How credit card debt settlement works – An example

How credit card debt settlement works - An example

Let's say John owes a total debt of $100,000 on 5 credit cards. He is finding it difficult to keep up with the minimum payments. John doesn't want to file bankruptcy as he does not want to involve the court. So, finally John ends up working with Marc R. Tow & Associates. Here are the 4 steps on how John could settle credit cards and pay off his dues.

1. Stop payment to creditors: John stops paying his creditors and instead he deposits a certain amount into a savings account. (a trust account that is overseen by certified third party, Noteworld.

2. No more handling of collection calls: While John starts falling behind on his payments, he may receive collection calls, which are effectively handled by the representative. John doesn't have to handle such harassing calls on his own.

3. Negotiation starts soon after: As Jesse accumulates a good amount of dollars into the trust account, the Marc R. Tow & Associates starts negotiating with his creditors one by one.

4. Debt is reduced by 40-60%: Finding that John won't be able to pay enough; his creditors agree to accept a reduced amount, say around 40-60% of his outstanding bills.

While John pays off one debt, he waits for better offers from other creditors. He makes sure that any extra money coming in would be used to pay off his bills. Finally, after an average period of 2 years, John is able to settle credit cards debt with all his creditors.
Debts you can settle

Credit card debt settlement is quite common. Other than unsecured credit cards, medical bills, gas/store cards, personal loans etc can also be settled. But tax debts, alimony, child support, mortgages, car loans and federally insured student loans are excluded from a settlement program.

Before starting your debt settlement we need to evaluate your case. All of our consultations are free. Contact us now!
How much to pay for settlement

On average we charge 25-35% of the debt balance that is forgiven under the program. The fees are based on:

* How much you owe in total
* Number of debt accounts you have
* How much you'll save by settlement

How long it takes to settle debts

It usually takes 2-4 years to complete a credit card settlement program or settle personal loans, medical bills and other dues. The period of completion depends upon your total debt amount. Before starting your debt settlement we need to evaluate your case. All of our consultations are free. Contact us now!
Creditors may not sue after settlement

Before starting your debt settlement we need to evaluate your case. All of our consultations are free. Contact us now!
Why Should I Hire Marc R. Tow & Associates for Debt Settlement?

Over more then 30 years we have helped thousands of individuals and business' settle on their debts. When we have a tough debt settlement case we will use our legal resources to get the creditor companies to budge. For example, we had a client who owed $50,000 to a large credit card company. The credit card company did not want to settle on the lower amount, so we drew up the Chapter 7 Bankruptcy forms and sent the credit card company a letter with the bankruptcy forms and told them that we are considering a chapter 7 bankruptcy for this client. Within a week we had the debt settled for the amount that we were looking for.

Our experience is vital for all of our cases. Even though debt settlement isn't a court case we treat it just as seriously and will get very aggressive when needed. Before starting your debt settlement we need to evaluate your case. All of our consultations are free. Contact us now!
Pros and Cons of debt settlement (or credit card debt settlement)

Whether you go for credit card debt settlement program or settlement on personal loans, payday loans etc, here are the pros and cons that you should be aware of.
Pros:

1. Avoid bankruptcy: With debt settlements, you can reduce your debt burden and pay off bills comfortably. You can negotiate with the creditors or collection agency (CA) and settle your debts for as much as you can afford to pay. Thus, you don't need to file Chapter 7 Bankruptcy.

2. Single payment: Instead of paying multiple bills each month, you'll have to make a single monthly payment to the settlement company. The monthly payments are accumulated in a trust account in order to be paid off to your creditors/CA after negotiation. So, you can avoid the stress of paying debts at different rates and dealing with several creditors at a time.

3. Avoid unfair collection practices: You can avoid unfair collection practices and harassment by debt collectors if you negotiate a settlement.

4. Eliminate extra charges: Marc R. Tow & Associates can try to eliminate late payment fees, if any. Any over-the-limit fees on credit cards can also be minimized or eliminated by way of settlement.

5. Avoid lawsuit & other legal actions: Creditors or the CA can file a lawsuit, get a judgment order and garnish your wages or place lien on your property. You may be able to avoid such legal actions if you're in a settlement program.

Cons:

1. Credit score drops: In a settlement program, you're asked to stop paying your creditors till you gather funds for making a lump sum payment to settle your dues. Moreover, you may settle your bills only after your accounts are charged off. Due to late payment or charge-offs, your credit score takes a hit.

2. You may owe taxes: Once you go for credit card settlement or settle other debts, creditors will forgive a percentage of what you owe. As such, the IRS will require you to pay taxes on this forgiven debt which is known as cancellation-of-debt (COD) income. Please contact your tax professional with these questions.

3. Account status on credit report: Unless negotiated with creditors or CA, the account status on your credit report will be updated as "Settled" which creates a negative impact on your score as compared to a "Paid in full" status.

Before starting your debt settlement we need to evaluate your case. All of our consultations are free. Contact us now!

Debt settlement program provides an easy way out of debt. However, your credit score is likely to go down when you stop paying creditors and save money for debt settlement (or credit card debt settlement). But you can repair your score by using a secured credit card, or a gas/store card. Such cards are easily available even if you have a poor credit history. Besides, you need to pay off other bills on time while you settle credit cards and other dues using debt settlement services.

Hi I'm Marc Tow; I have been a Real Estate and Bankruptcy attorney for 30 years. I have also been a Mortgage Broker for 20 years. I have been in business this long because I actually care about my clients. Feel free to contact me at towlawclientservices@yahoo.com or visit my website at http://towlawbankruptcy.com or call toll free at (888)445-4140. All consultations are free, thank you.