F.A.Q.
1. Debt Settlement
What is Debt Settlement?
Many individuals have problems paying their debts on time. Or maybe, you are already behind on payments or cannot afford to stay current due to a financial or medical hardship. Debt settlement is a method to reduce those debts. Our trained debt negotiation specialists will negotiate with your creditors on your behalf to reduce your debt balances by 40-60%. We can also help you to avoid filing a costly bankruptcy.
How do I qualify for your Debt Settlement Program?
After you filled out our easy online application, a Debt Counselor will provide you with a free consultation, which includes a detailed and customized financial analysis to determine if you would benefit from the program. The last thing we want to do is put you in a program that will only provide temporary relief. Our goal is to eliminate your debt as quickly and as cheaply as possible. If you are in debt and have a legitimate hardship, chances are we can assist you. However, we do not accept everyone into our program.
Is this the same as consumer credit counseling?
No. Credit counseling has no effect on your principal balance. In credit counseling you repay the debt in full, at reduced interest rates. One problem with consumer credit counseling is that the payments are still rather high and it typically takes 5 years to pay off the debt. These companies also receive most of their revenues from your creditors - the very people to whom you owe money. In other words, they probably do not represent your best interests. After all, they are being largely supported by your creditors. While in credit counseling, you pay your debts through the counseling company. You will stay current on payments and probably not damage your FICO score. However, you will receive a negative mark on your credit report, a CC or Credit Counseling mark. This is viewed negatively by lenders and may damage your creditworthiness.
What about bankruptcy?
Bankruptcy is an absolute last resort. It will have an extremely negative and lingering affect on your credit report for 7-10 years. It will also carry a horrible stigma and may affect you in other ways such as employment. You do not want to file for bankruptcy if it at all possible. If you are employed, are serious about resolving your debt, and have enough discretionary income to resolve your debt over time, you should contact us for a free initial consultation.
How about a loan?
This may already be part of the problem and an additional loan can only compound matters. Could you even qualify? And if so, you may need to secure the loan with an collateral - a risky venture. If you default on a secured loan, you'll lost the collateral, which could be your home.
Who is your perfect client
An ideal client:
Has a debt problem he or she cannot resolve.
Is having trouble staying current, is delinquent, or is close to being in litigation.
Has a positive cash flow.
May be considering bankruptcy, but would like to avoid it.
Has a minimum of $10,000 in unsecured debt.
Have some type of hardship (divorce, illness, job loss, etc.).
What is Unsecured Debt?
Unsecured Debt is not collateralized by property and commonly includes: credit cards, medical bills, commercial debt, personal loans, and consumer debt.
What is Secured Debt?
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. If you fall behind on this type of debt, the lender can repossess collateral in order to collect on their outstanding debt.
Will all creditors settle?
We look at each situation as being unique. We have established relationships with most creditors and know which ones are willing to settle and at what percentage. Our Debt Consultants will review the percentages we typically receive from your creditors and base their estimates on these. We will not accept into our program creditors that we cannot work.
What if I cannot afford to pay the settlement?
You are in control of what gets settled. If you do not have the funds available for a settlement, then no settlement is made. We will keep your creditor at bay until you have accumulated the requisite funds. Sometimes an attractive settlement offer is reached earlier than anticipated. In these instances, we recommend you take advantage of the offer, if possible. You need to make an effort to eliminate your debt by following the plan we develop. We form a partnership to help you solve your financial situation. Without an effort on your party, you debt will not disappear and we cannot settle.
Do I have to include all of my debts in your program?
You can select which debts you would like us to resolve. We recommend that you include all or most of your unsecured debt. It is important that you tell our consultants about all other unsecured debt you have. It may affect our ability to negotiate if you make payments to a creditor that is not included in our program, while not paying creditors in the program.
How does this affect my taxes?
Debt settlements should be recorded on your tax filing. If a debt is canceled or forgiven, the debtor generally must include the canceled amount in gross income for tax purposes. It is considered forgiven debt and taxed at your normal rate. If you have three debts and each is settled in a different year, then you would only owe taxes in the year in which each individual settlement occurs. Example: You owe Creditor A $20,000 and we settle it for $8,000. You have saved $12,000. Your tax rate is 25%. You would owe $3,000 in taxes (25% of the $12,000). Even with the taxes, you are still saving $9,000 in this example. Depending on your financial situation, you may be able to claim insolvency and not owe these taxes. For more information contact your accountant.
How does this affect my credit?
It is important to point out that we do not report to the credit bureaus. However, your creditors may report that you are participating in a debt program. Clients will likely experience an adverse affect on their credit. No form of debt reduction will have a positive effect on your credit. In debt settlement, you receive an 'open delinquency' on your credit report because regular payments are not made to your creditors. However, once we negotiate a settlement, you will pay the creditor directly yourself, and the late marks will cease. Your credit report will then read 'settled in full'. Our program will certainly improve your debt to income ratio by eliminating debt. This ratio is used by lenders to evaluate your creditworthiness. Since your debt is being resolved by way of settlement, future creditors will see you have made a concerted effort to resolve your debt instead of filing bankruptcy. Remember, our program is a bankruptcy alternative so credit is a secondary concern. Our goal is not to improve your credit, but to get you out of debt as quickly as possible.
Do you pay my creditors or do I pay them?
We do NOT disburse funds to your creditors during the program. We are not a credit counseling program. The purpose of our debt management program is to settle your debts at a discount to the principal balance. While in our program, regular payments are not made to your creditors. We cannot negotiate meaningful settlements on current accounts. If you can afford to pay off your debts on your own, you should do so. Once you approve a negotiated settlement offer, you will then make settlement payments directly to your creditors from your settlement account. The settlement account is an account that you control at your bank.
How long will the program take?
The length of time necessary for completion of the program varies from case to case and will depend largely on your budget. Depending on the monthly payment you decide upon, the debt can be eliminated as soon as you can come up with the necessary funds. It could be as soon as 120 days. A typical program, however, takes 12-36 months.
Can my creditors call me when I'm in the program?
Yes, but most will not. The majority of first party creditors are cooperative and will update your records to indicate you are participating in a debt management plan. Our program includes representation by our in-house legal department. We send cease and desist letters to creditors. This compels third-party creditors or collection agencies to only communicate with us. However, they may still call for 30 to 60 days while the program is being set up as the amount of time it takes for their records to update varies by creditor. Usually, the calls will cease after the creditor receives notice from us. Your Debt Counselor will explain how various creditors are handled. Be aware that despite our efforts, there are unscrupulous collection agencies that will not abide by the law and will continue to call you. You can formally complain should this continue. You should also know that accounts are frequently sold. We may prevent one collection agency from contacting you. However, they may sell your account to another new agency and the process will have to be repeated.
Can my creditors sue?
Creditors maintain the right to use legal means to collect a debt. Some are more litigious than others. However, most will only sue if there is a lack of communication or they feel a consumer who can afford to pay, is trying to 'beat the system.' Lawsuits are not common but do occur. You should be aware that a creditor can only sue you if it retains an attorney in your state. Furthermore, it takes time and costs money to file. Lastly, even if a creditor were to take legal action, they can only collect what you actually have. A garnishment takes time and hinges on your employment. If you lose your job, the garnishment will temporarily cease. It is not easy for a creditor to attach to equity in your home and it may be protected by your state's homestead act. In summary, it is more cost effective for a creditor to settle than to pursue legal action. We work with your creditors to find a solution that will satisfy everyone before legal action is taken. While we cannot guarantee that legal action will not be taken, we are confident that our experience can avoid it.
I own a home with equity. How can this be used to help with debt settlement?
If you have available equity in your home we may be able to help you use this as a means to gather money for settlement more quickly. We have affiliations with several mortgage companies that are experienced in working with debt settlement companies. Ask your debt counselor for more information on this.
So what are your fees?
Our fee is based on a percentage of your overall debt. We guarantee that our fee is among the lowest in the industry. If for any reason, you fail to complete the program, you shall be entitled to a reimbursement of all unearned fees. Our exact fee schedule can be explained to you by your personal debt counselor and is further outlined in writing for your benefit. Our program is very affordable and far less expensive than costly legal fees or attorneys which may charge hundreds of dollars per hour. We receive our fees through an electronic funds transfer from the bank account you use.
Will my information be kept private?
We are committed to maintaining complete confidentiality and privacy. Feel free to read our comprehensive privacy policy found on this site.
2. Credit Repair
What exactly do you do?
Our program is designed to be very easy. When you sign up with us you give us your Limited Power of Attorney to carry out credit repair work on your behalf. Upon receipt of your credit reports we conduct a detailed examination in light of the laws that govern all of the participants in the credit reporting process. We will identify everything that is not in compliance. We then send letters to the relevant parties for the purpose of clearing derogatory information from your reports. Our approach is truly effective. In addition, we provide valuable counseling services to insure that you are armed with all of the information needed to maximize and maintain your valuable credit scores.
Is this an automated dispute service?
No! Automated dispute services enter the list of derogatory information from your credit report into their software, and typically ask you to select which items you would like to dispute. The software then prints dispute letters which are sent to the credit bureaus. Unfortunately this one-dimensional approach can leave the majority of potential improvement untapped. We believe that this is not an acceptable outcome. Everything on your credit can affect your financial life. Our comprehensive methods insure that you get all of the results possible.
How long will it take to repair my credit report?
You can expect to start seeing results within 30 to 45 days. But keep in mind that everyone's situation is different. The entire process may take as little as 60 days or may take 6 months or longer depending on the type and number of items that need to be addressed. It's probably no surprise to hear that the credit bureaus may not remove an item on our first request! This may necessitate additional efforts on our part. We have been dealing with the credit bureaus since 1989. We know how they operate! It's our job to re-address any oversights to make sure that you get the results that you are entitled to.
Should I sign up my spouse at the same time?
We suggest that you both sign up! We offer a 50% spousal discount to encourage you to sign up at the same time. As a couple you may share a significant number of accounts, or you may share none. Either way, when you sign up, we will set up individual files and you will both get the full benefit of individualized attention. To qualify as a couple you must share the same mailing address.
How do you dispute joint accounts?
Joint accounts are treated the same as individual accounts. If you take advantage of our 50% spousal discount we will set up individual files for both of you and every dispute will be pursued methodically. It is possible that we will be disputing the same information for you and your spouse at the same time. This is appropriate. You each have your own credit report and we will give you equal individual attention.
Can you help us build new credit?
If it looks like you will be left with "insufficient credit" when our job is done we will offer to guide you though the process of opening one or two new secured credit cards. This may be an important step in the process of building great usable credit. Creditors look for open accounts that are in good standing. A secured credit card requires a small savings deposit which usually secures the entire credit line on a MasterCard or Visa. These credit cards will be reported on your credit report. We will suggest that you use the new card for a small purchase and make the minimum payment each month. We do not have affiliate relationships with any of the credit card companies that we recommend. We make our recommendations solely for your benefit.
What should I do while you are repairing my credit?
You are signing up with us because you want good credit and all of the benefits that come with good credit. We work very hard to make sure that we get the best results possible. But there are things that you need to do too! Here some important guidelines: 1) Pay your bills on time. Late payments have a dramatic impact on your scores. 2) Don't max out your credit cards. Approaching the credit limit on your credit cards can cost you big time! You can lose over 100 points by running your cards up to the max. 3) Only open new accounts when you have to. Don't fall into the trap of taking every credit card offer that arrives in your mailbox. Newly opened credit lines reduce your score. By the way - it is also VERY important that you have credit! Once your credit repair program is underway, if it looks like you will end up with "insufficient" credit, we will guide you through the process of opening one or two secured credit cards. This is one of the best and most effective ways of building credit.
Do you share our personal information with anyone?
Never! Please see our Privacy Policy for all of the details, but in short: We do not, under any circumstances share, sell, or in anyway provide your information to anyone. To make this super clear; your name will not be sold or given to anyone for any purpose. No one will see your information. We will not discuss your case with anyone under any circumstances.
How do I send you my credit reports?
After you sign up we will provide you with specific (and easy!) step-by-step instructions for obtaining your credit reports and getting them to us. If you have not requested your free credit reports from annualcreditreport.com in the last 12 months you may do so. If you have already received your free credit reports and they are no more than 60 days old you can provide them to us via mail (or email). If you have already received your free reports and they are older than 60 days, you will have to purchase new reports. Please also note that once our process is underway you will be receiving updated credit reports periodically from each bureau reflecting the results of our efforts. There is no charge for these reports. We will request that you send us these reports and any other material communication that you receive from the bureaus to us so that we can monitor the results.
When I request my report, does it hurt my credit scores?
No. When you request your own report it has no impact on your credit scores. Generally speaking, when someone else runs your credit it is because you have applied for new financing. Since an inquiry usually indicates that you are about to incur new debt it is somewhat reasonable that your score is adversely impacted. It is worth noting however that the impact of an inquiry is small and vanishes in a number of months. There are several instances when your credit may be run without affecting your score. These exceptions include direct inquiries by you as well as inquiries that are made without your knowledge by potential creditors (think of those unsolicited credit card offers that arrive in your mailbox). The reason that these inquiries don't count against your score is simply because they don't indicate any intention on your part to incur new debt.
Can you order our credit reports for us directly?
No we can't run your credit for you. Credit repair companies are not allowed to order credit reports for their clients. Credit reports may only be run for the purpose of determining credit worthiness. We do believe that the law should be amended to allow credit repair companies to run your credit without impacting your score. The service that we provide is essential for millions of people and it is our position that legislation should be enacted to make the process of hiring us as easy as possible. However, until this occurs you will have to obtain your own credit reports. When you sign up we will provide you with super simple step-by-step instructions to make getting your reports easy and hassle-free.
What is "questionable credit"?
The most of all credit reports contain errors. Please don't assume that the derogatory information on your credit report is correct. If you honestly do not recognize an item or information on your credit report we should demand that the credit bureau research it. This is not a frivolous dispute! We are here to remove errors. We will ask you to be honest and to think carefully about every derogatory item on your credit. If you think that the report is wrong we expect you to tell us. Once we submit a dispute the credit bureau has 30 days to verify that the information is correct. If they cannot verify it in that period of time they are required to delete the item. The burden of proof is on them. This is as it should be, and it maximizes the probability of a valid and accurate result.
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