Your debt specialist will evaluate your situation and complete a debt analysis at no charge. If you qualify for debt settlement, they will work with you to find an appropriate program, determine a monthly program payment, estimate the length of your program and prepare your agreement. You will be able to set the date of your monthly draft which can be deducted from a checking or savings account. If you qualify and would like to proceed with another program such as credit counseling or consulting with a bankruptcy attorney, your debt specialist will make arrangements to assist you. Once your agreement is received, it is sent to your provider for final approval. After you are approved you will receive a welcome call to confirm that you completely understand the program and have no unanswered questions.
Depending on your program and creditors, your creditors may or may not be immediately contacted after you are enrolled. You will receive a welcome packet with important information on what to do if you take a call from a creditor. There may be some additional details you will need to provide and send back to your program provider.
As money accrues in your special purpose account, debts are negotiated and settled one at a time. You will receive notification each time an account is settled and when all accounts are settled you will receive a graduation package from your provider with copies of all settlement letters provided by the creditors as well as other valuable information and resources.
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 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.
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.
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:
I have never missed a payment and have a great credit score, should I continue to struggle to keep it?
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:
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:
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:
Debt Point is an accredited member of the United States Organization of Bankruptcy Alternatives, meaning we meet their highest standards as verified though an independent audit. USOBA is the industries oldest and only non-profit independent trade association. We are also members of The Association of Settlement Companies, another highly regarded industry association and are a Dun and Bradstreet listed company.