What are Debt Settlements?
Debt Negotiations is the process of negotiating with your creditors how much you owe. While most creditors are reluctant to negotiate with clients on repayments of money lent, we are adept at minimizing what your creditor will accept in lieu of full payment. Our negotiations are currently negotiating our clients debts down to 20%-40% of what is owed.
How do Debt Settlements work?
While the results of our program are substantial, the program itself is quite simple. The client will set up an account under their own name, and make deposits into this account on a designated day every month. As this money accumulates, we will start the negotiations process with your creditors. When you have enough in your account to make a suitable offer to one of your creditors (say 40% of what is owed), then we’ll make offers to multiple creditors to see who can offer us the best terms.
There is a time and a way to get the best settlements from each creditor. There are many factors to take into consideration including, time of the month, previous settlements, amount of debt currently being settled, relationship with creditor, and how much has already been sold off to collections. If you understand all of this, then you can get the best settlement possible.
What will this do to my Credit?
Most individuals lack the background to truly understand the true heart of this question. When an individual looks at their credit report, there is so much more information contained within the credit report than a mere credit score. It’s important to recognize what banks are looking for when they determine your loan eligibility. The debt settlement program will have an impact on your credit report. While your credit score will drop, the full impact will improve the overall chances of qualifying for a loan in the future. This is an important distinction that most individuals, debt settlement companies, and industry professionals miss.
What banks look for on your credit report
A few years ago, Credit score was the most important item found on a credit report. Not true today. Because of the change in the economy, and change in underwriting guidelines, the banks are now more focused on your debt to income ratio. What’s a debt to income ratio? Simply put, it’s a measure of your income vs. your liabilities. This ratio tells the banks underwriters how much discretionable income you have left over (after paying all of your bills), and tells them if you can truly afford to make another payment on that which you’re trying to get a loan. While the discussion on debt to income (D.T.I.) can be quite extensive, just keep in mind that the less money you’re paying out to creditors, the better your chances for qualifying for a loan.
How does this apply to you? While in a debt settlement program it is true that your credit score may drop, more importantly, the act of paying of debt will improve your D.T.I, and thus improve your chances of being approved for a loan.
If two individuals are applying for a loan, and client A has an 800 Credit Score with no money left over each month, and client B has a 620 Credit Score, but has $2000 left over monthly, the bank will approve client B EVERY TIME due to his DTI. In this, we can see that credit score isn’t nearly as important as what the current D.T.I is. Banks no longer offer “stated” loans. They are looking for individuals that can show a good cash flow.
Most importantly, AFPG has agreements in place with a respected company in the credit cleansing industry. If you are one of our clients, we will pay for an ongoing 6 month program to improve your credit score, once you’ve paid off all of your debt. Certain restrictions apply: please ask your analyst for information.
Do Debt Settlements Work?
They absolutely do. While we recognize that clients can at times be apprehensive about getting into a debt settlement program, we’ve taken many steps to prove to potential clients that what we offer is legitimate. Unlike most debt settlement companies, we don’t receive any fees until each of your creditors have been paid. We’ve designed our program this way to prove to you that our program does work. The onus is on us to perform. We accept the risk of not getting paid unless your creditors are paid off. If you’re still needing further proof, please see our BBB rating, our settlement letters page , and our testimonials from past and current clients. We’ve helped thousands of individuals and businesses with their finances over the years, and we’d like to show you why we’re so respected in the debt settlements industry.
What is the process of getting started in a debt settlement program?
Once consulted with one of our analysts, we will asses you situation, and advise you accordingly. In certain situations we may recommend bankruptcy, but our ultimate goal is to help you avoid bankruptcy. While we strive for our clients is to get out of debt, we do have other objectives.
1. Our program is designed to help minimize you current monthly debts
2. We want to reduce the amount of time that you’re paying on your credit cards
3. We want to reduce the total amount of money that you’re paying out to your creditors.
Once we’ve determined that our program is a good fit for you, then we’ll generate the application, have you sign and fax it back in. At that point you’ll be ready for compliance. Compliance is a 30 minute phone call to make sure you understand all strategies, and understand the premise of what we’re doing. It is here that we’ll give you our customer service number and fax.
