Frequently Asked Questions

What is debt settlement?

Debt settlement is the process of paying off your debts for an amount less than you owe. For example, a person with a Chase credit card with a $10,000 balance might only be able to pay $4,000 to close and “settle” the account and have the remaining $6,000 forgiven. You…

How does debt settlement work?

Debt settlement is a negotiation between you (or your representative) and your creditor (or their representative, such as a collection agency or collection lawyer) to pay a lesser amount than your current balances.

Why are creditors willing to settle?

It is an accepted business practice for creditors to take less than the balance owed, because they are unlikely to collect on the vast number of accounts that are more than 90 days late. For more information, you can watch this video: 

When are creditors willing to settle?

The timing can vary depending on who you’re working with. Creditors typically are willing to settle when you’ve become late enough to trigger the accepted protocol for loss mitigation. This is typically when you’re at least 90 days delinquent or more.

How do creditors determine debt settlement amounts?

Creditors will base the settlements that they agree to on: How delinquent your account is How long you’ve had the accountHow collectible you look on paper (in other words, how you appear to be managing your other debts)

What are the basic criteria to be eligible for debt settlement?

You’ve fallen behind on payments and the debt is “old enough” to be considered for a settlement plan (usually 5 or more months delinquent).You must be in a position to accept the terms or the amount of the settlement (have enough savings or resources to commit to a settlement in…

What are some of the benefits of debt settlement?

You’ll likely pay less and get out of debt faster, which is both a drawback and a benefit. If you’ve already missed payments with your creditor, and are in collections, settling will eventually help your credit.It can improve your financial situation.It can help you avoid being sued if you’re already…

How long does debt settlement take?

Debt settlements do not have a set time of completion. You could have a single account you are already late enough on, and settle it in one day. Settlements typically take as long as it takes you to pull money together to fund the deals. But try not to take…

How does debt settlement impact my credit score in the beginning?

Your creditors won’t settle with you unless you are late with payments. On-time payment history is roughly 30% of how your credit score is factored. This has a major impact on your credit score. If you’re already late with payments, your credit is already impaired. Settling the account can then…

How will my credit score change during and after debt settlement?

Credit scores typically don’t improve during settlements, but can improve rapidly after! Some people see a much more elastic bounce back soon after their last settlement payment, whereas for some people it can take a few years to see healthy credit score improvements.

What will show on my credit report during and after debt settlement?

Remarks of 30, 60, 90, 120, 150 days late, followed by a charge-off will appear. Additional trade lines could be reported later on by debt collectors and debt buyers.Once paid, it will show as a paid collection, but you can still accomplish your future credit and finance goals even with paid collections…

Is there a tax impact with debt settlement?

Not everyone will owe tax on their settlements.If you have a debt that is settled for less than the original balance, and the difference (the forgiven portion of the debt) is greater than $600.00, this would then need to be reported as income. In this case, you should receive a…

When will I be able to get a credit card, loan, car, and/or mortgage after debt settlement?

You can apply for credit cards, loans, car loans, and mortgages right after your last settlement payment is made.

Should I stop paying my creditors?

While we don’t advise people to stop paying their debts, we do offer education and information about the benefits and drawbacks of your decision either way.  When it comes to settling unsecured debts for less than the balance owed, such as credit card debt, the fact is, you have to…

Articles

What are car title loans & what are the risks?

What are car title loans & what are the risks?

Car title loans are one type of fast funding that carry a steep price in terms of interest and fees.…
How to negotiate directly with your credit card company

How to negotiate directly with your credit card company

If your credit card bills are coming in fast and furious, and you’re having a hard time keeping up, you’re…
How do traditional debt settlement companies make money?

How do traditional debt settlement companies make money?

A debt settlement company does exactly what its name implies: It helps you negotiate with your creditors to settle your…
Badge_ssl

We use bank-level security with 2048-bit SSL encryption and will never share your info without your consent

Badge_bbb

Resolve is an accredited company with the Better Business Bureau​

Badge_cfsi

We were selected as a winner of the prestigious CFSI Financial Solutions Lab by J.P. Morgan Chase

Copyright © 2020 Resolve Innovations, Inc., a Public Benefit Corporation. All rights reserved.