Frequently Asked Questions
About Our Debt Settlement Program

“Debt negotiation” and “debt settlement” are terms that refer to a form of debt relief. A debt settlement is when your creditor agrees to accept less than you owe to satisfy your debt. This process usually involves negotiations between the consumer and his or her creditors to settle unsecured debt for less than the full balance. These negotiations are often conducted on behalf of the consumer by a professional debt negotiation company.

It's important to note that debt settlement companies don't make monthly payments to your creditors; they offer your creditors lump sum settlements once you've set-aside enough funds for a settlement. Most debt settlement clients seek a debt settlement company's assistance because they cannot afford a debt management plan and are seeking to avoid bankruptcy. Debt settlement is typically for two types of consumers: 1) those who are already behind on their payments or 2) those who are about to fall behind.

Debt settlement can be an outstanding debt relief option for people who cannot afford consumer credit counseling but also want to avoid bankruptcy. A debt settlement company will customize a savings plan that fits your financial situation and help you set aside funds to pay off settlements. Due to a debt settlement company's lack of emotional involvement with your accounts, you can be sure that their negotiating position is objective and effective. When you hire a debt settlement company to negotiate on your behalf, you normally deposit money into a savings account each month that's administered by a third party. Once enough money builds up in your savings account, the debt settlement company uses those funds to obtain a settlement with your creditors for less than the outstanding balance.

Unlike other debt relief agencies - some of which are actually funded by your creditors - debt settlement companies typically operate with their clients' best interests in mind. As a result of this arrangement, debt settlement companies fund their operations by charging clients fees for the professional services performed by the company. Debt settlement companies are funded only by their clients so there is there is no conflict of interest.

Each debt settlement client is unique and your results may vary. Settlement savings may depend on who your creditors are or what type of debt you have. To see Debt Shield's Top Settlements and Overall Settlement Averages, click here. >> Debt Shield's Top 5 Settlements

The amount of time it takes to get out of debt greatly depends on your particular situation. A professional debt settlement program usually is projected to take less time than many other debt relief options, such and consumer credit counseling programs or by taking out a debt consolidation loan. The time it takes to complete a debt settlement program depends on many factors, including how much debt you have, who your creditors are, your ability to save and set aside funds for settlements, whether you adhere to all program terms, and the status of your debt accounts.

Your creditors prefer to collect the full amount you owe; however, they know that if you file bankruptcy, they may get nothing at all. Because of the possibility of taking a total loss, creditors are usually open to debt settlement, especially once they recognize the financial hardships you are facing. In other words, many creditors would rather accept a lump sum payment of less than the full balance owed than risk getting nothing at all.

Consumer credit counseling agencies (or CCCs) are organizations that provide counseling services to help you budget and organize your finances so you can pay back your debt. Consumer credit counseling agencies typically offer debt management plans that lower your interest rate so you can pay back your creditors. While some agencies may do a good job orchestrating a repayment plan, many of them are funded by the very creditors you are trying to settle with.

A debt settlement company is funded entirely through the fees it collects from clients, so they work entirely for you, not your creditors.

It may be in your best interest to consider bankruptcy, although you should investigate all other avenues of debt relief before filing bankruptcy. Learn more about bankruptcy as a solution to debt. If you want to explore bankruptcy as an option, you should speak with a bankruptcy attorney.

Disclaimer: Debt Shield is not a law firm and cannot provide you with legal advice. If you need legal advice, such as whether you should or shouldn't file bankruptcy based on your particular facts and circumstances, you should speak with an attorney licensed to practice in your jurisdiction.

Debt consolidation is when you combine all of your various debts into one large debt. The most common debt consolidation loan is a home equity loan. Home equity is the fair market value of your home minus what you still owe on your house. Consumers typically take out a home equity loan to help pay off other credit card bills, but this loan just moves the debt from unsecured accounts to a loan that is backed by their house.

While this process may sound convenient and homeowners may, in certain situations, be able to claim a deduction on their federal taxes for interest paid toward a home equity loan, the pit-falls of debt consolidation are numerous. For instance, if you take out a home equity loan and cannot afford to repay your lender, you could face foreclosure and eventually lose your home. Many consumers who chose a debt consolidation loan end up charging new debt on their credit card accounts, which increases their overall debt burden and chances for encountering financial difficulties. Debt consolidation may be an appropriate debt relief solution for some, particularly when coupled with budgeting advice and assistance, but it may be in your best interest to investigate other debt relief options first.

Not everyone qualifies for debt settlement. Generally, debt settlement is an alternative to bankruptcy for people with overwhelming debt who have endured personal or financial hardships that prevent them from fully repaying their creditors. Typically, most debt settlement companies require that you have at least $10,000 in unsecured debt (debt that has no collateral, like a home or car, attached to it) and are experiencing a legitimate hardship, such as unemployment, illness or other situation that has compromised your ability to repay your debts.

While each debt settlement company may have a different set of qualifications for their program, most companies require their clients to have at least $10,000 of unsecured debt and are experiencing a legitimate hardship. Typically, people who do not qualify for debt settlement either do not have enough debt, the wrong type of debt or cannot afford the debt settlement program. If you do not qualify for debt settlement, it may serve your best interest to investigate other debt relief options such as consumer credit counseling or bankruptcy.

Typically, only “unsecured” debts qualify for a debt settlement program. Unsecured debt is debt that is not "secured" by collateral, such as a home or car. Credit card debt is the most common type of unsecured debt. The amount of debt you owe may also play a significant factor in qualifying for debt settlement. If you have $10,000 or more of unsecured debt (such as credit card debt), you are experiencing a financial hardship and you want to avoid bankruptcy, then you might qualify for debt settlement.

Below are examples of unsecured debts that typically qualify for debt settlement:

Generally, debt settlement companies do not settle “secured” debt. This is debt that is backed by assets such as a house or a car. This is simply because creditors can repossess the asset instead of negotiating a settlement.

Below are examples of secured debts that do NOT qualify for a debt settlement program:

You can certainly attempt to negotiate a debt settlement on your own. But, if you do, make sure you do it right.

Our trained negotiators have years of combined experience negotiating and securing settlements with creditors and debt collectors. Furthermore, we believe that Debt Shield stands out in creditor's eyes as an honest and reputable company that does not enroll unqualified clients (i.e., those consumers who have the ability to fully repay their unsecured debt) so they may be more likely to negotiate a lower settlement with us than another debt settlement company.

If you do choose to settle on your own, or if you do not qualify for a professional debt settlement program, we highly recommend that you purchase the Do-It-Yourself Debt Settlement Kit from the National Financial Awareness Network (NFAN). This kit will give you the information you need to negotiate settlements with your creditors and debt collectors. To successfully settle debt on your own you need to understand the collections process, differences between various creditors, and the right time to begin negotiations. You must also understand how a debt settlement agreement is structured to make sure the agreement clearly spells out the negotiated settlement.

Debt settlement is a complicated process. If you're not sure you have the knowledge, organization and self discipline, you may want to leave it to professionals. Even if you have the time to learn how to save up, negotiate and settle your debts, you may still have some emotional attachment to the debt which could interfere with your objectivity. Professional debt negotiators maintain an objective position with the debt they settle, which means they are less likely to be intimidated by debt collectors.

Our results speak for themselves. We have settled over $100 million in debt for thousands of clients. Our clients feel comfortable with our program because we take many steps to make sure that our debt settlement program is designed to fit their specific financial situation.

Our fee structure is also designed with you in mind. Unlike other debt settlement companies, we do not "front load" our fees. Some debt settlement companies charge most or all of their fees in the first few months of the debt settlement program. However, Debt Shield spreads out our program service fees for the duration of your debt settlement program. We've found this makes debt settlement more affordable for people struggling to get out of debt and it also ensures that we continue to provide the best possible service throughout your entire program, from the first day to the last day.

Our experience and integrity also sets us apart from our competition. We are the first debt settlement company to win the Better Business Bureau of Greater Maryland's Torch Award for Marketplace Ethics and the only company in our industry to win the Smart CEO Future 50 Award.

Unlike some nonprofit debt relief organizations, Debt Shield does not receive commissions or payments from your creditors. Our business is funded through the fees we charge you, so our loyalty remains solely with you. If you're considering using a nonprofit debt relief organization, you may want to know that many such nonprofits receive some of their funding directly from their clients' creditors. In comparison, we do not accept any monies from creditors. We work for you, and only for you.

When you enroll, you will receive a Welcome DVD that explains the program and your responsibilities during the program. Once you receive this DVD, you need to watch it closely. Feel free to take notes, pause it, rewind it and re-watch sections or the entire video as you see fit.

You need to follow the instructions provided in the DVD to have a successful debt settlement program. This includes completing some paperwork and saving in a disciplined way throughout the course of your program.

Upon enrollment, you will also have access to “Debt Relief University,” an online series of courses aimed at helping you fully understand the negotiation and settlement process and what to expect from your creditors. "Debt Relief University" is completely optional; however clients with a better understanding of debt settlement typically experience more overall success in the program.

Debt settlement can have a temporary negative impact on your credit score. Delinquencies and charge-offs may be reported to the credit reporting agencies and remain on your credit report for up to 7 years. Settlements may be reported as “settled for less than full amount,” or something similar, on your credit report. However, if you qualify for debt settlement, chances are your credit may already be damaged due to late payments or other symptoms of your financial hardship. By enrolling onto a debt settlement program, you are indicating your desire to settle your enrolled debt once and for all rather than maintaining a good credit score, which serves to allow you to accumulate more debt. ⁱ

You can leave our debt settlement program at any time. Should you choose to do so, the entire balance of your savings account gets sent back to you.

We do not have a long term commitment, so you are under no contractual obligation to stay if you decide the program is not right for you. Don't worry, you will not be charged any penalty fees, closing fees, termination fees or any other hidden charges should you elect to leave our debt settlement program.

An original creditor is the bank or financial institution that initially extended you credit or issued you the loan. They can be a credit card company, a department store or anyone who has lent you money with the promise of being repaid (usually with interest). A debt collector, on the other hand, is a third party entity that creditors hire to collect a debt on their behalf. In most cases, a creditor hires a collector when a debt has become significantly delinquent--usually around 90 to 180 days late.

Yes, you will probably continue to see reminders from your creditors or debt collectors and collection efforts may increase during the initial stages of any debt settlement program. After enrolling in Debt Shield's debt settlement program, your accounts will naturally fall behind if they aren't behind already because you will be saving as much as possible into your set-aside account. ⁱⁱ Because of your financial inability to pay your bills during this process, you will likely receive some calls and letters from creditors and debt collectors. If you find an increase in calls or letters, simply direct them to us.

No company can completely stop debt collector calls. However, we ask your creditors to contact us directly about your accounts and ask you to direct creditors and debt collectors to our Creditor Hotline if they do contact you.

We work with the United Consumer Advocacy Network (UCAN) to address debt collection issues related to your debt settlement program. UCAN is a consumer advocacy company that works directly with you regarding debt collection calls. Once you report abusive/harassing debt collection calls to UCAN, they usually directly contact the collector (or his or her company) and request that the calls stop. From there, UCAN and you will work together for all future issues surrounding debt collection calls as long as you are in the debt settlement program.

Enrollment with UCAN comes with the Debt Shield debt settlement program at no additional charge to you. This is just another way Debt Shield goes the extra mile for our clients.

Creditors work with and settle accounts negotiated by Debt Shield on a daily basis. If your creditor tells you they do not work with Debt Shield or any debt settlement company, it is probably just another scare tactic to try and get you to pay them some money. Trustworthy debt settlement companies, like Debt Shield, only enroll clients whose accounts qualify for settlement. If Debt Shield enrolls a debt account into our program it's because we know that debt type and/or creditor has a history of settling.

Yes. We diligently attempt to negotiate a mutually agreeable settlement on your unsecured debt accounts, but there is the possibility a creditor can take legal action to get you to pay. One reason why this could occur is when creditors think you have sufficient assets (e.g., a high paying job, considerable investments and property, sufficient equity in your home) they can recover the full amount you owe. That is why it is important to understand that debt settlement is not for everyone, especially those who have sufficient assets to pay your debts in full.

Please note that we are not a law firm and we recommend you speak with a licensed attorney in your state for more information about this issue.