Debt Management Plans To Eliminate Your Debts , Consolidate Debts Into One Payment
Debt resolution (aka debt settlement, negotiated debt settlement, debt resolution, debt consolidation) is a process where a company negotiates or settles an unsecured debt to a creditor or debt collector. The debt resolution company has two goals when they’re negotiating with your creditors: to reduce the amount you owe and to “settle” the debt more quickly than you’d pay it off on your own. While that may seem too good to be true, the debt resolution process is pretty standard with creditors
Debt resolution is generally for people with $10,000 or more in unsecured debt who want to reduce their total amount of debt without declaring bankruptcy. If you’re facing financial hardship and have more debt than you can pay off in the next two to four years, debt resolution can be a solid option for getting yourself back on track financially.
While it varies from person to person, the average debt resolution program lasts two to four years. How long your program takes depends on a few factors, including how much money you deposit in your account every month. You can start paying off debts when you’ve saved enough money to cover the amount negotiated in the settlement. The more money you can add to your Dedicated Account, the quicker your debts can be settled.
We only work with debts without collateral attached to them, also known as unsecured debt. Unsecured debt includes everything from credit cards to store cards and medical bills. Debts with collateral attached –like mortgages, car loans, or federal student loans– are not eligible for debt resolution. Get in touch with us if you need to clarify which of your debts are eligible.
Most of your creditors won’t get into serious debt reduction discussions with us until they know you’re serious about paying them off. You can only prove that commitment to paying them off by building up enough money in your Dedicated Account. On top of that, creditors may be more likely to negotiate a settlement that benefits you once multiple payments have been missed. In general, the first settlement tends to happen within the first three to six months of the program.
The answer is simple: you are! Once you’ve enrolled in a program, you’ll set up your Dedicated Escrow (FDIC Insured) Account in your name and deposit your money into it. The reason for setting up this new account (rather than just putting your monthly deposits into an existing bank account) is to keep those settlement funds separate from your other money. Of course, if you ever withdraw from the program, the remaining funds in your Dedicated Account will be refunded to you.
Though making consistent, on-time program deposits is the best way to ensure your plan’s success, we know that even the most organized, punctual person on the planet will sometimes face unforeseen issues. It could happen to anyone, so it’s not a reason to drop you from the program. Keep in mind, though, that missing multiple program deposits could put your program at risk.
Part of your agreement with your credit card companies allows them to continue to add interest and late fees to your debt any time you fail to make payments. This means while you’re getting your Dedicated Escrow Account set up and funded, your credit card debt could go up. However, the goal of the debt resolution program is to arrange settlements that reduce your debt balances no matter what kind of interest charges or late fees are added after you begin our program.
In extreme cases when a creditor refuses to settle, the only option may be to remove the creditor from the program. If a settlement can’t be reached, we can’t collect a fee from you for that specific debt.
Creditors hire collectors to pressure you into paying as much as they can get,. Collection calls are a natural part of debt resolution programs, and are actually a key indicator that your debt resolution program is working! Our most successful clients choose to let calls from unrecognized numbers go to voicemail. There are even free apps you can download on a smartphone to block certain calls. we suggest that you refer the collectors to your settlement company, who will handle the calls.
Legal action by creditors could occur. If you do receive a legal notice, please send it to our team so they can prioritize this creditor and work to settle it first.
Rather than taking legal action, a more common step creditors take is selling your debt to third-party collection agencies and/or law firms. When something like this happens, this particular creditor or lender might get moved to a priority list. Our team will deal with them for you.
While the answer can be different for everyone, in general, forgiven debts can be taxable. When tax time rolls around, you may receive a Cancellation of Debt form (1099-c) from the lender that forgave your debt.
To find out about your specific situation –and understand the potential tax implications of any debt that’s been forgiven through a debt relief program– it’s a good idea to talk to your tax advisor.
Most client credit is already being negatively impacted by poor payment history and amounts owed, which are the two largest factors of your credit. Whether your credit is maxed out or you have a high debt-to-credit or debt-to-income ratio, chances are that your credit has been negatively impacted. Our goal is to help you resolve your debt quickly, so that you can start building a brighter financial future (including a more positive credit score) as soon as possible.
NOTE: All of your questions may not be listed in our FAQ page. We encourage you to ask your debt resolution specialist how the program works, they are trained to answer your questions, or find the correct answer for you. Our number one priority is to make sure you know the details
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