Frequently Asked Questions About Debt Settlement
Will I be free of all my debt when I complete your debt settlement program?
The Think Debt Relief debt settlement program can only help you with your unsecured debt. We’ll go to work for you to negotiate lower payoff amounts with your creditors than what you currently owe, and you’ll have to pay those lower amounts in order to settle those debts. Although we won’t be able to help you eliminate your secured debt, you’ll be able to focus solely on your secured debt once your unsecured debts are settled.
What’s the difference between unsecured and secured debt?
Unsecured debt isn’t tied to any collateral, and includes things like credit cards, medical bills, and personal lines of credit. These are the types of debt Think Debt Relief can help you negotiate, settle, and get rid of.
Secured debt is tied to some form of collateral; it includes accounts like a home mortgage or an auto loan. If you fail to make your payments on a secured debt, the collateral may be repossessed by your creditor — in the case of a home or auto loan, for example, you could end up losing you home or your car. Unfortunately, Think Debt Relief won’t be able to help you with these types of debt.
Will debt settlement repair my credit?
No, not directly, although after your unsecured debt is paid off, you may be able to begin taking steps to manage your debt responsibly and rebuild your credit.† However, as with all debt relief programs, your credit score may be negatively affected during the debt settlement process. How much your credit is affected will depend on your current credit score. (Please note that our debt settlement program isn’t designed to be a credit repair program, and Think Debt Relief doesn’t offer assistance with your credit score.)
Will debt settlement damage my credit?
Unlike a bankruptcy or a credit counseling program, our debt settlement program will NOT show up on your credit report. Although any of your debts that are settled for less than the full amount will typically be noted as “settled” rather than “paid” on your credit report, no one will be able to tell just by pulling your credit that you’re working with Think Debt Relief.
While it’s possible that you’ll see an adverse change to your credit score due to the debt settlement process, our goal at Think Debt Relief is to get you out of debt as quickly and painlessly as possible by negotiating lower settlement amounts that you’re better able to afford — so that you can take control of your debt and get your life back, without having to declare bankruptcy. Of course, your credit will usually be negatively affected if you fail to make any required minimum monthly debt payments while you’re enrolled in our debt settlement program.
How are your fees handled?
You won’t have to pay any fees upfront. Instead, our fees will be deducted from the Debt Reduction Account you’ll be using to pay your creditors.
Our fees are typically spread out over a period spanning 18–19 months and include a retainer fee and a service fee. The retainer fee is generally paid out over the first three or four months, and the service fee is then paid out over the following 15 months.
We’ll never try to hide our fees from you: Our retainer and service fees are included in any quote you get from Think Debt Relief. And we do offer a money-back guarantee on our service fees.‡
What about interest charges and late fees on my unpaid debts?
Being enrolled in a debt settlement program won’t protect you from the interest or late fees charged by your creditors. Your creditors will continue to charge interest and late fees as they normally would, and you’ll still be responsible for paying these charges, although our goal is to negotiate a settlement amount with your creditors that’s up to 50% less than what you owe now.*
You may be able to get relief from late fees and other charges by enrolling in one of our debt management plans instead, available through our consumer credit counseling program.
Can I negotiate with my creditors on my own?
You could, although your efforts might interfere with our ability to get you the best deal from each individual creditor. Keep in mind that our Think Debt Relief debt negotiation specialists deal with creditors all day, every day. Our experience and established relationships with certain creditors may allow us to negotiate a better settlement than you’re able to get negotiating on your own. However, the choice is completely up to you.
Do I have to take out another loan?
No. Unlike debt consolidation, our debt settlement program doesn’t result in another loan.
How does my Debt Reduction Account work?
Your Think Debt Relief Debt Reduction Account is an FDIC-insured bank account, established by you in your name and under your complete control. The money you deposit into the account is yours, and you control access to the account at all times. The sole purpose of the account is to help you make payments on your outstanding debts while you’re enrolled in our debt settlement program, which is why we recommend you keep your Debt Reduction Account separate from any other accounts you may have. Keeping your Debt Reduction Account separate can help you avoid spur-of-the-moment ATM runs or spending that money on other things.
Payments to your creditors will be deducted from your Debt Reduction Account, as will our retainer and service fees. However, no withdrawal or transfer will ever be made out of your Debt Reduction Account without your prior express authorization.
How will debt settlement affect my taxes?
Think Debt Relief enters discussions with your creditors on your behalf to try to negotiate a lower payoff amount that what you currently owe. In a debt settlement, the goal is to reduce your total unsecured debt that you have to pay back by a certain dollar amount. This dollar amount is called “forgiven debt” and is considered taxable income by the IRS — you’ll be required to pay income taxes on any forgiven debt that results from your debt settlement. IRS Form 982 allows for certain people to avoid having to pay taxes on forgiven debt due to economic hardship. Please contact a tax advisor for more information.
Can I still use credit while enrolled in your debt settlement program?
We can’t stress enough our recommendation that you NOT use credit cards or other lines of credit while enrolled in our debt settlement program. Not only will you be going deeper into debt, but you risk serious damage to our negotiated settlements with your creditors if they see you using other lines of credit, paying off that credit, or opening new lines of credit. Your creditors will usually regard any new use of credit as you having the ability to pay off your debt, and they won’t be inclined to negotiate with us for a reduced balance or interest rate on your account.
We strongly recommend you avoid using any credit except in an emergency. However, as with all aspects of the Think Debt Relief program, it ultimately remains your choice whether you want to continue to use your credit cards or draw on other credit lines.
What about keeping one credit card open and active in case of emergency?
That can be a good plan, as long as the credit card has a low balance and you can pay it off immediately. After all, you need to be able to handle an emergency if one comes up. But you should consider including all your other credit cards in your debt settlement program.
What is a Debt Management Plan?
A Debt Management Plan, or DMP, is another debt relief option that serves as an alternative to debt settlement. We can help you set up a debt management plan through our Think Debt Relief credit counseling program.
Unlike debt settlement, a debt management plan usually requires you to pay back 100 percent of what you owe; there are typically no debt relief negotiations with your creditors to settle your open principal balances for less than what you owe.
However, a debt management plan can have less of a credit impact than debt settlement. And since you’re committing to pay back your full balances, your enrollment in a debt management plan may allow us to negotiate with your creditors for other benefits that may not be available in a debt settlement:
- Interest-rate reductions
- Lower monthly payments
- No late fees
- No over-the-limit fees
- Additional help with bringing your account current
A credit counseling debt management plan may be a better solution for you than debt settlement, depending on your debt, your budget, and your creditors. One of our debt relief professionals will be able to tell you more about how a debt management plan can help you.
Will phone calls from creditors and collectors stop?
Although we can’t guarantee that all the collection calls will stop, at Think Debt Relief, we’ll do our best to communicate with your creditors and any collection agencies that get involved on their behalf — but only with your permission: We can inform your creditors that we have a limited Power of Attorney over your debt settlement, and that moving forward, they should contact us, not you.
However, creditors or collection agencies may still attempt to contact you — they have the right to attempt to collect on debts owed to them — but there are federal and state laws designed to protect you from harassment and threats. In all such cases, we want you to feel free to forward the communication to us and let our debt relief professionals respond. After all, it’s one of the services we provide, and we’re happy to handle all such communications. We’ll even work on your behalf to report violators of the Fair Debt Collection Practices Act and other collection laws. Please note, however, that Think Debt Relief doesn’t provide any kind of legal representation or mediation in our communications with your creditors
When do actual debt reduction negotiations begin with my creditors?
We’ll contact your creditors within 10 days after you enroll in our program. With your permission we’ll first let them know we have a limited Power of Attorney over your debt settlement and that they should begin contacting us, not you.
As soon as you’ve built up enough funds in your Debt Reduction Account to make a reasonable offer to your creditors — usually from four to nine months after enrolling — we’ll start our debt negotiations with each creditor, and we’ll generally reach settlement agreements shortly thereafter. Please keep in mind, though, that your own debt reduction and debt settlement timetable may vary due to your total debt, number of creditors, monthly payments, and other factors.
What are the chances my debt will get sent to a law firm and result in a lawsuit against me?
Although this is very rare, it could happen. The vast majority of the time, creditors want to settle: Since they’re in the business of collecting on debts, a negotiated reduced payoff is better for them than no payoff at all. When a debt leads to a lawsuit, a creditor is likely trying to force a larger settlement or a settlement with more favorable terms.
If this should happen to you while you’re enrolled in our debt settlement program, we’ll make that creditor a priority and try to resolve your outstanding debt with that creditor before any other creditors you may have. Although Think Debt Relief isn’t a law firm and we don’t provide any legal advice or representation, we’ll do our best to negotiate favorable settlement terms for you. If all else fails, we’ll either try to get you a long-term payment plan for whatever percentage of the balance you end up owing or refer you to a local attorney through our national attorney network.
Frequently Asked Questions About Loan Modification
What is a loan modification?
A loan modification is a permanent change to one or more terms of your home mortgage loan, such as your interest rate, your principal balance, or how many years you have to repay your loan.
The general goal of a loan modification is to make your mortgage more affordable, so you can keep up with your mortgage payments and your lender won’t foreclose on your home.
What’s the difference between loan modification and refinancing?
In a refinance, you’re not making any changes to your current home loan but rather taking out a new mortgage loan to pay off your current home loan. Your new mortgage will often carry a different monthly payment and interest rate than your current mortgage. You may refinance with your current lender, or you may find a different lender to do your refinance.
In a loan modification, unlike a refinance, you’re not borrowing any more money or taking out any new loans. Instead, you’re negotiating with your current lender to adjust the monthly payment, interest rate, or other terms of your current mortgage.
How do I qualify for a loan modification?
Just give us a call! We’ll ask you a few simple questions, then send your information on to our attorneys so they can prequalify you and determine whether or not they think they’ll be able to help you.
There’s no set minimum credit score required to qualify. The main considerations are whether you’re committed to keeping your home and whether you’ll be able to afford the new, lower mortgage payments on your modified home loan.
There’s never any charge to apply or find out if you qualify. If we determine that you don’t qualify for our loan modification program or if our attorneys don’t think they’ll be able to negotiate a loan modification for you, you pay nothing!
Can I still qualify for a loan modification if I owe more than my house is worth? What about if I don’t have a great credit score?
Yes and yes!
There’s no set minimum credit score required for a loan modification.
And unlike a mortgage refinance, a mortgage loan modification doesn’t require that you have any equity in your home. In fact, the Think Loan Modification program is specifically designed, in part, to help homeowners like you who may be “under water” on their home loan, owing more than their house is worth and unable to refinance into a new mortgage loan with a lower interest rate and lower monthly payments.
How does the loan modification process work?
All it takes to get started is a quick, simple phone call.
Give us a call for your free, no-obligation consultation. We’ll ask you a few basic prequalifying questions about your current mortgage and your individual circumstances, then send your information on to our network of independent attorneys.
Licensed, experienced attorneys in your state will review your information to determine whether they think they’ll be able to negotiate a loan modification for you. We’ll be able to let you know within 24–72 hours whether you qualify for our loan modification program.
There’s never any fee to find out if you qualify. We won’t charge you an application fee just to tell you that we can’t help you.
Once you qualify, it’s completely up to you whether or not you decide to enroll in the loan modification program. There’s never any obligation to enroll.
If you don’t qualify or you simply decide not to enroll in our loan modification program, you pay nothing!
When you enroll, one of our independent attorneys will contact your mortgage lender to begin the negotiation process for modifying your home loan. Typically, we’ll be able to negotiate your loan modification for you within 30–90 days.§
