Will I be free of all my debt when I complete your debt settlement program?
The New Hope Mortgage Solutions debt settlement program can only help you with your unsecured debt. We will go to work for you to negotiate lower payoff amounts with your creditors than what you currently owe and you will have to pay those lower amounts in order to settle those debts. Although we will not be able to help you eliminate your secured debt, you will be able to focus solely on your secured debt once your unsecured debts are settled.
What is the difference between unsecured and secured debt?
Unsecured debt is not tied to any collateral and includes things like credit cards, medical bills and personal lines of credit. These are the types of debt our attorneys can help you negotiate, settle and get rid of.
Secured debt is tied to some form of collateral; it includes accounts like a home mortgage or an auto loan. If you fail to make your payments on a secured debt, the collateral may be repossessed by your creditor; in the case of a home or auto loan, for example, you could end up losing you home or your car. Unfortunately, we will not be able to help you with these types of debt. We can help with a Loan Modification. Just ask and we will show you how.
Will debt settlement repair my credit?
No, not directly, although after your unsecured debt is paid off, you may be able to begin taking steps to manage your debt responsibly and rebuild your credit. However, as with all debt relief programs, your credit score may be negatively affected during the debt settlement process. How much your credit is affected will depend on your current credit score. (Please note that our debt settlement program is not designed to be a credit repair program.) However NHMS does use Credit Unlimited as its credit repair company. We also track your success and help with your case.
Will debt settlement damage my credit?
Unlike a bankruptcy or a credit counseling program, our debt settlement program will NOT show up on your credit report. Although any of your debts that are settled for less than the full amount will typically be noted as “settled” rather than “paid” on your credit report, no one will be able to tell just by pulling your credit that you’re working with a Debt Settlement Program.
While it is possible that you’ll see an adverse change to your credit score due to the debt settlement process, our goal is to get you out of debt as quickly and painlessly as possible by negotiating lower settlement amounts that you are better able to afford — so that you can take control of your debt and get your life back, without having to declare bankruptcy. Of course, your credit will usually be negatively affected if you fail to make any required minimum monthly debt payments while you are enrolled in our debt settlement program.
How are your fees handled?
You will not have to pay the attorney fees upfront. Instead, our fees will be deducted from the Debt Reduction Account you will be using to pay your creditors.
Our fees are typically spread out over a period spanning 18–19 months and include a retainer fee and a service fee. The retainer fee is generally paid out over the first three or four months and the service fee is then paid out over the following 15 months.
We’ll never try to hide our fees from you. Our retainer and service fees are included in any quote you get from us. And we do offer a money-back guarantee on our service fees.
What about interest charges and late fees on my unpaid debts?
Being enrolled in a debt settlement program will not protect you from the interest or late fees charged by your creditors. Your creditors will continue to charge interest and late fees as they normally would, and you will still be responsible for paying these charges, although our goal is to negotiate a settlement amount with your creditor that’s up to 50% less than what you owe now. You may be able to get relief from late fees and other charges by enrolling in one of our debt management plans instead, available through our consumer credit counseling program.
Can I negotiate with my creditors on my own?
You could, although your efforts might interfere with our ability to get you the best deal from each individual creditor. Keep in mind that an attorney and debt negotiation specialists deal with creditors all day, every day. Our experience and established relationships with certain creditors may allow us to negotiate a better settlement than you are able to get negotiating on your own. However, the choice is completely up to you.
Do I have to take out another loan?
No. Unlike debt consolidation, our debt settlement program does not result in another loan.
Payments to your creditors will be deducted from your Debt Reduction Account, as will our retainer and service fees.
How will debt settlement affect my taxes?
Our Attorney enters discussions with your creditors on your behalf to try to negotiate a lower payoff amount that what you currently owe. In a debt settlement, the goal is to reduce your total unsecured debt that you have to pay back by a certain dollar amount. This dollar amount is called “forgiven debt” and is considered taxable income by the IRS — you’ll be required to pay income taxes on any forgiven debt that results from your debt settlement. IRS Form 982 allows for certain people to avoid having to pay taxes on forgiven debt due to economic hardship. Please contact a tax advisor for more information.
Can I still use credit while enrolled in your debt settlement program?
We cannot stress enough our recommendation that you NOT use credit cards or other lines of credit while enrolled in our debt settlement program. Not only will you be going deeper into debt, but you risk serious damage to our negotiated settlements with your creditors if they see you using other lines of credit, paying off that credit or opening new lines of credit. Your creditors will usually regard any new use of credit as you having the ability to pay off your debt, and they will not be inclined to negotiate with us for a reduced balance or interest rate on your account.
We strongly recommend you avoid using any credit except in an emergency. However, as with all aspects of the program, it ultimately remains your choice whether you want to continue to use your credit cards or draw on other credit lines.
What about keeping one credit card open and active in case of emergency?
That can be a good plan, as long as the credit card has a low balance and you can pay it off immediately. After all, you need to be able to handle an emergency if one comes up. But you should consider including all your other credit cards in your debt settlement program.
What is a Debt Management Plan?
A Debt Management Plan, or DMP, is another debt relief option that serves as an alternative to debt settlement. We can help you set up a debt management plan through our credit counseling program.
Unlike debt settlement, a debt management plan usually requires you to pay back 100 percent of what you owe; there are typically no debt relief negotiations with your creditors to settle your open principal balances for less than what you owe.
However, a debt management plan can have less of a credit impact than debt settlement. And since you are committing to pay back your full balances, your enrollment in a debt management plan may allow us to negotiate with your creditors for other benefits that
may not be available in a debt settlement:
• Interest-rate reductions
• Lower monthly payments
• No late fees
• No over-the-limit fees
• Additional help with bringing your account current
A credit counseling debt management plan may be a better solution for you than debt settlement, depending on your debt, your budget, and your creditors. One of our debt relief professionals will be able to tell you more about how a debt management plan can help you.
Will phone calls from creditors and collectors stop?
Although we cannot guarantee that all the collection calls will stop, we will do our best to communicate with your creditors and any collection agencies that get involved on their behalf — but only with your permission: We can inform your creditors that we have you have a client attorney agreement with our law firm.
However, creditors or collection agencies may still attempt to contact you — they have the right to attempt to collect on debts owed to them — but there are federal and state laws designed to protect you from harassment and threats. In all such cases, we want you to feel free to forward the communication to us and let our attorneys and debt relief professionals respond. After all, it is one of the services we provide, and we are happy to handle all such communications. We will even work on your behalf to report violators of the Fair Debt Collection Practices Act and other collection laws.
When do actual debt reduction negotiations begin with my creditors?
We will contact your creditors within 10 days after you enroll in our program. With your permission we will first let them know the client directly has a contract with our law firm and that they should begin contacting us, not you.
As soon as you have built up enough funds in your Debt Reduction Account to make a reasonable offer to your creditors — usually from four to nine months after enrolling — we will start our debt negotiations with each creditor and we will generally reach settlement agreements shortly thereafter. Please keep in mind, though, that your own debt reduction and debt settlement timetable may vary due to your total debt, number of creditors, monthly payments and other factors.
What are the chances my debt will get sent to a law firm and result in a lawsuit against me?
Although this is very rare, it could happen. The vast majority of the time, creditors wants to settle: Since they’re in the business of collecting on debts, a negotiated reduced payoff is better for them than no payoff at all. When a debt leads to a lawsuit, a creditor is likely trying to force a larger settlement or a settlement with more favorable terms.
If this should happen to you while you’re enrolled in our debt settlement program, we will make that creditor a priority and try to resolve your outstanding debt with that creditor before any other creditors you may have we’ll do our best to negotiate favorable settlement terms for you.
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