Frequently Asked Questions About Our Debt Settlement Program
What is Debt Settlement?
Why Debt Settlement?
Is Debt Settlement right for me?
Why is Debt Shield the best value?
What should I expect once I am enrolled?
What can I expect from my creditors?
How do I get started?
What is Debt Settlement?
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What is debt negotiation and debt settlement?
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 negotiator.
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Where does a debt settlement company fit into my debt resolution goals?
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. 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.
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How does a debt settlement company fund its operations?
Unlike many debt relief options that can sometimes be funded by the very creditors you are trying to settle with, debt settlement’s professional payment plans typically operate with its consumer’s best interest in mind. As a result of this arrangement, the debt settlement company funds its operations by charging its clients fees for the professional services performed by the company.
Why Debt Settlement?
How much money can debt settlement save me?
Each debt settlement client is unique and your results may vary. Settlement savings may depend on who your creditor is or what type of debt you have. Settling your debt for 50% of the entire balance owed is not uncommon and most debt settlement companies negotiate for percentages somewhere between 20% and 60%. To see Debt Shield’s Top 5 Settlements and Overall Settlement Averages, click here.
How quickly can I be out of debt?
The amount of time it takes to get out of debt greatly depends on your situation. A professional debt settlement program usually takes about 36 months or less to settle all enrolled debt accounts. The time it takes to complete a debt settlement program also depends on how much debt you have and the status of your debt accounts.
Some debt settlements can take time because it is essential to let your accounts age. It is also important to let your set-aside funds accrue enough to offer a settlement to your creditors.
Why would my creditors agree to accept less than the amount I owe them?
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, your creditors would rather accept a lump sum payment of less than the full balance owed than risk getting nothing at all.
How does debt settlement differ from credit counseling?
Consumer Credit Counseling Agencies (CCC) are organizations that provide counseling services to help you budget and organize your finances so you can pay back your debt. CCCs work to lower your interest rate so you can pay back your creditors. While some CCCs may do a good job of orchestrating a repayment plan, many of them often are funded by the very creditors you are trying to settle with. So, you may end up with a repayment plan that is in your creditor’s best interest and not your own.
A debt settlement company is funded entirely through the fees it collects from clients, so they work entirely for you, not your creditors. A debt settlement company will negotiate settlements with your creditors rather than keep you in the minimum payment, debt cycle where you will likely get nowhere.
Should I consider bankruptcy?
Yes, it may be in your best interest to consider bankruptcy, although you should investigate all other avenues of debt relief before you do consider bankruptcy. Bankruptcy can eliminate all of your debt, but the consequences of bankruptcy may outweigh its benefits. The bankruptcy process is often troublesome, invasive and expensive. It can also leave you with a feeling of embarrassment due the unfortunate social stigma associated with bankruptcy. Many people who filed for bankruptcy in the past say they would never consider it again.
What about debt consolidation?
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, 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, but it may be in your best interest to investigate other debt relief options first.
Is debt settlement right for me?
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Who qualifies for a debt settlement program?
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 automobile, 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.
Who doesn’t qualify for debt settlement?
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 have or are experiencing a legitimate hardship. Typically, people who do not qualify for debt settlement either do not have enough debt or the wrong type of debt. 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.
What types of debts qualify for debt settlement?
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 automobile. 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:
- Unsecured Debt
- Credit Card Debt
- Medical Bills
- Personal Loans
- Store Cards
- Unsecured Bank Loans
What types of debts do not 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:
- Secured Debt
- Federally Backed Student Loans
- Taxes
- Car Loans
- Mortgage Loans
- Insurance Policies
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Can't I negotiate a settlement on my own?
You can certainly attempt to negotiate a debt settlement on your own. But, if you do, make sure you do it right.
Our trained and caring negotiators have years of 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 (e.g. those consumers who have the ability to fully repay their unsecured debt).
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 (among other important things) 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.
Why is Debt Shield the best value?
What sets Debt Shield apart from other debt settlement companies?
Our results speak for themselves. We have settled debt for thousands of satisfied clients and our popularity continues to grow. Our clients feel comfortable with our program because we 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. This provides little motivation for these companies to continue working hard on your debts because they already collected all their money in the beginning of your 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.
What guarantees can Debt Shield offer?
Debt Shield is one of the few companies in this industry to offer a customer service guarantee and a term guarantee.
Customer Service Guarantee:
Debt Shield clients who experience a legitimate customer service issue during the first 180 days of their enrollment may request and receive a prorated refund of their monthly maintenance fees, if the issue cannot be resolved. This guarantee applies to issues that are not directly related to the client’s financial condition.
Note: Client must have brought attention to the customer service issue and allowed Debt Shield an opportunity to resolve the issue. The prorated fees are the monthly maintenance fees paid from the date of the occurrence up to the present day.
Term Guarantee:
Debt Shield guarantees we will cut our clients’ remaining monthly maintenance fees in half, if they are not out of debt by the time we project. For example, if a client has a projected term length of 30 months and still has unsettled debt after 30 months, the monthly fee will be cut in half from month 31 to the end of the client’s program.
Note: The client must make all payments on time as scheduled. If the client reschedules payments or has an NSF (non-sufficient funds), the term guarantee extends past the original term length by the number of skipped or NSFed months accordingly. The only fees cut in half are the monthly maintenance fees paid during the additional months over the projected term.
Our guarantees demonstrate the confidence we have in our program’s ability to get our clients on the road to financial recovery. We want to earn your trust and give you the peace of mind that comes with knowing your debts are in professional hands.
Does Debt Shield work for me or my creditors?
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.
What settlement results do Debt Shield clients typically see?
On average, we settle our clients' debts for about 30-50% of the entire amount owed. Our program graduates are typically out of debt in 12 to 36 months. Each of our clients’ situations is different, so the results are different. While some clients may see their debt settled for 30%, other debt accounts may require a larger settlement because of the account type, status or other factors.
What should I expect once I am enrolled?
What steps do I need to take after I enroll?
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, saving in a disciplined way throughout the program and being patient for you settlements to arrive. This DVD is a wonderful help for you, so feel free to watch the video at different times during your program to refresh your memory on different issues and to rekindle your motivation to get out of debt.
How does debt settlement affect my credit?
Debt settlement can have a temporary negative impact on your credit. However, if you qualify for debt settlement, chances are your credit is already damaged due to late payments or other symptoms of your financial hardship. Once you are free from your debt, you should be better able to rebuild your credit.
What can I expect from my creditors?
What is the difference between my creditor and collectors?
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. According to reports from the Federal Trade Commission, debt collectors can become quite aggressive or even threatening when attempting to collect a debt.
Will debt collectors still call or send letters once I’m enrolled in the debt settlement program?
Yes, you will probably continue to see reminders from your creditors or debt collectors. Once you enroll in Debt Shield’s debt settlement program, your accounts will naturally fall behind because you will be saving as much as possible into your set-aside account. Because of you 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.
Can Debt Shield help alleviate collection calls?
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 Hot Line if they do contact you.
We work with the United Consumer Advocacy Network 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 on 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.
What if a creditor says they will not work with Debt Shield?
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.
Can I be sued by my creditors while enrolled in your program
Our goal is to settle your debts out of court, but a creditor reserves the right to take legal action to collect a debt. However, in our experience this rarely happens because, for the creditor, taking a customer to court is costly, time consuming and rarely worth it. However, if the creditor thinks you are able to repay the debt in full or if they receive no communication from you about your hardship and willingness to settle, they may file a lawsuit. This is why it is important to understand that debt settlement is not for everyone, especially those who have sufficient assets to repay their 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.
How do I get started?
Whenever you are ready to get started, just give us a call at 1-888-397-7546 and one of our caring and efficient debt consultants will be standing by to give you a free, no obligation debt consultation. This will be the first step on your way to living a life free from debt. If you prefer, you can complete our program application online and one of our debt consultants will call you to help you assess your situation.
