Debt Settlement FAQs
Q.How does debt settlement work?
A.Debt settlement is a process by which debt is negotiated with the creditors to lower the overall amount of debt to 40% of the original balance or less. All of our negotiations are done by an attorney and guaranteed or your money back.
Q.How long will it take to settle my debts?
A.This depends on your amount of debt and your financial situation and can be more accurately answered by one of our Enrollment Agents through our free consultation. However, most clients settle their debts within 3 years and some are even debt-free in 6 months.
Q.Should I just ignore my debt collectors?
A.Unless you are looking to file bankruptcy or have no assets that can be taken from you, you shouldn't ignore your debt or try to hide from a debt collector. Generally, the longer you put off resolving the issue, the worse the situation and consequences will become. You should try to work out a mutual agreement with the collector and/or creditor.
Q.What will happen to my credit score?
A.There is no incentive for a creditor to negotiate an account if you are paying them interest and fees. If you are not making minimum payment, this will have an effect on your credit score, and will show up as a negative on your credit report. On your credit report it may show late, delinquent, or past due. After completion of the program your accounts will appear as paid as agreed or settled as agreed with a zero balance and show that you paid them off. Upon completion of the program, we will have helped to drastically improve your Debt to Income Ratio. Reduction of debt can help to improve your credit score, as well as increase your borrowing power with lenders!
Q.What are my rights regarding debt collection harassment?
A.The federal Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. § 1692 and following) bars collectors from calling you at work, harassing you, using abusive language, making false or misleading statements, adding unauthorized charges, and many other practices. Under the FDCPA, you can demand that the collection agency stop contacting you (except to tell you that collection efforts have ended or that the creditor or collection agency will sue you). You must put your request in writing. It's against federal law for a bill collector who works for a collection agency (as opposed to working in the collections department of the creditor itself) to call you at an unreasonable time. Unreasonable times can be subjective depending on each person's individual life and work habits.
Q.Will credit counseling (CCCS) hurt my credit?
A.Using a credit counselor will not directly affect your credit score, but may make it hard for you to qualify for any further credit while using the program. When you enroll in credit counseling, you write a monthly check to an agency and the agency pays your creditors. A debt-management plan usually lasts three or four years and a comment stating that you're paying an account through a credit-counseling agency appears on your credit report which remains until the account is paid in full. This won't necessarily hurt your credit score but lenders will notice this when reviewing your credit report. Also, you must be aware of fraudulent or irresponsible debt counseling services because if they don't make your payments on time your credit score will suffer. Debt settlement is NOT credit counseling.
Q.Can I settle debts on my own?
A.You could, but without the experience and relationships with your creditors, it would be extremely difficult. You are also emotionally involved. Handling debt settlement yourself would be like repairing your own automobile; it can be done, but only if you have the expertise and tools.
Q.Do I have to include all my accounts?
A.No. Only those debts that you want to include in the program will be negotiated. Many people retain one credit account for emergency use. You do want to be careful about splitting up creditors under the same umbrella! Our Enrollment Agents can answer that question specific to your situation.
Q.Can I accelerate the program?
A.Yes. You can settle your accounts as soon as funds are available assuming the account has matured long enough. Many consumers get out of debt earlier than expected after securing funds for settlement. There are no pre payment penalties.
Q.How much does the program cost?
A.We charge a flat fee based on a percentage of the unsecured debt you place in the program. There are no other monthly or hidden charges whatsoever. Your monthly payment is determined by what you can afford. One of our Enrollment Agents will more thoroughly explain this during the initial consultation, and let you know your specific monthly payment with fees included.
Q.Will all my creditors settle?
A.Generally, there are few instances when a creditor will refuse to settle. Creditors realize that settling is in their best interest, and that you as a consumer are seeking an honorable alternative to bankruptcy. They also realize that recovering a portion of the money that's owed to them is better than recovering nothing at all.
Q.Can you stop interest and late fees?
A. No settlement program can stop a creditor from adding interest or late fees to an account. However, interest and late fees will be taken into consideration when settling your accounts. We negotiate the amount that you have to repay down to the lowest possible point. The amount of money you save is significantly greater than the interest and late fees that might be added.
Q.Can you prevent lawsuits?
A.We cannot, nor can any settlement company, prevent a creditor from exercising their legal right to sue you should they choose. However, most creditors realize that this is a costly and time consuming approach to resolving your debt, and would much rather settle than go through this process. Once your account has been assigned to a collection agency, it is rare that the creditor will sue you to recover their monies, and are generally satisfied to settle your account, realizing that recovering part of the debt is better than securing no payment at all.
Q.Are my creditors going to call me?
A Most creditor calls will stop within 30 to 90 days. In all cases, you should keep a log of all calls you get from creditors with respect to the debt you put into the program. If at anytime you feel you are being harrased contact your settlement coach immediately. They will ask you a 9 point questionaire, and if they feel the FDCPA laws were violated, they will refer you to an Attorney who may pursue legal action at no extra cost to you!
Q.If I miss a payment, will I be dropped from the program?
A.No. Simply call our customer service department and they will arrange payment over the phone. It is understandable that circumstances may arise and we will help you get back on track with your payment schedule.