Debt Settlement FAQs
What is debt settlement?
Debt settlement is a process by which your attorney contacts the creditor and negotiates a repayment amount which is less then you owe.How much less is, usually, the negotiated repayment amount?
Depends on the creditor’s willingness to negotiate the debt and the representative’s negotiation skills.Do I have to have the money available to pay once a settlement is reached?
Yes, once a settlement is reached, typically the creditor wants the money in 7 to 10 days.Will my credit report show that the debt was paid?
It will show that the debt was paid but it will say something like “debt was paid for less then originally owed”.What about all the interest to accumulated while the debt was delinquent?
A good representative will negotiate the interest, fees and penalties first and then negotiate the principle balance owed.What is a 'factoring company'?
A factoring company is one that buys “bad debt” in bulk and then tries to collect more then they paid to make a profit. Typically it is easier to negotiate a settlement with such a company then the original creditor, but this is a general rule.Why can't I do it myself?
You can, but it’s been my experience that the creditor will not negotiate with you or will not give you as good as a deal.What if my representative settles all my debt except one?
That is the risk of debt settlement is that one or more creditors may not settle with you. There is no law that a creditor has to take less then what is owed.How much is the fee for this service?
Typically, the fee is 20 to 25% of the amount saved. For example is the total savings was $2,000 then the fee is $400 based on 20% commission.What if I don’t have the money, is there another way?
Yes, many debt settlement companies will allow you to pay a monthly amount. Once your account reaches a certain amount, the company will then start to negotiate your debts. You will have to continue making your payments until you reach a pre-determined amount. This amount may fluctuate depending on the settlement percentages.
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