FAQ
(Q): How does debt settlement and negotiation work?
(A): Debt Settlement is what happens when you reduce the amount of your unsecured personal debts through
creditor negotiations. At its core, debt settlement is the best option for a creditor to “lose the least” on accounts
that default in payment. The process is largely predictable due to established timelines and bank policies which
vary from creditor to creditor. Debt Settlement is a proven effective means to eliminate debt for the right
person.
(Q): Why does debt settlement work?
(A): Banks in the process of lending, know that a percentage of accounts will not perform, meaning some
accounts will default and go unpaid. There is a multi-billion dollar industry built around the known fact that not
everyone will be able to repay their debt. This collection process is centered on a lenders effort to “lose the
least”. The tools and mechanisms in place for this “lose the least” effort are by and large, predictable. Once an
account becomes seriously delinquent, the odds of ever being paid another penny on it decrease dramatically.
Creditors have the option of accepting less than the balance in satisfaction of the entire debt, or drop the account
into the collection pipeline and see what they get on the other end. This pipeline consists of 3 options, assign,
sue or sell.
(Q): Do the creditors agree to this settlement?
(A): They have a choice not to agree to the proposed settlement which may end up getting them nothing if you
were to file bankruptcy or get 50% of what’s owed.
(Q): Will my debts be sent to collection agencies?
(A): While you are enrolled in a debt settlement program, late fees, penalties, and interest will continue to
accrue on your debt until your creditor accepts a settlement offers and the settlement is completed as agreed. If
you do not or cannot remit your monthly minimum payment, you will be in default of your agreement with your
creditor(s), which may result in an increased interest rate or other actions adverse to your interests. If you do not
or cannot pay your monthly minimums for one credit account, that may impact or cause a default on your other
credit accounts (Universal Default) subjecting you to higher interest rates, penalties, and other actions that may
be available to your creditors. Your creditors may reflect late fees, penalties and additional interest on your
monthly statements while you participate in a workout program until a settlement is finalized with your
creditors. If negotiations are unsuccessful, you may be responsible for payment of the entire new balance.
Participation in a debt settlement program, like any failure to pay creditors on time, will likely increase
collection activity, including increased phone calls and correspondence from the creditors or debt collectors.
The Company will assist you to reduce such activity but it will not stop completely
(Q): Is my credit negatively affected?
(Q): Is my credit negatively affected?
(A): Credit score is divided into 5 categories:
1. 35% accounts for “paying bills on time”
2. 30% accounts for amount of debt owed
3. 15% accounts for length of credit history
4. 10% accounts for new credit accounts received
5. 10% accounts for type of credit
While participating in a debt settlement program, your credit score will be negatively impacted but only
accounts for 35% of your credit score. So what is important, having a great credit score or being debt free?
Everyday your balances are increasing even though you may have used the credit card just once, why? Because
credit card interest rates are compounded interest which means interest is being charged on top of interest. So
while you are worried about your credit score being immaculate, you’re actually working at two jobs, one your
regular job and the other one is for the creditors who have you working at without being aware of that fact.
Q): How much reduction can you guarantee?
(A): We cannot guarantee that your debt will settle for any particular percentage within any particular time
period, or that any of your accounts can be settled at less than full value. Any individual creditor may use a
number of different criteria in determining that creditor’s willingness to settle a debt or the amount acceptable
in settlement, including, but not limited to the amount of the debt, the current status of the debt, the reasons you
are seeking debt settlement, the debt settlement program, the type of debt, and the amount of your disposable
income. Our clients savings average 50% reduction.
(Q): What is this Trust Account?
(A): You understand that we will not take possession or control of any of your funds, other than receiving fees
owed to us under the terms of this Contract. You or your designee is responsible for depositing and transferring
any funds that are required for any settlements to an account set up for you which is FDIC insured.
(Q): Can my wages be garnished?
(A): By failing to pay creditors in accordance with the terms of the contractual agreements with those creditors,
you may be in violation of the agreements with those creditors, which may result in litigation. Once a judgment
has been obtained, a creditor may garnish your wages or seize any available assets or property. State laws
regarding judgments vary. Please consult an attorney practicing in your state regarding litigation and possible
judgment consequences
(Q): Can I just consolidate my debt?
(A): Although consolidation may be a valid option, our program will normally resolve your debt in a shorter
period for less money. If you could save 40 to 60 percent and be debt free in less than 36 months would that
interest you?
(Q): Will I have to take out another loan to cover my current debts?
(A): No, actually settlement is a plan for changing when and how much you pay your creditors to achieve
settlements. Loans are a method of obtaining funds. A few customers use a “consolidation” or equity loan in
conjunction with their debt negotiation program, but the majority funds their settlements by following the
savings plan we agree to base on their income and expenses – much like you and I will personalize a budget for
you…with that in mind.
(Q): Will I be totally debt free when I’m done?
(A): Our program will handle your unsecured debt, not debt that is secured by collateral. For example: home
loans, car loans and boat loans. However, after completing the program, if you continue to use the savings plan
that is part of your debt settlement program, and you apply the savings to your secured obligations, then you
should be able to pay off your secured debt ahead of schedule.
(Q): Will I be totally debt free when I’m done?
(A): Our program will handle your unsecured debt, not debt that is secured by collateral. For example: home
loans, car loans and boat loans. However, after completing the program, if you continue to use the savings plan
that is part of your debt settlement program, and you apply the savings to your secured obligations, then you
should be able to pay off your secured debt ahead of schedule.
(Q): Can I shorten the scheduled time-frame for the settlement of my accounts?
(A): Absolutely! Simply speed up the process by increasing your savings with any tax refunds or other
unexpected cash flow.
(Q): Will I be responsible for late fees and interest charges?
(A): Yes, certainly 100% if you do not enroll with us or if you enroll with us and do not complete your program.
The great news is if you remain in the program and build your funds so we may achieve settlement we will
typically settle for about 1⁄2 of what you owe, make sense? Great… All settlement percentages we quote you are based on our proven track record over years of negotiating with creditors. We anticipate your balances to be higher at “settlement time” than they are today and have adjusted accordingly already.
(Q): Why shouldn’t I just file bankruptcy?
(A): If you qualify for a Chapter 7 this may be an option for you. Many of our customers although qualifying
for bankruptcy choose settlement simply because a bankruptcy filing is more detrimental in your credit history
and can remain on your credit reports from 7 to 10 years after the bankruptcy filing has been discharged and
many credit and job applications today ask, “Have you ever filed bankruptcy?” What we are doing is sharing all
of the information you need to make an informed decision, you ready to continue? Return to presentation…
(Q): Who controls the savings fund allocations to creditors?
(A): Every month you authorize an automatic transfer of the scheduled monthly deposit from your bank account
to your trust account. This is an account fully insured and monitored by regulators; no one can touch the funds
until you authorize a settlement. The first few months’ payments will be used to pay the fixed portion of our fee.
Thereafter a small portion of the monthly payment will be deducted to pay for the administration of your
accounts, the negotiations with your creditors, negotiators and access to the attorneys. All of the rest of the
money will be saved to negotiate and pay settlements with your creditors. You will have the ability to manage
your account and personal information online. You can terminate at any time and any money remaining in the
account will be promptly returned to you if you do.
(Q): I don’t want you to have my bank account information!!!
(A): We have already discussed your financial situation, we have agreed on a plan that can get you debt free,
obviously we are not putting this on credit cards, let’s move forward so we can get this debt behind you.
(Q): I do not do business over the Phone...
(A): Our conversation will be held in confidence much as your Creditors have worked with you without an
office down the street where you do business face-to-face. We can do the same, to help you out of debt. Of
course, our emails are encrypted and safe as well; at ____ we make things as simple as possible for you. If your
credit card company called you today and offered you the ability to pay only half of what you owe interest-free,
would you be interested? Of course you would.
(Q): Should I put all of my credit cards in the program?
(A): No, It is not in your best interest to place any accounts below $500 into our program. You can quickly pay
down to zero, and you might hold them open for emergencies. So you only want one emergency card, pay off
any other low balance cards and bring in all unsecured accounts over $500
(Q): Could I negotiate on my own?
(A): Sure, like many things we can do on our own like changing your own oil, but most of us choose to hire
experienced people who specialize and often achieve quicker and better results than we may on our own. How
much debt did you settle last month? Our settlement professionals help consumers pay millions back to their
creditors every month, would you be happy if they could help you settle your accounts?
(Q): Can I still use the credit cards that I have put into your program?
(A): No, while you are on the program these accounts will eventually be closed. Your creditors will be very
unlikely to negotiate with us if you continue to use your cards.
(Q): I have a Moral Obligation to the creditor, don’t you agree?
(A): If a client proceeds to explain that he/she has a moral obligation to the creditor, explain that they have a
moral obligation to their family. Which is more important? Their contractual obligation is to the creditor or their
obligation is to their family to preserve their ability to make a living? It should be summed up like this: I have a
contractual obligation to the creditor (as well as a moral obligation not to skirt the consequences of breaking it:
losing my house and wrecking my credit score). But my moral obligation to my family trumps the contractual
obligation to the creditor.
(Q): Can a creditor sue me to recover a debt?
(A): Creditors have the right to file a lawsuit on a delinquent debt, though it is not very common. In most cases,
the purpose of the lawsuit is to force a settlement on the account. Because it costs the creditors money, they will
often settle an account before it reaches court and becomes a judgment. Should you be issued a summons on the
account, we will walk you through a response and do everything in our power to work out a resolution with
your creditor.
(Q): How do I get started with debt negotiation and settling my debt?
(A): Your first step will be scheduling a consult with one of our specialists so you can learn in detail what and
how debt settlement will work in your particular circumstances. You will need to qualify for our program. Not
everyone qualifies, but everyone appreciates the time we take in helping to determine what options will fit you.
(Q): Do you work with business or commercial debt?
(A): Yes, in some cases, we can assist consumers with business or commercial debt. The business, however,
must be inactive.
(Q): Can TDP stop my creditors from calling?
(A): No, unfortunately creditor calls are part of the process. There are options we have to reduce or minimize
the calls, but at times these options lead to more aggressive attempts from the creditor to collect, and even
pursue a lawsuit. Upon enrolling in debt settlement representation with TDP, we will provide
you with a copy of the Fair Debt Collections Practices Act Guidelines, which collectors must adhere to. This
way you are aware of your rights as a consumer and can determine if a creditor’s calls are harassment or within
FDCPA Guidelines.
(Q): Can I really negotiate my debt with my creditors myself?
(A): Yes! Debt settlement isn’t rocket science. It’s just that there is a formula to follow to optimize your results!
Most people are skeptical when they first hear about do-it-yourself or DIY debt settlement. There is no shortage
of sales people out there who reinforce the idea that only a pro should handle your settlements. They only get
paid, after all, if you hire them. Most of the people “selling” debt settlement could not settle their way out of a
wet paper bag. They enroll you – get their commission – then hand you off to a back end service provider.
The truth is: You Can Settle with Your Creditors! When you understand how the whole collection and
settlement process works coupled with up to the moment policies with each of your creditors, it becomes
simplistic and straight forward. You also save a ton in fees! This is why PLG’s focus since our inception has
been to start every member off with the tools and ongoing support needed to complete a DIY program. Maybe
you really want a pro to do the settlements for you? That’s fine. We just believe everyone should be given the
opportunity to know what the pros know and then make up their mind. Many of our members appreciate that.
You will too!
For a more detail read: DIY Debt Settlement
(Q): Will I still be able to use my credit cards?
(A): No, not the ones you intend to settle.
(Q): What does debt settlement and negotiation cost?
(A): Some Debt Settlement Companies charge several thousands of dollars to settle your debts for you (usually
21-25% of the total debt you submit to them at the time you enroll). Many hundreds of thousands of people over
the past several years seem to have no problem with these fees. However, many people did not understand they
were paying these high fees due to how the fee schedule was disguised, not fully explained or hidden in the fine
print of service contracts.
Here is what you need to consider: The fees you pay to a debt settlement service provider will directly relate
to how long it will take you to be successful and ultimately if you should even consider debt settlement at all.
Until these rules are published by the FTC, we strongly encourage you to only engage the services of a
settlement service provider whose fees are based on SUCCESS. Given that TDP fees are
25% of the total debt enrolled and all fees included within the program payment, we are currently the best
choice when making a straight cost comparison for full service debt settlement.
For some fun reading on this topic, read: Dude Meets Debt Wall
Also recommended: Debt Settlement– The Gist, The Juice & The Lies
(Q): Are your debt settlement products guaranteed?
(A): When it comes to guaranteed settlement results however, there can be no guarantees. If anyone is offering
one to you – promptly become skeptical of whom you are dealing with. Guarantees have long been used when
offering products and services to the public in two ways; by those who are supremely confident in your
satisfaction with the product or service they offer, or by those whose only goal is to get you in the front door
and satisfaction be damned. Due to all of the negative press the debt settlement industry is deservedly receiving
lately, you be the judge of which category one offering results guarantees would fall into.
(Q): Is it true that there are sometimes tax consequences to settling a debt for less than the original balance?
(A): Yes. If you have a debt that is settled for less than the original balance, and the difference (the forgiven
portion of the debt) is greater than $600.00, the creditor is supposed to send you a 1099c, which would then be
reported as income.
The IRS does allow you to write off any income from forgiven debts up to the amount by which you were
insolvent at that time. Unless you had a positive net worth at the time that you settled an account, which, for
many, is unlikely if you’re buried in debt, then you generally wouldn’t have to pay any taxes on the forgiven
debt(s). Always consult a tax attorney or adviser for options that can be applied to your specific circumstances.
Incidentally, if you do wind up owing taxes, it is because you saved money. So, keep that in perspective. In the
same way that you would budget and set aside funds to settle with, if you are solvent and owe tax on forgiven
debt, you must also budget accordingly.
For more detail, please visit:
http://www.irs.gov/individuals/article/0,,id=179414,00.html
http://www.irs.gov/pub/irs-pdf/f982.pdf
(Q): Can I be sued if I use the debt settlement approach?
(A): Creditors have the right to file a lawsuit if you are not paying a debt. This is one of the biggest concerns
you should have before determining if debt settlement is something you should attempt.
Given how many accounts fall delinquent each year, lawsuits in order to collect are not that common. Don’t let
this statement lead you to think it won’t happen to you though. Being sued means you will have to address that
specific debt as a priority to settle before it becomes a judgment. Settling a lawsuit out of court and avoiding
judgment is quite normal, but the rate of savings will generally not be as good as when settling debt that is not
in the courts.
If you are only marginally suited to try debt settlement as a means to avoid bankruptcy and you get sued early
on, it may become a show stopper. You may then have to file bankruptcy due to not being able to fund an out
of court settlement or have to agree to a payment plan that will hinder your ability to save money to settle with
other creditors. This can and does snowball into delays in settling other debts which can then lead to more
lawsuits.
Further: Threats of litigation are very popular, regardless of the fact that debt collectors are prohibited (by the
FDCPA) to threaten legal action unless they’re authorized to do so. This does not stop collectors from making
the threat. You will need to know which threats are credible and which are part of typical (and unfortunately
abusive) debt collection efforts.
start here!
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