| Home | FAQ | Contact |
FREQUENTLY ASKED QUESTIONS
1. What makes this product better than the other products on the marketplace today?
Debt Strategy Roadmap™is a comprehensive program that is intended to provide you with a customized solution to your specific situation. It literally provides you with a blueprint on how to get out of debt. It is not a "one size fits all" approach to debt elimination.The strategies and techniques you will utilize can be customized to fit your circumstances.
This program was designed by a former debt industry executive, so the information, strategies, and techniques are provided from an insider's perspective.
2. What exactly is debt negotiation?
There are two basic strategies of debt negotiation. The first strategy is debt restructure, which is to negotiate reduced terms on your debt. This is for example, lowering the interest rates, monthly payment amount, eliminating late and over limit fees, etc. Through debt restructure, you pay back the full principle balance on the debt you owe but under terms that fit your finances. This strategy is commonly offered through credit counseling companies.
The second strategy, and most common is debt settlement. Debt settlement works by reducing the balance owed (principal) on your unsecured personal debt accounts.This is different from simply reducing the interest rate as with credit counseling. Debt settlement allows you to set the amount of money you set aside each month toward your debt. By reducing the debt balance itself, debt settlement provides a much faster means of eliminating debt. Though results will vary, it is not out of the question for many creditors to accept 50%, 35%, sometimes as low as 20% of the balance owed in order to close out an account rather than lose the entire amount in a bankruptcy proceeding. From a business perspective, it is a matter of the creditor receiving something rather than nothing, as would be the case in most bankruptcies. Money that was previously wasted on minimum payments that mostly went toward interest charges instead go toward reducing the actual debt balance.
3. How do I know which strategy is best for me?
Debt Strategy Roadmap™ guides you through a comprehensive self-diagnosis that helps you determine which, if any, strategy is best for you. Keep in mind that you also have two options that do not involve debt negotiation on both ends of the spectrum- you can continue making your payments as agreed or you can file for bankruptcy.
You will not be forced to make this very important decision all alone. One of the benefits of Debt Strategy Roadmap™ is that you are entitled to complementary phone consultations with a coach to go over your situation and help you come to a sound decision.
4. Will the debt settlement strategy work for me?
Debt settlement is the most common debt negotiation strategy though it is not suitable for everyone. The real intent of debt settlement is as an alternative to bankruptcy. It is not a quick way of saving money on expensive purchases. It is an honorable way to pay back your debt when you simply don't have enough money to pay it back under the terms originally contracted.Here are a few guidelines to help you determine whether or not Debt Settlement is something you should consider:
Well, this is actually a litmus test question as to whether debt settlement is right for you. If you are able to pay back your creditors as agreed without getting further in debt or depleting your savings, you probably should not be using the debt settlement strategy. It really doesn't make sense to pay them less than agreed unless it's under a restructured agreement because you will get nowhere fast. So, if you are committed to debt settlement, any money you have available to you should be set aside for settlements. Ultimately, it is really your decision.
6. What happens to my credit when I partake in debt settlement?
Under most circumstances, your credit score will decline during the program itself. This is really dependent on where you are coming into the program. A consequence of not making your monthly payments is that your accounts will become delinquent and ultimately "charge off," which will reflect negatively on your credit. However, once a debt is settled, the settlement is reported to the credit bureaus. Settled accounts are positive compared to unresolved delinquent debts or bankruptcy. After all the debts have been settled, your credit score should begin to improve since the negative items have been resolved. Keep in mind that there are an incredible number of variables that affect FICO Score, which is the system that gages your credit worthiness. You can be current on all of your accounts yet still have what is considered a low FICO score. For example, your open balances compared to credit limits has a huge impact on FICO score. The bottom line is that you must weigh the real affect of debt settlement on your credit and determine your course of action. And bankruptcy, as it relates to your credit, is far worse than debt settlement. It will follow you around for ten years. The bottom line is that this mission should be more about getting out of debt and less about your credit rating. By the way, debt restructuring as well as credit counseling, which essentially does the same thing, has a detrimental impact on your credit report and will for a longer period of time because it will take longer to complete the process.
7. Are there any tax consequences?
Banks are required to report canceled debts exceeding $600 to the IRS and you are supposed to report the same as income on your annual tax return. However, the IRS permits you to write off any "income" from canceled debts up to the amount by which you were "insolvent" at the time. So unless you have a positive net worth, which is highly unlikely if you're deep in debt, then you ordinarily won't have to pay taxes on the forgiven amounts. You should consult your own tax adviser for advice specific to your situation. Either way, if you owe tax it will be because you saved money off your debt balances, so you'll still be ahead of the game.
8. What about creditor phone calls?
Creditor phone calls will occur when you fall behind on your debt payments. There is really no getting around that. Only a bankruptcy attorney can stop calls entirely. There are ways of dealing with these calls and we cover that extensively in our program. We will even show you how collection calls are not all bad. As long as they are calling you, nothing more sinister is going on.
9. Can I be sued ?
Creditors have the legal right to bring a lawsuit for non-payment of a debt but lawsuits are far less common than most people think. Creditors usually do not want to go through the expense of suing and the process of collecting. Getting a judgment brings the creditor just a small step closer to getting paid and the process can backfire because lawsuits are a main trigger for bankruptcy filings. In general, lawsuits can normally be avoided, provided you are willing to work out suitable arrangements with your creditors through the negotiation process. Most creditors would rather work things out than spend more money taking a customer to court (with no guarantee of being able to collect on a judgment).
10. Can my wages be garnished?
Wage garnishment is mainly an intimidation tactic used by collectors to try and separate them from their money. Actual garnishment actions are relatively rare, and do not happen without advance warning. Ordinarily, you will have plenty of time to react in order to avoid such an unpleasant result. First, a creditor must bring a lawsuit, obtain a judgment, and then take an additional step to obtain authorization for the garnishment. No one can take your paycheck without court approval, and you must be given notice of such court action through formal documentation. Under a worst-case scenario, you may need to negotiate a repayment plan on the full debt balance. And of course, you may consult with an attorney licensed to practice in your state at any point in the process.
11. Will I still be able to use my credit cards?
No. Your accounts will be closed shortly after you start missing payments. It is possible to keep one or two credit cards current for emergencies as you focus on the others.
12. Are all creditors willing to negotiate?
It is usually just a matter of time.Some creditors are more willing to negotiate during certain parts of the collection process than others, but they usually all will come around eventually. Charging an account off is never a good deal for a creditor. In that scenario, they will get pennies on the dollar. They are far better off working with you instead.
© 2008 United Financial Strategies All rights reserved
Debt Strategy Roadmap™is a comprehensive program that is intended to provide you with a customized solution to your specific situation. It literally provides you with a blueprint on how to get out of debt. It is not a "one size fits all" approach to debt elimination.The strategies and techniques you will utilize can be customized to fit your circumstances.
This program was designed by a former debt industry executive, so the information, strategies, and techniques are provided from an insider's perspective.
2. What exactly is debt negotiation?
There are two basic strategies of debt negotiation. The first strategy is debt restructure, which is to negotiate reduced terms on your debt. This is for example, lowering the interest rates, monthly payment amount, eliminating late and over limit fees, etc. Through debt restructure, you pay back the full principle balance on the debt you owe but under terms that fit your finances. This strategy is commonly offered through credit counseling companies.
The second strategy, and most common is debt settlement. Debt settlement works by reducing the balance owed (principal) on your unsecured personal debt accounts.This is different from simply reducing the interest rate as with credit counseling. Debt settlement allows you to set the amount of money you set aside each month toward your debt. By reducing the debt balance itself, debt settlement provides a much faster means of eliminating debt. Though results will vary, it is not out of the question for many creditors to accept 50%, 35%, sometimes as low as 20% of the balance owed in order to close out an account rather than lose the entire amount in a bankruptcy proceeding. From a business perspective, it is a matter of the creditor receiving something rather than nothing, as would be the case in most bankruptcies. Money that was previously wasted on minimum payments that mostly went toward interest charges instead go toward reducing the actual debt balance.
3. How do I know which strategy is best for me?
Debt Strategy Roadmap™ guides you through a comprehensive self-diagnosis that helps you determine which, if any, strategy is best for you. Keep in mind that you also have two options that do not involve debt negotiation on both ends of the spectrum- you can continue making your payments as agreed or you can file for bankruptcy.
You will not be forced to make this very important decision all alone. One of the benefits of Debt Strategy Roadmap™ is that you are entitled to complementary phone consultations with a coach to go over your situation and help you come to a sound decision.
4. Will the debt settlement strategy work for me?
Debt settlement is the most common debt negotiation strategy though it is not suitable for everyone. The real intent of debt settlement is as an alternative to bankruptcy. It is not a quick way of saving money on expensive purchases. It is an honorable way to pay back your debt when you simply don't have enough money to pay it back under the terms originally contracted.Here are a few guidelines to help you determine whether or not Debt Settlement is something you should consider:
- Do you have a legitimate financial hardship condition?
Most debt problems are caused by loss of income, medical issues, divorce/separation, or simply unintentional bad decisions. These are legitimate financial hardships that can happen to anyone through no fault of their own, and any one of these situations can wreak havoc on a household budget. - Are you committed to solving your problem?
This is true with any debt negotiation strategy, but particularly with debt settlement. As with most things in life, success is determined by your level of commitment to staying the course, even when the road gets a little bumpy. You likely didn't get into this situation overnight, so it is unreasonable to expect an overnight resolution. If you are likely to give up easily, then debt settlement is probably not the best choice for you. But if you are determined to avoid bankruptcy, it is a very viable approach to eliminating your debt.. - Are your debts primarily from credit cards and other
unsecured debt?
Most types of unsecured debt can be negotiated, including medical bills, lines of credit, signature loans, repossession deficiencies, financing contracts, department store cards, miscellaneous bills and more. Debt settlement is not appropriate if your problems are primarily from secured debt (such as mortgages and car loans) or household bills (such as utilities).
- Are you able to set aside a sufficient amount of
money toward your debt settlement strategy?
Though there is no set guideline as to the amount of money you need to put aside each month, it is important to be realistic. If you cannot build up funds for settlement at a reasonable pace, then the program becomes less viable. A good rule of thumb is that you should be able to set aside roughly 2% of your debt level on a monthly basis. So, for example, if you owe $20,000 in unsecured debt, you should be able to consistently set aside $400 per month. This is only a rule of thumb, so other amounts may work. You can start off setting aside less money and then increase later. Keep in mind that the more you can set aside, the faster you will become debt free.
Well, this is actually a litmus test question as to whether debt settlement is right for you. If you are able to pay back your creditors as agreed without getting further in debt or depleting your savings, you probably should not be using the debt settlement strategy. It really doesn't make sense to pay them less than agreed unless it's under a restructured agreement because you will get nowhere fast. So, if you are committed to debt settlement, any money you have available to you should be set aside for settlements. Ultimately, it is really your decision.
6. What happens to my credit when I partake in debt settlement?
Under most circumstances, your credit score will decline during the program itself. This is really dependent on where you are coming into the program. A consequence of not making your monthly payments is that your accounts will become delinquent and ultimately "charge off," which will reflect negatively on your credit. However, once a debt is settled, the settlement is reported to the credit bureaus. Settled accounts are positive compared to unresolved delinquent debts or bankruptcy. After all the debts have been settled, your credit score should begin to improve since the negative items have been resolved. Keep in mind that there are an incredible number of variables that affect FICO Score, which is the system that gages your credit worthiness. You can be current on all of your accounts yet still have what is considered a low FICO score. For example, your open balances compared to credit limits has a huge impact on FICO score. The bottom line is that you must weigh the real affect of debt settlement on your credit and determine your course of action. And bankruptcy, as it relates to your credit, is far worse than debt settlement. It will follow you around for ten years. The bottom line is that this mission should be more about getting out of debt and less about your credit rating. By the way, debt restructuring as well as credit counseling, which essentially does the same thing, has a detrimental impact on your credit report and will for a longer period of time because it will take longer to complete the process.
7. Are there any tax consequences?
Banks are required to report canceled debts exceeding $600 to the IRS and you are supposed to report the same as income on your annual tax return. However, the IRS permits you to write off any "income" from canceled debts up to the amount by which you were "insolvent" at the time. So unless you have a positive net worth, which is highly unlikely if you're deep in debt, then you ordinarily won't have to pay taxes on the forgiven amounts. You should consult your own tax adviser for advice specific to your situation. Either way, if you owe tax it will be because you saved money off your debt balances, so you'll still be ahead of the game.
8. What about creditor phone calls?
Creditor phone calls will occur when you fall behind on your debt payments. There is really no getting around that. Only a bankruptcy attorney can stop calls entirely. There are ways of dealing with these calls and we cover that extensively in our program. We will even show you how collection calls are not all bad. As long as they are calling you, nothing more sinister is going on.
9. Can I be sued ?
Creditors have the legal right to bring a lawsuit for non-payment of a debt but lawsuits are far less common than most people think. Creditors usually do not want to go through the expense of suing and the process of collecting. Getting a judgment brings the creditor just a small step closer to getting paid and the process can backfire because lawsuits are a main trigger for bankruptcy filings. In general, lawsuits can normally be avoided, provided you are willing to work out suitable arrangements with your creditors through the negotiation process. Most creditors would rather work things out than spend more money taking a customer to court (with no guarantee of being able to collect on a judgment).
10. Can my wages be garnished?
Wage garnishment is mainly an intimidation tactic used by collectors to try and separate them from their money. Actual garnishment actions are relatively rare, and do not happen without advance warning. Ordinarily, you will have plenty of time to react in order to avoid such an unpleasant result. First, a creditor must bring a lawsuit, obtain a judgment, and then take an additional step to obtain authorization for the garnishment. No one can take your paycheck without court approval, and you must be given notice of such court action through formal documentation. Under a worst-case scenario, you may need to negotiate a repayment plan on the full debt balance. And of course, you may consult with an attorney licensed to practice in your state at any point in the process.
11. Will I still be able to use my credit cards?
No. Your accounts will be closed shortly after you start missing payments. It is possible to keep one or two credit cards current for emergencies as you focus on the others.
12. Are all creditors willing to negotiate?
It is usually just a matter of time.Some creditors are more willing to negotiate during certain parts of the collection process than others, but they usually all will come around eventually. Charging an account off is never a good deal for a creditor. In that scenario, they will get pennies on the dollar. They are far better off working with you instead.
© 2008 United Financial Strategies All rights reserved