Debt Settlement FAQ (Questions and Answers)

  1. Can debt settlement stop the creditors from calling me at home and at work? If need be, HDS can serve a “Cease and Desist” notice on creditors that continue to call or harass a client after HDS has informed the creditor that HDS represents the client. While most reputable creditors will discontinue this behavior, HDS can not guarantee that all creditors will abide by such notice and could require a notice to an appropriate government agency.
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  2. What happens to my credit score if I enroll in your debt settlement program? HDS programs are designed to resolve and eventually settle the client’s debt with their creditors. While our programs should improve the client’s financial situation, HDS has no control over the credit reporting bureaus or the posting policies of creditors.
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  3. Can debt settlement guarantee how much my settlement amount will be for? HDS prepares a program worksheet for the client to review and approve after which HDS will prepare a forecast for each creditor. However, HDS can not guarantee what the client’s creditors will do now or in the future until a settlement agreement has been reached, acknowledged, conveyed and accepted by all parties.
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  4. Should I stop paying my creditors? HDS can provide the client with an assessment, analysis and forecast of what might be expected if the client chooses to enroll in an HDS program to resolve and settle their debt. HDS cannot advise a client to stop paying their creditors. However, HDS can advise a client that their income is inadequate to service their debts and that they should not borrow money from existing or new creditors to pay old debts while they are insolvent.
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  5. Should I file for bankruptcy instead? Most HDS programs are much less damaging than bankruptcy. HDS believes that bankruptcy should be a last resort rather than a first choice for resolving and settling creditor accounts whenever possible. Bankruptcy stays on your records for up to ten years and generally returns the least amount of funds to the creditor for the same or similar efforts.
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  6. Can I exclude a credit card from the debt settlement program for living expenses? This can depend on the specific situation, but we usually advise against it unless there are certain circumstances present. Please ask a debt advisor for more information, or see Will enrolling in an HDS settlement program prevent me from obtaining credit?.
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  7. Do you have to be delinquent to qualify for an HDS program? No! Most businesses and consumers experiencing a financial hardship from a variety of adversities know in advance that their cash or cash flow will be insufficient to satisfy their debts. Communicating early with creditors can often prevent accounts from becoming delinquent or being turned over to collection agents, whom rarely have the authority to accept anything other than a lump sum payment to settle the debt. (If clients had enough cash to pay all of their creditors in a lump sum they would probably not be experiencing a financial hardship.) While many creditor policies and regulations prevent them from settling debts in the early stage of delinquency, they can however keep the account in-house if they know there is a settlement plan for resolving and settling the debt.
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  8. What if I have a Chase credit card (for example) that I’m trying to settle on, but my checking account is also with Chase? Can they take my money instead of settling on my credit card? Yes, this actually can happen! This is something that you might not be told about by others, either because they simply don’t know that this is a possibility, or because they don’t want to have to give you the bad news. Believe us…if you have $3,000 or $5,000 or more that is sucked out of your account with no advanced notice, that can cause huge problems. Isn’t the piece of mind worth it?
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  9. Does it matter if I have a hardship or can give my creditors a good reason for why I’m in my current financial position? Yes – as we hope you’ve seen with us by now, we do the right thing every time and give you the facts so you can make the best decision. Debt settlement is not a tool to be used by people who can afford to pay off their debts (not just their minimum payments), and who have no real hardships. It isn’t for people just trying to “save some money” by working the system because their neighbor – who had a good reason – completed a successful debt settlement program with us. That said, you don’t have to have had a tornado hit your house or have had quadruple bypass surgery. Having your interest rates go from 9% to 30% overnight and simply not being able to afford the minimum payments is an easy qualification as a hardship! We will review the hardship to make sure it qualifies for the program, and notify the creditors in the proper way, at the proper time.
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  10. What if my creditors try to garnish my wages instead of waiting for the debt settlement program? Although this does not happen very often, as always we want to be straightforward and let you know that it is a possibility. Usually unless it is a large debt amount or there is a unique situation, the cost of the creditor garnishing your wages rather than settling the debt is prohibitive for them. Our services include advising you about these kinds of issues to let you know whether it is a real possibility, or just a threat. If the creditor does pursue this course of action, we can make special arrangements with you to represent you in court at a reduced rate. Again, this does not happen very often.
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  11. How will I know what my creditors offer to settle my debt or what your responses to them are? HDS will convey offers, responses to offers and acceptances between the client and the client’s creditors until a settlement agreement is reached or otherwise terminated by the parties.
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  12. How does the creditor know HDS really represents me? The client will provide HDS with sufficient confidential information to identify and authenticate the client to the creditor in a manner providing the creditor a level of confidence that HDS has established an agency relationship with the client.
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  13. If I have other financial resources do I have to disclose them to the creditor? HDS will provide a forecast based upon the client’s income and expense schedules as reported by the client to HDS, which are taken at face value and used to support proposed forecasts and programs on behalf of the client. However, a creditor may request additional documentation to support the client income as a condition for the creditor to resolve and settle the client account. The creditor is not limited to the information provided by HDS and may investigate possible financial resources of the client separately, for which the creditor may find cause for other actions upon such discoveries.
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  14. OK, so HDS can’t tell me to stop paying my creditors, what would you personally do? Given a scenario or event that leaves me where I can no longer afford the necessities of life and pay my creditor loan balances, I would employ the professional services of HDS to demonstrate to my creditors that I am serious about resolving my financial condition with them but in a least offensive manner and without bankruptcy or court actions.
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  15. Will enrolling in an HDS settlement program prevent me from obtaining credit? No! However, once enrolled in an HDS program, clients may only obtain new credit for allowable expenses, necessities of life or as may be used or required for the production of income, whether the client is an employee or a business. (See also the two answers below)
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  16. What are “Allowable Expenses” and “Necessities of Life”? These include such as food, clothing, shelter, transportation, utilities, insurance, medical expenses and necessary household, employment and business related expenses. In addition, clients having disabilities or medical needs may keep an open credit account with use restricted to those needs.
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  17. What are “Allowable Expenses” used for the “Production of Income”? These include such as travel, rental cars and meals expenses for employees whose employment requires them to travel. It would also include such as the purchase of goods and services directly related to the production of income. In these cases, a client would be allowed to keep an open and current credit account with use restricted to facilitate such transactions.
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  18. What happens if my creditors won’t or don’t settle with us after your fee is paid? HDS provides the same services to the client for the duration of the HDS program regardless of the payment option selected by the client. Most creditors eventually settle…some faster than others depending on their individual policies and strategies. Some offer lower settlements for earlier payoffs fearing that the client may file bankruptcy. Other creditors hold out longer hoping for a larger settlement. Most tend to fall between the two and can therefore be forecasted within a reasonable estimate of what to expect overall.
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  19. How can HDS help with your debt problem? HDS, with principals having over twenty years experience working with secured and unsecured debt, will work with you and your creditors to resolve and settle your debts based on your financial capability and not on someone else’s financial model. We can also redirect most of the creditor correspondence and communications to HDS for timely and proper responses.
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  20. Can you tell me more about the debt settlement process? HDS will analyze your debts and financial condition then structure a settlement plan based on a forecast of your financial resources and capabilities, which will be submitted to you for your approval. Once you’ve successfully enrolled in one of our programs, HDS will process the documents necessary to provide proper notices to your creditors. As your accounts move through the collection process and into creditor departments authorized to settle accounts, HDS will convey to each creditor their apportioned allocation from your settlement plan so that they may reach settlement agreements with you.
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  21. What if my creditors only offer debt settlement amounts above your estimated amounts? That is possible and HDS will convey all such offers or responses-to-offers received from the client’s creditors to the client. However, HDS has the client’s forecast from their current financial condition by which to further convey on behalf of the client and use that information to demonstrate the limits of what the client has to work with. The only option the creditor will have is to incur more expenses through a court action, which could force the client into bankruptcy where the creditor may end up with far less if anything at all.
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  22. What is unsecured vs. secured debt, and what can be enrolled in your debt settlement program? Unsecured Debt – for HDS purposes shall be defined as any loan, lien or other financial obligation of a client, which IS NOT secured by real or personal property and DOES NOT have a priority position with respect to other unsecured obligations of the client. Secured Debt – for HDS purposes shall be defined as any loan, lien or financial obligation of the client, which IS secured by real or personal property and or DOES have a priority position with respect to other unsecured obligations of the client. NOTE: Client debts having priority by statute or court order, such as taxes and judgments, may be settled. Even the IRS is authorized to negotiate tax settlements under an “Offer in Compromise” with taxpayers.
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  23. Does HDS control or direct my debt settlement funds while they are accumulating? The client’s income and expenses for the necessities of life dictate the amount of funds the client has available to accumulate to settle with creditors. These settlement funds remain under the care, custody and control of the client. HDS will convey final settlement agreements to the client along with any payment conditions of a creditor, which shall be performed at the direction of the client.
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By the way…this is a great place to ask questions that weren’t already answered here. We’ll review your debt settlement question ASAP, and post a reply. (If it is an involved or confidential question, please feel free to use the contact form on our About Page).

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