How Debt Settlement Works

In its simplest form, debt settlement is intended to help you shrink your debt by negotiating with your creditors to reduce your balances.

Debt settlement is not consumer credit counseling. It’s not intended for consumers who don’t know how to manage their finances or pay their bills on time. Debt Settlement is a means of reducing or eliminating unsecured debt. It’s considered to be the first step in seeking debt relief, since you can get yourself back on your feet quickly and without a long term affect to your credit profile. Debt settlement is geared for the following unsecured debt types:

Personal loans
Lines of credit
Credit cards
Department store charge cards
Payday advances
Subsidized and private student loans
Repossessed auto loan residual balances
Foreclosed home residual balances
Old utility bills
Medical bills
Collection accounts

How do my creditors know you’re in my corner?

One of the first things we do upon your enrollment is send letters of representation from our law firm to your creditors. We inform them that we’re representing you in regard to your indebtedness with them. Also, they’re to no longer contact you with regard to those debts, as outlined by current debt collection laws. You’ll have an attorney and a debt analyst assigned directly to you.

We then set up a joint use savings account that monies are deposited into every month by you so that we can negotiate down your debt. We as well send out initial settlement offers. Sometimes creditors will take advantage of these early offers. Typically though, time becomes our ally. Our law firm aggressively works to negotiate down your outstanding debts as early in your program as possible. We inform you every time we receive a settlement offer, so that you can either approve the offer, or wait until they offer a better settlement. You’ll receive monthly statements regarding your joint use debt settlement account, and you must approve all expenditures. So we work for you, but you’re still in control.

Here are some typical debt settlement facts.

You must be delinquent on your accounts before your creditors will consider your hardship and negotiate your balances. There’s no practical way around it. If you’re current, and have been current, there is no demonstrated hardship that would motivate your creditors to negotiate immediately. On a positive note, by eliminating the debt, you will be able to turn around your debt to income ratio and restore your purchasing power.

Your creditors may not negotiate the balance until you have enough money to do so.

This is just a business transaction for them. Cash flow is critical to them and they want to recoup their funds as quickly as possible. Once a settlement agreement is approved they will typically require a settlement payment within 24-36 hours.

Occasionally, a large balance will be negotiated over 3-4 payments, and in that case, the negotiation is started sooner. This is not typical, but there is a possibility this can happen.
You must also remember we are people who are very good at negotiating with people. We aggressively work to get our clients the best settlements in the industry.

Save, save, save…

Typically, most settlements are estimated around 40% of what you owe, which is why you’re put on a monthly savings plan.

Again, your creditors will all be notified of your hardship and your intent to settle your balances just as soon as you start the program.

Often your settlement percentages may be lower than 40% of the balance owed, in which case any additional funds left in your settlement account will simply be saved for the next settlement.

It’s not uncommon to complete your program earlier than expected because of our strong negotiating relationship with the creditors.

Balances will be settled one at a time.

We begin with the best settlement offer, making sure that you gain confidence in our program by seeing results as quickly as possible.

We make sure we’re suitable for your situation.

We begin with the best settlement offer, making sure that you gain confidence in our program by seeing results as quickly as possible. We make sure we’re suitable for your situation.

Flexibility is an important factor, due to the nature of “life”. Communication is the key. We make sure to work with you to complete the program, even if you should experience any additional hardship.

Your original creditor always has the legal right to contact you.

There’s no way around this. Some creditors will ignore the letter of representation from your attorney that is sent to them and will keep contacting you throughout the program. Some will respect that request to cease communications with you and will start communicating directly with your customer support analyst. Regardless, it’s not your job to speak to them. It’s your job to communicate with your customer support analyst.

If and when the account has been charged off and sent to third party for collection, those
calls will be easier to handle.

Once a settlement has been reached with your creditor, you must approve it.

You will be notified of any settlement of 50% or less. We will provide recommendations based on what is known about your account and your creditor. You have the final approval on all settlements.

If you approve a settlement, an agreement will be obtained, in writing, from your creditor, detailing the agreement and how the transaction should be made. Once that transaction has been completed, a settlement in full (SIF) letter will be obtained, in order to document and confirm that you have settled and closed this account at zero balance and that the remaining balance has been forgiven.

Our Debt Settlement Program is very effective. Here’s a step-by-step overview:

Step 1: Call or e-mail us for a no-cost hassle-free debt relief consultation. We’ll assess your financial situation and determine your potential for debt settlement.

Step 2: We work with you to determine the appropriate monthly dollar amount that you plan to save towards a negotiated settlement. This amount is typically significantly less than your current minimum payments, and goes toward paying off your debt (not simply paying credit card interest charges). These funds will be saved every month in a new account.

Step 3: Upon enrollment in our Debt Settlement Program, we contact your creditors in an attempt to handle future creditor communications. You are requested to avoid using credit while in the program.

Step 4: After funds have accrued sufficiently, negotiations accelerate with your creditors to reduce your debts. We stay in contact with you to keep you apprised of your situation. Please note, it may take several months of savings before we’re in a position to make agreeable settlement offers.

Step 5: Once a settlement is successfully negotiated with a creditor, you’ll be asked to authorize the debt settlement, after which we send you a debt settlement notification from us.

Step 6: After the debt settlement terms are negotiated, a single payment is made toward that settlement.

Step 7: After the full settlement amount is paid, your creditors may report to the credit rating bureaus that your accounts are “settled in full,” “settled,” “paid,” “paid by settlement”, or “settled for less than the full amount.” Either way, you no longer owe on the account and the balance is zero!

Congratulations, you are now free of that debt and World Law Debt Settlement will continue working hard on your other debts!

We then repeat steps 4 through 7 for any additional qualified debts that you have.