There are two sections of frequently asked Questions (FAQs) below are Q & A's specific to the non profit debt consolidation program. Please click this link for frequently asked questions about the Debt Consolidation program FAQ's , as the two programs differ greatly.

 

Please review all of the Q&A's, it contains important information about your debt settlement plan.

 

If you have any further questions about debt settlement that are not answered below, you can ask a question using you Facebook, Hotmail, Yahoo or AOL login...

 

 

Below is a list of frequently asked questions about debt settlement....

Dealing with Creditors
How To Deal With Contact From A Creditor

Although the process for eliminating your unsecured debt is generally painless, there is one area that can cause frustration, and that is receiving calls from creditors. You have given us the authority to act on your behalf to settle with your creditors. You have also agreed to cease talking to the creditors, and not to negotiate with them on your own. Your creditors want to be paid; trying to contact you by both phone and mail are normal business practices. Your job is to avoid talking to them.

The collection process is designed to put you at an emotional disadvantage so that you will feel that only you can deal with them and that you must do so immediately. Your creditors have been at this for a long time and every word they say and every technique used are skillfully designed to put pressure on you to act to their benefit. Few industries are as skilled at using the psychology of guilt and "impending doom" as collections. They may tell you that they do not deal with our industry or our company, or even that we are not a legitimate business. None of that is true.

We have a few suggestions on how to most effectively deal with these calls. You should consider the following options and make the decision that is best for you.

1. Change your phone number to an unlisted AND unpublished number. This is the quickest way to stop calls. If you get an unlisted number, they will be unable to reach you by phone, and will be forced to either call us, or contact you in writing, which is the preferable procedure. We understand that the process of changing your number is not convenient, but it is much more convenient than fielding creditor calls. It is definitely the most effective method of stopping calls before they start.

2. Contact your phone company and order privacy screening. This service will block all computergenerated calls, as well as calls made from toll-free numbers. Most creditors will fall under these categories, but you should understand that some might have ways around this feature. This feature has different names, such as Privacy ID (Sprint) and Privacy Plus (AT&T), but your provider should offer a similar option.

3. When a creditor calls, obtain the company name, person's name, telephone, and extension of the caller, and the FAX number. Give them our Customer Service number and hang up the phone, all without discussing our program. The information you obtain should then be faxed or mailed as needed to us for follow-up.

We will follow up on call records for you, but we need your help to educate your creditors to the fact that they are dealing with us and not you. Compliance is less than 100%, and it helps if you understand that. It takes a bankruptcy to eliminate collection procedures under the law.

Under the Fair Debt Collections Practices Act, we can stop collection agencies from calling.
Original creditors however, can continue to contact you unless they indulge in what can be called harassment. This includes calling at inappropriate times or calls to your place of employment after they have been informed not to contact you there.

If you receive harassing calls or your debt is assigned to a third party collection agency or
attorney, you should fax us, a creditor call record. Once you fax a creditor call record, we will provide that creditor a copy of your Power of Attorney authorizing us to act on your behalf. Some creditors will contact us after receiving a copy of the Power of Attorney. Many will not. Additional contact from us may be required.

 

The more aggressive creditors and collectors may continue to make collection calls until the point a settlement is paid.

Please be relaxed. These creditors cannot hurt you. They may report late payments to the credit bureau - that's okay. They may "write off" your account or sell it to a collection agency - that is okay. These actions are part of the expected process and will create the environment in which the best settlements can be negotiated. Hanging up on an aggressive creditor may even be satisfying. Eventually, our tactics lead to success, and the calls stop.

Your Rights In Debt Collection

If you use credit cards, owe on a personal loan, or are paying a home mortgage, you are a
"debtor." If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a "debt collector."

You should know that in either situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe.

Here are answers to some commonly asked questions about your rights under the
Fair Debt Collection Practices Act.

What debts are covered?

Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Who is a debt collector?
A debt collector is any person who regularly collects debts owed to others. This includes
attorneys who collect debts on a regular basis.

How may a debt collector contact you?
A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt
collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Can you stop a debt collector from contacting you?
You can stop a third party debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it.

 

You could still be sued by the debt collector or your original creditor.

May a debt collector contact anyone else about your debt?
If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.

What must the debt collector tell you about the debt?
Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

May a debt collector continue to contact you if you believe you do not owe money?
A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What types of debt collection practices are prohibited?
Debt collectors may not harass, oppress, or abuse you or any third parties they contact.
For example, debt collectors may not:
* use threats of violence or harm;
* publish a list of consumers who refuse to pay their debts (except to a credit bureau);
* use obscene or profane language; or
* repeatedly use the telephone to annoy someone.
* False statements.

Debt collectors may not use any false or misleading statements when collecting a debt.
For example, debt collectors may not:
* falsely imply that they are attorneys or government representatives;
* falsely imply that you have committed a crime;
* falsely represent that they operate or work for a credit bureau;
* misrepresent the amount of your debt;
* indicate that papers being sent to you are legal forms when they are not; or
* indicate that papers being sent to you are not legal forms when they are.
Debt collectors also may not state that:
* you will be arrested if you do not pay your debt;
* they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
* actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

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Debt collectors may not:
* give false credit information about you to anyone, including a credit bureau;
* send you anything that looks like an official document from a court or government agency when it is not; or
* use a false name.
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:
* collect any amount greater than your debt, unless your state law permits such a charge;
* deposit a post-dated check prematurely;
* use deception to make you accept collect calls or pay for telegrams;
* take or threaten to take your property unless this can be done legally; or
* contact you by postcard.

What control do you have over payment of debts?
If you owe more than one debt, any payment you make must be applied to the debt you indicate.

A debt collector may not apply a payment to any debt you believe you do not owe.

What can you do if you believe a debt collector violated the law?
You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney's fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector's net worth, whichever is less.

Where can you report a debt collector for an alleged violation?
Report any problems you have with a debt collector to your state Attorney General's office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General's office can help you determine your rights.

Understanding How Debt Settlement Works
When does American Debt Co. begin to settle my accounts?
Once we have received your completed paperwork, and after your first deposit has been made; your creditors will be notified immediately and American Debt Co. will begin the settlement process.

However, we can only settle a debt once the full funds are available in your settlement account.

On average we settle accounts at 40% of the balance. Example: You enrolled today, and your credit card account balance is $5000, on average a creditor will add an additional 12% of the balance if not paid off prior to 180 days. Therefore after 180 days your balance will be around $5600. Once You have 25% of the balance in your account we will propose to the creditor that we settle at that amount, which would be $1400. However the creditor may counter offer with a higher percentage.

If you do not have sufficient funds available in your savings account, and you're unable
to come up with the additional funds at that time, the creditor will cancel the deal. That doesn't mean that we can't make the same deal the in the future. Our target pay-off percentage is always 40% or less. Many accounts will settle around 25% to 30%, these accounts are typically of a balance higher than $2500 and have been past due for 6 months or more. As time goes on, the lower settlement amount the creditor will accept. They assume after 1 year or more, they're never going to get paid.

Does American Debt Co. make monthly payments to my creditors?
Typically no, however sometimes the creditor will agree to settle in two or three monthly payments. Most of the time, the creditor will settle for a lesser amount if we pay in one lump sum, usually 25% to 60% of the original debt balance. Terms and conditions of debt settlement vary greatly from creditor to creditor.

What do I do if I miss a monthly payment with American Debt Co.?
Don't worry, you will not be dropped from the debt settlement program. Please contact our customer service or NoteWorld to reschedule your payment.

Will my creditors continue to call me?
We notify your creditors of our representation and inform them that they should contact us with respect to settling your debt. Most creditor calls will stop within 30 to 60 days. If you continue to get calls, call our customer service department and they will again contact the creditor informing them of our representation. In all cases, you should keep a log of all calls you get from creditors with respect to the debt you put into our program.

Will my creditors continue to contact me by mail?.
Your creditors may also attempt to correspond with you by mail, however, you will then immediately contact American Debt Co. and report this correspondence. We will handle all of your creditors and collectors on your behalf.

Will the debt settlement program have a negative effect on my credit?
Yes, The Debt Settlement Program will have a negative effect on your credit profile.
However, once negotiated and settled, your creditors will report the accounts as "settled" or"Paid in full for less" and show a $0 balance. And it depends on your current credit report, if you're already behind on the accounts that you're enrolling into the program, by the time you finish the program your credit will be better than it is today since the balances will show $0 and paid off.

Why should I use American Debt Co. to settle my debts as opposed to handling it myself?
Our team has extensive experience in negotiating debt and working with creditors.

We have an impeccable relationship with creditors and collection agencies, who are
usually unwavering in negotiating with the consumer directly. Our team has extensive
knowledge in consumer debt and the Fair Credit Reporting Act, as well as the Fair
Debt Collection Practices Act.

Do I have to include all of my creditors into the program for settlement?
No. We recommend that you keep open at least one credit card. Any accounts that
are included in the settlement will have to be closed immediately. Creditors won't
settle accounts that are still open. You should keep one credit card open for
emergency use only.

How long will it take for me to become debt free?
It typically takes about 18-36 months after we've negotiated the total amount of
your debt down to 40%-60%. This includes all fees. However, it could be much sooner
depending on your individual situation.

How much does the debt settlement program cost / What are your fees?
Our service fee is 15% of your initial debt amount that you enrolled into the program plus a monthly service fee of $49.00. The 15% service fee will be deducted from your monthly deposits over the length of your program please see the payment schedule in your client agreement for exact details as it will vary from client to client.

On a side note, the FTC recently enacted a new regulation on debt relief agencies that sell their services over the phone. Therefore we no longer sell our services over the phone, your contract and our advertising information will be sent to you by US Postal service or email for your review. If you wish to sign up for our service after recieving this information you may do so through the internet or by mail. Telephone customer service support will be available after that.

What if my creditors won't settle?
There are very few circumstances where a creditor will refuse to settle. As with any
negotiation, there are offers and counter-offers and given time, and in the majority of
cases a settlement is reached. Creditors realize that settlement is in their best
interest because if a debtor files for bankruptcy, most times the creditor will be left
with nothing.

Will American Debt Co. stop late fees and interest from accruing on my accounts?
American Debt Co. LLC can not stop a creditor from adding interest or late fees to an
account. However, your individual program will reflect those fees and/or interest, and
is incorporated into the Settlement Program. Because we negotiate the debt down to
a fraction of what you owe, your savings are far greater than any interest or late fees that could accrue.

What if I want to cancel?
You may cancel at anytime. Any payments that have been disbursed to creditors as well as any fees collected thus far are non refundable. If you have a balance in your trust account, these funds will be returned to you. Please contact your representative at American Debt Co. for more information.

What if I made a balance transfer recently?
Accounts may be more difficult to negotiate and will possibly settle at a higher percentage than average if a client has made a balance transfer or cash advance on any enrolled credit cards during the last six months.

What if my accounts are already behind 30 days or more?
Any accounts enrolled in the program that have been delinquent for 30 or more days, or are
currently in collections, are more likely to have litigation pending or to have received a court summons.

For more information about understanding how debt settlement really works click here to get the straight facts.

Your creditors have the right to sue you at anytime they choose, American Debt Co. can not prevent your creditors from taking legal action. However we will work with you to the best of our ability to assist and guide you through the process. These accounts may be more difficult to settle and may settle at a higher rate than the originally estimated percentage.

What if I've already been sued by a creditor and they have a judgement against me?
If you own a house the creditor may place a lien against your property. Which means if you try to sell the property you must include the judgement amount in the sale price of your house.

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Some states allow garnishment of wages if you have a judgement against you.
We can still work with these types of accounts and attempt to reach a settlement.

Will creditors continue to add interest and late fees to my debt after I've entered the program?

Yes, typically for 90 to 180 days from the date of your last direct payment to your creditors they will continue to charge interest as well as ad additional late fees. However, even with additional late charges or interest, we are still able to settle accounts on average 25% to 60% of the balance.

What are the Tax Consequences of settling a debt for less?
Depending on your financial condition, the money you save by using debt settlement companies can be considered taxable income. Credit card companies and others may report debt settlements to the IRS, and the agency may consider it income, unless it finds you are "insolvent." You are insolvent when your total debts are more than the fair market value of your total assets. It can be complicated to determine whether someone is insolvent. If you're not sure whether you qualify for this exception, talk to a tax professional.

 

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