How do credit card debt relief programs work?
Credit card debt relief programs are usually either debt consolidation programs or debt settlement programs. Please read the individual sections on these services to learn more about each one.
What is a debt relief program?
A debt relief program is a program for individuals and businesses who have issues with high debt and/or paying off their debt. Debt programs help manage your debt to become debt free. Debt relief programs can involve a variety of services including credit counseling, debt consolidation, debt settlement and even bankruptcy.
Each program is designed to help you find a way out of debt quickly and affordably and are designed to help people with debt and […]
Do I have to include all my credit card debts in a debt settlement program?
We highly recommend all accounts be included in the program, but if there is a specific credit card you would like to not include, your debt advisor will see if that’s possible. To gain the best results to improve your credit score and work with your existing creditors, it is important to be honest about all of the debt you have accumulated. Giving accurate information can lower the amount of debt you will have to […]
How is debt settlement different from bankruptcy?
Debt settlement is an approach to debt reduction that involves negotiating with creditors to accept a smaller amount than what you owe and forgiving the remainder of the debt. Bankruptcy, depending on the type, is dismissing your debt or paying it off over a certain time frame. Bankruptcy is a public record and will stay on your credit report for 10 years.
When does the debt settlement company communicate with my creditors?
The initial communication for each creditor depends on the situation and the amount owed but most are contacted once the program is started.
Can a debt settlement company provide legal advice?
No, a debt settlement company cannot provide legal advice, we are not experts in that area. However, we can evaluate whether bankruptcy is an option you should consider. If bankruptcy or any other legal advice is needed, we can help refer you to one of our trusted attorneys.
Is the amount I save on each of my settlements taxable?
The amount you save on each settlement can be taxable, if you cannot prove you are insolvent. Many of our clients are able to prove insolvency since their debts are more than their assets. By proving insolvency the forgiven debt is not considered income.
Any debt that is forgiven over $600 or more will be issued a 1099 by the creditor. We do not handle taxes therefore it is important to talk to your tax accountant […]
What do the debt settlement company’s fees cover?
The debt settlement company’s fees cover managing and negotiating your accounts until a settlement is finalized. The fees also include unlimited support and advising time for our clients during the program.
How long does a debt settlement program last?
The amount of time a debt settlement program last depends on the debt settlement company and you. The most important factor is the amount of money you have, or can save, to pay off your debt. Most of our clients complete the program in less than 18 months. We recommend no more than an 24 month program, but your debt advisor will see what makes sense with your financial needs.
Will all of my creditors and collectors negotiate with debt settlement companies?
Most creditors and collectors will negotiate with a creditable debt settlement company. Since we are a trusted debt settlement company, most creditors will work with us. During your enrollment process with us, a debt advisor assigned to your case will let you know if we do not work with a certain creditor. If, during the process of the debt negotiation, there is a situation where a creditor or collector will not work with your debt […]