Debt Settlement FAQs
What kind of debts are generally eligible for debt settlement?
Most types of unsecured debt. This includes credit cards, department store cards, personal loans,
medical bills, and accounts with collection agencies.Debts not eligible include mortgages, student
loans, child support, and alimony debts.
Who is eligible for debt settlement?
In general, anyone in a state of "financial hardship." This is broadly defined and could include many
different financially damaging events, including loss of employment reduced income, divorce, severe
medical bills, or a variety of other circumstances that cause someone to accumulate too much debt and
an inability to pay his/her bills.
How does it work?
Debt settlement calculates a monthly amount you can afford to pay towards your unsecured debts. That
amount is placed in a third party trust account and builds up each month. Once enough funds have been
saved up, Debt Help Lawyers start working with your creditors on settling for less than you owe.
Will the creditors start calling and harassing you?
Yes. As someone goes delinquent with their accounts, especially in the beginning, they will get creditor
calls. This is why it is critical you work with Debt Help Lawyers rather than non-lawyer debt settlement
companies as only Debt Help Lawyers can meaningfully enforce your Fair Debt Acts rights.
What about lawsuits and wage garnishment?
Of course, creditors have the right to sue you to recover their money. But the purpose of the lawsuit is
to get a default judgment against you or to force a settlement. Debt Help Lawyers can aggressively intermediate
debt accounts that have reached this stage, and can often still successfully settle these debts for less than
you owe. Given the choice of spending countless hours fighting your case, debt collectors will prefer amicable
payment arrangements arranged through a Debt Help Lawyer.
Regarding garnishments, the creditor generally has to sue you first, obtain a judgment, and then file for a garnishment action.
Can you do it yourself?
Yes. However, you lack the leverage with your creditors Debt Help Lawyers have built through years negotiating
with creditors and debt collectors. Debt Help Lawyers also sue debt collectors who violate your FDCPA rights,
so collectors are on their best behavior when dealing with professionals rather than "do-it-yourself'ers."
How long does debt settlement take?
How long it takes to eliminate your debts is mainly dependent on your own financial situation. The more you
can save each month, the faster you can pay your debts and be debt free. But every situation is different and
you should contact a Debt Help Lawyer for a free case review.
How much does debt settlement cost?
The cost of debt settlement varies with each individual and their unique situation. Still, any debt settlement
program must be designed to meet both long term goals and short term budgets. With this in mind, the cost of
debt settlement is generally determined by 5 main factors:
How much money you owe to individual companies, and in total.
How late you are in paying your monthly minimums.
Which companies you owe money to.
How many companies you owe money to.
How much you are able to save each month to pay off your debt.
Once these variables are fully understood, an accurate estimate of what debt settlement will cost you can be
provided. Contact Debt Help Lawyers today for a a full debt relief consultation.
What is the difference between debt settlement and debt consolidation?
Debt consolidation is a loan, used to payoff current debts for a longer term. Debt settlement is a negotiation
where debts are paid for less, allowing you to satisfy your current obligations without incurring more debt.
(Most people should not acquire more debt to try and get out of debt. The last thing people with credit problems
need is more debt.)
What happens to your credit?
Your credit score will decline during debt settlement, exactly how much will depend on your original circumstances.
Some of the accounts you place into negotiation are likely to "charge off", which will reflect negatively on your
credit. However, once a debt is settled, the settlement is reported to the credit bureaus, which is often more
positive as compared to unresolved delinquent debts or bankruptcy. After all the debts have been settled, the credit
score can begin to improve since the negative items have been resolved.
What are the tax consequences?
Creditors are supposed to report canceled debts exceeding $600 to the IRS, and you are supposed to report the same
as income on your annual tax return. However, you are permitted by the IRS to write off any “income†from certain
canceled debts so you may not have to pay taxes on the forgiven amounts. You should consult your own tax advisor for
advice specific to your situation.
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