Debt and Credit Management FAQ's

Q. Will I be totally debt free when I'm done?

This program is focused on dealing with only unsecured debts (credit cards, medical bills, unsecured personal loans). We cannot help you with debt that is secured by collateral (such as mortgages or auto loans). After completing the program, however, the money that you are no longer paying towards your unsecured creditors can now be used to pay down secured debts, as well as to save for your financial future.

Q. Should I put all of my credit cards in the program?

If you have one card with a low balance that you can quickly pay down to zero, then you may hold onto it for emergencies. However the program will not work unless you enroll all of your high balance (greater than $500) credit card accounts. As you can imagine, it makes it difficult for us to negotiate with your creditors if they can see that you are keeping other accounts open and paying those accounts in full.

Q. How does this affect my credit?

If you do not make the required minimum payments to your creditor you may be breaking the terms of your agreement with them and your actions will probably be reported to consumer reporting agencies as a late, delinquent, charged-off or past due balance. This is true whether or not you have enrolled in a Debt Settlement Plan. Depending upon the condition of your credit report at the time of enrollment, a Debt Settlement Plan may have an adverse effect on your credit report and credit score. Our goal is to get you out of debt for the lowest cost, in the shortest period of time without declaring bankruptcy. Once you are out of debt, you will be referred to a reputable credit repair organization if you desire.

Q. Will I receive phone calls from collectors?

There are federal and state laws designed to protect you from creditor harassment. However, the fact is that most of our clients experience some collection calls. The goal is to get your creditors to call us and not you when they want to ask for money, and we will work to minimize the amount of calls that get through to you. In addition, we will work with you to make sure violators of collection laws, including the Fair Debt Collection Practices Act (FDCPA) are appropriately handled.

Q. Will I owe taxes on my forgiven debt?

The IRS considers a forgiven debt as taxable income, so at the end of the year, they will expect taxes to be paid on the settlement. The IRS, however, has a form (Form 982) available for certain hardship situations that may exempt you from this tax. Please contact a tax advisor to discuss this issue further.

Q. Do interest and late fees accrue on my accounts?

If you let your accounts go delinquent, your creditors will continue to add interest and late fees onto your balances. Keep in mind that the interest is going to accrue regardless of whether you make minimum payments or not. The goal is to negotiate substantial reductions to the balances on your accounts, even after the interest and late fees have accrued.

Q. Could I negotiate on my own?

Yes you can. You can also do your own taxes and repair your own car, but most people choose to seek help. Most people prefer to leave these tasks to experienced people who earn their livelihood as specialists in those lines of work. Our team of debt negotiation specialists has only one job - negotiating reductions on our clients’ unsecured debts, each and every day of the week. Our knowledge and experience puts us in the best position to stand up to your creditors and fight for the best settlement possible. Trust the experts, we are here to help!

Q. Do you begin negotiating with my creditors right away?

We will contact your creditors right away (typically within approximately 1 week of your joining the program) to let them know that we have Power of Attorney and to request that future collection calls come to us and not you. The actual negotiation activity is typically very limited until you have saved up enough in your settlement account to make reasonable offers to your creditors. Most (but not all) creditors do not want to spend time negotiating an account unless they know there are funds available. The first settlement typically happens in month 6 to 9 of a client’s program (this varies greatly and depends on your monthly payment and the number of creditors you have enrolled in the program as well as the balance of each individual account).