Q: Who is an ideal candidate for Debt Settlement?
A. The answer may surprise you, but almost anyone with at least $5,000 of unsecured debt may qualify. Debt Liquidation Services understands different people have different debts for different reasons. Debt Liquidation Services debt settlement program was designed for anyone with a debt problem that he or she cannot resolve, or may need help finding a better solution.

Many enrollees suffer, or have suffered hardships, such as a decrease in income, loss of a job, divorce, or death in the family. Others have suffered from a medical disability, domestic problems, or poor money management.

Anyone currently borrowing against one creditor to pay another (“robbing from Peter to pay Paul”), feels pressure of high interest rates and fees, is considering bankruptcy, or has fears of loosing their home may qualify.

Q: What is the difference between unsecured debt and secured debt?
A. Unsecured debt is any loan or debt that has no tangible assets or property attached to it. The most common types of unsecured debt are credit cards, department store cards, medical bills, utility bills, and personal loans. Should you fail to make timely payments, the lenders only recourse is to pursue legal action.

Secured debt is debt for which the creditor has collateral in the form of a security interest in personal and/or real property. Should you fail to make timely payments on secured debt, the creditor is entitled to repossess the property and sell it. Please keep in mind that you may still be liable for any deficient balance remaining after the sale of the property. When dealing with secured debt, it is important to obtain advice from a licensed attorney in order to protect your interests.

Q: Do I have to fall/be behind on my payments to qualify for debt settlement?
A. Most qualified applicants are delinquent on their accounts, and many are in collection status. As well, some are close to having suit for a judgment filed against them. However, others are still current, but do not feel they can afford to continue making the required monthly payments.

Q: What are the basics of debt negotiation?
A. During your initial consultation, Debt Liquidation Services staff will obtain your debt information and provide a free debt analysis. Upon qualification, a payment plan will be created that fits your budget. Your monthly payments will be saved and held in a trust account set up in your name. Throughout the program, our certified debt settlement staff contact & negotiate with your creditors on your behalf, to settle your debts at a reduced amount from the principal balance that is owed. Under the debt settlement program, once you approve a negotiated settlement offer, you will then make the payment directly to your creditors from your personal savings account. Once the payment has been made, the account will now be considered settled. As always, getting you out of debt is our job…. Keeping you out is our mission.

For more information click on the "Debt Settlement" tab.

Q: How is my money used? Safe? Processed?
A. Clients will send monthly payments, typically by ACH draft from a checking account, into a secure trust account set up in the client’s name. There, the funds will be saved until a settlement has been reached. While Debt Liquidation Services staff will be able to see the balance of savings, only the client will have the authorization to send or remove funds.

Q: Who pays my Creditors?
A. Only the client has authorization to release their funds to their creditor(s). A secure process has been established to allow clients to save funds, review settlement offers, and authorize settlement payments. Debt Liquidation Services does NOT disburse funds to your creditors during the program.

Q: Who controls my personal savings used for settlement?
A. Your personal savings account is a bank account that you control and at the bank of your choice. DLS will contact you monthly to ensure that you are depositing the minimum program savings amount as set out in your settlement program. When you have accumulated enough funds in your account our debt negotiators will begin the negotiations process with your creditors.

Q: How long does the debt settlement program take?
A. The time to complete the debt settlement program varies from case to case and is primarily based upon how much money you will be able to set aside each month to eliminate the debt of your enrolled accounts. During your initial free consultation, the time to complete the debt settlement program for your individual case will be discussed with you by our debt specialist. DLS average client can be debt free in 12 - 36 months. The amount of time it takes to clear your debts is largely dependent on your current financial situation. If your budget is extremely limited results may take longer. Every situation is different and we will be happy to discuss this during your free confidential phone consultation.

Q: Is debt settlement the same as debt consolidation?
A. No. The goal of debt settlement is to reduce the overall amount of the debt through negotiating the agreed payoff amounts with your creditors. Debt consolidation (loans) requires the application, qualification, and approval from a lender.

Debt Consolidation loans (and lines of credit) transfer the debt from one account to another and typically changes the unsecured debt into a secured debt (usually by your home). If you have less than the required equity (typically 25 - 30% LTV), bad credit, or negative debt to income ratio (too much debt), it is unlikely that you will be approved for a debt consolidation loan.

As well, if you are approved, you run the risk of making your financial position worse for several reasons. Statistics show that about 70% of people who obtain a debt consolidation loan will, within two years, be in more debt than when they received the loan. The main cause is that once you have paid off the credit cards, you have a whole new source of spending power: $0 Balance credit cards. Often, it is not long before these cards are being used again- possibly up to the credit limit. Now you are paying the loan payments, and on the credit cards (again!).

Also, most loans have front loaded interest, or include interest based on amount borrowed. This causes problems in three more ways; First, your debt to income ratio will look worse than before the loan was taken, and 2nd, even if you pay it off early, you pay the same interest as if you paid the full time frame of the loan. Last, if you start missing payments on the consolidation loan, you stand to lose the asset (usually your home) that the loan is secured against.

Q: Can you settle your debt on your own?
A. Yes, but it is not recommended. You may be able to do your own plumbing repairs, or install your own computer network, but one mistake can cost you a significant amount of time & money. As well, the settlement process is usually very emotional and stressful, especially when collectors are attacking you over the phone. Creditors know most people don't have the expertise to successfully negotiate their debts, and will use a vast array of sophisticated (and sometimes rather blunt) methods of intimidating you into financial arrangements you cannot keep.

Most people who are in financial difficulty prefer to leave this task to experienced people who earn their livelihood doing that particular kind of work, and Debt Liquidation Services has a staff of debt negotiators whose only job is to negotiate the settlement of your unsecured debt. They have working relationships with thousands of creditors, and in-depth knowledge about how these institutions work. By letting DLS do what we do best, you will receive better settlements with a fraction of the stress, and usually for less money.

Q: How does Debt Settlement compare to Consumer Credit Counseling?
A. Although both only require one monthly payment, debt settlement and consumer credit counseling are different most respects. While consumer credit counseling attempts to reduce interest rates, and sometimes payments, you still pay the full amount of the debt. The goal of Debt Liquidation Services debt settlement program is to reduce the overall amount of the debt, by negotiating agreed payoff amounts with your creditors. Debt Settlement can often save you thousands of dollars, and years of repayment.

Q: What can I expect as a result of your debt settlement program?
A. DLS has assembled an impressive team of dedicated individuals who work with one common goal… to save you money. Remember, Debt Liquidation Services debt settlement program is set up to work with your best interest in mind. We have created a win-win situation, by implementing procedures to ensure the best results for our clients. You can expect a substantial reduction in what you owe to your creditors. Although individual results will vary, you can typically expect a reduction of 40% to 60% of the balance owed on your total debt.

Q: How will debt settlement affect my credit?
A. The effects of a debt settlement program will vary depending on the client’s credit status before they enrolled. Of the factors that produce a credit score, payment history and debt to income ratio (amount of debt) are the primary reasons in both negative AND positive credit ratings. While in a debt settlement program, you will receive late marks on your credit, as you are not making regular payments to your creditors.

Any period of delinquency will negatively affect your credit, whether you are in a debt settlement program or not. This occurs for two reasons. First, since the account is past due, it is continually reported to credit bureau as the delinquency period extends (60, 90, 120 days). Secondly, the amount listed in the payment due column increases as past due payments stack up and late fees are accessed.

If your accounts are already delinquent, debt settlement may not have much [negative] effect. For consumers with unpaid delinquent accounts and negative payment history, settling the debts could quickly improve their debt to income ratio, and for much less money than originally borrowed. Once your account balance and payment due is settled and reported as a zero balance, your debt to income ratio will be reduced as long as you have not since incurred more debt. A low debt to income ratio typically has positive impact on accounts and credit, particularly over the long-term. Accounts that are paid/settled through negotiation look much better on your credit report than unpaid past due accounts. The history of the delinquency may remain, but the account moves from the current derogatory reporting section of the credit report, to the closed account section. As months pass, any derogatory history has less and less bearing on the credit score. Some lenders believe that after 12 months the accounts are given very little consideration. It appears that, provided all other debts are paid in a timely manner (house, car, other accounts kept current), the effects of the settlement process are temporary.

Many ask “Does debt settlement make sense for those who have current accounts, and a good credit rating?” Those with a high credit score must weigh the impact of negative payment history on credit ratings against the opportunity to reduce the overall debt much faster (and for much less), and greatly reduce the risk of bankruptcy. {Remember if you are considering chapter 7 or 13 bankruptcy it may stay on your report for up to 10 years.}

Note: Even if your accounts are current, your credit score may already be negatively impacted by your total debt and debt to available credit ratio; in this case negotiation of the accounts may still be a better alternative than making minimum monthly payments for the next 30 years and still having bad credit.

Q: Is debt settlement the same as bankruptcy?
A. NO. While both can remove or eliminate debts faster than most debt repayment options, accounts handled through debt settlement programs are typically looked at more favorably than those filed in bankruptcy. When comparing the two, it is important to remember that, although bankruptcy may seem to be the easiest solution to removing debt, even many bankruptcy attorneys state it should be considered only as a last resort.

In both Chapter 7 and Chapter 13, a major negative mark will be represented on your credit rating. Chapter 7 bankruptcies can stay on your credit report for up to 10 years, while Chapter 13 bankruptcy stays on your credit report during the time you are in the bankruptcy program, plus a specified time calculated from the date you complete the program.

Moreover, bankruptcy not only carries a negative stigma and mental stress, but also bankruptcy may affect your ability to get a job if you work in financial or security industries, or have duties involving financial information. Bankruptcy can cost up to $1,500- $3,000 to file, PLUS additional attorney’s fees, and in Chapter 13, there is a 5% trustee fee for the administration of your chapter 13 bankruptcy.

Bankruptcy will likely result in higher interest rates on future loans and credit, whereas debt settlement may help raise credit scores, and the chance for better rates. Debt Liquidation Services certified counselors help you find a payment plan that first your budget, while in Chapter 13 bankruptcy, the court decides what you can pay and what your budget is.

Q. How will debt settlement affect future jobs?
A. Many employers use credit scores as part of the determining factors for employment, and the military often uses credit to determine promotions. This means that debt settlement may improve employment eligibility, especially for financial and security related jobs. Additionally, home lenders are now asking on loan applications, "Have you ever filed for bankruptcy?" Even if the bankruptcy has fallen off your credit report, answering "No" is considered a federal offense if you have ever filed for bankruptcy. Thus bankruptcy will follow you for the rest of your life. Bankruptcy is a permanent decision that should only be considered as an absolute last resort to solving your debt matters. If you decide to file for bankruptcy, first seek the advice of a licensed attorney. If you have enough discretionary income and wish to work on resolving your debt over time, our Debt Settlement Program may be a better alternative.

Q: Does Debt Liquidation Servicess keep my information confidential?
A. Yes. Debt Liquidation Services maintains your confidentiality at all times and is bound by "Rules of Professional Conduct." We only disclose information to those persons that you have authorized. All creditors that you have contracted us to settle with on your behalf will be contacted by us and advised that you have retained Debt Liquidation Services to represent you. All information is considered highly confidential and personal. Please see our Privacy Notice.

Q: Will I continue to get calls and collection letters from my creditors?
A. Yes you may. Most original creditors are cooperative. Usually, the calls will reduce after the original creditor receives a hardship letter from you. Eventually you may still have to put up with their calls for another 30 to 150 days, because it takes time for original creditors to update their records and this varies by creditor. It is important that you review the section on how to handle creditor calls in the program kit you receive as a new client to minimize creditor harassment. You will also need to keep a creditor log of every phone call or letter that you receive from a creditor and report it to us. Once your account has been sold or moved to a collection agency, collection calls can be stopped but DLS must be made aware of the switch while you are in the program. Note that despite our best efforts, there are dishonest collection agencies that will not abide by a cease and desist letter and may continue to call you. This is against the law and you can formally complain should this continue. You should also know that accounts are frequently moved or sold over time. We may prevent one collection agency from contacting you. However, they may sell or move your account to a new agency and the process will have to be repeated to stop any new calls.

{DLS encourages you to review your rights under the Fair Debt Collection Practices Act & Debt Collection Laws for your State}

Q: Will fees and interest continue to accrue?
A. Most creditors will continue to charge fees and interest until the account is written off (typically 120 - 210 days), regardless of whether the consumer is participating in a debt settlement program or not. They do this in hopes of making more profits from you in your time of financial hardship. When our debt negotiators work out a settlement offer we attempt to negotiate from a position of the principal amount you owe less any fee accumulated during the settlement process.

Q: Will your program stop legal action against me?
A. Creditor lawsuits are not common, but creditors have the right to use legal means to collect a debt, so they do occur. Some creditors are more likely to file suit than others. It is also a common tactic of third-party creditors or collection agencies to threaten you with a lawsuit (which is illegal if they do not intend to sue). The reality is that third-party creditors or collection agencies rarely ever sue. Furthermore, it takes time, and costs money to file a lawsuit. Lastly, even if a creditor is to take legal action, they can only collect what you have. A wage garnishment takes time and always hinges on your employment, and may not be applicable in your state. If you own a home, it is sometimes difficult for a creditor to attach the equity in your home, and your state’s homestead act may protect it. In conclusion, it is typically more cost effective for a creditor to settle than to pursue legal action. While we cannot guarantee that legal action will not be taken, we are confident that our experience in dealing with creditors can reduce the possibility of this happening.

Note: Debt Liquidation Services cannot provide you with legal advice, and in certain situations, we recommend our clients seek competent legal counsel.

However, DLS will make every attempt to work with your creditors to find a solution that will satisfy everyone before legal action is taken. However, despite any legal action that may or may not be taken, your account can be settled before, during or after a lawsuit.

Q: What if I'm sued and they get a Judgment?
A. Here are some facts; Right now in the United States there are between 200 and 300 billion dollars of uncollected (Money Judgment debt). The court does not require the debtor to pay, and will not even help collect. Very few people know how to find these assets or what to do when they are found. The result is that millions of Judgments are just sitting in files. "Four of five winners of a Judgment never see a dime." We negotiate all unsecured debts, which include judgments. Regardless of what stage of collections a debt is in, it can be negotiated.

Q: Will I owe money to the IRS for my reduced settlement?
A. Creditors 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. Therefore, unless you have a positive net worth, then you ordinarily will not be obligated to pay taxes on the forgiven amounts. Additionally, if you do not qualify as insolvent non principal amounts such as fees accumulated on the account may be deducted from the amount reported. Refer to: www.IRS.gov Publication 908.

Note: You should consult a tax advisor for advice specific to your situation. This should not be considered tax advice.

Q: So what does the program cost?
A. Our fees are very competitive (based on a percentage of your overall debt), and consist of a one-time enrollment fee and a service fee. The enrollment fee is earned when: we perform a budget review & analysis of your accounts, and file setup (when we have prepared initial correspondence for the client to send to the contracted creditors directly, and when we send the program kit to the clients).

The service fee is earned as we engage creditors for settlement, handle creditor calls and communication, negotiate a settlement of your contracted accounts and administer the settlement and funding arrangements.

Q. What incentive is there to save me more money?
A. Debt Liquidation Services has created a win-win situation for our clients. Our expert certified debt negotiators are paid bonuses based directly upon their settlement results. That means the better the settlement they arrange for you, the more compensation they receive. This ensures the settlement team is working directly for YOU, and not the creditors. As a result, the absolute best settlement deals are achieved with your best interest in mind.

Q: What is the affect of Debt on my Credit Rating?
A. Many people assume that they have “perfect credit” because they are making all their payments on time. While making payments consistently, and on time, can help create a good credit rating (payment history accounts for 35% of your credit score), many people don’t realize the impact the actual amount of debt has on your overall credit score. Your actual debt plays an almost equally important role (30%) in your credit score. This means that even if you make all your payments on time, if you have a large amount of debt, you can still have low credit scores.

As well, the make up of your debt can also have a negative affect on your credit score. Credit cards, especially those charged to their credit limit, have a major impact on your credit score. Also, too many open accounts, and too many recently opened accounts will decrease the credit score.

Note: If you close your open but zero balance accounts, this may also negatively impact your credit score if it causes your Total Debt to Total Available Credit to be greater than 50%.