QUESTIONS TO ASK A POTENTIAL DEBT
If you are considering utilizing a
consolidation company for settling or negotiating your debt,
there are several important questions you should receive answers
for prior to enrolling. We also suggest reading about the
cons of debt consolidation.
What fees are involved for
FTC’s debt relief rules indicate that debt consolidation
companies are not allowed to charge fees up-front after October
27, 2010. No fees can be charged until a debt has been settled.
A good idea would be to request a disclosure of fees in writing.
How long has your company be
involved in the debt consolidation industry and how much debt
have you helped settle?
The age of a company should be secondary in your decision.
Results are #1. If any company you are considering utilizing for
debt consolidation can not or will not disclose how much debt
they have settled then obviously do not even consider this
company. Also, make sure that they are presenting overall
results and not just a few of their best.
Are you able to put a stop to
the constant calling being done by my creditors?
It is impossible to guarantee that all of your creditors are
going to stop calling. If any debt consolidation company says
they can stop 100% of call being made, they are lying.
Are you going to be making
payments to my creditors on my behalf?
Debt consolidation companies never make payments to your
creditors for you. You are responsible for making those
Is it still possible for my
creditors to sue me?
Yes, your creditors can still opt to sue you.
Will my enrollment in a debt
consolidation company have a negative impact on my
Unfortunately, even though you are taking steps to help your
financial situation, partaking in any type of debt relief
program will have a negative effect on your credit report and
How long does it take for my
first consolidation to be accomplished?
In general it should not take any longer than twelve months for
your first debt to be settled. The debt consolidation company
should be able to give a good idea as to how long it will take
based on who your creditors are and how much debt is owed.
How much money will I save?
The amount of money you will save is calculated by adding
the amount of debt that is going to be settled including all
fees associated for utilizing the firm’s services. As mentioned
above, it is a good idea to get a complete disclosure in writing
of estimated savings.
How long is the entire process
going to take and what will the final cost be?
No company is going to be able to give you an exact answer
as to how long it is going to take to settle all of your debts.
However, by law they are to provide you with an estimated amount
of time and total amount expected to save.
Are there any tax penalties
associated with debt consolidation?
Yes, the IRS calculates settled debt as taxable income.
Learn more about these
taxes associated with debt consolidation.
Who holds my funds while
waiting for a consolidation?
Your money will be held in an insured escrow account with a
third party. You are going to be in complete control of this
account with the ability to pull your funds out and close the
account at any time with zero penalties.
When I am going to hear from
your company again?
You should be receiving updates regularly in regards to what
the status is of all negotiations with all of your creditors.
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