Debt Settlement FAQ's

1. What types of debts can be settled with debt settlement?

Debt settlement generally applies to unsecured debts like current and past credit card debts, medical bills, deficiency balances (repossessions, short sales) and personal loans. Secured debts like car loans, student loans and mortgages cannot be settled with debt settlement, though other debt help programs may exist.

2. How long does debt settlement take?

The debt settlement process varies in length depending on your specific circumstances such as amount of debt and how much you can afford to contribute a month. Debt negotiations can take several months, and the debt relief program during which you pay off your reduced debt usually lasts between twelve and thirty-six months. However, the programs can be longer or shorter, again depending on your circumstances.   

3. Will creditors or debt collectors contact me during the process of debt negotiation?

When you start a debt settlement program with Attorneys For Consumers, letters of representation will be sent to the creditors and debt collectors of all debts enrolled in the program. Once a third party debt collector gets one of these letters, he cannot contact you again or he will be in violation of your Fair Debt Collection Practices Act rights. Some state laws also prevent original creditors from contacting you as well. Your Debt Help Lawyers will address this issue with you and develop a plan to deal with harassing creditors and collectors while representing you in the debt negotiation process. Once a debt settlement plan has been agreed upon, creditors will not contact you so long as you remain current with your payments.

4. If I apply for debt relief, will there be consequences for my credit report?

Generally yes, however, if you are applying for debt settlement services, chances are your credit report is already filled with high revolving balances and charge offs. The important thing here is that once you have graduated the debt relief program, you can start to rebuild your financial future.

5. What happens if I don’t remain current with my payments during my debt relief program?

If you cannot make your payments, you should have your debt settlement attorney contact your creditors to amend the debt negotiation. If you continue to remain delinquent on your payments, creditors have the right to take legal action against you.

6. Do my interest rates and late fees continue to build up during my debt relief program?

During the debt negotiation stage of your debt relief program, your interest rates and late fees will increase. However, once a debt settlement agreement has been reached, new terms will generally apply to the reduced debt.

7. How do creditors get paid with a debt relief program?

Your debt settlement attorney will help you set up a special “debt settlement account” in your name and instruct you to make payments into this account. As soon as there are enough funds, your debt settlement attorney will use that to negotiate a payment plan with your creditors.

8. If I apply for debt relief, how do I pay for these settlements?

You will continue to make monthly payments into your “debt settlement account.” Each creditor will receive their monthly payment pay automatic debit on a previously specified date.

9. Why shouldn’t I just file for bankruptcy?

Depending on your situation, you should avoid filing for bankruptcy at all costs. Bankruptcy is a costly legal process that does not guarantee complete debt relief. Furthermore, the social stigma attached to bankruptcy and the negative consequences for your financial future are serious considerations. Debt settlement is a much less invasive form of debt relief and the consequences are more short term.

10. Do I really need a debt settlement attorney?

It is wise to retain a debt settlement attorney to represent you in the complicated processes of debt negotiation and debt relief. Debtors who retain a debt settlement attorney are generally able to achieve lower balances to pay off and within a much shorter period of time. In addition, debt settlement attorneys know federal and state consumer legislation and will protect your consumer rights.

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