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Debt
Settlement: Frequently Asked Questions |
- Is debt settlement legal?
- Can I settle my debts myself?
- Will I still be able to use
my credit cards?
- Is financial hardship condition
necessary for debt settlement to work for me?
- What kinds of debts to include
in the debt settlement program?
- Is Debt Settlement the same
as Debt Management?
- Is Debt Settlement the same
as Debt Consolidation?
- What is the effect on my
credit?
- How long does it take?
- Is my information confidential?
- How much does your program
cost?
- Does the program work all
the time?
- What about filing Bankruptcy?
- What is Secured Debt?
- What is an Unsecured Debt?
- When does a Secured Debt
become an Unsecured Debt?
- Which debts should I include
in the program
- Will my case be accepted?
- Will I receive calls from
my creditors while in the program?
- What are the tax consequences?
- What about lawsuits?
- Can my wages be garnished?
Q. Is this legal?
A.
Absolutely! As long as you have a legitimate
financial hardship. We are not in the business of
trying to defraud lenders.
We have settled debts with
the largest credit card banks in the nation. Debt Settlement
is perfectly legal in all 50 states.
Q. Can settle my debts myself?
A.
Although it is possible, it is very difficult to negotiate debt on your own. 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 getting you to pay your debts (Scare tactics). It's almost like you trying to change your own transmission. Can you do it? Yes, but if you don't know what you're doing, nor have the tools to change it, it can be an extremely complicated task. The settlement process is usually very emotional and stressful, especially when you are the one being attacked by collectors over the phone. By letting us do what we do best, you will get better settlements with a fraction of the stress. Remember, we have years of experience in dealing with creditors and handling people's financial problems.
Q. Will I still be able to use my credit
cards?
A.
No. Since the banks are giving up half
or more of the money you owe, they will of course discontinue
your credit privileges. However, many clients keep current
on one card with a small credit line for emergency purposes.
Q. Is financial hardship condition necessary
for debt settlement to work for me?
A.
Yes. This will usually take the form
of loss of income, medical condition, death of a family
member, divorce or separation, loss of child support payments,
or some other serious event that caused a severe financial
setback. It doesn't always have to be drastic, but there
should be an identifiable circumstance (or set of circumstances)
that got you into trouble.
Q. What kinds of debts can i include
in the debt settlement program?
A.
The negotiation strategy described above
works well for a variety of debts, but the winner is credit
card debt. The steepest discounts and greatest success can
be obtained with credit card accounts. Department store
charge cards, financing contracts, and miscellaneous bills
can also be negotiated, but with less predictable results.
Medical bills are often negotiable, depending on the background
of the case, usually with good results. Student loans cannot
be negotiated (since these are Federal loans, Uncle Sam
can dip his hands into your tax refund to collect the balance).
Auto loans can be refinanced, but generally not reduced.
If your automobile has been repossessed and you have a deficiency
balance, that balance can be negotiated. Mortgages can be
rescued from foreclosure with a variety of techniques, but
of course you’ll still be on the hook for full value.
Basically, you can negotiate any UNSECURED DEBT
using our program.
Q. Is Debt Settlement the same as Debt
Management?
A.
No. Debt Management includes consumer
credit counseling, debt reduction settlement, and debt consolidation.
Under consumer credit counseling you pay 120% of the debt
back over an extended period of time. With Debt Settlement,
overall debt is reduced and is paid off in a much shorter
time period.
Q. Is Debt Settlement the same as Debt
Consolidation?
A.
No. With our Debt Settlement, you negotiate
to actually reduce the total amount you pay to your creditors.
Debt consolidation requires you to obtain a new loan in
order to pay off your existing debt. If you have too much
debt and/or bad credit, it is highly unlikely that you would
be approved for a consolidation loan. If you are approved,
you're basically robbing Peter to pay Paul. The end
result is that you are now in more debt because of interest
being added to the new balance of all your debt.
Q. What is the effect on my credit?
A.
Your credit rating is largely determined by two factors, your payment history and the amount of debt you owe, or debt to income ratio. The truth is that any debt management program will negitavely affect your credit in the beginning. However, as you begin to pay off the accounts and obtain zero balances, you will ultimately lower your debt to income ratio and therefore improve that specific portion of your credit score. Understand this - no matter which direction you choose in getting out of debt you are looking at years of repayment. Our goal is to eliminate your debt in the quickest manner possible to get you back into a debt free situation so your life belongs to you again and not your creditors.
Q. How long does it take?
A.
The length of time necessary for completion
varies from case to case and will depend on you having the
funds available to resolve your debt. The amount of time
necessary to complete your program depends on a number of
factors.
If you follow all the procedures,
you can expect to be free of all contracted unsecured debt
at the conclusion of your program participation. Of course,
you will remain obligated on certain secured debts (i.e.,
Mortgages, auto loans, and any other SECURED DEBT).
You can expect a substantial
reduction in the amount of debt you owe to unsecured creditors.
While individual results may vary, you may settle your outstanding
debt for as little as 25%-65% of the balance owed.
Q. Is my information confidential?
A.
Yes. Our company does not sell
your information to any other 3rd party for any reason whatsoever.
Once you become a member and start the program, your information
is stored on an internal server not accessible by the internet.
Our secure client login server is protected with 128 bit
SSL encryption. We maintain updated anti-virus, spyware,
and hack protection software. We urge our clients
to maintain an updated anti-virus and spyware software program
on their computers as well to ensure 100% privacy.
Q. How much does your program cost?
A.
Our fees are based on your total amount
of unsecured debt you want to settle. Service
Fees vary as each individual case is different. You
will have 24/7 access our members area as well as download
your client packet to get started right away.
Q. Does the program work all the time?
A.
No program works 100% of the time with
every creditor, and of course no one can guarantee specific results
in advance. One thing I always hated when I worked
for debt settlement companies is that they always wanted
you to lie to the customers and tell them things they wanted
to hear. With that being said, again, no program works
100% of the time. There are different circumstances
in which negotiations may not work at all. If you
think you may have an account that might not work on our
program please contact us and we'll review it with you and
discuss your alternatives. We are proud to say, however,
that the program we offer has a very high success rate.
In fact, over the years we have settled vast amount of consumer
and commercial debt using our debt settlement program.
Q. What about filing Bankruptcy?
A.
You should only file Bankruptcy as a
last resort and after all other methods have failed. If
you have enough discretionary income to resolve your debt
over time, it may be recommended that you attempt Debt Settlement
in lieu of filing bankruptcy. Resolving your debt through
Debt Settlement will have a more positive impact on your
credit rating in the long run. Remember that a Bankruptcy
will stay on your credit profile for up to 10 years. You
may not realize it now, but you may need a debt free credit
report in the future for an investment, home, car, or any
other unforseen future event or circumstance.
Q. What is Secured Debt?
A.
A Secured Debt is a loan where
the creditor retains a security interest in an item of real
or personal property such as a house or an automobile. If
you fall behind on payments on this type of debt, the lender
has the ability to repossess the property in order to mitigate
their damages. It is important to remember that you could
remain liable for any deficiency balance owing after the
property has been repossessed and sold. Certain exceptions
may apply and will depend on the exact nature of the security
interest. The laws regarding home mortgages vary from state
to state and the lender's rights generally depend on the
terms of the mortgage and whether any other lenders have
an interest in the Real Property. In these situations it
is important to seek competent legal advice to protect your
interests.
Q. What is an Unsecured Debt?
A.
An Unsecured Debt generally arises
out of a contract you enter into with a creditor which enables
you to obtain goods or services on credit in exchange for
your promise to pay that creditor back. The most common
types of unsecured debt are: credit cards (including department
stores and gas cards) and personal loans. If you fall behind
on this type of debt it can become overwhelming.
Q. When does a Secured Debt become an
Unsecured Debt?
A.
A secured debt may become
an unsecured debt in situations where the property securing
the loan has already been repossessed and sold by the creditor
such as a repossessed automobile. If the sale of the property
does not cover the contractual obligation, a deficiency
balance is owed by the consumer. This deficiency balance
then becomes an unsecured debt. Certain exceptions may apply
and will depend on the exact nature of the security interest.
Q. Which debts should I include in the
program?
A.
In the Consumers Debt Relief
Debt Settlement program you can select which accounts you
would like resolve. It may be recommended that you include
all or most of your unsecured debt and this will be discussed
with you after program participation. It is not recommended
to pick and choose which unsecured debt to include because
it could possibly undermind negotiation leverage.
In turn, this will not allow us to obtain the lowest possible
settlement amount for you.
Q. Will my case be accepted?
A. If you
are someone who is in debt and serious about resolving your
debt and are currently working, chances are we can assist
you. Simply complete the application to get started.
Q. Will I receive calls from my creditors
while in the program?
A.
Although we will send correspondence to your creditors requesting
that they cease all communication with you, you still may
receive some calls through the process. There are
different laws for 1st party and 3rd party collections which
we cover in our exclusive client area. 90% of 1st
party collection agencies will honor a standard cease and
desist letter. There are those who will want to play
hard ball with you and pester you. You don't have
to talk to them if you don't want to. We will walk
with you through the process 100% of the way and show you
how to deal with those creditors who want to play hard ball
and attempt to scare you.
Q. What are the tax consequences?
A.
Banks are supposed 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. So unless you have a positive net worth, which
is highly unlikely if you’re deep in debt, then you
ordinarily won’t have to pay taxes on the forgiven
amounts.
Q. What about lawsuits?
A.
Lawsuits are far more rare in debt matters
than most people think. Some debtors fall behind, don’t
make any payments for years, and never hear from a single
attorney. Of course, the bank has the right to sue you to
recover their money. But generally, if you keep up a dialogue
(through our program) with the bank, they would prefer to
work out a solution rather than sue. In fact, lawsuits are
one of the chief reasons that many people are reluctantly
forced into bankruptcy. However, when you take the debt
negotiation approach, lawsuits can normally be avoided if
you’re willing to work out an arrangement with your
creditor.
Q. Can my wages be garnished?
A.
A common tactic used by aggressive debt
collectors is the threat of wage garnishment (One of our
founders used to be a debt collector). If you’re already
struggling financially, nothing is more scary than the prospect
of having money taken out of your paycheck without permission.
Collectors try to make it sound like this will happen on
your very next payday if you don’t send a check immediately.
This, quite simply, is false. The creditor first has
to sue you, obtain a judgment, and then file for a garnishment
action. If you’re willing to work with your creditors
through your negotiator, all this can be easily avoided.
Certain states also have laws in place to prevent wage garnishment
and filing suit against debtors.
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