Types of Debt that Can be Settled
There are two types of debt: secured debt and unsecured debt. The former is a type of debt that is tied to an asset, like a home, a car, or land. Secured debt cannot be resolved with our program, as the creditor need only seize the asset as a means of recovery.
Unsecured debt, on the other hand, is type of debt that is not tied to any asset and includes credit cards, medical bills, non-federally backed student loans. Any of these types of unsecured debts can be settled through our program, as we negotiate with the creditor on your behalf to reduce the balance owed. Once we reach an agreement with the creditor for a reduced amount, and the client pays off that amount through our program, the debt will be considered settled or resolved. We will work closely with you to determine the best repayment plan that works for you.
What makes me a good candidate for debt settlement?
A debt settlement program is certainly not for everyone. Qualified candidates are those who have a legitimate financial hardship that has caused them to fall behind on their payments to creditors. We will not welcome clients into the program whose intent is defraud or deceive creditors. We only represent those customers who are truly in need of our services and stand to significantly improve their financial situation.
Why should I use your company to settle my debts as opposed to handling it myself?
Our experienced debt negotiators have established relationships with creditors, collection agencies, and law firms. We will be able to negotiate a better settlement on your behalf than you would be able to on your own. Our negotiating team has extensive knowledge in the various federal and state consumer protection laws, and leverage that knowledge to obtain the best settlements possible.
Who is holding my funds while I’m waiting on settlement?
Your funds will be held at Global Client Solutions, Inc., one of North America’s largest escrow companies in an FDIC insured account. The account will be opened in your name with you having ultimate control over its funds. The monies collected in this account get disbursed to the creditors only when a negotiation is reached with your creditor.
Do I have to include all of my debts into your program?
No. You may choose which debts you would like to enroll, although most of our clients do choose to enroll all of them, so that they are truly debt free and can have a fresh start once the program is concluded. Our consultants will help you decide the best course of action based on your current financial status.
How will debt settlement affect my taxes?
In the United States, forgiven debt of over $600 is considered as “income” and is therefore taxable by the IRS. This means that if you owe $15,000 to a creditor, and we settle it for $5,000, the $10,000 difference is taxable as income for that tax year. However, you may be able to write off this income using IRS Form 982, called the Reduction of Tax Attributes Due to Discharge of Indebtedness. We recommend a call to your account or tax profession for further discussion, but know that you will be pleased when you do.
How is debt settlement different from bankruptcy?
Bankruptcy is an option of last resort. It will remain on your credit report for 7 to 10 years, and you can be denied employment, state licenses, insurance, further credit, and housing because of it. In addition, since the bankruptcy laws have changed since 2007, it is now more difficult to qualify for a Chapter 7 which would discharge your debt. You will likely therefore find yourself in a Chapter 13, wherein your debts are simply restricted over a five year period resulting in you paying off most of your debts in full.
What types of debt collection practices are prohibited?
The following actions are illegal and may not be undertaken by a creditor:
- Calling you at work when they know your employer forbids it;
- Calling you before 8:00 a.m. or after 9:00 p.m. in your time zone;
- Making an excessive number of phone calls to annoy or harass you;
- Continuing to contact you when you are being represented by someone else;
- Telling a person other than you, such as your spouse, family member, or employer that you owe a debt;
- Misrepresenting the amount, character or legal status of a debt;
- Giving you false information about a debt;
- Failing to honor your request to cease communication;
- Threatening to take your property or garnish your wages when this action would not be permissible;
- Threatening criminal prosecution or implying that you have committed a crime;
- Threatening to take legal action against you when the debt collector does intend to take;
- Tricking you into accepting charges for collect calls, or C.O.D. mail;
- Using threats of violence or harm against you
- Publishing lists of consumers who refuse to pay their debts (except as to credit reporting agencies)
- Using profane or obscene language
- Repeatedly using the telephone to annoy or pester you
- Telephoning you without identifying themselves and their stated purpose
- Advertising your debt
- Falsely implying that they are attorneys or government representatives;
- Falsely implying that you have committed a crime;
- Falsely representing that they operate or work for a credit bureau
Who is a debt collector?
A debt collector is any person or company, other than the original creditor, who regularly collects debts owed to others. Under the 1986 Amendment to the Fair Debt Collection Practices Act, this includes attorneys who collect debt on a regular basis.
What do I do if I believe that a debt collector violated the law?
You have the right to sue the debt collector in a court of law for violations of the FDCPA. If you win, you may recover damages you suffered and, in certain instances, you may recover statutory damages as well. Certain jurisdictions also allow for the recovery of your attorneys fees.