So, let’s begin this answer by asking, “What is your credit score today?” Obviously, if you are a top borrower with a credit score of 750-850, debt resolution is going to have a negative effect on your credit.
However, our typical client has a credit score of about 620. And many times, we consider between 600 and 660 the worst credit score that you can have. That’s because this score allows you to get approved for credit cards that are charging the highest interest rates—ranging from 25 to 40%—or it’ll get you something like a payday loan.
The name FICO comes from the company that developed the score. It comes from their original name, The Fair Isaac Company. It is not a credit reporting agency. It developed this score so lenders could understand their financial risk for individuals they are considering lending to.
You are entitled to one free copy of your credit report every 12 months. You can get a free report from each of the credit reporting companies. The only authorized website for getting your free report is annualcreditreport.com. Or you can call and request your report at (877) 322-8228. This report is absolutely free from Equifax, Experian and Transunion. Be careful when signing up for services that charge you for these. It is truly a free report. It’s estimated that 20% of consumers have an error on their credit report that can bring down their credit score. So order your report and see if it’s accurate.
You need to understand that Debt Resolution is not a loan program. And the only way a creditor is going to be willing to take less than what they are owed or reduce and eliminate part of the principal, is this: The creditor must have a reason to do so.
If you’re continuing to make payments, there’s no reason or motivation for a creditor to take less than the principal balance. If you can afford to make your minimum monthly payments or you can afford to pay your debt, then you probably won’t qualify for our debt resolution program.
Debt resolution is only for those individuals who are in a hardship, and they simply cannot continue to pay their minimum monthly payments or afford to pay their debt back. We do not make payments to creditors until we have made a successful resolution with your creditor and then with your permission, a payment will be made from your special purpose savings account directly to your account holder.
This is one of the most negative effects of a debt resolution program: creditor calls.
Anytime you owe somebody money, they have the right to call you. However, there are many laws and statutes regarding how creditors can collect and when they can make those phone calls. This includes what time, what they can ask on that call, and who they can contact about your accounts.
The great thing about handling creditor calls… is that we tell you just to forward them to us. DebtBlue has relationships directly with the majority of creditors and collection agencies, and many times we can reduce or eliminate those calls on your behalf. If you’re active in our debt resolution program, creditors will usually stop collection efforts because they know you are saving with DebtBlue to pay that debt.
In other situations, we use the CLG Plus Plan, Veritas, or Fortress Legal Plan to make sure that creditors and collection agencies don’t violate your rights through the Fair Debt Collection Practices Act (FDCPA). If there is a violation, CLG Plus, Veritas or Fortress will take legal action against them. And, in some cases, our clients receive a significant amount of money if their rights are violated. So, make sure you work with our client success team if creditor calls become overbearing. We will help ensure you’re using every legal remedy to reduce creditor calls.
Our typical program length is about 32 months, and our typical client will graduate about a month or two early from their program. Actual dates depend on whether you have had any changes to your program or if anything has changed with your participation in depositing funds in your special purpose savings account.
So the most important part of being successful in your debt resolution program, is staying committed and making your scheduled deposits.
Our fee is typically roughly 25% of the debt that you enrolled at the time you enrolled. Remember: no fees are collected up front. We don’t collect anything until we render service and until the payment is made to the creditor, then DebtBlue will collect its fee but only for that resolved account.
In addition to the fee that goes to DebtBlue, there’s the fee that you would pay if you decide to sign up for the CLG Plus Plan, the Veritas Legal Plan or the Fortress Legal Plan, which is $39.95 a month. There’s also a fee that’s less than $10 per month for your deposit account. There are some other ancillary fees—like if DebtBlue does a check by phone to a creditor to make a payment. These banking fees are not charged by DebtBlue; they are charged by your special purpose account.
We worked with you to establish an estimated program length based on the best information available to us at the time. There are many factors that impact whether a client’s program is shorter or longer than we project at enrollment, such as the creditors willingness to settle your current escrow balance, and your drafting history.
It is critical to keep on track with your monthly payments to ensure your estimated time in the program is successful. We perform services on your behalf to the best of our ability, with your best interests in mind, but we cannot make, and have not made any expressed or implied guarantees regarding results.
The time needed to produce a settlement of a given debt depends on several factors. These include your financial hardship, the age and balance of the accounts you owe, the funds you have available to pay to your creditors and ultimately the willingness of your creditors to enter negotiations. Please be advised that we are working diligently on your behalf to get you the best offer possible. You can always add funds to speed up the process, because money talks with the creditors, but you do have to be a certain amount past due for them to negotiate.
We were able to negotiate a great settlement for this account, but you did not have enough money in your account to satisfy the settlement in a lump sum, therefore, we are making monthly payment arrangements to them to satisfy the settlement amount. This could also benefit you in the way that we can begin negotiating with your other creditors to accelerate your program. We also like to do term settlements so that we can do more than one settlement at a time which is another win for you!
The performance fee is based on the total amount of debt enrolled in the program, and is already included in your current monthly payment. Now remember, we don’t collect any fees until we settle an account for you, so all of your deposits are building up so we can start settling accounts as quickly as possible.
We have options for you if you are no longer able to afford the monthly payment we budgeted for you. You have the ability to skip one monthly deposit per 12 months, or we can revisit your hardship and budget to see if anything has changed and we can make recommendations based on new findings.
Please realize that this will likely extend your time in the program and you want to get out of debt as soon as possible. Also, the sooner we can settle your accounts the better it is for you – you know, these creditors won’t wait forever to get paid.
That depends on many factors. Once your first draft cleared, we assign negotiators to your account, and they will assess your portfolio to determine a plan of action to tackle your outstanding balances. Our goal is to get you out of this debt ASAP and on your way to financial freedom. We will keep you updated on our progress and notify you via phone, text and email when a settlement opportunity is reached.
The short answer is no. However, can you be taxed for the forgiveness of debt? Yes. And that’s done with a Form 1099. The IRS views debt forgiveness like this: If somebody writes off a portion of your debt, then you have to declare that as income.
You have to declare that as 1099 income because you did not pay taxes on that income. However, the most common way that you pay taxes under a 1099 under debt forgiveness is if you are in a solvent status. Solvent status means you have more assets than liabilities. Our clients are typically–even when they graduate–still considered to be in a neutral status, which means they don’t have any more assets than they have liabilities. Sometimes they’re in a negative liability situation, which is called insolvency.
So, will this impact your taxes? No, it will not impact your taxes. Will you get a 1099? Yes, you will. You’ll get that from your creditors. Will you have to pay taxes on that? You’ll need to consult a CPA, but the vast majority of our clients do not have to pay any taxes for the debt that has been forgiven.
You don’t have to have $10,000 in debt to enroll. We do accept some clients with debts below that figure. However, you must have enough debt for debt resolution to actually be a benefit. Let’s look at it this way:
If you enroll $10,000 into a debt resolution program, after your fees and after the accounts age… by the time that you complete the program you’ll probably only experience a small savings. However, if you have $20,000 enrolled in a debt resolution program, your savings are going to be anywhere from $6,000 to $8,000. Same thing if you are enrolling $30,000… You’ll likely end up saving 9, 10, or 11 thousand dollars.
So, there’s a greater benefit when you have a larger amount of debt enrolled. Also, it comes down to the Time Value of Money. If you had $10,000 in debt today, and I told you that you can pay that debt off for only $7,000 or $7,500, you’d probably reason that $2,500-$3000 savings is not worth the hassle.
However, if that $7,500 didn’t have to be paid back immediately but could be paid over 30 months, now the time value of money changes things. That’s because there’s no interest and no penalties being paid on the debt, and you can make that payment over a 30-month period. NOW the program becomes much more palatable. So, it is not only the fact that you’re saving on that $10,000 balance, which will be reduced – but it’s the amount of time that you can take to pay it out.
The reason why we have that cutoff at $10,000 is for the benefit of the client.
Unsecured debt is debt that is not secured by an asset like a house, land, or car. Unsecured debt is the type of debt where creditors did not require collateral before giving you access to the money. This typically includes credit cards, medical bills, department store cards, and utility bills.
Yes. If you are more than 60 days late on a credit card payment, then the issuer can impose a penalty APR as high as 29%. If this happens the issuer is permitted to apply the 29% APR to your outstanding balances. In most cases, the Credit Card Act prevents credit card companies from raising the interest rate on the balance you owe; however, in the case of a payment more than 60 days late they can. They can also increase your interest rate if you have had your card for at least a year. They are required to give you a 45-day advance notice. If your credit score has gone down significantly, then the issuer can also choose to raise your rate.
You can find out if someone owes you money for free at www.missingmoney.com. Missingmoney.com is a database of governmental unclaimed property records. You might find money from things like:
This site will connect you to the unclaimed property from participating states and provinces. Searches and claiming are always free on this site. The site is updated weekly. You search by your name and it quickly pulls up any money owed to you.
DebtBlue’s program is proven to work. We develop a customized reduction plan with you. You are free from the stress and pressure of dealing with your creditors because we negotiate directly with them on your behalf. You get fast, friendly service from DebtBlue backed by over 20 years of experience.
DebtBlue refers to creditors that threaten legal action as a “priority account.” Think of it as a creditor trying to skip the line… like somebody’s getting a Fast Pass at an amusement park, saying “Hey, I don’t want to wait in line… I want to go straight to the front, so I’m going to take a legal action.”
Creditors know that a legal action–or a perceived legal action–that threatens you or puts you into a fear-based mindset, is a tactic that makes a client want to pay that creditor faster.
So, what happens if you receive a summons? First, call your DebtBlue Client Success team and second, forward the notice to DebtBlue and we will take it from there. We are very successful at resolving our priority accounts and have Sr. Negotiators assigned specifically to these accounts.
Typically less than 1% of all accounts that are enrolled will experience an aggressive legal action. That is why we have the CLG Plus Plan, Veritas, and Fortress Legal Plans: to add confidence for our clients in these unique and rare situations.
Simply put: Yes. Debt resolution companies are required to be licensed, bonded and registered in every state in which they work and are also fully federally regulated.
This is how you can tell whether a debt resolution company is legitimate or not: If a debt resolution company charges you fees upfront, it is not a legitimate resolution company.
That’s because federal statutes require that services have to be rendered before any fees are collected. Another way to find out if the company you are working with is legit, is if they are a member of the American Fair Credit Council. The AFCC audits all of its members annually to ensure they are following all state and federal rules and laws.
So, is debt resolution legit? Yes. Debt resolution companies are not only federally regulated—they are also subject to state licenses.
Absolutely. And many of our clients have reached resolutions directly with creditors. However, we compare this with representing yourself in court. It’s highly advisable that you have a lawyer with you. The one that thing we stress when it comes to doing debt resolution on your own is this: You have to make sure that you have the correct documentation.
The correct documentation says that your accounts have been settled in full, and there’s no way that you’re going to owe anybody else in the future for this debt. Also, when you’re resolving accounts, typically you’re resolving one account at a time.
When DebtBlue resolves accounts, we’re resolving multiple accounts at a time. This gives you the benefit of a volume discount. For instance, DebtBlue may offer to settle 100 accounts with a particular account holder.
These hundred accounts may total $50,000. And of this $50,000, DebtBlue may offer $20,000 to resolve immediately. In doing so, we can get much better resolutions for our clients. In other words, DebtBlue is like Costco for the creditors and you WIN!
Credit card companies are experts at helping the amount of your credit card debt increase with tactics like minimum monthly payments, low introductory rate offers that balloon into very high interest rates, late fees, and penalties. When you make minimum payments, the interest and fees add up quickly. Before you know it, you owe more than you originally charged on your card.
No. Credit card companies are not allowed to take your house to pay off your debts. However, if you have taken out a home equity loan and you fail to pay or default on your payment, then lenders could foreclose on your home. If you have equity in your home, then the lender may want to get that equity back to pay off the loan. They usually don’t want to do this, but it is possible.
A summons is just another form of collection and that does not deter us from helping you achieve your goal. Now that you got served a summons that does not mean we cannot negotiate a successful resolution on it. Although your creditors have the legal right to sue you for non-payment, lawsuits are the exception rather than the rule – very few summons ever make their way to court.
No, when someone dies owing a debt, the debt does not go away. Generally, the deceased person’s estate is responsible for paying any unpaid debts. When a person dies, their assets pass to their estate. If there is no money or property left, then the debt generally will not be paid. This will vary depending on where you live, so please consult your local laws for more specific guidance.
Looking for our in-depth video archive? Look no further! You can view a wide variety of videos covering many different topics by clicking here.