Q: What is a Debt Management Program?
A: A Debt Management Program, often referred to as credit counseling services, is a process that allows a professional firm to reach an agreement with your creditors to achieve the lowest and most affordable monthly obligation needed to satisfy all your unsecured credit accounts. A few of the benefits to debt management is the ability to have a lower monthly payment, a lower interest rate and become debt free in a fraction of the time compared to doing it on your own. Although debt management is not a loan, this program can dramatically reduce their overall interest rate, charges, monthly payments, and most importantly pay-off time.
Q: Is this a loan?
A: No, this is not a debt consolidation loan. The whole concept is designed for the consumer to get out of debt, not put you further into debt. Think of it as getting on new terms with the creditors. When a consumer obtains a bank loan, that person will end up in this same situation years down the road. We recommend reading our debt options link as it explains this more in detail. They say the definition of insanity is doing the same thing over and over, but expecting a different result. Why would a consumer seek a whole new loan, to where the monthly minimums will only go towards finance charges and fees? It makes no sense.
Q. Will this affect my credit?
A. American Debt Solutions does NOT report to the credit bureaus. The debt management program is not factored into your credit score. If you check on FICO's web site (Fair Isaac Corporation), it shows on the bottom of that page that the program is not calculated into the credit score. Here is the direct link, "What's Not In Your Score" and see for yourself how Credit Counseling participation does not affect your FICO score. However, the debt settlement program will impact ones credit score.
Q: Can I still use the credit cards?
A: A consumer cannot use any credit cards that are put in the credit card debt consolidation program. The creditors see it as doing the consumer a favor. Because of this, they don't want consumers abusing the system on these new terms.
Q: What do I need to do to get started?
A: An in depth comparison on what the consumer was doing and a debt consolidation vs debt settlement comparison can be provided by one of our debt educators.
Q: What kind of debt can be included?
A: You can consolidate unsecured debt such as credit card debt, department cards, personal loans, judgments, medical loans, collection accounts, repos, and past due utilities. To qualify for these services, the total debt must be at least $3,000 or greater.
Q:What are the benefits to this program?
- Consolidate debt into ONE payment
- Consolidate into a lower payment
- Reduce or even eliminate Interest Rates
- Late, Limit, Finance Charges may be reduced or eliminated
- By having a lower payment, expect to get out of debt much sooner!
- No credit check or home required!
Q: Is Debt Settlement the same as Debt Management?
A: No. Debt Settlement does not work similar to the Debt Management Program. The whole point to Debt Settlement is to reduce the overall amount of the balance, by negotiating agreed payoff amounts with your creditors. This will actually reduce your balances, unlike Debt Management. Debt Settlement can save you thousands of dollars and years of re-payment.
Q: How long does the Debt Settlement Program take?
A: The length of the Debt Settlement Program varies from case to case and is based on how much money the consumer can put aside each month. Unlike Debt Management, the actual payment amount is flexible. When speaking with the debt educators, you will be provided with several payoff durations to which the applicant can chose from. Again, the actual term depends on how much you can afford to pay each month. The average case is 12 to 36 months.
Q. Is the Debt Settlement Program guaranteed?
A: If a settlement is not done by the processing agent, any amount accumulated minus fees will be refunded.
Q. How will Debt Settlement affect my credit?
A. Unlike Debt Management, the debt settlement program may have a negative effect on the credit score while in the program. If the accounts are already delinquent it may not have much effect. Debt Settlement does not pay your creditors every month similar to a Debt Management Program. Because of this, the creditors will go unpaid for X amount of months until the estimated amount has been built to settle out that specific account. If you're concerned of your credit, we advise you seek Debt Management (scroll above).
Q. Will I continue to get calls and collection letters from my creditors?
A. You may, but most creditors will not. Most creditors are cooperative and will update your account records to display your Debt Settlement enrollment. Receiving calls for the first 30-60 days is to be expected, but think of this as "temporary stress". Usually, the calls will cease after the creditor receives notice from the lawyers that you've entered Debt Settlement.
