FAQ’s

Who holds my money while I am waiting for settlement?
Unlike many other companies who contract a third party bank to hold your money, our company sets up a valid attorney’s escrow account in your name.

How is debt settlement different from debt consolidation?
Debt settlement is a program that will help you save money to pay your unsecured debts in the future. Debt consolidation, on the other hand, is a loan that is more commonly known as a refinance, where one would typically refinance their house and pull money out to pay off the credit card debts, which in turn converts your unsecured debt to secured debt, which we definitely don’t recommend.

Does the Credit Counseling Agency loan me money?
No, the Credit Counseling Agency does not lend you any money; this is not a consolidation loan. The Credit Counseling Agency negotiates with your creditors to lower payments and interest rates and accepts one payment from you that we then disburse to all creditors included in the program.

Who qualifies for a debt settlement program?
A debt settlement program is certainly not for everyone. Qualified candidates are those who have a legitimate financial hardship, which has caused them to fall behind on their payments to creditors, or will cause them to fall behind in the near future. We will not welcome anyone into the program that has the intentions of defrauding, deceiving, or swindling their creditors. We only represent consumers who are truly in need of our services and stand to significantly improve their financial situation.

How is debt settlement different from bankruptcy?
Bankruptcy is an option that is generally treated as a last resort. It will remain on your credit report for 10 years and you can be denied employment, state licenses, insurance, and tenancy of an apartment. Most importantly, you can be denied virtually any type of credit with a bankruptcy on your record. In addition, since the bankruptcy laws have changed recently, it is even more difficult to qualify for Chapter 7, the method of liquidating assets to eliminate your debt. You will not be allowed to discharge alimony, child support, taxes, student loans, judgments, or any loan on the bankruptcy petition. Under Chapter 13 bankruptcy, your debt payments are simply restructured meaning you will still have to pay a percentage of your debts while you suffer the consequences of bankruptcy. Debt settlement is an attractive alternative to bankruptcy. It provides a convenient method to save money to help pay your debts in the near future. You’ll be able to restore your credit much quicker through a settlement program.

What is the difference between unsecured and secured debt?
Unsecured debt is derived from credit that is extended without the use of collateral. Credit card debt, medical bills, department store card debt, and personal loans are all examples of unsecured debt. A signature promising to repay the creditor is all that is required to obtain this type of debt. Secured debt is a loan that is tied to something tangible. A mortgage and an auto loan are common examples of secured debt.

Do I have to include all my debts into a debt settlement / management program?
No. You may choose which debts you would like to enroll in the program. Your debt consultant will help you decide the best plan of action based on your current financial situation.

Can I pay the account balance off early?
Yes, if you receive a gift, inheritance or any other sources of unexpected income, they can probably negotiate significant settlement savings with your creditors on your behalf.

Can I still use my credit cards while in a program?
The cards you include in the program will be considered inactive and frozen. You can choose to hold on to one or more credit cards for emergency use and include those cards at a later date, if you wish. The creditors feel that it is only fair to freeze your accounts considering they will usually be elimination or reducing your interest rates.

Can I pay more per month than agreed to?
You can always increase your monthly payment. The more you pay, the faster your accounts will be paid off. Just let the Credit Counseling Agency know that you want to increase your payments before hand so they can advise you as to which creditors will be sent more money.

How much do you charge?
The fees we charge are minimal and are included inside your payments and will be offset by the savings you will get from your creditors.

When will you begin settling my debt?
Upon receiving your first payment, our attorneys will immediately go to work by contacting your creditors and debt collectors to inform them that they are now handling your accounts. They will request a validation of your debts. We can only settle a debt once all of the funds are available in your settlement account.

Why should I use you to settle my debts as opposed to handling it myself?
We have experienced attorneys and debt arbitrators that fight for your rights. We will be able to negotiate a better settlement with the creditors, which are usually averse to negotiating with the consumer directly. The attorneys have extensive knowledge in Federal and State Consumer Laws and exercise the Fair Credit Reporting Act, Fair Credit Billing Act, as well as the Fair Debt Collection Practices Act to help settle your debt.

Will I still receive harassing calls from creditors or collection agents?
In regards to the creditors, they have the right to attempt to collect on the debts owed to them. They will receive several letters from our attorneys including letters of representation and a cease and desist letter, which requests that all further communication in reference to your account be directed to them. Often times, creditors will continue to contact you, which is completely legal. However, once your debt is sold to a collection agency, the Fair Debt Collection Practices Act is implemented meaning that it would be illegal for a collector to communicate with you in connection with the collection of any debt. A debt collector may not harass or abuse any person in connection with the collection of a debt.

What are the tax consequences?
Laws vary state by state. The best course of action to take is to consult your accountant.

Do I get notified every time a settlement is made? Which one and the amount?
Absolutely. You are involved in the entire process. A copy of all ongoing correspondence and negotiations will be sent to you as well as regular phone calls from customer service and a monthly newsletter.

Do you send Cease and Desist letters along with letters of representation at the start of the process? I have been told that this often causes an instant law suit from the creditor. How do you handle this?
Yes we send cease and desist letters along with letters of representation. As far as being sued, you are protected under Fair Debit Collections Practices Act. However, as you know anybody can sue anybody at anytime in this country. It is our understanding that the credit card banks don’t even consider lawsuits until an account has gone approximately 370 days past due.

How does settlement affect my credit score?
Any method used to improve your debt situation other than making scheduled payments to your creditors will negatively affect your score. There are too many unknown variables to predict how much your score will actually decrease, however the intention of this program is to settle your debt, not to improve your score. Once the program is completed and your credit report reflects less debt or none at all, it should be easy to increase your score at that time.

What if my creditors won’t settle?
It is extremely rare for a creditor not to settle. Due to the fact that you have a legitimate financial hardship, creditors realize that a settlement is in their best interest because if you file for bankruptcy, they can be left with nothing. Creditors lose billions of dollars per year from consumers filing bankruptcy.

Can I include my car or mortgage loans in the consolidation?
These types of loans are considered “secured loans”. Credit counseling agencies generally do not handle these loans. However, as a courtesy, upon request we will investigate the alternatives of your secured loans provided your loans are current.

How long will it take to settle my debts?
The settlement time on each account will differ depending on the amount of debt in question. Some accounts may take as little as 12 months to settle, while others may take much more time depending on what your budget will allot. Remember, although an agreement may be reached with your creditor in just a few months, the settlement will not take place until the monies are available in your settlement account.

Should I keep paying my credit card bills?
We are not here to advise you not to pay your debts now, however if you continue to make payments to your creditors, there may be less debt or possibly none left at all for us to settle. If you are able to save money in this program and make payments to your creditors at the same time, then you probably don’t actually have a legitimate financial hardship and probably belong in a debt management program instead of a settlement program.

How will debt management affect my credit rating?
If your credit rating is good it should remain good as long as you continue to make on time, consecutive monthly payments. If your credit is not good your participation and compliance with our program will help you rebuild your credit so that you will no longer be looked at as a risk but a good paying customer. Most creditors will waive late fees and re-age the account. The account is then considered current, a great plus for people who are behind.

Do I pay my bills that are coming due?
The first payment that you make to us does not go towards your bills, so any bills you have coming due within the first 1 - 3 weeks after signing up need to be paid if you can afford to do so. This will help maintain your current status during the coordination period.

How will I know that my accounts are being paid?
You will continue to receive your monthly statements from your creditors that will reflect your payments being made to us. Your statements will also reflect your new interest rates on these accounts. You will also receive a monthly statement from the credit-counseling agency showing you when they received your payment, when the payments were made to your creditors and how much have paid back since you have been in the program. You will also have access to your account information online with a login and password that the credit-counseling agency will provide to you.

How low can you get my payments?
That all depends on the creditors that you owe. Each creditor has their own guidelines that must be followed. An estimate will be provided, but the actual monthly payment could be a little different once the actual proposals are made and accepted.

How can you do this while I can’t?
The program was set up by your creditors and all the credit-counseling agency does is follow each creditor’s guidelines. These guidelines are only provided to certified counseling agencies.