Frequently Asked Questions about Debt Settlement by Preferred Financial Services…
Andover, Massachusetts July 28th 2010 – When researching debt reduction solutions online consumers will come across literally thousands of websites offering some sort of service to reduce a consumers debt for a fee. While debt settlement has been around for decades in some form, there continue to be false rumors and explanations of what exactly debt settlement is, how it works, and how it benefits the consumer. If you are debating between options in regards to your debt, please review some of the following FAQ’s and contact me if you have any further questions regarding the process, its consequences, and its benefits.
- What is debt settlement?
Debt settlement is a legal way for the consumer to settle their debt for less than the principal balance.
- Is there a cost for this service?
Yes, there is a fee for this service and will vary from company to company. The industry average is 15-20%. While the fees may be similar, there are other factors to consider as well. Always ask about the refund policy and also where your money will be going. A reputable firm will place your funds in a 3rd party account that you will have supervision over.
- How will debt settlement affect my credit?
Debt settlement is not a credit enhancement program, it is a debt reduction program. If your goal is to reduce your debt amounts owed then debt settlement could be a great option for you. If your goal is to improve your credit score then debt settlement will not be a good option for you. Enrolling in a debt settlement program will most likely lower your credit score in the short term while negotiations are ongoing. Once your debt has been settled your score can improve. Keep in mind, your credit score is made up of many different factors including your total debt, payment history, available credit, and public records.
- How long will a debt settlement program take?
The length of the program will vary according to each individuals circumstances. Factors that can impact the length include total debt amount, number and type of creditors owed, as well as the availability of funds that can be used to settle an account. Typical programs vary in length from 18-48 months.
- Will I owe money to the IRS after completing debt settlement??
This is a possibility with any debt settlement program. Any debt that has been forgiven with a value over $600 cane be considered income by the IRS. You will receive a form from your creditors at the end of the tax year that will allow you to claim this as income. However, there are times when consumers are able to write off this income based on IRS guidelines.
- How do debt settlement companies determine a client’s suitability for a program?
Most reputable debt settlement firms will complete a budget analysis with each prospective client to determine if the program would be a good fit. This analysis includes an examination of the clients income and expenses.
- Will all of my debt be reduced through a debt settlement program?
Debt settlement firms handle strictly unsecured debts such as credit cards, personal loans, medical bills, etc. When successfully completing a debt settlement program the account balances on any enrolled account will show a zero balance, which is the primary focus of the program. Remember, to complete a debt settlement program takes a lot of patience and commitment from both the consumer and the debt settlement firm over a substantial period of time.
Are there any other questions you would like answered? What questions did you ask when you were enrolling in a program?
Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.
For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .
Contact:
Stephan Tavernini
Marketing Coordinator
Certified Debt Arbitrator
Preferred Financial Services
