Frequently Asked Questions:
1. How will the debt settlement program affect my credit?
The debt settlement program will affect your credit score as monthly payments are not being made to your creditors and they will report this to the credit reporting agencies. However, as we settle delinquent accounts throughout the program, they will be reported back to the reporting agency and your credit score will start to repair itself.
2. Should all my credit cards be enrolled in the debt settlement program?
Yes, but it is okay to keep a few cards outside the program for emergency use only. Although this does not guarantee that they will not keep these accounts open due to non-payment on accounts included in the debt settlement program.
3. What is the cost for the debt settlement program?
Service fees for the debt settlement program are 15% of the total debt you enroll. There is a $59 a month service fee and a one-time enrollment fee of $199. You must agree to pay all fees at the time of enrollment and they will be fully disclosed to you.
4. Will interest rates and late fees continue to add up after my enrollment in the debt settlement program?
The credit card companies will continue to charge interest and late fees. When we go to settle the account, these fees will be included in the settlement. This settlement will typically be far less than what you originally owed on the account. So technically you will not be paying any of the fees that have accumulated after enrollment.
5. Will a creditor ever not accept a settlement?
It is very rare that a creditor would not accept a settlement. The creditor may decide to settle the account for close to the original balance owed when you signed up for the program. This will still save you money by not paying back all the interest and late fees that have accumulated on the account.
6. If I can afford my monthly payments should I join the debt settlement program?
This program is designed for people that have a financial hardship and do not have many options. This program is not recommended if you have the ability to pay off your debts on a monthly basis.
7. Do I have to pay any taxes?
Although the amount saved on settling the debt far outweighs the amount of taxes you MAY have to pay on an account, you may still be liable for the taxes. Sometimes the creditor will file a 1099C form and you will have to pay taxes on the difference of the settled amount and amount owed. Your tax professional should be consulted as there is a claim of insolvency that can be filed to waive these taxes if you show cause.
8. Can I be sued while in the debt settlement program?
In most situations the creditors would rather settle an account away from court than go through the lengthy litigation process. Yes, the creditors do have the legal right to sue you due to non payment, but we can still attempt to settle the account they decide to take legal action. We have an attorney network and paralegals on staff to assist you through the process.
How does the debt settlement program work?
You will asked to set aside a given amount of money each month based on your financial situation and what you are able to afford after speaking with one of qualified representatives. This monthly payment will be saved up in a trust account set aside for you. We will begin to negotiate on a settlement when enough funds are saved up. When an agreement is reached on an account, we will get your approval to send out payment from your trust account to the creditor to complete a settlement. The process of saving up funds will repeat until all accounts are settled.
