Debt Settlement

Debt Settlement

Hawaii Bankruptcy Attorney Offering Debt Negotiation Services

Hawaii lawyers discussing debt settlement

Our goal here is to help you avoid bankruptcy, and still become debt-free!

At our office, Chapter 7 or Chapter 13 bankruptcy are not the only options for our clients. Hawaii bankruptcy lawyer Blake Goodman also offers debt settlement or debt negotiation services (the terms are used interchangeably), and he will review with you all your options so you can make the best decision for yourself and your family to gain financial freedom.

Take a closer look at these numbers:

-$20,000 balance owed on Credit Cards
-$40,000 if paid off diligently
-$30,000 if paid through Consumer Credit Counseling Services (and results in Bad Credit)
-$140,00 if minimum payments over 10 years
-$11,000 if negotiated by a qualified lawyer

For clients interested in debt settlement, our goal is to help you avoid bankruptcy, and still become debt-free!

Dangerous Consumer Credit Counseling Plans–Warning!

Our Honolulu debt negotiation or settlement services is not the same as Consumer Credit Counseling, whereby you pay all your creditors back in full with an adjusted interest rate over 5 to 7 years. We perform true Debt Settlement Plans, eliminating 40 to 60% of the amount you owe.

Many of my clients come to me after spending up to two years with a consumer credit counseling program, only to find that they are no closer to being debt-free than when they started. Their accounts are marked as seriously delinquent, and not all of the creditors agree to the  management plan, so some of them file lawsuits to collect. In fact, the consumer credit counseling programs generally increase the client’s monthly payments until there is virtually no benefit from the program.

Relief From Stress and Strain of Debt

This Debt Settlement or Debt Negotiation Program (as we call it) reduces your unsecured debt burden through direct negotiation with your creditors. In this program, your creditors are contacted about your financial set-backs and offered a settlement deal in order to satisfy the balance of your credit cards, signature loans, hospital bills, and other debts. In many cases, if you qualify for the program, you can obtain significant settlements in interest and principal. Bankruptcy is not filed, and you’ve still eliminated a vast portion of your debts in 24 months or less.

Your Creditors are Contacted and Required to Deal Only with Your Representative

That’s right. While you’re working to pay your debts back through a Debt Settlement Plan, collection agencies and their lawyers are forced to deal with your Hawaii bankruptcy lawyer instead of you.

One Consolidated Payment

After a financial analysis of your situation, one monthly payment will be arranged for you in order to pay off your creditors. You don’t have to juggle your monthly finances or throw darts at which bills get paid this month.

Different From Consumer Credit Counseling

Unlike Consumer Credit Counseling whereby an intermediary acts to reduce interest and monthly payments, our Debt Settlement Plan attempts to reduce the principle owed, producing a good chance that you will be able to pay off your debts in a much shorter period than possible under a traditional consumer credit counseling program. This could provide you with considerable financial savings and a quicker arrival to your destiny: peace of mind.

Just Remember

If you don’t do something with your credit cards, the repayment burden can out-last even you. If you take any credit card balance and just pay the minimum payment (usually 2%) and use an 18% interest rate (conservative in today’s market) the repayment would last 24 years. That is correct, and that is without the credit card companies’ penalties and extra interest charges they assess when you’re late.

More than 80% of the national work force is dependent on two incomes due in large part to personal debt. Call today at 808-528-4274 or fill out our online questionnaire to set up a confidential analysis of your situation with a seasoned Honolulu bankruptcy attorney to determine whether this powerful debt management tool could produce real financial and emotional benefits for you.

What actions must a collection agency avoid?

Under the Fair Debt Collection Practices Act, a collection agency may not act in the following ways:

  • Third-party communications. The collection agency cannot contact third parties other than the debtor’s attorney or a credit bureau for any reason other than to locate the debtor. Collection agents who contact third parties must state their names, and may only add that they are confirming or correcting information about the debtor. They cannot give the collection agency’s name unless asked directly. They cannot state that they are calling about a debt. Collection agents may not contact a third party repeatedly unless they believe an earlier response was wrong or incomplete and that the third party has revised information. Further, collection agents cannot communicate with third parties by postcard or by correspondence that uses words or symbols that betray their collection motive.
  • Attorney-represented debtor. A collection agency cannot contact the debtor directly if a qualified Hawaii bankruptcy lawyer represents him or her unless the debtor gives the collection agency specific permission to do so.
  • Debtor communications. Collection agents may not contact debtors before 8:00 a.m. or after 9:00 p.m., or at another inconvenient time or place. Collection agents also may not contact a debtor at work if he or she knows that the employer bans receipt of collection calls while on the job.
  • Harassment or abuse. Agents cannot threaten or use violence against the debtor or another person. They cannot use obscene or profane language. They cannot publish a debtor’s name on a “blacklist” or other public posting. Agents cannot call repeatedly or contact the debtor without identifying themselves as bill collectors.

What is the different between a debt workout and a debt consolidation?

A credit card debt “workout” is also referred to as a negotiated settlement. For example if you owed $5,000 on a credit card and made an agreement with the credit card company to pay $2,000 instead of $5,000 as a settlement in full on the debt, this would be a credit card debt workout. Firms who perform this type of work may identify themselves as debt management, debt relief, debt workout, debt settlement or debt consolidation. However, I define debt consolidation as a reorganization of the debt through a credit counselor or taking a debt consolidation loan to pay off the debts in full.

Who is eligible for a debt workout to get out of credit card debt?

Creditors typically agree to debt settlement arrangements where they feel a settlement of the debt will be in their best interest. In most cases they come to this conclusion because the person requesting the debt negotiation appears to be a legitimate candidate for bankruptcy. Knowing that in most bankruptcy cases they would receive nothing, they opt to take a discounted settlement on the debt rather than receive zero dollars in a bankruptcy.

What would trigger them insisting on my income and asset information as a part of the debt settlement negotiation?

Let’s assume that after seeing your credit report and some preliminary information the creditors make a high debt settlement offer such as 75 cents on the dollar. In order to persuade them to take a debt settlement less than their initial offer, they might demand further evidence of your financial hardship including financial statements. Then, with evidence in hand proving the person’s lack of ability to repay the debt, the creditor may consider a debt reduction allowing a pay off in a much lower range.

What is a typical settlement percentage?

Most of credit card debt accounts settle in a range of 30 to 50%. Be aware that some credit card debt accounts may settle considerably higher reaching into the 75 to 80% range while in rare cases credit card debt accounts will settle in the 20 to 30% range. In very rare cases I have seen debt solutions agreed to for as little as 5 to 10% or as much as 90 to 95%.

What would determine differences in the debt settlement amounts?

The foremost factor in debt settlement is the debtor’s financial situation; the next most important factor would be the internal debt settlement policy of the creditor. It is difficult to predict the internal policies of these creditors but they are usually very consistent in their practice. For example – MBNA, American Express and Citicorp may be all major financial firms, but their respective policies on debt settlements are quite different. However, American Express customers generally receive the same treatment across the board. Only an attorney who works with these creditors everyday could know these nuances of their policies, and could use this knowledge when putting together a debt settlement plan.

Do credit card debt settlements need to be made all at once to achieve debt elimination?

With most settlements you will need to pay off the individual credit card debt all at once in a lump sum. However, in some cases the creditors will arrange a short payment plan, especially with larger amounts of credit card debt. These plans might range anywhere from three to six months.

How does this type of credit card debt workout affect someone’s credit?

It depends on the status of the debtor’s credit before the debt workout. As an example, Let’s imagine that credit report scores run on a scale of one to ten, one being the best. Only ranks of one and two are good enough to walk into most local banks to get a loan or credit card. After a debt settlement, a person would be considered near a six on this scale.
For someone who started as a one or two this would be a dramatic decrease in their credit score. Anyone with good credit should consider the debt workout as an option very seriously before undertaking it. However, an individual may already have a score of 9 to 10 if they have multiple accounts that creditors wrote off. For these people, settling their accounts through debt settlement would actually improve their credit. This does not mean it will make their credit good – rather, it just means their credit will go from very bad to only plain bad.

Can a person achieve these credit card debt settlements on their own or do they need to hire a debt settlement professional to get out of credit card debt?

While it is certainly possible for someone to achieve a credit card debt settlement on their own, I do not recommend it anymore than I would recommend somebody taking out their own appendix.

In the first place, creditors take the situation much more seriously when a Hawaii bankruptcy lawyer contacts them. An individual would not know how to negotiate a debt settlement or what a proper debt settlement would be. A settlement professional working in this field would know how to deal with most individual creditors.

In order to achieve the proper credit card debt settlement, it is important to understand the proper way to fill out certain financial forms. Most individuals do not know how to do this properly. A settlement professional also knows what to say, what not to say, what to ask for and who to talk to. Credit card settlements are best done according to the creditor’s standard operating procedures and formats. An individual would have no idea how to go about following such debt solution procedures.

It is disturbingly common for debt collectors to try and do things, which may be industry tricks or potentially commit fraud in order to get you to pay off debt in full. Some of these things may include getting you to reveal information about yourself you may have no obligation to reveal, or having you to send money you have been told would be settlement of the debt in full only to find they have lied and simply taken the money on account.

Have More Questions About Debt Settlement? Call Us Today

At our Honolulu bankruptcy office, we offer all our prospective clients different options to consider, including but not limited to bankruptcy. Call 808-528-4274 or fill out our online questionnaire to begin the path to financial freedom.