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Frequently Asked Questions:
Why can't I just negotiate with creditors on my own?
Why can't I just keep paying off my creditors on my own?
How does Debt Consolidation differ from Debt Negotiation?
How will joining a Debt Management Program affect my credit
rating?
Can I send in more money once I have a better cash flow?
Should I pay my bills in the time before I send you my first
payment?
After I pay off one account, can I just pay less?
Will I still receive harassing phone calls?
Q: Why can't I just
negotiate with creditors on my own?
A: In some cases, you can negotiate with creditors on your own to arrange payment
or have positive information reported to a credit bureau. However, to get the benefits of
lowered monthly payments, lower interest rates, stopped late charges, and waived over the
limit fees, you need a debt management program.
Q: Why can't I just keep
paying off my creditors on my own?
A: If you keep paying just the minimum to your creditors at the current interest
rate, it will take you much longer than if you paid off your debt through a debt
management program. A $10,000 debt usually takes 32 years and $24,500 to pay off, if you
are paying the monthly minimum of 2.5% of the balance at an average interest rate of
18.5%. Because of the reduction in interest rates, the stopping of over the limit fees,
and so on, it will take a lot less time to pay off your debt. Chances are, in the past,
all your debt payments have just gone to pay off interest. You probably haven't even
reduced the balance! On average, debt management clients pay off their debts in 3 to 5
years, depending on individual circumstances.
Q:
How does Debt Consolidation differ from Debt Negotiation?
A: Debt Consolidation is a program that was designed by your
creditors to assist you in paying off your accounts. It is endorsed by all
the major credit card companies and has been an excellent alternative to
bankruptcy for over 50 years. Debt negotiation is not endorsed by the
major credit card companies. In fact, debt negotiators intentionally
withhold money from creditors for several months to gain leverage in
settling the account for a smaller balance. Not only will this process
significantly damage your credit rating, but it will damage any possible
relationship you wish to establish with your creditors in the future.
Q: How will joining a Debt
Management Program affect my credit rating?
A: Enrolling in a Debt Consolidation Program will not affect your credit score unless you are
late in making your monthly payment. In fact, if you have been late in paying your
accounts in the past, enrolling in our Debt Consolidation Program can help to improve your
credit rating by reestablishing timely monthly payments to your creditors. Some creditors
may report that they are receiving payments from a third party consolidator; however, this
notation does not impact your credit
score and will be removed from your credit report upon completion of the program.
Read what the inventor of
your FICOŽ score, Fair Isaac Corporation, has to say in
the following article:""What's
Not In Your Score".
Q: Can I send in more money
once I have a better cash flow?
A: Of course - you can always increase your monthly payment. The more you pay, the
faster your accounts will be paid off.
Q: Should I pay my bills in
the time before I make my first payment?
A: That's your decision, however we recommend that you do if you can. There is a
brief negotiation period of approximately 30 days after your first payment is received.
During this time arrangements are made for future payments with creditors. If you miss due
dates for accounts during the negotiation period, you are at risk of penalties and
negative information reported to the credit bureau.
Q: After I pay off one
account, can I just pay less?
A: We highly recommend that you pay the same amount and transfer whatever you used
to pay for the other account to a high interest account. That way, as you pay off each
account, you end up paying more to the remaining accounts, speeding up the process without
changing your monthly spending budget.
Q: Will I still receive
harassing phone calls?
A: You may during the first several months on the program. It takes 2-3 months for
your creditor's collections department to find out you're in a Debt Management Program.
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