Debt settlement is a process by which your debt is negotiated with your creditors to lower the overall amount of your debt. You then pay the remaining balance as a lump sum, saving time and money.
2. How long will it take to settle my debts?This depends on your amount of debt, your financial situation, and can be more accurately answered by one of our Enrollment Agents through our free consultation. However, some clients settle their debts within 3 years and some are even debt-free in 6 months, provided they complete the program and are able to save funds.
3. Should I just ignore my debt collectors?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.
4. What will happen to my credit score?If you are not making minimum payment this will have a negative 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 settled as agreed or paid for less with a zero balance and show that you paid them off. Upon completion of the program, your Debt to Income Ratio should be drastically improved. Reduction of debt can help to improve your credit score, as well as increase your borrowing power with lenders!
5. What are my rights regarding debt collection harassment?The federal Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. ยง 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.
6. Will credit counseling (CCCS) hurt my credit?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.
7. Can I settle debts on my own?You could, but without the experience it can be difficult and time consuming. Handling debt settlement yourself would be like repairing your own automobile; it can be done, but only if you have the expertise and tools.
8. Do I have to include all my accounts?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.
9. How long will the program last?This is dependent upon the amount you can save on a monthly basis and successful completion of the program. We can tailor a program to specifically address your needs.
10. Can I accelerate the program?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.
11. How much does the program cost?Depending on the firm that's chosen, 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.
12. Will all my creditors settle?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.
13. Can you stop interest and late fees?No, settlement programs can't 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. Typically law firms negotiate the amount that you have to repay down to the lowest possible point. The amount of money you save is typically greater than the interest and late fees that might be added.
14. Can you prevent lawsuits?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, they are generally willing to settle your account, realizing that recovering part of the debt is better than securing no payment at all.
15. Are my creditors going to call me?There is no guarantee that calls will stop, however statistics show that they may slow down after 90 days on the program. 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 any time you feel you are being harassed contact your Account Manager immediately. They will ask you a 9 point questionnaire, 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!
16. If I miss a payment, will I be dropped from the program?You must keep in mind that the program will not be successful if you miss multiple payments. Most law firms allow you to miss a payment or two. In the event you are missing too many payments, they will contact you or notify you in writing to discuss the issues you are having. Keep in mind that the goal here is to get you out of debt. The program will not work if you are not willing to save funds.
