Debt relief is a process of negotiating with credit companies to reduce the amount of money that you owe or simply pay it off in a lump sum. There are even some situations that you can settle the amount for a substantial amount less than you owe due to your current financial situation. If you have more debt that you will be able to pay off in two to three years, this is a great option to consider. Most creditors are willing to explore this path because if you wind up filing bankruptcy they may receive nothing. Instead they settle or agree to a reduced amount to close the debt and receive at least a portion of what is owed.
The following is a list of frequently asked questions that will help you determine if the debt relief path is right for you and exactly how it works.
What makes a person a candidate for debt settlement?
These programs are not for everyone. However, if you are experiencing a sincere hardship, which has caused you to fall behind or completely stop payments on your debts, you are an ideal candidate for debt relief. Be Free Financial will only represent individuals who have a sincere need of the services to help improve their overall financial situation.
Why is Be Free Financial a better option than handling the debt yourself?
The experienced professionals at Be Free Financial understand how debt works. Additionally, they have an established relationship with creditors and various collection agencies. They are trained to negotiate the absolute best deal possible with your creditors.
Should you pay your debts while in negotiating with your creditors?
No agency should ever advise you to not pay your debts. However, if you continue to pay your debts, you may not be eligible for a settlement or consolidation. If you are able to pay your debts while waiting for the negotiation process, chances are you are not in legitimate need of these services.
Are all debts included in a debt relief program?
You can pick and choose which debts you want to include in your debt relief program. Your Be Free Financial representative will help you determine which debts should be included.
How does debt settlement and bankruptcy differ?
Bankruptcy is typically and option only chosen as a last resort. Filing for bankruptcy will provide a negative mark on your credit report for 10 years. This can impact your chances for employment, obtaining state licenses, insurance and rental possibilities. Also, when you file for bankruptcy you are likely to be denied any type of credit for at least 10 years. With the recent changes to the bankruptcy law you will also still be liable for much of the debt that you are trying to get rid of, which means that there is no reason to pursue this debt relief option.
Are there any rules that apply to the collection of debts?
There are laws that have established the proper methods that debt collectors can use to collect outstanding debt. They cannot abuse or harass you in any way. Additionally, they cannot do the following:
- Threaten you with violence or harm in any way, including property, person or reputation.
- Create a public list of consumers who have not paid their debts.
- Use obscene language.
- Not identify themselves during a collection call.
Additionally, debt collectors cannot make false statements where they claim that they are government representatives, that you have committed some sort of crime or falsely represent that they represent, operate, or work at a credit bureau.
What if a debt collector commits a violation?
If a debt collector performs any of the above violations, you should report their actions to your states attorney general, as well as the Federal Trade Commission. There are many states that have their own laws regarding proper practices for debt collection, which can help you determine the rights that you have.
What are the fees associated with Be Free Financial Services?
There are no upfront fees. You can have your financial report analyzed to determine if the services that are offered will help your current situation. Fees will only be accessed once you have entered into an official agreement with Be Free Financial.
How will you determine the services that are right for your situation?
There are several debt relief options available for you. When you call Be Free Financial a debt specialist will work with you to determine which option is right for your specific situation. This is only done after your free credit report has been obtained and you have had a full evaluation of your financial situation.
Will you be completely debt free when the program reaches completion?
While Be Free Financial cannot officially help you with secured debts, such as mortgages or auto loans, they can help reduce your unsecured debts so that your other expenses are more manageable. You will be able to reduce the amount you are required to pay on credit cards, unsecured personal loans and medical bills, which will help you better manage your secured debts.
Will there be taxes due on forgiven debt?
The IRS considers forgiven debt to be taxable income. However, if you are facing an extreme hardship, you can fill out a form 982 that may exempt you from this tax.
Will Be Free Financial begin contacting creditors right away?
In most cases your financial representative will begin contacting your creditors right away. There are certain difficult creditors that may require more effort. The fact is that the actual negotiation process will not occur until month six to nine when you have saved enough to actually settle your debt. If you opt for consolidation services, the negotiation can begin right away.
Will a debt relief program increase your credit rating?
No. The debt relief program is simply to ease your debt burden. The settlement or consolidation that you receive will not automatically help your credit rating. However, as you begin making regular payments you may see a slight increase in your credit rating, however this is not guaranteed or offered as part of the services.