Can debt settlement stop the creditors from calling me at home and at work?

Settlement firms can serve a “Cease-and Desist” notice on creditors that continue to call or harass a client after the settlement firm informs the creditor the settlement firm represents the client.  Most reputable creditors honor that notice.  Those that persist may require a notice to an appropriate government agency. 

Can debt settlement improve my credit rating?

Settlement eliminates debt, which improves the client’s financial condition.

Should I stop paying my creditors?

Settlement firms cannot advise clients to suspend payments to creditors.  Conversely, creditors will only negotiate settlements with clients whose accounts are delinquent.  Those choosing settlement should use the full measure of their financial resources to achieve debt freedom.

OK, so you can’t tell me to stop paying my creditors, what would you do personally?

A reputable settlement firm provides an excellent solution for people who can no longer afford the necessities of life while paying their creditors.  The firm will resolve the financial difficulties at a substantial savings without bankruptcy or court actions.

Will it help to inform creditors of the cause for my financial condition?

Mostly, no.  Generally, there are very few causes that creditors have not heard numerous times before.  Reputable settlement firms spot exceptions, and include those hardships appropriately in negotiations.

How will I know what my creditors offer?

Settlement firms will convey to the client all creditor offers, responses and acceptances until a settlement agreement is reached or otherwise terminated by the parties involved.

How do creditors know the settlement firm represents me?

The client provides the settlement firm with sufficient confidential information to authenticate an agency relationship between the client and settlement firm.

How do I know what each creditor wants to settle for?

The settlement firm conveys all offers, responses to offers, and final settlement agreements to the client.  Final settlements include payment instructions by the creditors.   

What financial resources do I have to disclose to the creditor?

Clients complete a questionnaire to establish their disposable income, that is, the amount they can set aside each month to pay off settlements.  Clients should include all their financial resources when computing disposable income.

What happens if my creditors won’t settle?

All creditors eventually settle, some faster than others depending on individual policies and strategies. A few offer lower settlements for earlier payoffs fearing the client may file bankruptcy.  Others hold out longer hoping for a larger settlement.  Most fall somewhere between these two extremes.

What if my creditors’ offers are higher that the forecasts?

Settlement is a negotiation process.  Creditors usually initiate the process with high offers while settlers respond with low offers.   The gap between those offers lessens as the process continues until a reasonable settlement is reached.    Reputable settlement companies know where individual creditors typically settle.  The goal is to reach that settlement level or even less.

Who controls my funds while they are accumulating?

Settlement funds remain under the client’s control throughout the process. The settlement firm conveys final agreements to the client along with the creditor’s payment conditions.  Those conditions are performed at the direction of the client.

Do I have to be delinquent to enter a settlement program?

No.  Most business and consumers experiencing financial hardship know in advance their cash flow will soon be insufficient to satisfy their debts.  Communicating early with creditors often prevents accounts from being turned over to collection.  While many creditor policies and regulations prevent them from settling debts in the early stages of delinquency, creditors can keep the account in-house if they know there is a credible settlement plan in place.

Can I settle debts myself?

Creditors rarely take the amateur do-it-yourselfer seriously? Instead, they either turn the amateur down flat, saying they do not settle, or they offer a very high settlement, and insist on a lump-sum or very high payments that the client cannot afford. 

Why are settlement companies successful in obtaining good settlements?

The settlement companies we represent enjoy an excellent reputation with the creditors, which has been established through years of experience.  Our settlers deal with the creditors every day.  They know what to say, when to say it.  They know where to initiate negotiations, and where settlements should come in based on the creditor at hand. That’s why involvement with one of our settlement firms places clients on a level playing field with creditors, resulting in settlements clients could not negotiate on their own.  

Can I maintain a credit card while in a settlement program?

Clients may maintain one card for emergency purposes.  We recommend the client choose a card with a low interest rate.  We also ask that the credit limit be placed at less than $1,000.  Exceptions include small business owners who need a higher limit for travel or inventory expenses.  The settlement firm and client agree to the credit limits on a cases-by-case basis.

What about tax consequences?

Creditors, at times, report canceled debt to the IRS.  In response, you are required to report that debt as income on your yearly tax return. You can also deduct any expenses related to settlement, which lessens or eliminates tax consequences related to the canceled debt.  Those who find themselves in this situation should consult with an accountant or tax expert. 

Will I be sued?

A creditor has the right to sue. Typically, though, the likelihood of being sued is minimal for clients who keep lines of communication open through their settlement firm. Creditors much prefer an agreeable compromise to the process of litigation.

Can my wages be garnished?

Aggressive collectors may threaten garnishment. They imply the garnishment will happen quickly unless you send payment immediately. This is untrue. A creditor must sue, obtain a judgment, then file for a garnishment action. The amount of the garnishment depends on what the individual’s other expenses are. The garnishment process can be long and cumbersome for creditors, who much prefer settlement to garnishment.