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Debt Consolidation FAQ

What is debt consolidation and how will it help me get out of debt?

Debt Consolidation is a widely-used term to describe debt repayment plans that allow you to combine your monthly payments to your creditors into one monthly payment, often combined with lower interest rates and other creditor benefits, to get you out of debt as quickly as possible.

There are really two types of debt consolidation plans available in order to provide these benefits – a Debt Management Plan or a Settlement Plan. Both plans feature the benefits of a combined monthly payment, but the way they reduce your debt is quite a bit different.

Determining which plan is right for you really depends on your specific situation including the type of debt you have, your income and ability to make consistent payments, and what you agree is affordable.

What is unsecured debt?

Unsecured debt is when your creditor does not hold any collateral that they can take back if you fail to pay.

Examples of unsecured debt include:

  • Credit Cards
  • Department Store Cards
  • Legal Bills
  • Unsecured Personal Loans
  • Health Club Memberships
  • Magazine/Record Clubs Fees
  • Cellular Telephone Bills
  • Signature Loans
  • Collection Agencies
  • Credit Lines

Our Debt Relief Programs cannot accept secured debt such as mortgages or auto loans.

What is debt management and how will it help me get out of debt?

Debt Management is a mutual agreement between you and a debt relief organization. Simply put, you agree to repay your unsecured debts in full over time, without taking on any more debt. In return, most creditors will agree to significantly reduce your interest charges eliminate future late and over-the-limit fees. This Plan is dramatically different from a Settlement Plan.

What is debt settlement and how can it help me get out of debt?

Debt Settlement is an alternative to bankruptcy for those who want to pay back at least a portion of their debt, but cannot afford to fully repay their debt on their own, or through the Debt Management Plan. On a Settlement Plan, your monthly payments are held in a protected escrow account while negotiations take place with your creditors for a less-than-full repayment.

How to deal with debt collectors - Will a debt relief plan stop collection calls?

This depends on the type of plan that you enroll in. With the Debt Management Plan, collection calls usually stop after the third consecutive payment. If you continue to receive collection calls after your creditor has posted three consecutive payments, please contact us by e-mail with the name of the creditor and the last four digits of the account number to allow us an opportunity to investigate.

If you are enrolled in the Settlement Plan, collection activity, including calls, is likely to increase until settlements occur. This is to be expected, because monthly Plan payments are being deposited into your protected escrow account, rather than being sent to your creditors every month. Once a settlement occurs with a creditor, all collection activity will stop. It is important to understand this difference when enrolling in the Settlement Plan.

Can you help me with my budget?

Yes. Completing a budget can feel like a daunting and frustrating process. We will help you build a budget which will help you monitor your monthly expenses – a crucial part of getting and staying out of debt. Remember, unlike others, we have tons of useful tools and tips, to help you stay on top of your expenses.

What information do I need to enroll?

To enroll in one of our debt relief plans, please have:

  1. Estimates of your monthly expenses and income to help you build a budget.
  2. Your bank account information if you wish to take advantage of our EasyPay system (recommended).

How much will a debt relief plan cost me?

Your costs may vary based on state regulations and the number of creditors you place on the Plan. The easiest way to find out your specific Plan costs is to start an online application or call to speak to a coach at 1-888-888-CARE (1-888-888-2273).

How long will it take to finish the plan?

If you are enrolled in the Debt Management Plan, you will receive a “good-faith” estimate of your repayment terms with your enrollment documents. Most of our customers are able to pay off their debt within five years. However, your actual experience with the Plan may vary based on your creditors and the amounts due to them.

How will my creditors know I have joined a Debt Management Plan?

Before your first plan payment, we will notify your listed creditors that you joined a Debt Management Plan. This notification, called a proposal, includes the account number and open balance you provided at the time of your enrollment, as well as the program payment indicated on your Repayment Schedule. In most cases, creditors accept proposals. If any of your creditors request any changes before accepting the proposal, we will immediately contact you.

If you are receiving collection calls, the collection agent may not be aware of a proposal from our Plan until the benefits are granted.

If you are enrolled in the Settlement Plan, the amount of time on the Plan will depend on how quickly your creditors accept the settlement offers. It can take typically 3-5 years to settle your accounts.

How long does it take for the creditors to accept the Debt Management Plan proposal?

If you are enrolled in a Debt Management Plan, your creditors will receive proposals within seven to ten days of your program enrollment. It will often take four to seven weeks for them to process the proposal. Most creditors require three consecutive payments through the debt management program before they will offer benefits. Often your creditors may notify us only when the proposal is declined. In this event, we will research the cause and work with you and your creditor to make the necessary changes to have the proposal accepted. Please check your creditors’ statements to see if they have started applying benefits.

Can I still use my credit cards if I enroll in the Debt Management Plan?

The objective of the Debt Management Plan, which is a different program than a Settlement Plan, is to get you out of debt as quickly as possible, so the creditors you put on the Plan may inactivate their accounts with you while at the same time granting you benefits.

Can I buy a car or house while I’m on the Debt Management Plan?

This depends on the lender and also on how well you are making consistent monthly payments. Before approving a mortgage or car loan, a lender wants to know that you are creditworthy. If they can see that you are making consistent and timely payments and that your debt to income ratio has gone down, it may be helpful. The Debt Management Plan can help you do both of these. It is important to note that if you enroll in a Settlement Plan, however, that it is highly unlikely you will be able to secure a mortgage or car loan until the Plan is complete and all of your debts have been settled.

Does Debt Consolidation Hurt Your Credit?

The Debt Management Plan, which is different from a Settlement Plan, provides important benefits to help your situation by allowing you to pay back your debt much faster than you could on your own. The Plan typically includes creditor benefits such as reduced interest rates, eliminated late fees, and the end of collection calls. We cannot make any assurances about the state of your credit or credit score, given this is beyond our control and outside the scope of the Plan. While there is nothing that can be done to immediately fix a bad credit profile, by making consistent monthly payments over time, a person may be able to improve their overall credit profile and creditworthiness.

Do I need to continue sending payments to my creditors after I have signed up for a Debt Management Plan?

As you get started on the Debt Management Plan, it’s critical for you to get off to a solid start with timely, consistent payments. We suggest to our new customers to make sure that they set aside the money to make their first plan payment. If there’s money leftover and you have credit card payments due before the plan gets underway, go ahead and pay the bills. If you’re not able to pay the credit card payments due before the plan goes into effect, you may see late fees reflected on your next creditor statements. Keep in mind that these late fees are typically eliminated after three consecutive payments on our program.

Can my creditors take legal action against me while I am enrolled in a Debt Management Plan?

Your creditors have the right to take you to court even if you are enrolled in a Debt Management Plan (DMP). Contact us immediately if this happens. If you do have to go to court, your payment history on the DMP can serve as evidence of your good faith effort to repay your debt.

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