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Debt negotiators will negotiate with your creditors on your behalf. They give you an alternative to bankruptcy and a solution to your unmanageably increasing debt due to high interest rate. So how does settlement work? Debt negotiators will have an affordable monthly service plan put together for you in order to obtain settlements with your creditors.
Q: Can you settle your debt on your own? Sure you can, but we would not recommend it. You may be able to make your own plumbing repairs or install your own computer network, but most people don't have the time or expertise to deal with it. Creditors deal with thousands of people who are in financial difficulty every day and have a vast array of sophisticated (and some rather blunt) methods of intimidating you into financial arrangements you cannot keep. The settlement process is usually very emotional and stressful, especially when you are the one being attacked by collectors over the phone. Most people prefer to leave these tasks to experienced people who earn their livelihood doing that particular kind of work. Debt settlement companies have a staff of debt negotiators whose only job is to negotiate the settlement of unsecured debt, every day, five days a week. By letting the Debt negotiator do what he or she does best, you will most likely get better settlements with a fraction of the stress. Debt negotiators know how to deal with creditors and have in-depth knowledge about how these institutions work. Debt negotiators can potentially save you thousands of dollars and free you from a considerable amount of stress. Q: How long does the debt settlement program take? The time to complete the debt settlement program varies from case to case and is primarily based upon how much money the creditor is willing to settle for and how much money you have saved aside each month to eliminate the debt of your enrolled accounts. During your initial consultation, the time to complete the debt settlement program for your individual case should be discussed with you by a debt specialist. The average client can be debt free in 12 - 36 months. The amount of time it takes to clear your debts is largely dependent on your current financial situation. If your budget is extremely limited results may take longer. Every situation is different, the negotiator will be happy to discuss this during your free confidential phone consultation. Q: What can I expect as a result of your debt settlement program? You can expect a substantial reduction in what you owe to your creditors. Although individual results will vary, you can typically expect a reduction of 30%-50% of the balance owed on your total debt. Q: How will debt settlement affect my credit? A Debt Settlement Program will have a negative effect on your credit while in the program. If your accounts are already delinquent it may not have much effect. For consumers with unpaid delinquent accounts this makes debt settlement an excellent option over ignoring the delinquent past due account, considering the savings versus paying the past due account in full. The question is, does debt settlement make sense for those who have current accounts, and a good credit rating. Those with a high credit score must weigh the negative impact on credit ratings against the risk of bankruptcy and the potential of being debt free for less than the full balance. Note: even if your accounts are current your credit score may already be negatively impacted by your total debt and debt to available credit ratio; in this case negotiation of the accounts may still be a better alternative than making minimum monthly payments for the next 30 years and still having bad credit.
Q: 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 but even bankruptcy attorneys will tell you it will remain on your credit for 10 years. Both Chapter 7 and Chapter 13 will represent a major negative mark on your credit rating. In Chapter 7 bankruptcy it will stay on your report for 10 years and chapter 13 bankruptcy stays on your report during the time you are in the bankruptcy program plus a specified time calculated from the date you complete the program.
Q: Does the debt settlement company keep my information confidential? Yes. Debt settlement companies maintain your confidentiality at all times and is bound by "Rules of Professional Conduct." They only disclose information to those persons that you have authorized. All creditors that you have contracted them to settle with on your behalf will be contacted by them and advised that you have retained the Debt settlement company to represent you. All information is considered highly confidential and personal. Q: What is the difference between unsecured debt and secured debt? 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, utility bills, and personal loans. Should you fail to make timely payments, the lenders only recourse is to pursue legal action. Secured debt is debt for which the creditor has collateral in the form of a security interest in personal and/or real property. Should you fail to make timely payments on secured debt, the creditor is entitled to repossess the property and sell it. Please keep in mind that you may still be liable for any deficient balance remaining after the sale of the property. When dealing with secured debt, it is important to obtain advice from a licensed attorney in order to protect your interests. Q: Will I continue to get calls and collection letters from my creditors? Yes you may. Most original creditors are cooperative. Usually, the calls will reduce after the original creditor receives a hardship letter from you. Eventually you may still have to put up with their calls for another 30 to 150 days, because it takes time for original creditors to update their records and this varies by creditor. It is important that you review the section on how to handle creditor calls in the program kit you receive as a new client to minimize creditor harassment.You will also need to keep a creditor log of every phone call or letter that you receive and report it to the debt settlement company that you are working with. Once your account has been sold or moved to a collection agency, collection calls can be stopped but the Debt Settlement Company must be made aware of the switch while you are in the program. Note that despite best efforts, there are dishonest collection agencies that will not abide by a cease and desist letter and may continue to call you. This is against the law and you can formally complain should this continue. You should also know that accounts are frequently moved or sold over time. The Debt settlement company may prevent one collection agency from contacting you. However, they may sell or move your account to a new agency and the process will have to be repeated to stop any new calls. See your rights under the Fair Debt Collection Practices Act & Debt Collection Laws for your State Q: Will fees and interest continue to accrue? Most creditors will continue to charge fees and interest until the account is written off (typically 120 – 210 days) in hopes of making more profits from you in your time of financial hardship. When Debt negotiators work out a settlement offer they attempt to negotiate from a position of the principal amount you owe less any fee accumulated during the settlement process. Q: Will the debt settlement program stop legal action against me? Creditor lawsuits are not common but they do happen. It is also a common tactic of third-party creditors or collection agencies to threaten you with a lawsuit (which is illegal if they do not intend to sue). The reality is that third-party creditors or collection agencies rarely ever sue. Furthermore, it takes time and costs money to file. Lastly, even if a creditor is to take legal action, they can only collect what you have. A wage garnishment takes time and always hinges on your employment and may not be applicable in your state. If you own a home it is difficult for a creditor to attach the equity in your home and it may be protected by your state’s homestead act. In conclusion, it is typically more cost effective for a creditor to settle than to pursue legal action. While the Debt Settlement Company cannot guarantee that legal action will not be taken, they are confident that there experience in dealing with creditors can reduce the possibility of this happening. Despite any legal action that may or may not be taken, your account can be settled before, during or after the suit. Just because an account goes to legal action does not mean that it cannot be settled. The threat of legal action can be the scariest of all. IT CAN BE HANDLED. The Debt settlement companies recommend that clients seek competent legal counsel in certain situations. Note: Debt settlement companies cannot provide you with legal advice. They work with your creditors to find a solution that will satisfy everyone before legal action is taken. Q: What if I'm sued and they get a Judgment? Right now in the United States there are between 200 and 300 billion dollars of uncollected (Money Judgment debt). The court does not require the debtor to pay, and will not even help collect. Very few people know how to find these assets or what to do when they are found. The result is that millions of Judgments are just sitting in files. "Four of five winners of a Judgment never see a dime." Debt settlement companies negotiate all unsecured debts, which include judgments. Regardless of what stage of collections a debt is in, it can be negotiated. Q: Will I owe money to the IRS for my reduced settlement? Creditors are required to report canceled debts exceeding $600 to the IRS and you are supposed to report the same as income on your annual tax return. However, the IRS permits you to write off any “income” from canceled debts up to the amount by which you were “Insolvent” at the time. Therefore, unless you have a positive net worth, then you ordinarily will not be obligated to pay taxes on the forgiven amounts. Additionally, if you do not qualify as insolvent non principal amounts such as fees accumulated on the account may be deducted from the amount reported. Refer to: www.IRS.gov Publication 908 Note: You should consult a tax advisor for advice specific to your situation. This should not be considered tax advice Q: So what does the program cost and how do the settlement companies get paid? The fees are very competitive, they are based on a percentage of what the debt settlement company saves you, and DOES NOT consist of an enrollment fee or a service fee. The debt settlement company can not charge you any fees until it has an agreement in writing with the creditor. Once the settlement company has the agreed settlement amount in writing they can then charge you the fee. The typical savings fee is between 15 and 35 percent depending on the settlement company. Unfortunately, there are still some debt relief companies that are still charging up front fees and do nothing for the consumer. These are the companies that you want to stay far away from. If you come across a company that is charging any up front fees you should report them to the Attorney Generals office and the FTC. Q: Who is an ideal candidate for Debt Settlement?
Q: What is the affect of Debt on my Credit Rating?
Many people assume that making payments on time means they have good credit and being late with payments causes bad credit. Making consistently late payments will cause a bad credit rating, but your payment history only accounts for 35% of your credit score. Your make up of debt plays an almost equally important role.The make up of your debt can have a negative affect on your credit score. Many people think they have "perfect credit" but in fact have low credit scores and to a Creditor they have "bad credit". We recommend you get a copy of your credit report before you commit to any program. Credit card accounts are the most common cause of negative impact on your credit report:
Q: Is Debt Settlement the same as Consumer Credit Counseling? No. Debt settlement does not work like consumer credit in most respects. The goal of the debt settlement is to reduce the overall amount of the debt, by negotiating agreed payoff amounts with your creditors. Debt Settlement can save you thousands of dollars and years of repayment. What are the benefits of a Debt Management Program / Consumer Credit counseling? Our Debt Management Program is focused on assisting you in regaining control of your finances, creating a household budget, and consolidating your debt into one monthly payment. We work with creditors to arrange for the benefits that creditors offer through participation in a debt management plan. Most creditors will provide benefits, which may include lower interest rates, stopping late and over limit fees, and re-aging delinquent accounts to reflect a current status. How does Nation Wide Consumer Debt Relief Inc., obtain lower payments? Many of the major lending institutions and credit card companies have agreed to either reduce or eliminate an individual's interest charges and late fees. It should be of interest to you that we may be able to lower your monthly payments by as much as 50%. Will you advise the credit bureaus that I am paying my bills through your agency? No. We do not report to credit bureaus. However, your creditors may report that you are participating in our debt repayment program. Note: that if the credit bureaus report that you are on a consumer credit counseling program it does not negatively affect your 3 digit FICO SCORE as long as you make your monthly payments on time each month. Do you loan money? No. Nation Wide Consumer Debt Relief is not a lending institution. We work with creditors on your behalf to establish an affordable new payment arrangement, which may include benefits such as a reduced interest rate and no late/over limit fees, allowing you to pay off your debt more quickly. We collect one monthly payment from you and disburse your payments to your respective creditors. Will creditors continue to call me after I start the Debt Management Plan? Unlike debt settlement where you will continue to receive calls from your creditors, no. You will not continue to receive calls from your creditors once the letters of proposals have been accepted by your creditors. Creditors usually stop contacting our clients after they receive proposals for payment arrangements from Nation Wide Consumer Debt Relief. In some cases, creditors need more time to modify their collection activities. This is usually accomplished within sixty (60) days of the client’s first payment. However, creditors still have the right to contact you. Should this happen, please do not negotiate with them. Instead, ask them to contact our agency or obtain their name and telephone number and advise your account manager. Will you accept cash or a personal check? Your monthly deposit must be deducted directly from you bank account or paid by money order or certified bank check. What kinds of debt can be put in a Debt Management Program? Our Debt Management Program can help you with unsecured debts such as credit cards, department store cards, medical bills, signature loans, and many collection accounts.
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