Debt Reduction - Credit Card Debt Reduction Program and Services

"I'd rather go to bed without supper than rise in debt." Ben Franklin

Franklin Debt Relief, LLC is a member of (TASC) The Association of Settlement Companies. This trade association has developed a standardized industry disclosure for consumers.

Debt Reduction
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Be debt free in as little as 12-30 months
Lower your debts by up to 50%
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Get a “New Deal”

Credit Card Debt Reduction

FDR's "New Deal" debt reduction service is an innovative approach to resolving unsecured debt, specifically credit cards. A client in our credit card debt reduction program may be able to reduce both their debt and monthly payment by as much as 50 percent and pay off their debt in as little as 12 to 36 months. For consumers overwhelmed with credit cards, medical bills, repossessions, personal loans, or collections debt, debt reduction is a great solution because you can become debt free quickly and cheaply, all while potentially avoiding the harsh implications related to bankruptcy.

Getting Approved for Credit Card Debt Reduction

After speaking to one of our debt reduction specialists, a client submits their most recent statements from their creditors, and our experts come up with a reasonable monthly payment based primarily on the following factors: 1) who the client owes; 2) what state they live in; and 3) their recent account activity. As a rule of thumb, the average monthly payment in our debt reduction service tends to be between 1.5% and 2% of the total amount of debt that a client enters into our program. Our fees come out of the monthly payment and are completely paid off over the first 18 to 19 months.

Debt Settlement Reduction: Saving for Settlement

A client begins making their monthly payment into a savings account that we set up for them, but which they have total control over. It is automatically withdrawn from their current checking or savings account the same day every month. Meanwhile, we advise the client to close every account that is enrolled and ask their creditors to note "account closed by consumer" on their credit report. This can prove advantageous for their credit down the road. In the meantime, as the client saves money in their savings account, payments are not disbursed to the creditors, but rather saved in order to eventually settle the accounts.

Debt Reduction: Eliminating your Debt

Once a client has enough money saved, we negotiate with the creditor and attempt to convince them to accept a lump sum settlement offer. Every time a debt is settled the client receives the settlement letter for their records. Average reductions range between 40 and 60 percent of what is owed at the time of settlement, and the creditor reports the debt as "settled" or "paid" on the client's credit report and signs a document releasing the client of any legal obligation for paying the rest of the debt. We reduce debts in one of three ways: 1) paying the account off individually with a lump sum; 2) paying off the account with a batch of other accounts that we're handling with the same creditor. For example, if we have 100 accounts with Chase and each client owes approximately $1000, then we'll settle all of the accounts at once for $40 to $50K total; 3) setting up a favorable payment plan with the creditor, where our client pays back a substantially reduced balance over 3 to 6 months.

The Downsides of Credit Card Debt Reduction

Now that you understand the workings of our "New Deal" debt reduction plan, let us address some of the downsides of the program. For starters, since you are behind on your payments througout the negotiations, debt reduction may have an adverse effect on your credit. The credit implications of credit card debt reduction are not as severe as bankruptcy, but it is not as good as if you had paid the debt back in full and without third party help. Secondly, a creditor is always reserved the right to pursue past due debts in court, and it is possible that a client can be sued during their debt settlement reduction program. This is a last resort for most creditors, and we strictly underwrite our cases so as to further diminish the likelihood of enrolling a client who may be the target of legal action. Since many consumers who are sued by unsecured creditors end up filing bankruptcy, creditors understand that it maybe more profitable for them to accept debt reduction offers. That said, there is no way to guarantee you will not be the target of legal action by a creditor. Thirdly, since the account is past due, the creditors are reserved the right to call you for information regarding the status of your account with them. To prevent the creditors from calling, we ask our clients to change their phone number and address with the creditors to our phone number and address upon enrollment. Also, there are numerous state and federal laws that protect consumers from creditor harassment. Our debt reduction experts may be able to take advantage of these laws to minimize collection calls. The final downside of debt reduction is that it's possible that you may have to pay taxes on the money you saved in our program. For some clients, this is of little concern for a couple reasons: 1) if you were insolvent at the time the debt was settled, you can fill out IRS form #982, which may exempt you from owing taxes on your savings. Someone is considered insolvent when they owe more than the value of their assets. Needless to say, many of our clients fit this profile, but to be sure about your individual situation, you should consult with a CPA or tax attorney. 2) If you're getting taxed on your savings, it may not be a grave concern anyway because you still may save money

You May Need Debt Reduction If:

If five or more of the following statements apply to you, then are likely in need of credit card debt reduction.

You don't have any savings.

You lose sleep thinking about your debt.

You make minimum payments on your credit cards.

You get calls from debt collectors.

You're afraid to look at your statements each month.

On the same token, you have no idea how much you owe.

You use credit cards for things you should buy with cash, such as groceries, gas, or utilities bills.

Your debt is putting an added stress on your marriage.

Your credit card debt to income is at or near 20 percent.

You have more than three major credit cards.

You lie to your spouse or other family member about your spending or hide credit card statements from family members.

After you pay your credit card bill, you increase your balance by the same amount (or more) the following month.

You're at or near your credit limit on your credit cards.

You write a check hoping that you have enough time to make a deposit before it clears.

You take out cash advances on your credit card to pay other bills.

You've been denied credit.

You've bounced checks.

If you lost your job, you would have no ability to make your bills.

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