you debt free within 36 months. Debt Settlement can have you debt free in half the time it takes for a Debt Management plan. Since you accounts are closed out, the interest and fees will also stop.

The advantage to choosing a debt settlement plan is that it will eliminate your debt by 40-60%. Unlike trying to managing your debt professionals target the problem by negotiating settlements with your creditors that will eliminate the debt problem. This is the most practical way for a consumer to get out of debt with the least amount of consequences.

If you are interested in learning more about the advantages of Debt Settlement over a Credit Counseling program, let a trained professional answer your specific questions. Click here to request a Free Consultation

6. Can you settle your debt on your own?

Sure you can, just like you can defend yourself in a criminal trial. Would you rely on yourself to defend your name if you had to go to court on murder charges? So why do you think you can defend yourself against creditors that have the right to sue you?

When you think you can settle your debt on your own, you should first remember that you got yourself into this hole of debt. I bet you even had different plans on how you were going to dig yourself out before it got this bad. It is understandable that you do need help with your debt problem, you are not a professional and must likely do not have the financial education of our staff and resources that a professional service has. Consumers who wish to avoid bankruptcy and get out know they need a debt management plan that is practical and effective.

Not just anyone can become a professional Debt Negotiator. Debt negotiators go through extensive training learning state and federal laws, credit industry practices, the process of arbitration, and they have a developed skill for the art of negotiation. Furthermore, professionals have taken the time to develop key relationships with creditors that allow us the ability to work with the same individual every time. These relationships are a key part to the amount of savings we able to get our clients.

When a professional service contacts creditors for settlements we usually contact them on the behalf of hundreds of clients; this is known as “buying power”. Since we are able to settle many hundreds of thousands of dollars at any given time, our clients get better settlement percentages because debts are not settled individually, they are settled in bulk.

Get Peace of Mind with Business Credit Monitoring!Collection agencies and creditors love to deal with individuals who are trying to settle their own debts because they know the majority of the time that the consumer has no idea what they are doing. There are many laws that govern the credit and collection industry and it takes several months to learn the laws and know how to identify when a violation occurs. Further, under laws such as the Fair Debt Collection Practices Act, Fair Credit Reporting Act, and Fair Credit Billing Act, validation letters, dunning letters, and requests for production must be drafted correctly. For an individual to set out and try to learn the process of simply writing the documents would take countless hours and would need to be under the supervision of legal counsel.

It is very common for creditors to offer verbal settlements but never provide written documentation. Only after you paid the “settlement” do you realize that the creditors agent lied to you and you still owe the full balance. In the settlement agreement there must be specific terms on how the account will be reported to the credit bureaus. Most consumers believe that the collection agency will offer to remove the negative information from the credit report. That is not true. Legally, the debt is not allowed to be removed; that is not to say that it can not be done. On a credit report there are comments and codes. The only important factor is having the correct coded updated to reflect that they debt is paid in full.

In the event that our client has an aggressive creditor pursuing a debt, there are many stall tactics that can be employed to stop them in their tracks. The reason professional services have designed these tactics is to allow our clients more time to save money according to their payment plan and reach a reasonable settlement with the creditor. Unless you have worked for us, you will not understand what stall tactics are and how they can be used.

Another key part to become a successful debt negotiator is understanding the arbitration process. It is very common for a creditor to try and force a debtor into arbitration so they loose their rights that are granted in a courtroom. Arbitration can be a timely process and if the appropriate documents are not completed correctly, you will lose your case.

One of the most important pieces to the debt settlement game is developing relationships with an individual at each creditor’s office. These relationships are so important because we are able to build rapport with our contact and when we go to contact them, they know that we are not playing “debtor games” with them. Many Debt Settlement companies do not realize the importance of these relationships and get into screaming matches with the creditors agents. Good settlements are not reached by yelling at the person on the other end of the phone or table, they are reached by. Professionalism must be maintained by the Debt Negotiator to keep the respect of the creditor.

There are actual courses that individuals take who wish to pursue careers in the debt negotiation field because it is much more complicated than most would think. Debt Management is a service that a professional service provides that will eliminate your debt. Unless you have the software and industry experience to put one of these plans together, you are sure to find yourself wasting a lot of time and getting very frustrated. If you want your Debt Settlement program to be successful and save you thousands of dollars, leave it to the professionals.

Click here to request a Free Debt Settlement Consultation

7. How long does the Debt Settlement program take?8. Are your Debt Settlement services guaranteed?

Yes, many services do offer a money back service guarantee with their Debt Settlement program. What does this mean for you? This means that you will have the peace of mind in knowing that if they can’t deliver what it promises, you get your money back. Our guarantee is always provided in writing and explained to you prior to signing up with our service. Our guarantee applies to every account setup with our debt management plan and in the event that we are unable to settle a debt with a creditor, you will be refunded all monies paid for that account.

Most companies will have a logo stating “Satisfaction Guaranteed” or “100 % Guarantee” but provide no information about this claim. Some will provide their guarantee in writing.

Be extremely wary of any company that requires you to provide information before they will provide you with theirs. The Fair Trade Commission ( FTC ) recommends that consumers review the Debt Settlement Enrollment Contract prior to giving any banking information or setting up a payment. It is required by all Debt Settlement companies to provide this information to the consumer, if they do not, they are not supposed to take money from you.

Many services also carry Business Errors and Omissions Insurance to further protect our clients. E & O Insurance is maintained in the event that a consumer was mislead and believes that something we did on their behalf was done incorrectly, and that this error cost them money or caused them harm in some way. This type of insurance would pay any claim that was ruled in favor of the client.

Many services openly publishes this information to allow their clients and competition to know what they stand for.

9. What is the effect of how much debt I have on my credit score?

The amount of debt you have weighs heavily upon your credit score. Your "debt to credit" limit is approximately 30% of your Credit Score. When you reduce the amount of revolving debt you have, not only will your credit score increase, your interest rates will drop. According to the credit scoring formula, you should not use any more than 40% of the available credit limit per each credit account.

If your debt is mostly charge offs or collections accounts, your debt is destroying your credit score. Bad debt such as charge offs place a number 9 for each account on your credit report. The number 9 signifies that not only do you have a debt, but you are also not paying as you agreed in the credit contract. The only way to get a charge off removed from credit report is to pay off the debt.

The best way to get the number 9 removed is to have a professional settle the debt with the creditor. Most services will get at least 50% of the debt eliminated and get a Debt Settlement agreement with the creditor to show that the debt is paid in full with a $0 balance and have the number 9 removed from all three credit bureaus.

Click here and complete the Consultation form to have your Debt Eliminated by 60% and have the charge offs removed from your credit report.

10. How will Debt Settlement affect my credit score?

This question can not be accurately answered without knowing information specific to your credit profile. To have this question answered specific to your situation, click here and complete the Free Consultation form and a Debt Specialist will review your information and then call you to give you a consultation.

If the debt is with a collection agency, collection attorney, or a debt buyer and is reporting on your credit report as a “charge off” / report code I9 or R9, then settling the debt is the smartest decision. If you pay the debt in full, you are doing nothing better to increase your credit score and you are literally throwing money away. Once a debt is reported as a charge off, the account can not hurt your credit score anymore than was has already happened.

At this point you have 2 options; pay the debt in full and it will be reported as paid in full. Or, you can choose a Debt Settlement plan and pay about 40% of what is owed and a professional service will have your credit report reflect that your account is paid in full with a zero balance.

This part of the Debt Consolidation FAQ answer is written as accurately as possible but under general information terms based on a debt with a credit card company. The answer may different as it pertains to your unique situation.

A Debt Settlement Program will not have a negative effect on your credit score but there are factors involved with credit card debt negotiation that can have a negative effect on your credit score. In fact, there will be nothing on your credit report or on your public records showing that you had enrolled into a Debt Settlement Plan with a professional service.

Here are the factors that will contribute to a poor credit score while enrolled into a Debt Settlement Program. First, before a credit card debt can be settled, the account must be at least 120 days delinquent in payments. Therefore, on your credit report, it will show that you have a late payment on this account.

If you enroll into Credit Counseling or a Debt Management Plan, then a stamp will be placed on your credit report for 7 years showing that you enrolled into a credit counseling or debt management plan. To your future creditors, that looks as bad as filing Chapter 13 Bankruptcy and is essentially the same thing.

What most consumers do not realize is that the amount of debt a consumer carries impacts their credit score by 30 percent. The more debt you have, the higher your debt to income ratio is. A high debt to income ratio is not good and is a sign that you are having a hard time paying your bills. If you have $15,000 in debt and have an annual salary of $45,000 then you have a debt to income ratio of 33%. According to the credit scoring model, you should not be any higher than 40%.

If you are looking at this website, most likely you are already have a high debt to income ratio. If you are still struggling to make the high credit card payments, you have to take a step backward in order to take ten forward; this is one of those times. What we mean by that statement is that you will have to temporally have a bad credit score while we get you out of debt, then your credit can be repaired by our credit repair program. While your credit will not be “destroyed” you may take a hit initially on your credit report. As we settle accounts, your credit score will begin to increase; then we will recommend that you sign up for credit repair to have the negative information removed from your Expieran, Equifax, and Trans Union Credit Report.

To find out the details to your unique situation, you do need to speak with a professional today!

11. How does Debt Settlement compare to bankruptcy?

Filing for bankruptcy has many negative implications, and should be considered only as a last resort. Bankruptcy may seem to be the quickest solution to removing your outstanding debt and bankruptcy attorneys will tell you it will only remain on your credit for 10 years.

Both Chapter 7 and Chapter 13 will represent a major negative mark on your credit rating and will stay with you for the rest of your life. Chapter 7 bankruptcy will stay on your report for 10 years and in the case of chapter 13 bankruptcy, the clock does not start ticking to remove the bankruptcy mark from your credit report until the chapter 13 bankruptcy plan is completed.

• Bankruptcy can cost up to $1,200 to file and additional attorney’s fees.
• In Chapter 13 bankruptcy you will typically have to pay back 80%-90% of your debts plus legal fee’s.
• Bankruptcy may affect your ability to get a job.
• Bankruptcy will likely result in higher interest rates on future loans and credit.
• Carries a negative stigma, mental stress, and other burdens.

Bankruptcy is a legal proceeding that is entered into court records that will never be deleted. Many loan applications, employment applications, insurance applications, and other everyday forms ask "Have you ever filed for bankruptcy?" Even if the bankruptcy has fallen off your credit report, to answer this question untruthfully is considered a federal offense. Which means bankruptcy will follow you for the rest of your life. If you are currently considering bankruptcy, speak with a Specialist so they can explain the consequences and help you find other solutions that are not so permanent

Click here to request a Free Consultation

12. Why settle the debt when I can file bankruptcy?

Filing bankruptcy is like being innocent but pleading guilty to a felony conviction. Once that conviction is on your record, it will never go away; a felon will always be known as a felon. Bankruptcy stays on your credit report for 10 years, but it will stay with you for the rest of your life. When you go and try to buy a home, on the mortgage application will be a question if you have ever filed bankruptcy. If you lie on the application, you are breaking federal law by not answering the question accurately.

When you apply for or submit your resume for a new job, the employer will likely conduct a background investigation on you prior to hiring you. Part of an employment background screening process looks at your personal credit report and your public records. If the bankruptcy is no longer on your credit, it will always remain on your public records. Again, the decision to file bankruptcy years ago is still ruining your future.

When your children start to attend to college and they need their parents help applying for student aid and student loans, again you will be asked if you have ever filed for bankruptcy. Again, if you lie on this federal application, you will be breaking federal law and will be punished when caught.

Just like you would never want to have a felony on your record, you do not want to file for bankruptcy when there are better alternatives.

Bankruptcy may seem to be the quickest solution to removing your outstanding debt but that is not true, Debt Settlement is a much better option.The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changed the way consumers are able to file bankruptcy. Under the new bankruptcy law, consumers may only file chapter 13 bankruptcy, which is a repayment plan where the consumer must repay approximately 90% of what is owed within a 7 year period. In addition to the debt repayment plan, you will also be required to pay your bankruptcy attorney about $2,000 upfront to retain his services.

If you choose a Debt Settlement Plan, you will not have to pay an upfront fee; a professional will start you out on your monthly payment plan that is setup for you when you speak with our Debt Specialist. You will only have to repay 40% of what you owe and can be debt free within 36 months. Debt Settlement does not ruin your credit like bankruptcy, nothing will be stamped on your credit report showing you were in a debt settlement plan, and it will never come back at haunt you like filing bankruptcy.

Filing bankruptcy is a permanent decision that should only be considered as an absolute last resort to solving your debt matters. Call us now so we can show you alternatives to your debt problems and help you avoid filing bankruptcy.

Complete the Consultation form to have a Debt Specialist contact you today.

13. Is my information kept confidential?

In the era of identify theft, you can never be too careful when it comes to your credit card account numbers, banking information, and your private information like social security and drivers license numbers. Services guard your information behind encrypted software with multiple layers of passwords. Only those persons authorized by you and the employees authorized within our company will have limited access to your confidential information.

Professional services takes your security seriously. All of our employees are given background screens and must sign non-disclosure agreements prior to employment. We do not allow any documents or work with our client’s information to be taken home at night or removed from the premises. Our offices have individual locks and the building is monitored by video recording and an alarm system.

When ever you submit information through our website like the debt elimination form or free debt consolidation consultation form, that information is sent directly to our management team to review and import into our database. We collect only enough information that allows us to begin a consultation about a solution to your financial problems. We will then assign a Debt Specialist to contact you and listen to your problems and then help you consolidate your debt.

To further help clients against identify theft, services shreds all documents with sensitive or personal information on it. Professional services maintains compliance with all document and information destruction laws.

When you enroll into a debt consolidation plan, you will be required to complete a limited power of attorney. The limited power of attorney allows us to correspond with your creditors. It is only valid for the accounts in which you have enrolled with our debt settlement services and is only used for the purpose of settling your debts. Since it is a “Limited” Power of attorney, we are limited to only speak on the accounts that you have enrolled with your service. Your service does not require you to enroll all of your debts and we have no reason to contact your other creditors.

14. What type of debts can not be enrolled into a Debt Settlement Program?

There are very few types of debts that can not be enrolled into a debt settlement program. Debts that are classified as secured debts will not qualify. A secured debt is any type of debt that has collateral assigned to the credit card or loan agreement. Secured debts do not qualify for a debt settlement program because the creditor will typically seize the collateral and heavy penalties will be assessed to the consumer to recovery the collateral. If the collateral has already been reposed by the lien holder or credit grantor and they are coming after you for a deficiency balance, we can enroll this debt as there is no longer collateral.

It is best for you to consult a Debt Specialist so they may review your financial situation and advise you of which debts are considered secured and unsecured. In general, secured debts include auto payments, mortgage payments, student loans, taxes, jewelry accounts, and any type of real estate. In the event that the collateral has already been seized such as an auto repossession, this debt is no longer considered secured and will qualify for debt settlement.

Almost all unsecured debts qualify for a Debt Settlement Program. Unsecured debts qualify because the creditor can not seize any of your property that was purchased with your loan or credit agreement. Unsecured debt is any loan or debt that has no tangible assets or property attached to it. The most common types of unsecured debt are credit cards, department store cards, medical bills, collection accounts, and utility bills.

Just because the creditor can not seize your property does not mean they can not do anything to you though. That is why it is very important to have a professional help you with your debt problems before they get any worse than they already are. It is very easy to get the help you need, Start by clicking here and completing a free consultation.

15. Will I continue to get calls and collection letters from my creditors?

If bill collectors are harassing you with phone calls and threatening you with demand letters, you should contact a Debt Specialist immediately so they can advise you of your rights. By doing nothing, you will only make matters worse. A professional service can stop the collection agencies from calling you and redirect all of their calls to our office.

From our client’s experience, you will see a reduction in creditor phone calls within the first week and the remaining calls should cease within 30 days. Although some calls may still slip through the cracks from time to time, when you notify our credit relations department, they can have those calls stopped.

Our Credit Relations department is very proactive in dealing with your creditors and we have established direct contacts that allow us to be on a first name basis with them. Since we work with creditors on a daily basis, they know that we do not play games like the other debt settlement companies and your creditors are very friendly in working with a professional.

If your accounts are with the original creditor, it may take a little bit longer to get the phone calls stopped. Typically original creditors have very large mail processing centers and it takes longer for them to process the engagement letters we mail them. In the event this type of creditor gets very aggressive with phone calls, most services have other tactics they will employ to stop them from harassing you.

Most original creditors are cooperative and will update your records to indicate that you are participating in a debt settlement program and abide by the documents that we will forward to them. Another tactic we use is changing the address and phone number the creditor has on file to your service. We do this so all communications are sent to us.

Remember that when you have a debt problem and creditors are calling, you need to work quickly to resolve this problem. Procrastinating only makes matters worse. A professional can take care of your debt problems if you complete our free confidential consultation form.

16. Will fees and interest continue to accrue?

This depends on the status of your accounts. If your accounts are current, and payments are still being made, then it is very possible that late payment fees and interest will continue to accrue on your accounts until they are charged off (typically 120 – 210 days from the day of last payment). No matter what type of debt consolidation plan that is chosen, interest will always accrue when the accounts are kept in current or pre-charge off status. In most cases your service will only negotiate on the principle balance of your accounts thus making all of the added frivolous charges irrelevant.

Even though you are making monthly payments towards your debt settlement plan, those payments are not distributed to the creditors on a monthly basis. If payments are made on a monthly basis, then the creditors will not agree to settle your accounts. That is the reason your monthly payment is deposited into a savings account to accumulate until there is enough money to settle the account. Each account is settled individually; typically the smallest balance will be settled first unless there is reason to pay off another creditor first.

The advantage to enrolling your debt into a Debt Settlement program is a 40-60% reduction in your debt. Even if you pay 6 months of interest, late fees, and over the limit fees, that will only add up to an extra couple of hundred dollars compared to the thousands of dollars that you will save with a Debt Settlement Plan.

Now if your accounts have already been charged off, then no more late fees or interest will be charged on your credit accounts. The only exception to this is in the case of judgments, if a judgment has been issued and allows for interest to continue accruing.

Are you ready to eliminate your debt? If so, click here and complete the consultation form to have a Debt Specialist contact you today.

17. Will your program stop legal action against me?

This question has two answers; both are correct but based on different factors. First if the creditor wants to pursue legal action against a debt, there is nothing that can be done to stop them except at the conclusion of whatever legal action taken. Now, if the creditor finds a way to get what they want without having to pay the large legal expenses, then they will most certainly take the easier route.

This brings us to Yes, legal action can be stopped with our debt settlement program. Once legal action has been initiated, the only thing that will stop your creditor from pursuing the debt further is either payment arraignments or a payment to settle the debt. An out of court settlement is the best thing for the debtor because it ends all legal action and the debt is paid in full. Typically an out of court settlement will cost about 50% of the balance. For example, if the creditor is suing for $10,000 then an out of court settlement can be reached for $5,000.

This often brings us to the question of why a creditor would even hire an attorney in the first place to sue a debtor. It is standard policy for banks and credit card companies to turn over their bad debts to collection agencies and collection attorney’s. It is the job of these bill collectors to due whatever it takes to get the debt paid. If the collector feels that there is no chance the debt will get paid out of court, then they will hire an attorney to sue the debt. But just because an attorney gets involved, does not mean that they are going to sue. There are many Collection Attorneys out there that never sue debtors. They operate just like a collection agency with a call center and call center reps called bill collectors.

The success of Collection companies is based off of a numbers game. If a debt collector makes 100 calls in a day, they will speak with maybe 20 people. Of those 20 people, maybe one of them will make a payment towards the debt. So you can see why it is necessary for bill collectors to harass debtors constantly; if they do not collect money, then they will not get paid.

If you are being harasses by debt collectors, a professional service can stop those phone calls. Click here and complete the debt elimination form to get your life back

18. What if the credit card company gets a judgment against me?

This is another common lie spread by credit card companies and banks trying to prevent their customers from choosing to consolidate their debt with a debt settlement program. Creditors do not sue their customers because they enroll into a Debt Settlement Program. As a rule of thumb, any creditor can sue their debtor at any time in an attempt to force the debtor to make a payment. Creditors must have forgotten that turnips do not bleed. The problem that creditors face is that lawsuits are very expensive and they will be throwing good money at bad, causing even a further financial loss. Most services have established very good relationships with your creditors to help protect you against the possibility of a lawsuit and we even do out of court settlements to stop legal action.

Settling your debts with creditors is the quickest way for a consumer to eliminate debt. If you are able to settle your debts within 180 days from the debt of your last payment, then you will not need to worry about being sued by your creditors. It is very rare for a creditor to sue a debtor when a hardship exists that prevents the consumer from paying their bills but there are exceptions to this rule.

From our experience, only about 1 in 100 people are sued by their creditors for not paying their debts on time. This is very specific to certain high risk states, Michigan, New Jersey, and New York. If you are a resident of one of these states and have certain creditors, you should consider not enrolling the high risk creditors into a debt settlement program and continue to pay those bills yourself. To get the list of high risk creditors, please click here.

In the event that you are sued by your creditor, there is still time to settle the debt out of court, but it is best to consult with an attorney first. It is very important to be proactive in dealing with the plaintiffs counsel and answer any summons that will be delivered by the court. In the event that a judgment is issued against the debtor, the debt can still be consolidated with a Debt Settlement Plan and a settlement will be reached at a later date.

Consumers should know that it is very important to take the right steps and deal with their debt sooner rather than later. Procrastination is not your friend. Interest is compounding daily causing you to go further and further in debt. Take the first step now and get out of debt, Click Here to get 3 Different Payment Plan option

19. Will I owe money to the IRS for my reduced settlement?

There is a lot of bad information about whether or not a debtor will owe money to the IRS when a settlement has been reached with the creditor. The reason why there is so much bad information distributed is because 1) people just do not know the true answer and 2) the banks, credit card, companies, and collection agencies do not benefit when a consumer settles their debt for less than the full balance so they make false and misleading statements. The quickest answer to this question will come from a Debt Specialist that can explain a debt settlement program in full, to have a debt specialist call you, Click Here.

Only a CPA or Tax Advisor can say for certain whether or not you will owe an earned income tax to the IRS after a settlement but here is the information that they will decide from. Publication 908 from the IRS tax manual has an insolvency exception and this is what applies to most clients of a professional service. The Insolvency Exception states a person is insolvent when, and to extent, your liabilities exceed the fair market value of your assets. Determine your liabilities and the fair market value of your assets immediately before the cancellation of your debt to determine whether or not you are insolvent and the amount by which you are insolvent.

Exclude from your income debt cancelled when you are insolvent, but only up to the amount by which you are insolvent. However, you must use the amount excluded to reduce certain tax attributes.

Simplified: any time the “Original Creditor” or the “First Party Collection Agency” charges off the debt and reports a loss on there tax statements and then settle a debt, they are supposed to report canceled debts exceeding $600 to the IRS. You are supposed to report the same as income on your annual tax return. Many people do not know that the IRS permits you to write off any “income” from canceled debts up to the amount by which you were indebted.

What this means in English: If your debt exceeds the amount in dollars of your assets, then you have a negative net worth. Therefore, if you have a negative net worth, you will not owe money to the IRS for settling your debts with a Debt Settlement Program.

To read the full Publication 908, Click Here.

20. So how much does Debt Settlement cost and how will a professional get paid?

Every major company in the industry that offers a Debt Settlement plan charges a 15% fee based of the amount of debt the client enrolls. Most services do not require you to pay upfront fees or processing fees like many other debt settlement companies. Your fee is included in your monthly payment that we setup for you. All of our debt settlement plans offer multiple payment plans depending on your current financial situation We encourage our clients to pay off their bad debt as quick as possible but at the same time live as they should.

If a company offers you a rate of less than 15%, be wary. They do not comply with the standards set by the debt settlement industry. You may think you are saving some money, in reality; you will pay a lot more for your debt consolidation plan. A company like this is typically very small and has not been in business for long nor will remain in business for long.

Get Peace of Mind with Business Credit Monitoring! 21. Who is an ideal candidate for Debt Settlement?

Debt Settlement is a Debt Consolidation Program for consumers who want to get out of debt and want to avoid bankruptcy. Not everyone qualifies though; if you have the ability to pay your bills and just do not want to, you do not qualify. To qualify for Debt Settlement, you must have or had a hardship that caused you to get into debt.

The only type of debts that can be included in a debt settlement plan are unsecured bad debts; these include credit cards, personal loans, automobile repossessions, utility bills, collections accounts, ect…

If you are struggling to make your payments, if you are current on your payments but falling behind, or if you are already delinquent, a professional can help consolidate your bad debt into 1 low monthly payment.

When people like you call us for help with their debt, they come from many different backgrounds with many different financial problems. Our trained counselors will listen to your specific situation and then customize a debt consolidation plan that you can afford and that will take care of the debt. Do not think that bankruptcy is the answer, a professional service will show you why Debt settlement is the best answer to get you out of debt.

22. Who pays my creditors?

When enrolled in a Debt Consolidation program, the company never makes payments directly to the creditor. The payments always come from the client’s personal savings account. Debt Consolidation companies are protecting their clients from having a specific comment stamped on the consumers credit report. If your service made the payments for you, we would have to update your credit report with a comment that you are enrolled into a Debt Management Plan. If you have this mark placed on your credit report, you will have a bad credit score for 7 years or until this is removed from the credit bureaus.

Debt Consolidation is not a loan and it is not a monthly pay your bills service. We work with your creditors to negotiate a settlement to reduce your debt where you can afford to make your payments.

Each month you make your monthly payment according to your debt settlement payment plan. A portion of that goes to your service and the rest of the payment goes to the client’s personal savings account. As the money accumulates in the savings account, the creditors begin to offer settlements to pay off the debt. As the debt negotiation process goes on, the client continues to make their monthly payment. Once your service gets your settlement down to the best possible debt settlement, the client then approves the debt settlement agreement and the bill is paid off from the client’s savings account.

The savings account will always remain in your control the entire time you are enrolled in the debt consolidation program. Only you the client have the authority to make a payment to a creditor to pay off the bill.

You should never let a company control your debt settlement savings account! Companies that require they maintain your savings accounts are typically scams and you should not do business with them.

23. Do I have to include all of my debts?

Many times consumers will ask us if they must enroll all of their debts into a debt consolidation program after they learn that all of their accounts enrolled will be closed with the creditor. The reason the accounts are closed is to allow the consumer a chance to recover from their debt and start over without having to file for bankruptcy.

No, you do not have to consolidate all of your debts if you do not want to but most of the time that is the smartest decision. Sometimes, we will recommend that you pay off certain debts yourself. This is recommended when the balances are relatively small, when your credit will benefit more by paying the balance in full by yourself, or when it is in your best interest.

You can choose which accounts to enroll in the program but it is always best to enroll all of your debts in the beginning. If you have two or more credit accounts with the same company, then you must enroll both of the accounts or not enroll either. This is called cross collaterization. Basically, a creditor will not understand if you are able to pay one account on your own and not the other. The creditor feels that since you have the ability to pay one debt, then you will have the ability to pay on the other account as well.

If you feel that you need to keep a credit card for emergency purposes, you may do so but first, let a Debt Specialist show you a better option for those potential emergencies.

To compare this method to others within the industry, contact us now.

Last Updated ( Wednesday, 30 November 2011 12:20 )  


Credit problems