What is
a Debt
Settlement Program?
A debt settlement program is an aggressive method of
helping consumers out of the debt trap while helping them to avoid
bankruptcy.
Each month clients deposit money into their own
personal bank account established specifically for the settlement program.
As funds accumulate in the client’s account, the debt settlement
company processing department negotiates settlements with the client’s
creditors, often enabling clients to get out of debt at a fraction of the
total amount they owe. Once the debt settlement company reaches a
settlement, the creditor is paid directly from the client’s account. On
average, clients that complete the program are debt free in less than three
years.
The benefit
of settled balances comes at a cost. In order to better negotiate
settlements with a client’s creditors, payments are withheld from the
client’s creditors for several months. This causes the creditors to begin
aggressive collection efforts to recover the client’s debt. The missed
payments are also reflected on the client’s credit report. For these
reasons, Done With Debt only recommends debt settlement for extreme hardship
cases and individuals who are already at least 2 months delinquent on their
accounts.
Program Highlights:
-
Bankruptcy Avoidance
-
Elimination of debt at a fraction of the full
balance owed
-
Debt free in less than 36 months on average
-
You determine
an affordable payment with counselor
assistance
-
Dedicated Program Advocate to guide
you through
the entire program
How
a DSP Works:
IMPORTANT: We currently do
not accept clients from Wisconsin or New York
Upon receipt of the your paperwork by the debt
settlement company, their staff contacts your creditors and informs
them that you are now enrolled in the settlement program and that all
future contact is to be made through them. You are assigned a Program
Advocate. The Advocate is the your direct personal contact throughout
the program. This person will handle any questions
or concerns you may have.
Your monthly payments will be deposited into an FDIC
insured bank account in your name. There, the money will accumulate until
there is enough to settle with a creditor. This may take
as little as a couple months to as long 9 or more months. You will be able to see
the balance of the account 24/7 online or over the phone.
You are
responsible for making your monthly deposits on time.
The staff of negotiators is always in communication
with your creditors in an effort to expedite the settlement of
your
accounts. When a settlement is reached, a settlement letter is obtained from
the creditor and then the funds are issued to the creditor from
your
program account. This enables you to monitor what is going with
your
funds and helps to establish a payment record with their creditor.
Damage To
Credit Report:
Debt Settlement will have an immediate negative impact
on your credit report. Any time payments are withheld from a creditor, for any
reason, it will be reported negatively to the credit bureaus. Further, when
a settlement agreement is reached with a creditor and that creditor receives
their payment, the account will show “settled” on your credit
report. This is also negative in comparison to the standard “paid as agreed”
remark.
On a positive note, by settling the debts,
your
debt to income ratio will improve significantly. This will have a long-term
positive impact on your credit history.
Fresh Start
Coaching Program:
The Fresh Start Coaching Program is a unique approach
to dealing with personal debt challenges. Credit card debt is one of the
most dangerous types of unsecured lending available, yet no one ever teaches
us how to manage and use it wisely. The fact is, we are rarely taught how to
handle everyday financial matters as a whole. As young adults we usually
learn through trial and error.
Through one-on-one sessions, our clients work with
experienced Personal Coaches who can teach them and guide them through the
various stages of dealing with their debt challenges. These sessions are
geared to bring information, awareness and skill to the client based on his
or her needs.
Many different topics can be discussed with a Personal
Coach. These may include:
·
Overcoming Overspending
·
Pay Yourself First (savings)
·
Money and Family History
·
Rebuilding Your Credit Rating
·
Understanding Spending Triggers
Debts Accepted in
Debt-Settlement:
- Credit Cards - MasterCard,
Visa, American Express, etc.
- Department Store Cards - Macy’s, Home Depot, Sears,
HSN, etc.
- Charge-Offs - debts a
creditor has been unable to collect
- Write-Offs - debts a
creditor does not believe they can collect
- Repossessions - debts owed
on confiscated material goods
- Unpaid Medical Bills - Hospitals, Doctors, Surgical
Center, Clinics, etc.
- Collections - typically includes debts unpaid for
last 180 days
- Past Utility Bills - owed for gas, electric, etc.
Must not be current acct.
- Personal Loans - unsecured loan based on contractual
promise to pay
- Judgements - court enforced collection tool for debt
Debts Not Accepted in Debt-Settlement:
- Homes - Subject to foreclosure
- Cars - Subject to repossession
- Credit Unions - Allowed if less than 30% of total
debt
- Furniture and Jewelry
- Student Loans
- Tax Debt (state and federal)
- Military Cards
- Payday Loans
- Debts under $500
When Creditors Decide To Take Legal
Action:
Although more the exception than the norm, it is
possible for a creditor to take legal action while in the
DSP. The longevity
of the debt, a high account balance, and the creditor’s policies are factors
that can increase the likelihood of legal action.
Creditors often threaten clients with letters
that look and sound like legal documents and it turns out to be a creditor
letter using “creditor scare tactics.”
If the creditor is taking legal action against the
client, this account becomes top priority. Although there are no guarantees,
these types of accounts can still be negotiated.
Settlement of these accounts is
even possible if there is
already a judgment in
place.
How Can I Apply?
Call our office at (619) 977-5687 to
speak with a counselor or fill out an
online application.
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