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Debt Settlement FAQ's
The Debt Settlement FAQs will outline our program is designed for
people who have had a severe financial
hardship and want to avoid filing for
bankruptcy. Below is a description of how the
program works. However, before you make any
decisions we strongly recommend that you read
and review all of your options. Speak with one
of our Certified Debt Mediators explain the program in detail and see if you
qualify.
Q. Who is qualified for
debt settlement programs?
Q. Who is NOT qualified for our
debt settlement program?
Q. How do you apply?
Q. How will Credit Exchange Center settle my credit card debts?
Q. Who can join Credit Exchange Centers' program?
Q. Is bankruptcy a better option for me?
Q. Does Debt Settlement have a negative impact on my credit?
Q. Can I still use my credit cards?
Q. What will I pay for your services?
Q. Do you guarantee that you settle all of my debts?
Q. Can I be sued?
Q. Can Debt
Settlement stop my creditors from calling?
Q. Does Credit Exchange Center repair my credit?
Q. Can creditors garnish my wages?
Q. What are the tax consequences?
Q. Can't I negotiate my debts with my creditors on my own?
Q. Who is qualified for our debt
settlement program?
A. Credit Exchange Centers'
debt settlement program is only for people facing financial HARDSHIP. This means people who are late on paying their debts, have little or no ability to pay their debts in the future and are facing a possible bankruptcy.
Q. Who is NOT qualified for our debt
settlement program?
A. Credit Exchange Center does not advocate that any person default on their debts. This program is not designed to negotiate debts for people who have reasonable means to pay off their debts. If you have the ability to pay your debts in the normal fashion, then you should honor your debts and do so. This program is NOT for people who have high credit ratings and can meet their monthly debt obligations.
Q. How do you apply?
A. Complete the form online. A
debt
settlement specialist will review your information and call you to review your situation. After a
debt
settlement specialist has reviewed your financial situation and hardship they will determine if you are qualified for our program.
Q. How will Credit Exchange Center settle my debts?
A. You will be asked to put aside and save a set amount of settlement funds on a monthly basis. This amount will be determined in your initial analysis based on total amount of debt and will be in line with your income and expense budget. Each person's situation is different and the negotiation process will begin at different times depending on the amount of your debt. Once the creditors agree to a settlement amount, we will present this offer to you. If you approve of the settlement,
we will instruct the creditor to fax over the ?settlement offer? in writing. Then have a three way recorded conversation with you, the creditor and us to settle the account. Debts can be settled in two different ways; one lump sum or a term settlement. One lump sum is just that, one payment and the account is paid. A term settlement is a settlement which is paid over an extended period of time until the account is paid. Credit Exchange Center then moves through each debt until all of your debts have been paid
and you are debt free.
Q. Who can join Credit Exchange Centers' program?
A. Credit Exchange Centers'
debt settlement program is mostly a hardship program. This program is for people who want to become debt free and:
-have a financial hardship
- are late paying their unsecured debts
-have no ability to make payments in the future
-bankruptcy is they only other option
Examples of qualifying hardships are a loss of income, medical emergency, death of a member of the household who provided financial assistance, or a divorce.
If you are currently meeting your monthly debt obligations and are able to continue to do so, then our
Debt Settlement program may not be for you.
Q. Is bankruptcy a better option for me?
A. Anyone considering our program should also contact a bankruptcy attorney to determine if their situation warrants filing for bankruptcy. Using the
Debt Settlement process does not guarantee that you will not have to file for bankruptcy in the future.
Q. Does Debt Settlement have a negative impact on my credit?
A. YES. Your credit score will decline due to entering this program. How much it will decline depends on your original circumstances. Most of the accounts you place into negotiation are likely to ?charge off?, which will reflect negatively on your credit. However, once this charged off debt is settled, the settlement is reported to the credit bureaus. Settled accounts are positive compared to unresolved delinquent debts or bankruptcy. After all the debts have been settled and
paid, the credit score should begin to improve since the negative items have been resolved. A high credit score is desirable to have, but if you have a financial hardship and are unable to pay your debts, then your first priority should be to pay your delinquent debts and get back on your feet financially.
Q. Can I still use my credit cards
while in
debt
settlement?
A. NO. All credit cards in the program will not be active and you will not have
charging privileges. Any cards you DO NOT put into the program should not be used. This program is for you to get out of debt.
Q. What will I pay for your services?
A. Credit Exchange Center has a 15% fee which is calculated based on the total amount of debt that an individual brings into the
debt settlement program. This program requires one or two down payments then small monthly fees paid throughout the first year of the program.
All costs and fees are always fully disclosed and you are required to sign for approval before you commit to our program.
Q. Do you guarantee that you settle all of my debts?
A. NO. There is no guarantee that your creditors will negotiate with us or that your debts will be reduced, but you will be notified by us regarding actions taken via the
online tracking system.
Q. Can I be sued?
A. YES. Your creditors certainly have the right to sue to recover their money. But usually the purpose of the lawsuit is to force a settlement on the matter. In our experience, most creditors would rather not go to the expense of suing and simply try to negotiate a settlement.
Q. Can Credit Exchange Center stop my creditors from calling?
A. NO. Your creditors have every right to try and contact you in order to collect a debt. However, we have been successful in eliminating most harassing telephone calls. If your account is in collections; collections agencies have to adhere to the FDCPA Guidelines. If you would like to learn more please read Fair Collection Practices Act.
Q. Does Credit Exchange Center repair my credit?
A. NO. Companies cannot remove legitimate negative items from your credit report. Negative items will remain on your credit report according to the conditions imposed by the credit reporting agencies. The goal of a
Debt Settlement program is to settle your delinquent accounts. When a delinquent account is settled this is reflected on your credit report. A settled account is better than an unresolved delinquent account. Your credit score should improve after successfully completing
our program. Since these debts are paid your debt-to-income ratio should improve. Debt-to-income ratios are not part of a credit score however; they are an important measurement by which lenders evaluate applicants for auto and home loans.
Q. Can creditors garnish my wages?
A. YES. However, this is can be a long process for the creditors. The creditor first has to sue you, successfully obtain a judgment, and then file for a garnishment action. If you?re willing to work with your creditors, wage garnishment can normally be avoided.
Q. What are the tax consequences?
A. Your creditors will report cancelled/settled debts exceeding $600 to the IRS and you are required 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. You need to consult your own tax advisor for advice specific to your situation.
Q. Can't I negotiate my debts with my creditors on my own?
A. YES. You can negotiate your debts with your creditors on your own. As a matter of fact if you successfully negotiate a debt it may cost you less in the long run to use this approach than to use Credit Exchange Centers' services.
You should note however, that the
Debt Settlement process can be a long and complex process for the average consumer. Our debt negotiators have the skills and knowledge of how your creditors negotiate and they have many years of experience negotiating the largest debt reductions. You don't have to spend all of the time and effort trying to negotiate with your creditors and you can rely on our experience to get the best debt reduction possible for you.
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