We work with multiple providers to find the right solution to your needs. This could be debt negotiation or credit counseling. Debt negotiation is the process of negotiating a reduction in your principal credit card balances. Credit counseling plans usually reduce your interest, but you pay back the full balance. If needed, we can also help you to submit your case to a bankruptcy attorney.

You may qualify if you have $7,500 or more in unsecured debt. Some of our programs have a $10,000 minimum. There is no cap on the amount of unsecured debt you may enroll, as we have had clients with several hundred thousand in credit card debt alone. Unsecured debt is typically credit cards, but can also include medical bills and most loans that are not tied to collateral. Our programs cannot negotiate car or mortgage loans because the lender can repossess the car or foreclose on the property. We can help you if your car or home has already been repossessed or foreclosed on, and you are left owing the bank money, which is called a “deficiency balance.” You must also be in a financial hardship. This could be a range of circumstances. Some clients have experienced a job loss or other reduction of income; a medical condition or even just unable to afford to pay off the credit cards because of rate and payment increases. Some clients have to struggle just to make minimum payments, they always carry credit card balances and borrow from one to pay another, and some may have already fallen behind. If you qualify, you can enroll whether you are current or behind in your payments.

If you qualify for a debt negotiation program, the goal is resolve debt as quickly as possible with a monthly settlement savings plan you can afford.  Factors that determine the amount of your settlement saving plan include your credit card balances, the creditors you owe and your budget. Your debt consultant will do a debt analysis to determine your monthly amount. Credit counseling programs usually require a significantly higher program payment.

Because we design a plan to balance resolving debt as quickly as possible with a monthly plan that you can afford, your debt specialists will design a custom program for you and give you an estimation of your program length. Due to individual circumstances not everyone is able to successfully get out of debt. Credit counseling programs usually take 5-7 years. Struggling to make minimum payments can take as much as 15- 20 years or even more to pay off your debt and that’s only if you discontinue using the cards.

If you are legitimately struggling and/or do not foresee being able to pay your debt in the near future, creditors would generally much rather settle than risk getting nothing or risk that you file bankruptcy. Also, it is common practice for credit card companies to sell delinquent accounts to collection agencies, often for just a few cents on the dollar. A settlement tends to make economic sense to creditors. Debt settlement helps them recover a portion of money that they otherwise may not have. Also, most people who have been struggling for years have already paid their creditors back more than what they borrowed in just fees and interest. Consider this scenario while keeping in mind that you have probably already paid back what you owe your creditors because of all the interest. Let’s say you loaned your neighbor $400 a year ago. In this example, your neighbor has never re-paid you anything. Imagine you knew your neighbor lost their job and then you saw a moving truck outside of their house. That day, your neighbor comes to you offering you $200 because they simply could not afford to pay the full $400, would YOU settle? Collectors may even try to tell you that they do not settle with negotiation companies or even attorneys. They often use many unscrupulous practices to try to collect as much as they can from you. Individual collectors are often paid a commission on what they collect from you. Your debt specialist can provide you with recent examples of settlements from creditors that you owe. Keep in mind, settlements vary case by case.

Each program has advantages and disadvantages. The primary difference is that credit counseling programs do not negotiate your balance, they reduce your interest rates. Also, the debts are typically paid down usually over 5-7 years, which is much faster than just making minimum payments. “Non-profit” credit counseling companies are paid by the creditors themselves for collecting the debt on top of the fees they charge the consumer. In the past, many have had their non-profit status revoked by the IRS. If you decide credit counseling is the right solution for you, we will place you with a credit counselor who does not receive any funds from your creditors.

See http://www.washingtonpost.com/wp-dyn/content/article/2006/01/12/AR2006011202085.html

No. As each settlement is negotiated and approved by you, creditors are paid in lump sum payments with the money you accrue in your special purpose account. Creditors are not willing to settle if you make monthly payments, they would want you to continue to make those monthly payments. We cannot advise you to discontinue paying your creditors on a monthly basis, but you will only be accepted in a negotiation program if you voluntarily agree that you won't make monthly payments to your creditors once you are officially enrolled. You will have 100% control over the special purpose account where you will deposit money on a monthly basis. With that said, if you can afford to pay off your debts on your own, you should do so. Debt negotiation programs are for people who cannot afford their payments, who cannot afford credit counseling, who have already fallen behind or those who foresee they will be unable to pay in the near future.

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iling bankruptcy is a serious decision with potentially serious consequences. Most people want to reserve bankruptcy as a last resort and the decision should be based on the advice of a qualified attorney. Bankruptcy laws changed in 2005 making it more difficult to discharge unsecured debt. Since 2005 more people do not qualify for a chapter 7 bankruptcy and can only file a chapter 13 repayment plan. These plans can last 3-5 years and the payments are usually deducted from your paycheck. Bankruptcy is a matter of public record and can be reviewed by prospective employers though public records or uncovered with a credit report for 7-10 years. Many people are surprised our programs can provide an alternative to bankruptcy with an affordable 2-4 year plan. If you are still considering bankruptcy, we can assist you to submit your case to a qualified bankruptcy attorney.

See http://consumer.abiworld.org/?q=node/10

Debt Point does not directly charge consumers any fees. Your provider will have fees that vary with the program you enroll in. All of your fees will be clearly disclosed in your agreement and are INCLUDED in your affordable monthly program payment. Our providers of debt negotiation programs do not charge settlement fees until debts are settled and funds have been sent to the creditor. The amount of fees you pay every year in interest alone to your creditors may be more than the total fees for your program.

If you are current on all of your payments, not making regular monthly payments will negatively affect your credit score. With that said, if you can afford to pay off your debt in full on your own, you should do so. If you are struggling, are already behind in your payments or feel you may be in the near future, your goal should be to first resolve your debt then rebuild your credit profile. Each time a creditor settles, they are required to report a 0 balance owing. It is also important to note that if you are current with your payments and your credit cards are maxed out, it can be very detrimental to your credit profile and affects your score and ability to obtain credit. Debt Point is not a credit repair organization. Every credit situation is unique. We cannot predict or make any promises regarding your individual credit outcome after any program. Please visit the following links for more credit score information:

www.fico.com

www.creditcards.com

IIt is sad that many people have no savings, no investments and very little money left over at the end of the month because they are concerned with only their credit scores by struggling to barely make the minimum payments. Credit scores can be rebuilt, but the damage to a family and lost money thrown away to high interest cannot. Most of us learned in school that if we invested $1000 a month combined with the power of compound interest, most people could easily retire a millionaire. Many elderly people have contacted us with stories of how they struggled to pay debt most of their lives and retired below the poverty line. Credit scores will not help you retire, what you do with your money today will. Your financial decisions now will impact the rest of your life.

With that said, if you can afford to pay off your debt on your own, you should do so. But if you are genuinely struggling, the longer you wait, the more damage you are doing by not getting help. The American Bankruptcy Institute indicates “some people file because their financial situation is causing them emotional distress or depression, or because they would like to free themselves of debt now and have their income and property to themselves in the future.” We believe the same can be said for alternatives to bankruptcy.

Let’s look at two examples. Although each situation is different, this scenario provides valuable perspective.

et’s look at two examples. Although each situation is different, this scenario provides valuable perspective. Consumer “A” is spending $1000 dollars a month in credit card payments and has a good credit score because they have made their minimum payments on time even though most of their payment went to interest. Their credit cards are maxed out however, a great concern to the lender. With their credit card bills, Consumer “A” only has $500 a month to go toward a house payment, which is not nearly enough to afford the house they want. Furthermore, they have no savings or any money they can pull from investments because $1000 a month has been lost to high interest credit card payments for years. Consumer “B” has the exact same income. They have successfully completed our program in 36 months and have 0 credit card debt. Their credit scores are currently less than perfect, but in their case, as they continued to make their car payments and other secured debt payments on time. During the program they were able to put away and save $500 a month because they were able to reduce the original $1000 a month sent to credit card minimum payments down to $500 a month in the settlement plan. Since they graduated the program 6 months ago they saved an additional $1,000 a month and now have $24,000 to go toward a down payment. They also have $1500 a month to go toward a house payment rather than only $500. Who is going to be the stronger borrower? Your debt to income ratio could be the factor that prevents or qualifies you for a loan. The above example is an illustration of one possible outcome. Due to many factors we cannot guarantee or predict the outcome of your credit report or your ability to qualify for a loan upon successful completion of any program and not all clients succeed. Debt Point is not a credit repair organization. Please visit the following links for more information:

www.fico.com

www.creditcards.com

Debt-to-income ratio important as credit score

A

chapter 7 bankruptcy can reflect on your credit report for up to 10 years and can be public record much longer. A chapter 13 is very ugly during the repayment plan which can last 3-5 years. During that time, doing any with your credit will be difficult and you will have to get permission from the court for certain financial decisions. A chapter 13 is typically reported on your credit report for 7 years. If you are considering bankruptcy we can help you submit your case to a qualified attorney. Please visit the following links for more information:

Please visit the following links for more information:

http://consumer.abiworld.org/?q=node/10

http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspx

www.leagle.com

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ome credit counseling companies make the claim that their services do not affect your “FICO Score.” If you had available credit on your accounts this is not true, because when you enroll in credit counseling all of your accounts are closed by the creditors leaving you with “no available credit” on those accounts and reducing your credit score. Having maxed out credit cards can also be detrimental to your credit profile. The NFCC states “A DMP [Debt Management Plan] could have a negative impact on a creditworthiness decision by a potential creditor, landlord, or employer because it is an indicator that you are or have experienced financial difficulties. In addition, creditors may report that you are on a DMP and are not paying as originally agreed although they have accepted the reduced payment.” Please visit the following links for more information:

http://www.nfcc.org/creditcounseling/faq.cfm

www.fico.com

Yes. No company can promise to stop creditor calls. You will be given instructions on how to minimize creditor calls. If you are harassed it is important to report the harassment to your provider’s customer service. If it continues you may be referred to an attorney who may take legal action against the creditor that is harassing you for no out-of-pocket expense. Furthermore, caller ID, call screening services or changing your phone number are other options that some clients use. Finally, creditors may not call your place of employment once they are informed not to do so.

When your creditors are contacted depends on what program you are enrolled in and the individual creditors you owe. In a negotiation program, the advantage of contacting creditors immediately is it will reduce their calls to you. The disadvantage is that it is often better to contact the creditor only when money is available to negotiate a settlement.

Anyone has the right to sue anyone so it is possible, but rare, for a particular account to sue. Historically, this occurs with approximately 2-4 percent of individual accounts enrolled. Some creditors have expressed they would rather settle than attempt legal action as statistics have shown about 80% of judgments are never collected. Lawsuits also cost creditors a lot of money so if one occurs, it is usually because the creditor has reason to believe you have the assets to pay back your debts in full. If a creditor pursues legal action as part of the negotiation process, several measures can be taken and your provider will work very hard to resolve this situation. If your provider is an attorney, they can legally defend you against the lawsuit. The most common solution is an expedited settlement of the account or a stipulated settlement in which a settlement is made over several payments if funds are not available to settle in a lump sum. Other options include setting up a long term, low or zero interest payment plan with the individual creditor suing, or even negotiating a post judgment settlement. Some states such as Texas and Florida have very strong consumer protection laws making it difficult or even impossible for creditors to collect a judgment in many cases. If a creditor sues knowing you are in a settlement program, it may be to essentially “cut in line” and attempt to get paid before other creditors.

Generally all accounts over $500-$1000 need to be included unless they can be paid off very quickly. If you leave an account out and creditors see that you are making payments they may question your hardship because it appears you are trying to pay the other creditor in full, plus interest while negotiating a reduction in your balance with the enrolled creditor.  Creditors typically view your credit report on a regular basis even when you are paying your debts on time.

In a negotiation program some interest and fees will accrue; however, we factor this in when estimating your program terms. Since successful settlements reduce the total amount that you owe, any additional fees and interest are included in the negotiation as part of the settlement.

It is possible that a creditor may send you a 1099-C for forgiven debt after a settlement. IRS Form 1099-C indicates that the Internal Revenue Service considers $600 or more of forgiven debt as taxable income.  The forgiving lender must provide the taxpayer with a 1099-C tax form.  This form will list the amount of forgiven debt or interest.  The IRS does not require tax payers to report the forgiven debt if the tax payer was insolvent at the time the lender forgave the debt.  Being insolvent means that the amount of a client’s debts is greater than his or her assets.  Debt Point does not offer any legal or tax advice and clients should consult a tax professional regarding the potential tax consequences of debt settlement as it relates to their circumstances.

You absolutely can if you have the time, patience, knowledge and nerves to deal with your creditors. Doing so is not likely to save you more money than letting a professional do it for you and will likely be a huge headache. A professional negotiator is not going to be intimidated by creditor tactics which are sometimes illegal. If you are a mechanic you would probably fix your own car, otherwise you will let a professional do it for you. The people negotiating your debts have dealt with creditors on a daily basis and often have relationships with creditors giving them a huge advantage. Sometimes bulk settlements are used. This is when creditors settle multiple client accounts at one time making the process more efficient on both sides and often saving more money than negotiating an account individually. Also, if you do not arrange a settlement correctly the creditor may still attempt to go after you for the rest of the money. Our negotiators have your best interest in mind and unlike credit counseling organizations, our programs are not funded by the creditors.

Since 2002 the team at Debt Point has helped thousands of people find a path to resolve debt. For years we have been featured on both national and local talk and news shows across the country. We only work with providers that meet our very high standards and we are not a one size fits all solution. We strive to find the best option for your individual situation. Our experience and track record speaks for itself.