Q: How does your credit card debt settlement
A: The goal of our program is to settle and
resolve your debts for less than you actually owe. When you enroll
in our debt settlement program, each month your payment is
automatically deducted from your checking account and part is used
to pay our fees and the rest is saved in a trust account set up for
you by Noteworld Servicing Center with Key Bank. Once you have
saved sufficient funds in this account and your credit card account
has become eligible for settlement, we negotiate with one of your
creditors to get them to accept a lump sum pay off for less than you
owe to completely satisfy the debt. Once they agree, we get the
proper documentation from the creditor showing this and then with
your permission, authorize Noteworld to distribute the funds from
your trust account in accordance with the settlement agreement.
This process continues until the program is complete and all of your
debts are resolved.
Q: Is there a minimum total debt amount in
order to be eligible for your debt settlement program?
A: Yes, we only accept clients with more than
$10,000 of debt, and each balance must be above $1000 in order to be
included in our credit card debt settlement program. We do make some
exceptions depending on the client hardship and creditor, so feel
free to contact one of our debt settlement experts to see if you are
Q: How will your credit card debt settlement
program affect my credit?
A: Debt settlement will likely have a negative
effect on your credit. Your credit would benefit more by making on
time payments for the full balance than enrolling in a debt
settlement program. The marks left on your credit from a debt
settlement program will remain your credit for up to seven years and
include past due payments, charge offs, accounts being sent to
collections, and in some cases, judgments. Unfortunately, this is
one of the compromises one must accept in order to settle their
balances and realize the savings potential of our program, although
the credit impact is generally less than filing bankruptcy.
Q: What are some signs that I may need
credit card debt settlement?
A: You don't have any savings. You cannot
afford the minimum payments on your credit cards now or in the
foreseeable future. You get calls from debt collectors. You take out
cash advances on your credit card to pay other bills.
Q: What is the difference between credit
card debt settlement and credit counseling?
A: In a credit card debt settlement program,
negotiators work on your behalf to settle your balances for less
than you owe. In a credit counseling program, counselors work on
your behalf to reduce interest rates to as low as 0%. The credit
card debt settlement program lasts between 1 and 3 years, whereas
credit counseling services last for between 4 and 6 years. In
general credit card debt settlement tends to be a more aggressive
approach to debt elimination, where the savings potential is greater
but so are some of the downsides. Some consumers may be better
suited for credit counseling depending on their individual
Q: Can I get a home equity loan to fund my
credit card debt settlement program?
A: Yes, this is encouraged if possible. In
these cases, a client gets a home equity loan or refinances their
home, we negotiate with the credit card companies, and once they
agree to a settlement for less than the balance owed, we use the
money from the 2nd mortgage or refinancing to settle all the credit
cards. This process takes as little as 4 to 12 months to complete,
and it is recommended, although we understand if a client does not
have the means or the desire to pursue this avenue of credit card
Q: Is credit card debt settlement the same
A: No, credit card debt settlement is very
different from bankruptcy. Bankruptcy may be a suitable alternative
for consumers who have limited income or are seeking debt relief for
secured debts like mortgages and car loans, among other reasons. In
a Chapter 7 bankruptcy, the court orders a debtor to liquidate all
of their non-exempt property and a trustee pays the creditors back
with the proceeds from their sale. In many cases, your home, car,
and other assets will be exempt from liquidation in a Chapter 7
bankruptcy, but this depends on your state. In a Chapter 13
bankruptcy, the court orders a debtor to turn over all their
disposable income for a period of three to five years. Since
Franklin Debt Relief is not a law firm, we are not qualified to give
you legal advice about bankruptcy.
Q: Can I be sued in a credit card debt
A: Yes, a credit card company is reserved the
right to pursue a client in court to collect the full debt amount if
you are past due on your payments, which will be the case during our
program. Having your account handled by a law firm in itself may
not result in a lawsuit, however, as we usually set up a payment
plan or settle those accounts, albeit at a higher percentage
(60-80%) once we learn they are being handled by a law firm. Read
below for more information about the potential outcomes of a
Q: What happens if I am sued while working
with your debt settlement company?
In some cases, an impending lawsuit results in
a settlement that is higher than the amount originally estimated. In
other instances, a lawsuit results in what is called a stipulated
agreement with the creditor, where they enter a judgment against the
client in court, but they agree to a payment plan to resolve the
debt. After the debt is paid, any legal right to the debt is
dropped. In these situations, the client usually pays the debt off
in full at 0% on the very low end or at statutory interest, which
typically ranges from 6% to 12%, over a 24 to 60 month period. In
other instances, the creditor pursues legal action, gets a judgment
and then does nothing else to collect the debt. In the worst case
scenario, it is possible a creditor will attempt a wage garnishment,
freeze a bank account, or put a lien on a clients' property to
collect the debt after a judgment is entered. Since Franklin Debt
Relief is not a law firm, we cannot represent you in court or give
you legal advice.
Q: How much does your credit card debt
settlement program cost?
A: Franklin Debt Relief charges no up front fees for the services we provide, and clients only pay a fee after an account has been settled or resolved for an amount they agree to. The fee we charge varies based on your individual situation, but typically it is a percentage of what you save a flat percentage of the total amount of debt you enroll (20% of the debt you enroll in our program).
Q: Can you elaborate on what happens to
interest and late fees during the program?
A: Late fees and interest charges continue as
usual until an account is settled. In our experience, the majority
of accounts that are settled are not affected by this fact as our
negotiations target settlement percentages according to the original
balance, but there are certainly cases where despite our best
efforts, our ability to settle debts for our targeted percentage is
impaired by the fact interest and late fees accrued on the account.
In particular, late fee and interest charges most affect accounts
that we are forced to set up payment plans or settle for higher to
avoid legal action.
Q: Can you give me more information about
the tax implications of settling my debts?
A: Yes, it is possible that you may be taxed on
the savings related to our settling of your credit card debt.
However, for clients who are technically insolvent, then filing IRS
form 982 may exempt you from paying taxes on the savings from
settling. The IRS defines insolvency as financial state in which
someone owes more (liabilities) than the value of their assets. Many
of our clients fall under this category, but you should consult a
tax attorney for advice regarding your situation. Secondly, even if
you are taxed on the savings from debt settlement, you may still
save a lot of money. Remember, you are only taxed on a percentage of
the savings. For example, if our debt settlement program saved you
$2000 off one of your credit cards and you had to pay 25 percent of
that amount to the IRS ($500), then you still saved approximately
$1500. Assuming the debt was $4,000 and our fee was $600, the total
savings is still $900. Again, since we are not tax specialists,
however, we cannot offer advice in this area.
Q: What are my responsibilities throughout
the credit card debt settlement program?
A: Your main responsibilities are to be
truthful, not make additional charges on the accounts you intend to
settle, and to make your monthly payment as planned. Without ample
savings we will be unable to obtain settlements from the credit card
companies. If you will have trouble making your monthly payment,
then it is important that you notify us 5 business days in advance,
so you do not get charged for having insufficient funds. Moreover,
it is important to forward creditor correspondence you receive and
stay in touch with us, so we always have quick and easy access to
you during the negotiation process in the event that we need you to
supply our debt settlement representatives with any important
information regarding your credit card accounts. Other
responsibilities include giving us relevant information about any
co-applicants, co-signors or authorized users before the process
Q: What is the difference between credit
card debt settlement and credit repair?
A: Credit repair involves removing inaccurate
or unverifiable information off your credit report. Unlike debt
settlement, however, credit repair cannot legally resolve any debts
that you actually owe. Franklin Debt Relief is not a credit repair
Q: Do you make payments to each of my credit
cards every month?
A: No, we negotiate with your credit card
companies to settle your debts for less than you owe. Once you have
saved enough money and one of the credit card companies has agreed
to lower the amount you owe, we pay them off with a lump sum
settlement of your debt.
Q: Can you get the collections calls to
No. Although there are some steps we can take
to stop collector calls, as well as numerous state and federal laws
that protect consumers from harassing phone calls from collections
agencies, clients should expect calls throughout the debt settlement
program. Once your accounts move to collections, you can notify us
of any calls you are receiving and we can take specific steps to get
the calls routed to us instead by notifying the collector of our
representation in writing. Although they are legally obligated to
contact us instead of you once this is done and many collection
agencies do in fact honor this responsibility, some may not and once
your account leaves that particular collection agency, the new
collection agency may call you until they receive written
notification of our representation.
Q: What laws can you take advantage of to
reduce creditor calls?
A: Debt collectors are bound by the Fair Debt
Collections Practices Act (FDCPA). The FDCPA specifically states
that a debt collector is obligated to contact third-parties with a
Power of Attorney instead of the debtor.
Q: Do you make payments to each of my credit
cards every month?
A: No, we negotiate with your credit card
companies to settle your debts for less than what you owe. Once you
have saved enough money and one of the creditors has agreed to
accept a settlement for your debt, we get the proper documentation
from the creditor and with your permission, authorize Noteworld to
pay them off with a lump sum settlement of your debt using the funds
you saved in the trust account.
Q: How do you decide which credit card
companies get paid first?
A: We prefer to settle with the most aggressive
creditors first (the ones who are most likely to pursue legal action
to collect the debt). Assuming all things are equal, we will settle
based on which creditor is offering the best settlement. If each
creditor is offering similar settlement percentages, we usually try
to negotiate the smallest account.
Q: How long does it take for you to contact
my creditors and start negotiations?
A: The length of time it takes for us to begin
negotiations depends on how far past due your accounts are, your
creditors, and how much money you have accumulated for settlement,
among a number of factors. In other words, this varies and depends
on your individual situation. Since all or most of the first three
payments in the program go to fees for Franklin’s services, you will
not begin aggressively accumulating funds for settlement until you
are at least four months into the program. This being the case, the
typical client would likely see negotiations begin and an account
settled in the first six to eight months of the program. Once an
account is paid off, funds must accrue again before another debt can
Q: How long do the negotiations take before
everything is settled?
The length of the program is expected to vary
based on your unique situation, but the typical client is expected
to have their debts resolved within 24 to 48 months. If all your
accounts are successfully settled, then it’s possible for you to
resolve your debts in less than 24 months, but if one or more of
your accounts is forced to be set up on a payment plan because of
legal action, then it’s possible that your accounts will not
resolved within the 48 month estimate given above.
Q: Will I still be eligible for bankruptcy
if I do debt settlement, but lose my job or income down the road?
A: In most cases, bankruptcy is still available
as an option, but since we are not a law firm, we cannot speak as to
whether or not you will qualify. What we do know is that it is
important to note that any money we spent in your credit card debt
settlement program up until then will go forever. On the flip side,
since you are always in complete control of your savings account,
any monies still in reserve there will be returned to you at your
Q: Is it possible that a creditor will
refuse to settle?
A: Creditors rarely refuse to accept
settlements, but it’s a possibility. What’s more likely is an
account cannot be settled because the client does not have the funds
saved yet to make settling an option at that time. If the account
is being handled by an attorney in your state and there aren’t funds
available to settle (most attorneys require 60 to 80% of what is
owed), then non-settlement is likely. For the most part, when a
credit card company or collector refuses a settlement offer,
however, we wait for the account status to change or wait until more
funds are built up, and then begin negotiations again until it is
Q: How does your debt settlement company
come up with an estimate of how much I will have to pay the credit
A: Our estimate is based almost entirely on who
the credit card company is. Each creditor has a different internal
policy regarding debt settlement, so each one typically accepts
settlements within a certain range. The vast majority of creditors
will accept settlements in the 40 to 60 percent range during a
specific period in the collections process. Debt settlement is a lot
about timing and planning, and it comes down to having the right
amount of money at the right time in order to obtain the ideal
settlement. Even with the best planning, however, clients must
understand that every situation is unique and results do vary, so
although we do give our clients estimates in good faith, they are in
fact just that - estimates.
Q: Do I have any incentive to pay these
accounts off faster?
A: Absolutely. By paying off the debts faster
your credit score will be able to improve more quickly since you'll
be done with the program earlier. That is, if you are in 24 month
program, you can start restoring your credit much faster than
someone in a 36 months program. Moreover, shorter debt settlement
programs are even less likely to be in danger of legal action by the
creditors because we can potentially settle all the accounts before
it ever gets to that point.
Q: Can I pay more some months and less other
months in your debt settlement program?
A: Yes, we allow a lot of flexibility in terms
of your monthly payment, although we do not allow you to pay less
than a certain amount every month. A lot of our clients will use
their tax refunds to fund their program and get out of debt even
faster than what we estimate. You are informed of the minimum
monthly payment before enrollment into the program, and if you are
having difficulty making a payment one month, please feel free to
call our customer service to discuss your options. It's important
to note that if you are barely able to afford the minimum payment we
give you, you are best not enrolling. The leading cause of failure
for our program is the inability to save funds or being unable to
continue the program altogether because of budget issues. In this
situation, clients are forced to file bankruptcy and the fees they
paid up to that point were spent in vein.
Q: What is the longest debt settlement
A: For the most part, we aim to have our
clients in programs that last no more than 3 years, oftentimes
shorter. That said, much of the program length is determined as the
process unfolds and depends on how the creditors react to our
settlement offers, your ability to save funds, and whether or not
your accounts are forwarded to attorneys for collection. Although
we aim to provide good-faith estimates of the program length to our
prospective clients, results do vary, so we cannot completely
predict when you will be debt free on the accounts included in our program.
Q: How will debt settlement affect my
spouse's credit rating?
A: As long as the debts are in your name only,
your spouse's credit rating may not be affected by debt settlement.
If you spouse is an authorized user, you can request that they be
taken off the account prior to enrollment in order to ensure that
they are not affected by our program. However, if you live in a
community property state (Texas, Arizona, California, Idaho,
Louisiana, Washington, Nevada, New Mexico, or Wisconsin), then the
credit card company may treat your debt as your spouse's debt for
collections purposes, even if your spouse is not a co-applicant on