Debt Settlement Explained

Once you have joined a debt settlement program, it is important that you don’t panic. Debt settlement programs take time. The first few months can be the most painful because you are setting aside money, and the debt settlement company is taking their fee, but you aren’t seeing much happen. On top of that you are probably not receiving a whole lot of communication from anyone, except perhaps the creditors. There is a method to the madness of a debt settlement program and it is in your best interest to try to understand that you are in the best hands possible in your situation.

Your first year:

In your first year while setting aside money, it may look like you aren’t saving much but rather paying a majority of the debt settlement companies fees. It may feel like your debt settlement company is getting paid first. If you are having trouble paying your minimums then it is in your best interest for the company to extended a longest program for you to reduce your monthly payments. That means that in your first year you might not be saving a whole lot toward your settlement funds. It isn’t because the debt settlement companies are greedy, it’s because you can’t afford to put more toward the savings. That’s OK… Because you are in control of your program. Any time that you can put extra funds into your settlement account, you should. Any extra funds you put into the program will go toward your savings, not the company fee. Putting extra money into the account will expedite your debt settlement program and get you out from under all of this debt quicker. So start off slow and as you catch up on other bills you can then dedicate more money to your settlement account.

Creditor phone calls:

The original creditor has a legal right to contact you in an attempt to collect your debt. When you enter a debt settlement program you will sign a Limited Power of Attorney letter that your debt settlement company will send to each creditor, but the original creditors still have the ‘right’ to call you. That being said, the less you speak with your creditors the less they will call, and there is no law that says that you have to speak with them. The best advice is not to answer the phone unless you recognize the number. The creditors have a tendency to say whatever it will take to squeeze your last dime out of you. That is their job. The first thing they will say is that they don’t work with settlement companies or settlement programs. They may try to scare you with threats of legal action… it’s all in an attempt to get whatever money they can get out of you… and if they keep getting money out of you, then you may hinder your debt settlement company’s ability to negotiate a settlement with them.

Communication with your debt settlement company:

You should be able to expect reasonable communication with whatever debt settlement company that you sign up with. Reasonable would be within 24 hours of leaving a voicemail or message. Please understand that no matter what company you sign up with, they will have just enough negotiators employed with them to handle the clientele that they currently have. If they had more than enough people they would be wasting money. If they experience a growth in clientele, they may need to hire additional employees. Be patient…

Every negotiator that I have ever spoken to is on some sort of commission structure. They may get a base salary, but then they bonus by acheiving different goals. For instance, they may get a bonus for getting lower settlements, or for the amount of customer contact they have. Believe me, negotiators work very hard and are on the phone all day long. It is in the negotiators best interest to get back to you in a timely manner. When leaving a voicemail for your negotiator speak clearly, and leave your name, a daytime phone number (they all work regular business hours in their time zone) and the nature of your call. If you are calling to let them know that you put extra funds in your account, tell them the amount on the voicemail and don’t expect a call back. They will notate your file… believe me!

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