What is unsecured debt?
An unsecured debt is one that is not attached to a specific tangible item that could be repossessed by the creditor. For example, a car loan or a home mortgage cannot be included in a debt settlement or deb consolidation program because the creditor could legally repossess your car or foreclose on your home. However, credit card debt, medical bills that have been turned over to collection agencies, store cards, signature loans, any unsecured lines of credit and revolving charge accounts are all types of unsecured debts that can be included in our legal debt settlement program. Student loans are generally government backed and cannot be discharged even in a bankruptcy proceeding, however, private student loans that are not government backed may be eligible for inclusion in a legal debt settlement or debt consoldidation program.
What is a Debt Management Plan?
A program designed to assist consumers in paying outstanding debt, avoiding bankruptcy and minimizing legal and debt problems. Your credit cards and other unsecured debts are consolidated into one monthly payment, usually with better repayment terms offered by most creditors, like reduced interest rates and waived late fees.
If I join a Debt Management Plan, how will it affect my credit?
If you are delinquent on your accounts now, we can get your creditors to re-age your accounts and show them current. If you pay your bills on time, but have too much credit, and you are not getting ahead by making minimum payments, by reducing your debt to income ratio, you will improve your credit.
How long will it take to pay off my debts on a Debt Management Plan?
Debt repayment varies greatly from client to client. t depends on the total amount of debt that you have and the terms being offered by your specific creditors. However, our clients are often able to pay back their debt in 3 to 5 years.
Do I have to put all of my credit cards into this program?
NO. The choice is up to you which debt you include in our program. In fact, many people choose to keep at least one credit card for travel or emergency purposes. You can always add additional credit card later.
How is Debt Settlement different from Debt Consolidation?
Debt settlement is a legal solution designed to negotiate settlements on unsecured debt based on what you can afford to pay your creditors. The amount of time required to complete a debt settlement program can depend on several factors, including how quickly you are able to accumulate adequate settlement funds. Typically, a legal debt settlement program allows a consumer to become debt free in 2-3 years. With Debt Consolidation, your payments are based on creditor guidelines. It can take a bit longer to become debt free as the consumer pays back the entire debt; however, creditors are often willing to waive late fees and lower interest rates during the repayment period.
How will my credit be affected with Debt Settlement?
While you are in the debt settlement program, your credit score will decline because you will not be making payments to your creditors. However, the damage that could be done to your credit if you were to file bankruptcy may be greater and far reaching, limiting your ability to obtain future credit as well as hindering employment and will remain in the public records for up to 10 years. It is important to remember that although debt settlement might worsen your credit in the short term, the long term effects of debt settlement are to pay off debt completely.
Are there any tax liabilities to Legal Debt Settlement?
The Internal Revenue Service requires that creditors report any "cancelled debts" as "forgiveness of debt", that is, that portion forgiven, over $600 as "income" to the consumer. This will often come in the form of a 1099 filed by the creditor. Depending on your financial situation, this may or may not create a tax liability for you; therefore, we recommend that you seek the advice of your tax advisor. Generally debtors who are insolvent at the time of the "forgiveness" are not subject to tax liability but each situation is different.
Can I be sued by my creditors?
Creditors have the right to and may choose to pursue legal action against you. There is no way to prevent this. Most Creditors, however, would prefer to work out a negotiated settlement than spending the money by atking a consumer to court.
Can my wages be garnished?
Whether a creditor can or cannot garnish your wages is governed by the laws in your state. Even then, a creditor must first bring a lawsuit and then obtain a judgement before acquiring the authorization for the garnishment. Some states do not allow any wage garnishment and even those states that do have regulations placing limitations on garnishment. No one can garnish your paycheck without legal action and some form of due process and generally you must be given notice of any such court action through formal documentation.
What if a creditor refuses to negotiate?
Debt settlement is recognized as a viable option by creditors and collection agencies throughout the credit card industry. Erasing Debt and The Credit and Banking Law Group, P.A. has established contacts with the major financial institutions, collection agencies, and collection attorneys through years of previous debt negotiations.
Should I consider filing for Bankruptcy instead?
Bankruptcy should only be considered as a last resort and after all other alternative debt solutions have been exhausted. There are numerous negative consequences to bankruptcy, including the possibility of losing your home or car, as well as an unfavorable impact on your credit report resulting in severe limitations to future credit and employment. Even though bankruptcy has some positive aspects, it is still considered a serious matter and will stay on your credit history for up to 10 years; therefore, it is wise to do everything in your power to avoid bankruptcy.
Will I still receive harassing phone calls?
It might be possible in the first several months, since it takes time for your creditor's collections department to find out you're on program with our agency. If you get a harassing call, inform the creditor to contact us.
Let one of our debt specialists explain how our Debt Settlement or a Debt Consolidation program may be the best answer for you. Call us now for a CONFIDENTIAL NO-OBLIGATION REVIEW of your financial situation and debt picture.
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