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FAQs about Debt Consolidation, Management, and Settlement

  1. What is Debt Consolidation program?
  2. What are the warning signs that I am too much in debt?
  3. What is debt management plan?
  4. What debts can I include in DMP?
  5. Is there a credit check in DMP?
  6. How long does a debt management plan last?
  7. How do I know that creditors are paid?
  8. Can creditors take legal action while I'm on DMP?
  9. Does debt management hurt credit score?
  10. Does the payment in DMP remain same?
  11. Can I use credit cards while on DMP?
  12. Does debt management affect buying a home or car?
  13. What is debt settlement?
  14. When can I go for debt settlement?
  15. Is debt settlement a good option?
  16. How long will it take to settle my debts?
  17. How do I choose the right debt settlement firm?
  18. Why do creditors agree to settle debts?
  1. What is Debt Consolidation program?
    Debt consolidation is a way by which you can consolidate unsecured debts into a single manageable payment. The purpose is to negotiate with your creditors and reduce the interest rates or waive off late fees so that you're able to manage your debts better. In addition, a negotiation of the original balance may be eligible for those who have fallen behind on payments. Ask your counselor for more information. A minimum of $10,000 in unsecured debt is required for settlements.
  2. What are the warning signs that I am too much in debt?
    The following signs indicate that you are too much in debt. You're unable to meet the minimum payment on your debts. Your expenses exceed your income by 50% or more. You have fallen behind on your monthly debt payments. You have exceeded your credit limit. You have lost track of your monthly payments. You're thinking of filing for bankruptcy.
  3. What is debt management plan?
    A Debt management plan (DMP) is a way by which a credit counseling agency helps you to pay off debts through reduced interest rates and payments. With a debt management plan, you can avoid paying extra charges for late payments, and experience a payoff time of 4 years instead of 40. Repayment thus does not harm your fico score as payments are made on time.
  4. What debts can I include in DMP?
    Unsecured debts such as credit cards, medical bills, personal loans, gas cards, utility bills not at your current address, department store cards and repossession loans can be included in DMP. Secured debts like mortgage or car loan are not allowed so if its an asset that can be repossessed, its not unsecured and thus does not qualify for the program.
  5. Is there a credit check in DMP?
    No, there isn't any credit check because debt management plan is not a loan.
  6. How long does a debt management plan last?
    A Debt management plan lasts for 2-5 years within which your debts are paid off. The credit counselor will estimate how long you'll take to complete the payoff based upon our debt management software that calculates creditor requirements based upon your debt amounts.
  7. How do I know that creditors are paid?
    You will receive a monthly statement which shows how much is paid to each of your creditors and what amount of debt is left to be paid, along with a reduction of your interest rate after meeting creditor guideline payment history of reaging account. Be sure to ask your counselor about reaging guidelines at 1.800.442.8004 ext 100.
  8. Can creditors take legal action while I'm on DMP?
    Your creditors have no reason to take you to court in a DMP since you are making your payments on time. However, if a creditor should choose to threaten suit in a debt settlement program where you are saving up a lump sum, it helps to utilize our attorneys to help respond to such suits and explain a financial hardship.
  9. Does debt management hurt my credit score?
    Your creditors may report to the credit bureaus that you are on a DMP. Thus, your credit report may show a comment which states that you're repaying debts through a third party.The comment remains there till you pay off the account in full. However, it doesn't hurt your score since 35% of your fico is measured by making payments on time, and 30% of your fico is measured by your debt to income ratio. High debts equal lower scores.
  10. Does the payment in DMP remain same?
    The payment in a DMP may or may not change depending upon your financial situation. If your financial situation improves, payments can be raised to reduce debt balance faster.
  11. Can I use credit cards while on DMP?
    You cannot use credit cards and incur more debt while on DMP. The credit counseling agency may ask you to sign an agreement in this regard. They may also close or suspend your lines of credit. However, an emergency card is allowed at times.
  12. Does debt management affect buying a home or car?
    If you're buying a home or car with a secured loan, you'll have to be on DMP for at least 1 year without any late payment. The best thing is to check out the lender's guidelines in this regard.
  13. What is debt settlement?
    It is an option by which you can reduce your debt amount by 40%-60% of the outstanding balance. Thus, debt settlement (debt negotiation or debt arbitration) allows you to pay much less than what you owe.
  14. When can I go for debt settlement?
    You can go for settlement under the following conditions: You are behind or about to be behind on payments; Creditors have threatened to file a lawsuit; or your account is sent to collection.
  15. Is debt settlement a good option?
    Debt settlement is a good option in the sense that it reduces your total debt amount by 40%-60% of the outstanding balance. However, it drops down your credit score initially since 35% of your fico is measured by your payment history. But consider that 30% of your credit score is also calculated by the amount of debt you carry. A high debt load of 50% DTI or more lowers your score too, so its important to pay down your debt in one of our two solutions.
  16. How long will it take to settle my debts?
    It takes 2-5 years to settle your debts depending upon how much you can pay on a monthly basis.
  17. How do I choose the right debt settlement firm?
    Check if the settlement firm is accredited by the BBB and has a decent rating. Verify if it is a member of the Trade Association of Settlement Companies (TASC). Also, find out if the debt consultants are certified by the IAPDA. We utilize over 200 attorneys nationwide to review each and every file. For a free no obligation quote, call 1.800.442.8004 ext 100 today.
  18. Why do creditors agree to settle debts?
    Creditors find that it's profitable to settle debts because they not only get a tax break, but get cash for a smaller amount and many time eventually are paid back the balance. In addition, collection agencies have a 7 year statue of limitations for many unsecured debts.
 
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Advantages of Debt Management

  1. Stops creditor harassment.

    A debt management plan may be a voluntary agreement, but most creditors will stop chasing someone for debts when they know they are trying to pay them

  2. Prevents personal bankruptcy.

    A debt management plan can be introduced relatively quickly and, once creditors know they will be receiving a payment, most would rather that than receive nothing by declaring a debtor bankrupt

  3. Affordable monthly payment.

    Signing up to a debt management plan means that a debtor can put all forms of unsecured debt, such as credit card debt and unsecured loans, under one roof. Better yet, a single monthly repayment is made which is disseminated to creditors on a monthly basis.

  4. Complete flexibility.

    A debt management plan allows a debtor to pay off the debt in 4 years instead of 40. Many banks will allow a client to enter back into a program from 60 to 67 days of missed payment provided they have a reason why their situation has changed if its within 5 years. Alternatively, it is also possible to increase contributions to the debt management plan to reduce the overall debt burden time span.

 

*Estimates based on prior results; individual results will vary based on circumstances, including your ability to save sufficient funds and complete the program. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Read and understand all program materials prior to enrollment, including potential adverse impact on your credit rating.**While the testimonials and other information on this website may be exciting, Debt Management Affiliates, Debt Management Guys, Debt Settlement Guys, and (or) Debt Consolidation Guys promises only to perform the steps we've agreed to in each client's case. As with any legal work, no outcome is promised. Your results may vary.***Facts and Figures on our website are substantiated by our back-end operations. Our back-end operations are accredited by the USOBA and TASC. Debt Management Affiliates, Debt Management Guys, Debt Settlement Guys, and (or) Debt Consolidation Guys are not affiliated with MSNBC, Fox, CBS, or USA Today and logos used are registered trademarks of their respective owners.

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