Debt Settlement FAQs:

What Is Debt Settlement?

While more and more Americans are beginning to investigate the potential benefits of debt settlement, the industry’s still a young one, and many consumers remain confused about how precisely debt settlement works. After all, in a manner of speaking, debt settlement negotiations happen every time a borrower answers a debt collector’s call. Professionals in the field work an entirely different magic.

Successful debt settlement negotiations can eliminate up to 70% of a borrower’s total debt balance - with the entirety paid off in less than three years with the right program. There are as many variables to negotiations as there are borrowers, but this website will provide an introduction to the procedures of debt settlement as they’re now used.

What Are My Debt Relief Options?

Though media coverage of debt relief programs tends to lump them all together, there’s actually a great difference between the competing debt relief solutions. The debt settlement plan is often compared, for example, to bankruptcy (though without the crippling effects upon credit reports and FICO scores), and to consumer credit counseling (even though settlement seeks to reduce total debt-load rather than just interest rates) and but much separates the superficially similar methods.

Debt Settlement - Debt Settlement is the fastest and least expensive way to get out of debt. Often referred to as Debt Negotiation, Debt Settlement is a direct and ambitious approach to debt reduction and it is best suited for individuals that have considered filing for Bankruptcy protection...Debt Settlement continued.

Bankruptcy - Bankruptcy should be considered only as a last resort. The effects of filing for Bankruptcy protection are long-lasting - up to 10 years in certain states. Recently the rules for filing Bankruptcy changed, and it is now harder than ever to "wipe the slate clean"...Bankruptcy continued

Debt Consolidation - Also called a Consolidation Loan, Debt Consolidation is the replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. Unfortunately the credit markets have tightened in recent months and if your FICO credit score is less than 660 your options for an unsecured Debt Consolidation Loan are going to be severely limited...Debt Consolidation continued

Credit Counseling - Consumer Credit Counseling companies are organizations that operate nonprofit financial counseling programs. Typically they will charge a fee for their services and they attempt to work with your creditors in order to reduce your interest rates and your minimum monthly payments. Recently, many credit counseling organizations have faced scrutiny because of their misuse as a "nonprofit" organization...Credit Counseling continued

Do Nothing - You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water. That’s why you started looking for help. That’s why you are reading this page. The worst thing you can do at this point is to Do Nothing. You owe it to yourself to speak with a Debt Management professional as soon as possible

Do I Qualify For Debt Relief Programs?

There’s no easy answer, but borrowers with elevated debt-to-income ratios certainly have a greater likelihood of immediate assistance. The probability of successful debt relief negotiations varies dramatically based upon the borrower’s home state, the specific debts accrued, and credit activity within the past year. Also, those debtors who have suffered recent accidents or injuries, underwent medical procedures, faced unexpected and/or lingering unemployment, underwent divorce, or went through any life-altering trauma that forced sudden dependence should expect creditors to look upon their situation with greater understanding.

Will Debt Relief Stop Collection Attempts?

Recent government legislation intended to protect consumers from unfair harassment (the Fair Debt Collections Practices Act), greatly limits collection agencies’ contact with consumers. Depending upon the state, there are regulations specifying when and how often collection agents can call, and, if the agency’s informed in writing that the borrower no longer wishes to be bothered, they’ll be legally restrained from any attempts. Furthermore, once the borrower begins working with debt relief companies, the debt collector will be forced to submit all correspondence to the settlement professional. FDCPA regulations force collection agencies to speak with whomever holds power of attorney within debt negotiations.