Frequently Asked Questions about Debt Settlement, Debt Consolidation, Bankruptcy

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1. What is the difference between debt reduction and debt consolidation?

Debt reduction is the process of lowering your principal balance and interest rates to less than you currently owe. This process is usually complete and your entire debt is paid off in a 12-36 month period. For example, if your debt amount is $30,000, we can generally get it reduced on average to $15,000. This figure includes the amount you owe and interest. Debt Consolidation involves qualifying for a new a loan from a bank to consolidate all of your outstanding unsecured debts. The typical interest rate associated with Debt Consolidation is 12%. For example, if your debt amount is $30,000, you will pay the entire $30,000 principal balance back plus 12% interest. The usual payoff time frame is 5-7 years with a debt consolidation loan and your combined payment to eliminate the debt would be close to $40,040.01.

2. What is a settlement?

A settlement is an agreement made by our attorneys or negotiators on your behalf with your banks or credit card companies stating that they are willing to take a lesser amount of money than you currently owe them and consider it a full payment with a zero balance reporting on your account.

3. Why would my creditors be willing to accept less money that what I actually owe them?

Because your debt is unsecured they essentially are left with little or no choice. They are left with the option of you filing for Bankruptcy and them receiving nothing or they can take a loss and at least recoup a portion of what they lent to you. Our attorneys and negotiators have a personal history of dealing with major creditors and lenders that have come to realize that clients who are enrolled into our debt reduction program are more likely to fulfill the settlement amount than clients whom are not enrolled into our program.

4. Will the creditors continue to call me?

No company can stop all of the creditor calls, so if a company claims they can, be very careful! Your creditors do have a legal right to call and try to collect the debt from you. However, there are several things we do to combat and eliminate roughly 95% of these phone calls. We will supply you with a creditor call script so if a creditor does call you can be assured of what you need to say to them before offering them our phone number. We will also send out cease and desist letters to your creditors so they are informed that you have enrolled into our program and to contact us directly to work out a new payment arrangement.

5. Do I have to enroll all of my credit card accounts into the debt reduction program?

No, it is wise for you to keep at least one credit card out of the program to use for emergency purposes. You would want to keep the credit card with the lowest balance and interest rate out of the program.

6. Will my credit card accounts be closed if I enroll them into a debt reduction program?

Yes, the accounts that you choose to enroll into the debt negotiation program will be closed. It is impossible for us to obtain settlements from your creditors if you are still using the accounts and making timely payments.

7. Does the Fair Debt Collections Practices Act apply to major credit card banks?
No, it only applies to the professional debt collection companies or collections attorneys the major credit card banks hire. The original creditors are regulated by state law but major credit card companies follow policies close to those of the FDCPA and will comply with your request to stop phoning you at home or work. If feel the original credit card company and not the attorney or collections company is harassing you then you need to research your state laws and file a complaint. Typically, the Attorney General in your state is the proper authority to contact.

9. A collector called me and told me that he was going to call my employer and have my wages garnished. Can they do this?

You are entitled to due process under The Constitution of the United States. This means a collector must sue you first and the matter must be heard in front of a judge. If the case goes against you then the judge will issue a judgment, at this point the collector must go back to the court and request a writ of garnishment. Your employer will not garnish your wages until he receive an official document from the court ordering him to do so. This is the procedure in most states; if you find yourself in this situation you should review the Rules of the Court in your jurisdiction or contact an attorney.

10. Does the debt collector have to accept my partial payments?

No, they usually claim that they can't and pressure you into a full payment. They will use very aggressive tactics to scare you in to paying the debt in full as quickly as possible. Never pay them a token payment just to satisfy the collector on the phone and never give anyone your bank account information over the phone. Dishonest collectors have been known to hit someone's bank account more than once which could overdraft your account. Always demand any agreement in writing first before paying a collector, if they refuse to send you it in writing first then hang-up.

For more information visit my website www.legallysettledebt.com

Article Source: http://depositarticles.com/

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