Frequently Asked Questions

 

The goal of our program is to allow you to pay your unsecured debt for less than what you owe. Our representative will work closely with you to examine what you owe, and how much is available to pay. Once you enroll, we will open a trust account at Rocky Maintain Trust Bank that will be funded by you each month. These funds are automatically withdrawn from your bank account and are used to pay your negotiated debt and our fees. We will also have you sign a document that will authorize us to speak on your behalf to your creditors, and will also allow us to distribute the funds held in the trust account to pay out your debt. This process will continue until the debts are paid.

There are basic differences between the two. In a debt settlement program, negotiators work on your behalf to settle your balances for less than you owe while in a debt counseling program, counselors work on your behalf to reduce interest rates to as low as 0%. The debt settlement program lasts between 1 and 3 years, whereas debt counseling programs last for between 4 and 6 years. Generally, debt settlement offers a greater savings potential as it is a more aggressive approach to debt elimination.

      Yes, we only accept clients with more than $10,000 of unsecured debt.

Debts such as credit card balances and certain bank loans are considered unsecured. Mortgages and similar debts are not included.

No, your credit cards will not be paid. We will be negotiating with the credit card companies to reduce the amount you owe so that payments will not be made during this time. Once an agreement is made with a particular creditor, and you have sufficient funds in your trust account, then that creditor will be paid. We will continue this process with each creditor until your debts are paid.

The program normally takes between 1-3 years, depending on the amount of debt you have and how much money is available to pay the debt.

Debt settlement will likely have a negative effect on your credit, though chances are you may be having problems making timely payments to your cards right now. In an ideal world your credit would benefit more by making on time payments for the full balance than enrolling in a debt settlement program, but our world today is anything but ideal!!  The marks left on your credit from a debt settlement program will remain your credit for up to seven years and include past due payments, charge offs, accounts being sent to collections, and in some cases, judgments.  The credit impact of following our program however is generally less than filing bankruptcy.   

You should consider our program if you cannot afford the minimum payments on your credit cards now, or will have difficulty making payments in the foreseeable future; you are getting calls or letters from debt collectors. You take out cash advances on your credit card to pay other bills; you “take from Peter to pay Paul” but never catch up.

Yes, there are some things you should consider. Your account will be past due on your payments while you are on our program and a credit card company is reserved the right to pursue a client to collect the full debt amount. As such, you may receive calls or letters from debt collectors or from law firms seeking payment. Having your account handled by a law firm does not albeit at a higher percentage (60-80%) once we learn they are being handled by a law firm. Although there are some steps we can take to stop collector calls, as well as numerous state and federal laws that protect consumers from harassing phone calls from collections agencies, clients should expect calls throughout the debt settlement program. Once your accounts move to collections, you can notify us of any calls you are receiving and we can take specific steps to get the calls routed to us instead by notifying the collector of our representation in writing.  Although they are legally obligated to contact us instead of you once this is done and many collection agencies do in fact honor this responsibility, some may not and once your account leaves that our particular collection agency, the new collection agency may call you until they receive written notification of our representation. In all instances you need to let us know immediately of any letters or phone calls you receive regarding your debts.

By participating in our program you will be able to pay your debt for less than what you owe over a relatively short period of time. For many, this benefit clearly outweighs the downside of this program.

It is possible, but rare, that some creditors will refuse to accept settlements.  For the most part, when a credit card company or collector refuses a settlement offer we wait for the account status to change or wait until more funds are built up, and then begin negotiations again until it is settled. More often than not an account cannot be settled because you may not have enough funds in the trust account to offer settlement.  If the account is being handled by an attorney in your state and there aren’t funds available to settle (most attorneys require 60 to 80% of what is owed), then non-settlement is likely. 

We can settle your debt even if a creditor sues though settlement payments may change with the impending lawsuit. In this situation, the settlement is normally higher than the amount originally estimated. In other instances, the creditor may enter a judgment against you in court but they agree to a payment plan to settle the debt in a stipulated agreement. After the debt is paid, any legal right to the debt is dropped.  In these situations, the client usually pays the debt off in full at 0% on the very low end or at statutory interest, which typically ranges from 6% to 12%, over a 24 to 60 month period.  In other instances, the creditor pursues legal action, gets a judgment and then does nothing else to collect the debt. In the worst case scenario, it is possible a creditor will attempt a wage garnishment, freeze a bank account, or put a lien on a clients' property to collect the debt after a judgment is entered. Since Debt Elimination of America, LLC is not a law firm, we cannot represent you in court or give you legal advice.

Late fees and interest charges continue as usual until an account is settled. However, we negotiate your debt with the goal of settlement percentages according to the original balance so that, in the end, the accounts settled are not affected by these additional fees. There are certainly cases where despite our best effort, our ability to settle debts for our targeted percentage is impaired by the fact interest and late fees accrued on the account.  In particular, late fees and interest charges most affect accounts that we are forced to set up payment plans or settle for higher to avoid legal action. 

It is possible that you may be taxed on the savings related to our settling of your credit card debt. However, for clients who are technically insolvent, then filing IRS form 982 may exempt you from paying taxes on the savings from settling. The IRS defines insolvency as financial state in which someone owes more (liabilities) than the value of their assets. Many of our clients fall under this category, but you should consult a tax attorney for advice regarding your situation. Secondly, even if you are taxed on the savings from debt settlement, you may still save a lot of money. Remember, you are only taxed on a percentage of the savings. For example, if our debt settlement program saved you $2000 off one of your credit cards and you had to pay 25 percent of that amount to the IRS ($500), then you still saved approximately $1500. Assuming the debt was $4,000 and our fee was $600, the total savings is still $900. Again, since we are not tax specialists we cannot offer advice in this area.

Our fees are spread out of the first 18 months of the program, and come in two parts – Retainer Fees and Service Fees.  In total they amount to 15 percent of the amount you owe.  The first three payments to the program mostly go to covering the Retainer fees, and the Service fees are paid over the 15 months thereafter.   Assuming you complete the program, since we can potentially reduce your total debt amount by up to 60 percent, the total cost of the program (what you pay us and your creditors) will be 55 percent of what you owe at the very lowest, but a more realistic total cost would be about 65 to 75 of what you originally owed.   On the high end, you can end up paying your full debt back plus interest and late fees that accumulated throughout the process, plus our fees, although we do have a "money-back guarantee" for clients who do not realize at least 30% savings off their balances at the time of settlement.  For clients who pay the allotted monthly payment to their trust account handled by Noteworld, the likelihood that they will not be able to settle any of their accounts is low, but certainly possible. There are also potential tax implications for settling your debts that may add to the total cost, as the IRS expects you to report any savings from settlements as income on your tax return for the year in which they can prove to the IRS that they were insolvent (assets were less than their liabilities or debts) at the time their debts were settled.  You should consult a tax professional for any questions about this issue.

Your primary responsibilities are to maintain the trust account funded, to be honest with us as to your debts, and not add more debt to the accounts we are trying to settle. We will not be able to obtain settlements from your creditors unless we have sufficient money in your trust account. If you will have trouble making your monthly payment, then it is important that you notify us 5 business days in advance, so you do not get charged for having insufficient funds. You must keep us abreast of all correspondence received from your creditors so that we know how best to help you. Furthermore, it is important that you stay in touch with us, so we always have quick and easy access to you during the negotiation process in the event that we need you to supply our debt settlement representatives with any important information regarding your credit card accounts.  Other responsibilities include giving us relevant information about any co-applicants, co-signors or authorized users before the process starts. The more information you give us, the better we are at negotiating your debt.

We have found that the best course of action is to first settle with those creditors that are most aggressive and/or are likelier to pursue legal action against you. This is our first priority. Then we will settle with those creditors offering the settlement percentage, followed by the negotiating of the smallest account.

Remember that we do not make monthly payments to your creditors. We negotiate with your creditors to settle your debts for less than what you owe. Once a creditor has agreed to accept a settlement for your debt, and you have sufficient funds in your trust account, we get the proper documentation from the creditor and with your permission, authorize Noteworld to pay them off with a lump sum settlement of your debt using the funds you saved in the trust account.

It all depends on your individual situation, and depends among other things on how far past due your accounts are, your creditors, and how much money you have accumulated for settlement. Remember that all or most of the first three payments in the program go to fees for services, and that you will not begin aggressively accumulating funds for settlement until you are at least four months into the program.  As such, negotiations will begin and an account settled in the first six to eight months of the program. Once an account is paid off, funds must accrue again before another debt can be settled. 

Again, it all depends on your individual situation. We have found, however, that most clients have their debts resolved within 24 to 48 months. There may be exceptions to this period, particularly if payment plans were established subsequent to a legal action commenced by a creditor.

Our experience has allowed us to estimate based almost entirely on who the credit card company is. We have found that each creditor has a different internal policy regarding debt settlement, so each one typically accepts settlements within a certain range. The vast majority of creditors will accept settlements in the 40 to 60 percent range during a specific period in the collections process. It all comes down to having the right amount of money at the right time in order to obtain the ideal settlement.  You need to remember that each situation is different and unique, and that we can only give, in good faith, our best estimates. Results do vary.

You can pay your debts faster, and we would recommend that you do if you can afford it. The most obvious reason for doing so is that the faster you pay a debt, the less likely that creditor will begin legal action against you. Further, you will be able to cut down the number of months you will be involved in the debt settlement program, allowing you to rebuild your credit that much sooner.

We can only give good-faith estimates of the length of the program to you, though our goal is to complete the program in no more than 3 years. Each situation is unique and will depend on how the creditors react to our settlement offers, your ability to save funds, and whether or not your accounts are forwarded to attorneys for collection. Results vary with each individual.

There is a lot of flexibility in terms of your monthly payments, although there is a minimum payment that you must make each month. If you cannot make these minimum payments then you may not be eligible to enroll in our program. We want you to succeed, and our experience has taught us that the leading cause of failure for our program is the inability to save funds or being unable to continue the program altogether because of budget issues.  Once that happens you would have paid all the fees in vain and may even have to file for bankruptcy. It does not mean that you will not succeed if you are having difficulty making a payment one month. In this instance, we want you to call our customer service so we can discuss your options.

 In a Chapter 7 bankruptcy, the court orders a debtor to liquidate all of their non-exempt property and a trustee pays the creditors back with the proceeds from their sale. In many cases, your home, car, and other assets will be exempt from liquidation in a Chapter 7 bankruptcy, but this depends on your state.  In a Chapter 13 bankruptcy, the court orders a debtor to turn over all their disposable income for a period of three to five years.  Bankruptcy may be a suitable alternative for consumers who have limited income or are seeking debt relief for secured debts like mortgages and car loans, among other reasons Since Debt Elimination of America, LLC is not a law firm, we are not qualified to give you legal advice about bankruptcy.

Since we are not a law firm, we cannot speak as to whether or not you will qualify.  We do want to make you aware of the fact that if you do not complete the program but file for bankruptcy instead, any money spent in your debt settlement program up until that point will be lost forever. On the flip side, since you are always in complete control of your savings trust account, any money still held there will be returned to you at your request.

No they are not the same. Credit repair involves removing inaccurate or unverifiable information off your credit report.  Unlike debt settlement, however, credit repair cannot legally resolve any debts that you actually owe. Debt Elimination of America, LLC is not a credit repair organization.

Debt collectors are bound by the Fair Debt Collections Practices Act (FDCPA). The FDCPA specifically states that a debt collector is obligated to contact third-parties with a Power of Attorney instead of the debtor. When you enroll in our program you will provide us with a Power of Attorney that we will then pass on to your creditors who should then call us instead of you.