Our programs use a process called "debt negotiation" or "debt settlement.” This is the process of negotiating a reduction in your principal credit card balances.  If you do not qualify for a debt negotiation program we can refer you to a reputable credit counseling provider or bankruptcy attorney.

First your professional debt consultant will evaluate your situation and complete a debt analysis.  If you qualify for debt settlement, they will work with you to determine a monthly savings plan, estimate the length of your program and prepare your agreement.  You will be able to set the date of your monthly draft which can be deducted from a checking or savings account.

Once your agreement is received, it is sent for final approval. After you are approved you will receive a welcome call to confirm that you completely understand the program and have no unanswered questions.

Depending on your program and creditors, your creditors may or may not be immediately contacted after you are enrolled.

You will receive a welcome packet with important information on what to do if you take a call from a creditor. There may be some additional details you will need to provide and send back to your program provider.

As money accrues in your special purpose account, debts are negotiated and settled one at a time.  You will receive notification each time an account is settled and when all accounts are settled you will receive a graduation package with copies of all settlement letters provided by the creditors as well as other valuable information and resources.

You may qualify if you have $7,500 or more in unsecured debt.  Some of our programs have a $10,000 minimum.  There is no cap on the amount of unsecured debt you may enroll, as we have had clients with several hundred thousand in credit card debt alone.  Unsecured debt is typically credit cards, but can also include medical bills and most loans that are not tied to collateral.  Our programs cannot negotiate vehicle or mortgage loans because the lender can repossess the vehicle or foreclose on the property.  We can help you if your car or home has already been repossessed or foreclosed on, and you are left owing the bank money which is called a “deficiency balance.”  We cannot help you with student loans because they are usually secured by the federal government.

You must also be in a financial hardship and this could be a range of circumstances.  Some clients have experienced a job loss or other reduction of income; a medical condition or even just unable to afford to pay the credit cards because of rate and payment increases.  Others struggle just to make minimum payments, they always carry credit card balances and borrow from one to pay another, and some may have already fallen behind. You can enroll whether you are current or behind in your payments though you cannot enroll in a negotiation program if you make monthly payments to your creditors.

Historically settlements can be in the range of 40-60% of the balance at the time of settlement, excluding fees.  Completion of our programs will save you a tremendous amount of money compared to what you would have spent paying your debt back in full, plus interest year after year.  Your hardship is the reason creditors usually settle.  

We design a settlement plan that balances getting you out of debt as quickly as possible with a payment you can afford.  Your monthly savings may be as much as 50% of what you would be paying in just minimum payments.  Factors that determine your payment plan include your credit card balance, the creditors you owe and your budget.  Your debt consultant will do a debt analysis and determine what your payment plan will be.

Since we design a plan that balances getting you out of debt as quickly as possible with a payment you can afford, our graduates have typically had most or all of their debt resolved in about 2-4 years. Struggling to make minimum payments can take as much as 15- 20 years or even more to pay off your debt and that’s only if you discontinue using the cards.  Credit counseling program may require payments equal or close to your minimum payments and take 5-7 years while chapter 13 bankruptcy can take 3-5 years.  Your debt consultant will design a custom program for you and give you an estimation of your program length. 

If you are legitimately struggling and/or do not foresee being able to pay your debt in the near future, creditors would generally much rather settle than risk getting nothing or risk that you file bankruptcy. Also it is common practice for credit card companies to sell delinquent accounts to collection agencies, often for just a few cents on the dollar.  A settlement in the range of 40-60%, for example, tends to make economic sense to creditors.  Debt settlement helps them recover a portion of money that they otherwise may not have.  Also, most people who have been struggling for years have already paid their creditors back more than what they borrowed in just fees and interest.

Consider this scenario while keeping in mind that you have probably already paid back what you owe your creditors because of all the interest.

Let’s say you loaned your neighbor 400 dollars a year ago.  In this example, your neighbor has never re-paid you anything.  Imagine you knew your neighbor lost their job and then you saw a moving truck outside of their house.  That day, your neighbor comes to you offering you $200 because they simply could not afford to pay the full $400, would YOU settle?

Collectors may try to tell you that they do not settle with negotiation companies or even attorneys.  That is simply untrue. They often use many unscrupulous practices to try to collect as much as they can from you.  Individual collectors are often paid a commission on what they collect from you.  Visit our settlement page for examples.  Your debt consultant can provide you with recent examples of settlements from creditors that you owe.  Keep in mind, settlements vary case by case.

Credit counseling programs do not negotiate your balance, they reduce your interest rates, though not all creditors may give you a reduction. There is data that shows fewer people graduate these programs because the payments are often about the same as making minimum payments.  Also the debts are paid down somewhat slow- usually over 5-7 years which can be faster than just making minimum payments. Although they may claim to be non-profit, credit counseling companies are paid by the creditors themselves for collecting the debt on top of the fees they charge the consumer.  In the past, many have had their non-profit status revoked by the IRS.

No.  Creditors are paid in lump sum payments one at a time throughout your plan with money you accrue in your special purpose account.  Creditors are not willing to settle if you make monthly payments, they would want to you continue to make those monthly payments.  We cannot advise you to discontinue paying your creditors on a monthly basis but we can only accept you in a negotiation program if you voluntarily agree that you won't make monthly payments to your creditors once you are officially enrolled.  You will have 100% control over the special purpose account where you will deposit money in on monthly basis.  This account is only used to fund the program fees and settlements.  With that said, if you can afford to pay and resolve your debts on your own, you should do so.  Our programs are for people who cannot afford their payments, have already fell behind or that foresee they will be unable to pay in the future.

Filing bankruptcy is a serious decision with serious consequences and should be considered a last resort. Bankruptcy laws changed in 2005 making it much more difficult to discharge unsecured debt.  Since 2005 more people do not qualify for a chapter 7 bankruptcy and can only file a chapter 13 repayment plan.  These plans can last 3-5 years and the payments are usually deducted from your paycheck.  Some attorneys have been known to collect fees upfront, attempt to file a 7, but then push people into a chapter 13.  Bankruptcy is a matter of public record and can affect future employment.  Many people are surprised that our programs can help them to avoid bankruptcy with an affordable plan that can put them on the path to be debt free in as little as 2-4 years.  If you are still considering bankruptcy, we can provide information for local bankruptcy attorneys in your area who will give you a free and no obligation consultation.

Your fees will vary with the program you are enrolled in and the total amount of debt that you have.  All of your fees will be clearly disclosed in your agreement and are INCLUDED in your monthly plan payment.  There are no hidden fees and your program may include a guarantee that you will save a set amount of money with your creditors or pay no service fees.  The amount of fees you pay every year in interest alone to your creditors may be more than the total fees for your debt negotiation program.

If you are current on all of your payments, not making regular monthly payments will negatively affect your credit score.  With that said, if you can afford to pay off your debt in full on your own, you should do so.  If struggling, are already behind in your payments or feel you may be in the near future, your goal should be to first get out of debt then rebuild your credit profile.  Each time a creditor settles, they are required to report that they are “settled in full” or possibly “paid in full” with a 0 balance owing.  Many of our clients receive credit card offers after graduating our programs but we hope that no one goes back in debt.  It is also important to note that if you are current with your payments and your credit cards are maxed out, it can be very detrimental to your credit profile and affects your score and ability to obtain credit.

Freedomdebt.com is not a credit repair organization, however many of our clients enter a credit repair program after completing one of our negotiation plans to further improve their credit profile. This can also be done on your own and upon graduation, you will be provided with resources that can assist you, at no charge.

It is sad that many people have no savings, no investments and very little money left over at the end of the month because they are concerned with only their credit scores by struggling to barely make the minimum payments.  Credit scores can be rebuilt but the damage to a family and lost money thrown away to high interest cannot.  We learned in school that if we invested $1000 a month combined with the power of compound interest, most people could easily retire a millionaire.  Many elderly people have contacted us with stories how they struggled to pay debt their most of their lives and retired below the poverty line.  Credit scores will not help you retire, what you do with your money today will.  Your financial decisions now will impact the rest of your life.

Let’s look at two examples. Although each situation is different, this scenario provides valuable perspective.

Consumer “A” is spending $1000 dollars a month in credit card payments and has a good credit score because they have made their minimum payments on time even though most of their payment went to interest. Their credit cards are maxed out however, a great concern to the lender. With their credit card bills, consumer “A” only has $500 a month to go toward a house payment which is not nearly enough to afford the house they want. Furthermore, they have no savings or any money they can pull from investments because $1000 a month has been lost to high interest credit card payments for years.

Consumer “B” has the exact same income. They have graduated from our program in 36 months and have 0 credit card debt. Although their credit scores are currently less than perfect, but in their case, they are “decent” as they continued to make their car payments and other secured debt payments on time. During the program they were able to put away and save $500 a month because they were able to reduce the original $1000 a month sent to credit card minimum payments down to $500 a month in the settlement plan. Since they graduated the program 6 months ago they saved an additional $1,000 a month and now have $24,000 to go toward a down payment. They also have $1500 a month to go toward a house payment rather than only $500.

Who is going to be the stronger borrower? This illustration is one possible scenario. Due to individual factors, we cannot assume, guarantee or predict your credit outcome after completing a debt negotiation program. We are not a credit repair organization. Please visit the following links for more information on credit scores.

www.fico.com

5 Components of a FICO Score

Debt Settlement verses 30 Day Late Payment and Bankruptcy

A chapter 7 bankruptcy can reflect on your credit reports for up to 10 years after it was discharged and can be a public record for life.  A chapter 13 is even uglier because the repayment plan can last 3-5 years. During that time, doing anything with your credit will be next to impossible and you will have to get permission from the court for certain financial decisions.  The chapter 13 is reported on your credit report for an additional 7 years after the 3-5 year repayment period.

Credit counseling companies often make the claim that their services do not affect your “Fico Score”. This is not true.  When you enroll in credit counseling, all of the accounts are closed by the creditor.  This leaves you with no “available credit” with those accounts and that will reduce your credit score.  It is important to note that the closer your credit card balances are to their limits, the more it lowers your credit score.  Having maxed out credit cards can be very detrimental to your credit profile.  Worse, creditors report that the accounts are enrolled in a debt management plan or similar, which to lenders, could look as bad as a bankruptcy.  If you ask an auto dealer or mortgage company, they will likely tell you they consider credit counseling the same or similar to a bankruptcy.

Yes.  No company can promise to stop creditor calls. You will be given instructions on how to minimize creditor calls. If you are harassed it is important to report the harassment to customer service and if it continues you may be referred to an attorney, who, for no out of pocket cost may take legal action against the creditor that is harassing you.  Furthermore, caller id, call screening services or changing your phone number are other options that some clients use.  Finally, creditors may not call your place of employment once they are informed not to do so.

When your creditors are contacted depends on what program you are enrolled in and the individual creditors you owe.  The advantage of contacting creditors immediately is it will reduce their calls to you. The disadvantage is that its often better for settlements to contact the creditor only when money is available to negotiate a settlement.

Anyone has the right to sue anyone so it is possible but rare for a particular account to sue and occasionally it is part of the negotiation process.  Some creditors have admitted they would rather settle than attempt legal action as statistics have shown about 80% of judgments are never collected. Lawsuits cost creditors a lot of money and only occur with very few individual credit accounts.  They usually occur if the creditor has reason to believe you have the assets to pay back your debts in full.  If a creditor pursues legal action as part of the negotiation process, several measures can be taken and your settlement department or “Advanced Collection Team,” depending on the program you are enrolled in will work very hard to resolve this situation.  The most common solution is an expedited settlement of the account or a stipulated settlement in which a settlement is made over several payments if funds are not available to settle in a lump sum.  Other options include setting up a long term, low or zero interest payment plan with the individual creditor suing, or even negotiating a post judgment settlement.  Some states such as Texas and Florida have very strong consumer protection laws making it difficult or even impossible for creditors to collect a judgment in many cases.  If a creditor sues knowing you are in a settlement program, it may be to essentially “cut in line” and attempt to get paid before other creditors.

Depending on the laws where you reside, if a judgment is obtained and left unresolved it could lead to garnished wages, liens on property, levies on bank accounts and other collections measures.

Generally all accounts over $500-$1000 need to be included unless they can be paid off very quickly.  If you leave an account out and creditors see that you are making payments they may question your hardship because it appears you are trying to pay the other creditor in full plus interest while negotiating a reduction in your balance with the enrolled creditor.  Creditors typically view your credit report on a regular basis, even when you are paying your debts on time.

Some interest and fees will accrue, however we factor this in when estimating your program terms. Since a settlement reduces the total amount that you owe, any additional fees and interest are included in the negotiation as part of the settlement.

It is possible that a creditor may send you a 1099-C for debt forgiven after a settlement.  You may not have to pay taxes on forgiven debt if you file a Form 982 provided your liabilities are more than your assets.  DebtPoint.com does not give tax advice and we recommend the advice of a tax professional if this occurs.

You absolutely can if you have the time, patience, knowledge and nerves to deal with your creditors. Doing so is not likely to save you more money than letting our professionals do it for you and will likely be a huge headache.  A professional negotiator is not going to be intimidated by creditor tactics which are sometimes illegal.  If you are a mechanic you would probably fix your own car, otherwise you will let a professional do it for you.  The people negotiating your debts have dealt with creditors on a daily basis and often have relationships with creditors giving them a huge advantage.  Sometimes bulk settlements are used to save clients more money which is when creditors settle multiple client accounts at one time making the process more efficient on both sides and often saving people more money than negotiating an account individually.  Also, if you do not arrange a settlement correctly, the creditor may still attempt to go after you for the rest of the money.  Our negotiators have your best interest in mind and unlike credit counseling organizations, our programs are not funded by the creditors.

Getting out of overwhelming debt is not an easy task and there is no easy solution.  Due to individual circumstances, not everyone completes settlement programs and your success is dependent upon your ability to accrue funds and completion of all program terms.  The primary program we offer has a higher success ratio than credit counseling programs or chapter 13 bankruptcy when comparing industry statistics provided to the FTC.

Since 2002 the team at freedomdebt.com has helped tens of thousands of people. Although servicing tens of thousands, we have no unresolved complaints.  For years we have been featured on both national and local talk and news shows across the country.  Many competitors have only been in business a short time because of the recent high demand for debt relief services and have little experience.  Worse, they often do not have their clients’ best interests in mind and exist only to capitalize on a desperately needed service for millions.  Unlike most competitors, we are not a once size fits all solution, we strive to find the best option for your individual situation and the state you live in.  Our experience and track record speaks for itself.