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Frequently Asked Questions
Am I a good candidate for a debt settlement program?
How does it work? What is the difference between consumer credit counseling services and debt settlement? How long does it take? What happens with my creditors during this process? What is this going to do to my credit? What are your fees? What types of debt can be entered into the program? What can not? What is three cycles of credit restoration? Will I be sued? Can my wages be garnished? Will I owe taxes on the forgiven debt amounts? Can I use my credit cards? What if a creditor won’t negotiate? Am I a good candidate for a Debt Settlement Program? If you find yourself:
BACK TO INDEX How does it work? Once you enroll into our debt settlement program, you will make one monthly payment into your own Special Purpose Account, similar to a savings account. Each payment builds onto the next and your funds accumulate. This allows our trained debt arbitrators to negotiate settlements with your creditors on your behalf, and your debt begins to reduce as each account gets settled until all the balances are at zero. Settlement offers range from 30 to 50 cents on the dollar, ultimately saving you thousands of dollars. BACK TO INDEX What is the difference between consumer credit counseling services and debt settlement? Consumer credit counseling focuses on lowering the interest rates, so you will pay back 100% of the debt, plus interest, plus the company’s fees. It is not uncommon to pay back 130% or more. It is a form of consolidation where you make one smaller monthly payment to the service, who then distribute portions of that to all of your creditors. The average length of the program is 60 months, and once complete, you will have a Third Party Assistance (TPA) listed on your credit report, which is viewed as a negative mark and will remain on it for up to seven years. The debt settlement process centers its attention on reducing the entire amount by 30% to 50%. This helps your credit score in the long run because as each account gets settled, the balances are at zero, and your debt to income ratio (one of the largest portions of the Credit Score pie graph) is much less. Your credit score will potentially see an increase as you continue on this path. The most important point is that everything is in your name, so there is no TPA listed. BACK TO INDEX How long does it take? The length of the program really depends on how much debt you bring into the program and what you can afford monthly, but our program should not take longer than three years. We have 12, 24, 30 and 36 month programs. BACK TO INDEX What happens with my creditors during this process? If you think nobody cares if you're alive, try missing a couple of car payments. ~Earl Wilson Creditors will contact you as soon as you miss a payment. If you have already missed several payments, you are probably already experiencing some phone calls from them. If you have been current, your creditors will call with a friendly reminder--in the beginning. Since funds are accumulating into your Special Purpose Account by way of affordable monthly payments, chances of us settling any accounts in the first few months are rare, and the phone calls from your creditors will get more and more persistent, perhaps heated. It is recommended to avoid these calls as much as possible. Once you’ve entered the program, you are assigned a Member Services Representative, who provides suggestions and walks you through what to do if you happen to answer an angry creditor’s phone call. BACK TO INDEX What is this going to do to my credit? Your credit rating and credit score are two different things. If you currently owe more than you own, your credit score is probably low even if you’ve been making your payments on time. Once you enroll into the debt settlement program, your credit score will take a dip; however, as each account gets settled, and the balances equal zero, your credit score begins to rise again. Your credit rating will look better overall due to all of the settled accounts. Your debt to income ratio is much better after you’ve completed the debt settlement program. Furthermore, there is no record of Third Party Assistance (TPA) on your report. A TPA listed on your report can be almost as damaging as having a Chapter 13 bankruptcy listed. Basically, debt settlement can hurt your present, but it definitely helps your future. BACK TO INDEX What are your fees? Our fees are 15% of the total amount of debt you bring into the program. Debt Consolidation Deals has the lowest fee structure in the industry, which are stretched throughout the first half of the program. Funds begin to accumulate with your first deposit into your Special Purpose Account rather than 100% going directly to fee charges. BACK TO INDEX What types of debt can be entered into the program? What can not? Only unsecured debt can be included in our debt settlement program: credit cards, retail store cards, gas cards, personal loans, medical bills, utility bills (if you no longer rely on the service), repossessed vehicles, charge offs, collection agency bills and other unsecured debt. Secured debt is not allowed into our program such as home mortgages, auto loans and payday loans. BACK TO INDEX What are "three cycles of credit restoration"? Debt Consolidation Deals also pays for three cycles of credit repair once you’ve completed our program. Your accounts are listed as “settled in full” and your balances are zero. Credit recovery cleans up any negative marks and allows you to start fresh. BACK TO INDEX Will I be sued? There is always a possibility that creditors may contact a law firm to collect on a debt. If this happens, our negotiations team will concentrate on settling that account to prevent any legal action from occurring. Keep in mind that litigation is a timely and costly process for banks and may be used more as a threat than actual fact. Regardless, do not ignore these letters or phone calls and contact your Members Service Representative as soon as possible to help answer any questions you may have. BACK TO INDEX Can my wages be garnished? This is another common threat used by debt collectors to scare you into making a payment by making you believe that if you don’t, it will come out of your very next paycheck. This is not true. Creditors first have to sue you, obtain a judgment and then file for garnishment action. Wage garnishment can normally be avoided if you’re willing to work with your creditors. BACK TO INDEX Will I owe taxes on the forgiven debt amounts? Forgiven debt amounts can be considered income, so owing taxes is possible. However, the IRS allows insolvent taxpayers to exclude cancelled debts, so unless you have a positive net worth, you probably won’t need to pay taxes on your settlements. BACK TO INDEX Can I use my credit cards? No, you can not use your credit cards; they will be closed. We do allow you to have one low-limit credit card for emergencies only, and you should notify us for the purposes of its use. BACK TO INDEX What if a creditor won’t negotiate? You may be asking this question because you have attempted negotiating with your creditors yourself and haven’t had too much success or maybe were told there is no such thing. Debt Consolidation Deals has yet to find a creditor who will not negotiate. Once hardship is established (because you’ve entered the program) creditors are willing to negotiate with our certified debt arbitrators, who have a bit of an advantage due to volume, experience and lack of emotional involvement. We are able to develop relationships with your creditors, and we possess the skills needed to deal with them. In addition, we have no personal attachment to the debt, and therefore, are able to negotiate more effectively. Creditors will negotiate because they would rather receive some money than no money and then write off the loss when they do taxes at year's end. BACK TO INDEX |
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Disclaimer: Debt Consolidation Deals, Inc. does not provide legal, investment or Tax advice. If a client needs legal services or legal expertise, they must seek the advice of a licensed attorney. Individual program results may vary. |