Frequently Asked Questions about
Consumer Debt Negotiation and Settlement
How does debt settlement and negotiation work?
Debt Settlement is what happens when you reduce the amount of your unsecured personal debts through creditor negotiations. Debt Settlement is proven to be much more effective than merely reducing interest rates, as is the norm with Debt Consolidation and Credit Counseling (CCCS). If you reduce the actual debt balance, Debt Settlement provides a much faster means of becoming debt-free.
How long does the debt settlement process take?
The amount of time you are enrolled in our debt settlement program actually depends on the amount of funds you have available to pay off your creditors. During your consultation, you will establish an affordable monthly payment with our representative that will determine how long it will take to settle with all your creditors, usually 12-36 months.
Will debt settlement affect my credit score (FICO)?
Yes. More often than not, being in debt, your credit accounts already have, or are, in the process of being reported negatively to the major credit reporting agencies. Depending on how long you have been delinquent in payments, negotiating and settling these debts for good will have an overall positive effect on your credit score. Settled accounts and/or zero balances are seen as "positive" when compared to unresolved debts or a bankruptcy. This is even more important when you are attempting to purchase or refinance a home. If you have charge offs or collection accounts being reported, it is best to approach settlements prior to applying for a loan.
Also, there are times that settling a long over due account can have a net negative effect on your credit. When it comes to properly addressing your debt load while keeping an eye on your future credit goals and needs, working with a Certified Debt Arbitrator could mean the difference of thousands of dollars needlessly wasted as well as additional years separating you from achieving your goals.
Will I be able to get credit in the future?
Yes. When you have successfully finished the program, the debt you placed in our program will have a zero balance. Good cash flow and the ability to pay, which is what lenders look for. Clients are able to purchase homes, refinance and obtain credit cards, re-establishing their good credit rating.
Can I negotiate my debt with my creditors myself?
Most people would enlist the help of a specialist if they needed something outside their area of expertise. For example, if you needed a tooth pulled, you would go to a dentist, and if your car wasn't working properly, you would most likely take it to a mechanic. Creditors are experts in using tactics to get you to pay, and unless you have knowledge of the credit and collections industry policies and procedures, and the laws that apply, your results may not be what you had hoped for. We are experts in debt negotiation – that is all we do. With our skill and expertise and the leverage of multiple clients, we can facilitate lower settlements and you will not have to endure the stress of the creditor calls.
Will I still be able to use my credit cards?
No, not the ones you intend to settle.
What does debt settlement and negotiation cost?
We charge a flat rate fee that is 15% of your total debt load, we do not charge you any portion of the sum of money saved through the settlement program. To find out what your individual budgeted monthly payment will be, please contact us at: 888-756-6177 for a detailed explanation of the program and the cost.
Is my personal information kept private?
Yes, absolutely. In a case where we are negotiating settlements for you, however, you will be required to provide Solutions4Debt with written, and sometimes verbal, authorization that allows us to give and receive information on your behalf when negotiating credit accounts with each individual creditor, as requested by you, our client.
Will creditors or debt collectors still be contacting me about my debt(s)?
Creditor calls are simply part of the process. We immediately notify the creditors that we represent you, and they are put on notice to direct their calls and communication to us. Our experienced staff is extremely knowledgeable in your legal rights as a consumer, and we demand the creditors to adhere to such laws. It is our job to manage your accounts, handle the creditor calls, and take the stress and the burden off of you. We are here to protect your rights, and we will make every possible effort to get the best outcome for you.
Is it true that there are sometimes tax consequences to settling a debt for less than the original balance?
Yes. If you have a debt that is settled for less than the original balance, and the difference (the forgiven portion of the debt) is greater than $600.00, the creditor is supposed to send you a 1099c, which would then be reported as income.
The IRS does allow you to write off any income from forgiven debts up to the amount by which you were insolvent at that time. Unless you had a positive net worth at the time that you settled an account, which, for the most part, is unlikely if you're buried in debt, then you generally wouldn't have to pay any taxes on the forgiven debt(s). Always consult a tax attorney or advisor for options that can be applied to your specific circumstances. Incidentally, if you do wind up owing taxes, it is because you saved money. So, keep that in perspective.
What is the difference between secured debt and unsecured debt?
Secured debt is any debt that is collateralized by another asset. Examples are: car loans, home equity loans and credit cards secured by a bank account. If a debt is secured the creditor has the right to sell the asset in order to satisfy the debt. We negotiate unsecured debt only. There are exceptions, such as a car loan balance left after repossession. In this scenario the secured debt becomes unsecured and is then negotiable. Unsecured debt examples are: credit card debt, medical bills, department store credit cards, oil/gas credit cards and personal unsecured loans.
What types of debt(s) can be settled?
Most any type of unsecured debt can be settled. For example:
- Consumer debt
- Credit card debt
- Business and/or commercial debt
- Slow or late payments
- Defaults
- Charge offs
- Debt collectors and/or attorneys
- Medical bills
- Utility bills
- Deficiency balances
- Store credit cards
- Major credit cards
- Pre judgment and post judgment settlements
- Bank account and/or wage garnishments
- Settlement and negotiations with nearly all creditors
- Loan re-modification
To best determine which accounts can be settled, please call our office during normal business hours 8am to 5pm PST. Solutions4Debt maintains strong relationships with professional Consumer Advocates that may be able to assist you with specific debt(s) in the event that we cannot. We will be happy to refer you to other resources.
Is there any type of debt that can't be settled?
Presently, Solutions4Debt does not assist in negotiating secured debt or student loans.
Can my wages be garnished?
Debt Collectors can be intimidating and may use questionable tactics that are designed to scare people into making a payment, even if they cannot afford it. Actual garnishment actions are not that common and you will have advance warning. Creditors must first file a lawsuit, get a judgment, and then get court authorization for a garnishment. You cannot just have your pay check, or any portion of it, taken without court approval, and you must receive notification and proper documents from the court first. Worst case scenario, you may need to negotiate a settlement that is higher than you would have liked.
Can I be sued if I use the debt settlement approach?
Creditors have the right to file a lawsuit if you are not paying a debt. Lawsuits, however, are not that common. It costs creditors money to take you to court. In addition, a judgment is just a piece of paper until they figure out a way to collect money against it. Threats of litigation are, however, much more popular, regardless of the fact that debt collectors are prohibited (by the FDCPA) to threaten legal action unless they're authorized to do so. Lawsuits can be avoided. It is very common to work out suitable arrangements with your creditors without ever going all the way through court procedures.
Can I still settle my debt if I'm currently being sued by a debt collector or creditor?
Yes. It is still possible to come to acceptable settlement terms during litigation or after a judgment has been filed.
Do you work with business or commercial debt?
Yes, we can assist companies and small businesses seeking debt relief.
How do I get started with debt negotiation and settling my debt?
Fill out our Free Debt Consultation Form or contact us. If you prefer to just call and speak with a Certified Debt Arbitrator, please do so at 1-888-756-6177. We would be happy to answer any questions you have in regards to your current debt problems. There is no charge to speak with a Certified Debt Arbitrator.
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