FAQ
We have found that once someone becomes an American Debt Control client, there are often questions that arise about the settlement process. For many people, debt settlement is a new concept and totally different than all other programs out there. The questions and answers below will help you better understand American Debt Control's Debt Settlement Program. Again, please contact your Debt Specialist with any questions that are not answered here.
Q. Why are my creditors still calling me?
A. The Fair Debt Collection Practices Act (FDCPA) specifically addresses third-party debt collectors and does not necessarily apply to the original creditor. The FDCPA entitles the originator to contact the debtor regardless of a request to cease verbal communications. However, a vast majority of creditors will honor the request as soon as they can process the request into their systems. American Debt Control will fax or mail a "Creditor Engagement Notice" in order to help cut down on some of the calls from your creditors. Again, there are a few creditors we choose not to contact right away so we can get you a better deal on the settlement when funds are available. If this is the case, you will still receive calls from these creditors. The best ways to cut down on these calls are to: (1) change your number to unlisted, giving it only to friends and family, (2) use your caller ID or answering machine to screen calls or (3) try some sort of an auto-dialer gadget (such as Telezapper) for those nasty direct-caller creditors. A Call Log will be supplied so you can keep track of which creditors continue to call. Once you have it filled out, you can mail or fax it in to your Customer Care Representative. Please be patient and let the process take its course.
Q. Can I still use a credit card I have in the program?
A. NO. Any account in the program will be requested to be closed during American Debt Control's initial contact with your creditors, or if they are one we don't contact, they will typically just close it anyway. If you have a credit card account not enrolled in the program but is issued by the same bank or credit card company as a card that is in the program, the creditor will most likely close it as well. Also, some companies check your credit report and can increase the percentage rate even if you have never been late with payments on accounts that are left out of the program.
Q. Will I still receive monthly statements from the creditors, and will they still charge interest and late fees?
A. YES. Most creditors will continue to send statements as long as the debt is outstanding. Once an account is settled, you will no longer receive statements. We ask that you only send in statements in the beginning of the program to verify balances. You do not need to continue to send in statements. We only need collection letters. Your creditors will also continue to charge interest and late fees as another form of intimidation to keep you doing exactly what they want – sending payments to them every month for the next 20–30 years. When American Debt Control begins the settlement process, your Settlement Advisor will negotiate everything at that time.
Q. Are all the accounts settled at the very end of the program?
A. NO. You will use your personal savings fund to settle each account, one at a time throughout the program, as soon as you indicate to us you have sufficient funds available for American Debt Control to begin negotiations. Our Settlement Advisors may sometimes contact you before you have the necessary funds available to see if you might be able to come up with monies for outstanding settlement offers. Your Settlement Advisor will assist you in deciding on the accounts and in the order that is the best for your situation. If you ever do come into funds faster than what the program lays out, this is always a good thing and will only help you get out of debt faster.
Q. What about Lawsuits or Arbitration? Can I be sued?
A. Lawsuits are far less common in debt matters than most people think. Some people may fall behind and not make payments to their creditors for years and never hear from a single attorney. Of course, the bank has the right to sue you to recover their money. Generally, however, the banks would much rather work out a solution than sue. Lawsuits are very costly for creditors. American Debt Control is not a law firm; nor are we your attorney. However, we do have a very good understanding of how the whole process works. In most situations, a creditor sues because they want action on that account. Less than 2% of our clients' enrolled accounts have lawsuits against them. Our Settlement Team is still able to achieve options and/or a settlement from the creditor who decides to sue. Do not let lawsuits or the threat of a lawsuit intimidate you, but rather use them to your advantage. American Debt Control can still call the law office or attorney to work negotiations for a settlement. Of course, please save any and all correspondence you receive from your creditors and forward a copy to your Customer Care Representative immediately. Please remember, when faxing correspondence to American Debt Control, you must include a cover sheet noting Attention: Your Customer Care Rep's Name. Also, please remember to include your name and telephone number.
Q. Can I shorten the program for the settlement of my accounts?
A. YES. The pace of the settlement is based on the availability of funds. If you are able to come up with additional funds such as 401(k)s, loans from family members, garage sales or selling assets, you can settle your debts in a shorter time frame. It is to your advantage to do so. You can also shorten the program by disciplining yourself to add more money to your monthly savings account. REMEMBER, all of the settlement funds are in YOUR personal savings account, and YOU have complete control over any funds deposited into the account. The faster you accumulate funds in that account, the faster American Debt Control can begin settlement negotiations. Also, if you have funds right at the beginning, remember, your accounts must age a bit before they are ready to settle. Please be patient and let the process run its course.
Q. What should I do with any letters or correspondence I receive from my creditors or collection agencies?
A. Some of the letters you receive require a response from our office and are time-sensitive material. Others may not be as time sensitive and may not require any response. Therefore, any written correspondence you receive should be immediately forwarded to your Customer Care Representative for a determination of the required reply, if any. in doubt, FAX it over! Let us take a look at the letter, and we will respond or assist you in responding accordingly.
A. You do! The account is maintained and set up by you at your own bank. This account can be an existing account or a new account, whichever is most convenient for you. You will need to discipline yourself to add the required funds into your personal savings account each month of the program. Once funds start to accumulate in that account and you have let your Customer Care Representative know of the amount you have in that account, your Settlement Advisor will start working negotiations. Once we get offers, we will call you for final approval. If you agree to the settlement amount, American Debt Control will request a settlement letter for the dollar amount agreed upon in order to settle your outstanding balance. You will then use the funds from your personal savings account to send the creditor certified funds, checks by phone or cashier's checks for the agreed-upon final amount. Typically, the creditors will require these funds to be in their office within seven to ten business days from the receipt of the settlement offer, some faster. Your Settlement Advisor will discuss the particulars of each settlement as they occur.
Q. Are you making payments to my creditors?
A. No. When you choose to settle a debt, versus paying the balance in full, a creditor will only negotiate on an account that is in a past-due status. You have a personal account where funds accumulate, and we use those funds to negotiate settlement on your behalf. Monthly payments are not sent in to your creditors; they are receiving an agreed-upon lump-sum cash settlement once your funds are available.
Q. Will creditors call me?
A. The hard truth is yes. You do owe them money so they have every right to call. Now there are things you can do to handle these calls. A good majority of our clients change their home number. Calls start to decrease around month five of the program. There are some creditors that are contacted right away, and some are contacted at a later date. In our experience, we handle different creditors at different times to save our clients as much money as possible through settlement.
Q. Will this affect my credit report?
A. Honestly, anything you do will affect your credit report. This is hitting the unsecured payment-history side of your credit report. If you're in a situation where you are having trouble paying your bills or the debt is so overwhelming that you just don't ever see a way out, then debt settlement is a good option for you. If you are at the point where you're considering an option to settle your debt, then your credit report shouldn't be a concern until your debt is addressed. You have to weigh what keeps you up at night, a good credit report or the credit card debt.
Q. Do you hold onto my settlement funds?
A. As members of TASC, we are not allowed to hold clients' funds. We have our clients set a personal account where funds start to accumulate, and we use those funds to settle our clients' debts. By holding on to your own funds, our company name doesn't show up on your credit report like Credit Counseling services do. You are in control of your funds.
Q. Do I receive a 1099 after my account settles?
A. If the savings is more than $600, then yes, you will receive a 1099. You will need to seek the advice of a tax expert. However, with a good majority of our clients, they are insolvent, which means they have more in unsecured debt than they do in assets. Again, seeking advice from a tax expert is the best way to go.
Disclaimer
American Debt Control does not provide legal, tax or investment advice. If you need legal advice, legal expertise, court filings or tax assistance, you must seek the advice of a licensed attorney or CPA. Individual results may vary.