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Nine Things You Must Know to Succeed on a Debt Settlement Plan

Download this Guide as an Easy to Read PDF.

The items listed in this guide are the Nine Things You Must Know to Succeed on a DSP, whether you are on Month 1 or Month 51 of your DSP.

A Debt Settlement Plan (DSP) is only the first step in resolving your debt. Participation in a DSP is a long-term commitment, as it takes approximately three to five years, on average, to successfully complete the plan. During this time, it is extremely important that you take an active role in your own success, and always remember that this is a partnership between you and CareOne Services, Inc.

1. Understand the plan you signed up for. While the purpose of a DSP is to help you pay down your unsecured debt, the DSP process is quite different from that of a Debt Management Plan (DMP).

  • It is critical that you carefully review your agreement so that you understand the details of the plan you have enrolled in, as well as its requirements.
  • We negotiate with your creditors to accept less than the full amount of debt owed. In order for settlements to be considered, your accounts must first become delinquent, which means your creditors will stop receiving monthly payments from you until they are willing to negotiate.
  • Because creditors are no longer receiving payments, there is the risk of increased collection activities and escalated collector calls.
  • While a DSP may be a better alternative to bankruptcy, enrollment in a DSP can have a greater impact on your credit rating than a DMP.
  • Keep a copy of your Client Agreement with your other DSP information. You can always refer to it for answers to your questions regarding program details.

2. Provide a realistic budget from the start.

We recommend a relief plan based partly on your budget, and if you provide us with an inaccurate assessment of your budget, you may end up enrolled in the wrong plan for your needs. You may even end up not qualifying for any of our plans due to an incorrect assessment of your finances. In contrast, most of our DSP customers cannot afford the DMP monthly payments and are able to repay only a percentage of their debt in order to avoid bankruptcy. If you are constantly falling behind or missing your monthly DMP payments, and feel that you simply cannot afford to continue making these payments each month, settlement may be the appropriate option for you, as your monthly payments will be lower, and, ultimately, you will only pay back a percentage of your debts.

3. Provide us with current contact information.

It is critical that we are able to contact you at any point during your plan participation, as we often need to inform you of settlement negotiations and keep you up to date on payment information. Because of this, please remember to update any of your contact information if it changes, including your email address, phone number, mailing address, or fax number.

4. Review your creditor and My CareOne communications.

We will notify you once we have successfully negotiated a settlement offer with a creditor. This communication will also prompt you to approve the Success Fee. Our Success Fee is the only fee we receive for our services, and is only taken once we have successfully negotiated a settlement on your behalf. It is your responsibility to ensure that we have your most recent contact information, and that you are making it a habit to log in and check your My CareOne account as often as possible, as we will communicate with you via My CareOne messages, as well. If there is ever a question regarding a communication from CareOne or from one of your creditors, just contact our Settlement Services department at 1-800-CARE123 or email us through the Help Center gadget in your My CareOne portal for assistance.

5. Understand the ramifications of changing payment dates or missing payments once we have negotiated a settlement.

The fastest way to build value in your escrow account is to make your payments on time every month. Once we negotiate a settlement for you, creditors expect to receive the new payments in a timely and consistent manner until the negotiated amount is satisfied. If you miss a payment, your creditor may withdraw the settlement and you could once again owe the entire amount.

6. Know how to handle aggressive collection activities.

Because your accounts must become delinquent for a period of time so that we can secure settlements, your creditors are no longer receiving monthly payments and may become more aggressive with their collection activities. This can include escalated phone calls and potential legal action, including the possibility of being sued by a creditor. If this does occur, it is important to know exactly what to do to make the process run as smoothly as possible. First, contact us. One of the benefits of enrolling in a CareOne DSP is access to an attorney who can assist you in handling increased collection activities at a greatly reduced rate. Be sure to submit all legal documentation you receive to us so that an attorney can review it. Please fax any legal documents to 1-888-862-0623. It is also important to know your rights as a consumer so that you don't fall victim to unfair debt collection practices.

7. Deposit extra earnings or bonuses into your DSP escrow account.

We are only able to negotiate settlements with creditors once enough money has built up in your escrow account. The faster this happens, the more quickly we can work with your creditors to accept our offers. Any additional money you can deposit into your escrow account along the way helps it to increase in value more quickly. This is especially important to keep in mind when you receive a raise or bonus at work, a birthday present, or a tax refund.

8. Set aside money for irregular or unexpected payments.

While your main priority right now is to pay off all of your debt, you never know when an unexpected and unplanned-for expense will present itself. It is important to be prepared for this situation by setting aside a small amount of money each month, preferably in a savings account, so that you can cover your expenses without jeopardizing your DSP. Just be sure that this unexpected payment is something that cannot be avoided, like purchasing medicine for a sick child, or fixing a part on your car.

9. Take advantage of our free tools and resources.

We offer a multitude of free resources and educational materials, available on our website, to help consumers learn to manage their money and create a secure financial future. We also have an extremely robust community where you can connect with others facing similar financial situations by participating in our groups and forums, and reading our blogs.

We take your success very seriously, and work hard to support and assist you as you gain financial independence.

Please feel free to contact our Settlement Services department at 1-800-CARE123, or via email through your My CareOne portal, with any questions.

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