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How does debt settlement work?
Debt settlement is a process by which we negotiate with your creditors to lower the overall amount of your debt. You then pay the remaining balance as a lump sum, saving time and money.
How long will it take to settle all of my debts?
This depends on your amount of debt and your financial situation and can be more accurately answered by one of our specialists through our free consultation. However, most clients settle their debts within 3 years and some are even debt-free in 6 months.
Should I just ignore debt collectors?
Unless you are looking to file bankruptcy or have no assets that can be taken from you, you shouldn't ignore your debt or try to hide from a debt collector. Generally, the longer you put off resolving the issue, the worse the situation and consequences will become. You should try to work out a mutual agreement with the collector and/or creditor.
What will happen to my credit score?
There is no incentive for a creditor to negotiate an account if you are paying them interest and fees. If you are not making minimum payment, this will have an effect on your credit score, and will show up as a negative on your credit report. On your credit report it may show late, delinquent, or past due. These negative effects are only temporary. After completion of the program your accounts will appear as paid as agreed or settled as agreed with a zero balance and show that you paid them off.
What are my rights regarding debt collection harassment?
The federal Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. § 1692 and following) bars collectors from calling you at work, harassing you, using abusive language, making false or misleading statements, adding unauthorized charges, and many other practices. Under the FDCPA, you can demand that the collection agency stop contacting you (except to tell you that collection efforts have ended or that the creditor or collection agency will sue you). You must put your request in writing.
It's against federal law for a bill collector who works for a collection agency (as opposed to working in the collections department of the creditor itself) to call you at an unreasonable time. Unreasonable times can be subjective depending on each person's individual life and work habits.
Can a collection agency add interest to my overall debt?
Yes, The Fair Debt Collection Practices Act (FDCPA) allows a collector to add interest if your original agreement calls for the addition of interest during collection proceedings or the addition of such interest is allowed under state law. Every state authorizes the collection of such interest.
What is a credit report?
A credit report is a record of your credit activities. It lists any credit card accounts or loans you may have, the balances, and how regularly you make your payments. It also shows if any action has been taken against you because of unpaid bills.
Where do credit reports come from?
A company that gathers and sells credit information is called a consumer reporting agency (CRA). These types of companies collect information about your credit activities, store it in giant databases, and charge a fee for supplying the information. The most common type of CRA is the credit bureau.
There are three major credit bureaus that operate nationwide, plus many smaller companies serving local markets.
What is a credit rating or score?
Your credit rating is drawn from your credit report, which outlines your borrowing, charging, and repayment activities. A good rating helps you reach financial goals; a poor rating limits your financial opportunities.
Since your credit report influences whether you are able to buy a home and get a job, it is extremely important to protect your credit rating by making loan and bill payments on time and by not taking on more debt than you can handle.
Who is allowed to see my credit report?
Consumer reporting agencies can provide information only to the following requestors:
- creditors who are considering granting or have granted you credit;
- employers considering you for employment, promotion, reassignment, or retention;
- insurers considering you for an insurance policy or reviewing an existing policy;
- government agencies reviewing your financial status in connection with issuing you certain licenses or government benefits; and
- anyone else with a legitimate business reason for needing the information in connection with a business transaction that is initiated by the consumer.
Consumer reporting agencies also furnish reports if so required by court orders or federal jury subpoenas. And they will also issue your report to a third party if you give them written instructions to do so.
What type of information is on my credit report?
There are usually four types of information:
- Identifying Information: Your full name, any known aliases, current and previous addresses, social security number, year of birth, current and past employers, and, if applicable, similar information about your spouse.
- Credit Information: The accounts you have with banks, retailers, credit-card issuers, utility companies, and other lenders (accounts are listed by type of loan, such as mortgage, student loan, revolving credit, or installment loan; the date you opened the account; your credit limit or the loan amount; any co-signers of the loan; and your payment pattern over the past two years).
- Public Record Information: State and county court records on bankruptcy, tax liens, or monetary judgments (some consumer reporting agencies list non-monetary judgments as well).
- Recent Inquiries: The names of those who have obtained copies of your credit report within the past year (two years for employment purposes).
Where do consumer reporting agencies get their information?
Credit bureaus collect information from parties that have previously extended credit to you, such as a department store that issued you a credit card or a bank that granted you a personal loan.
How do I correct an error on my credit report?
Contact the consumer credit reporting agency immediately. The company is then responsible for researching and changing or removing incorrect data. This process may take as long as 45 days. At your request, a corrected report will be sent to those parties that you specify who have received your report within the past six months, or employers who have received it within the last two years.
How can I get a copy of my credit report?
You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies—Equifax, Experian and TransUnion. This free credit file can be requested through www.annualcreditreport.com or by contacting the companies directly by phone or by mail as listed below.
To process your request, you will need to provide specific information, such as your name, current and previous addresses, telephone number, social security number, and date of birth. Also, to verify your identity, other information such as a copy of your driver's license, utility bill(s), or bank statement may be required. Keep in mind that the three large bureaus do not necessarily share information with each other. The content of your credit report can be different at each bureau, so it's a good idea to request copies from each one.
To contact the three major credit bureaus
Will debt counseling hurt my credit score?
Using a debt counselor will not directly effect your credit score, but may make it hard for you to qualify for any further credit while using the program.
When you enroll in debt counseling, you write a monthly check to an agency and the agency pays your creditors. A debt-management plan usually lasts three or four years and a comment stating that you're paying an account through a credit-counseling agency appears on your credit report which remains until the account is paid in full. This won't necessarily hurt your credit score but lenders will notice this when reviewing your credit report.
Also, you must be aware of fraudulent or irresponsible debt counseling services because if they don't make your payments on time your credit score will suffer.
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