Frequently Asked Questions
From basic questions & program details to more complex creditor & collector inquiries, we have you covered!
Still have questions?
What is a debt resolution program?
Debt resolution (also known as debt negotiation or debt settlement) is the process of having a company like ours negotiate settlements for you on your unsecured debts.
The primary goal when negotiating with your creditors is to obtain a settlement for your enrolled debt more quickly than you can pay it off on your own.
This may seem too good to be true but debt resolution is something your creditors do often. Many frequently settle debt for less than the amount owed. Your creditors know that when you are facing a financial hardship you may never pay the entire debt or even decide to file bankruptcy. It is in their best interest to settle for less rather than getting no money at all.
Are you a good fit for a debt resolution program?
Debt resolution is usually best suited for people with at least $15,000 in unsecured debt and for people who want to reduce their total debt without filing bankruptcy. If you’re having a financial hardship and have accumulated more debt than you can foresee paying off in the next few years, debt resolution may be a valid solution to get you and your family back on track financially.
What types of debt can Bounce Debt Relief help with?
Bounce Debt Relief only works with debts that do not have collateral attached to them. This is known as unsecured debts. Unsecured debts includes things like credit cards, store cards, personal loans and medical bills. Debts that have collateral attached to them such as mortgages, auto loans, or federal student loans are not eligible for our debt resolution program. If you are unsure if your debts qualify, contact us and one of our Certified Debt Specialist will help you to determine.
How does a debt resolution program with Bounce Debt Relief work?
Your Certified Debt Specialist will give you a detailed walk through of every step, but below is an overview of the process.
- After you enroll in a program, we create a custom negotiation strategy based on your particular financial situation. Your program is built to maximize your savings, reduce your monthly payments, and settle with your creditors as soon as possible.
- The next step is us helping you open an FDIC-Insured Dedicated Account that you have full ownership of. This is where you send your monthly deposits. The sole purpose of this account is to build up your savings to fund settlements with your creditors.
- The Debt Resolution Program works with your creditors to negotiate, on your behalf, a settlement as quickly as possible. It’s best to continue to speak to your creditors but minimally. When you speak with them too often it triggers them to call you more. Next step is for you to stop using the credit card or loan enrolled in your program.
- Once your creditors agrees to a lower settlement amount, and you’ve approved the settlement, payments from your Dedicated Account get sent to that creditor. A settlement may be a one-time lump-sum payment or it may involve multiple payments over time. Once all agreed payments are mede to a creditor it completes the debt resolution services on the settled debt.
*NOTE: We will also collect a fee from your Dedicated Account, but only after:
- A settlement has been agreed to by you and your creditor,
- At least one payment has been made towards that particular settlement, and
- The settlement has saved you money on the enrolled debt.
When will I have my debts paid off?
While it varies from person to person, the average debt resolution program lasts two to four years. How long your program takes depends on a few factors, including how much money you deposit in your account every month. You can start paying off debts when you’ve saved enough money to cover the amount negotiated in the settlement. The more money you can add to your Dedicated Savings Account, the quicker your debts can be settled.
Keep in mind: Missing deposits towards your debt resolution program can stall your negotiation process as there won’t be enough funds in your Dedicated Account for negotiation.
How soon do you start working with my creditors?
Most of your creditors won’t get into serious debt reduction discussions with your negotiators until they know you’re serious about paying them off. You can only prove that commitment to paying them off by building up enough money in your Dedicated Account.
In general, the first settlement tends to happen within the first four to six months of the program.
Who is in charge of that Dedicated Account?
The answer is simple: you are! Once you’ve enrolled in a program, you’ll set up your Dedicated Account in your name and deposit your money into it. The reason for setting up this new account (rather than just putting your monthly deposits into an existing bank account) is to keep those settlement funds separate from your other money. Of course, if you ever withdraw from the program, the remaining funds in your Dedicated Savings Account (minus banking and earned settlement fees) are –as always– yours.
What happens if I end up missing monthly deposits? Am I going to be kicked out of the program?
No! We know that even the most organized, punctual person on the planet will sometimes face unforeseen issues. It could happen to anyone, so it’s not a reason to drop you from the program.
If something comes up out of the blue, give customer service a call and we can find a way to get you back on track. If you know ahead of time that you’ll have a problem with a deposit, tell us at least five business days ahead of time so we can make other arrangements.
Keep in mind: building up the amount of money in your Dedicated Account is an important part of settling your debts, so missing a deposit may delay your debt relief program progress (plus, you could miss possible settlements.)
Will I still get charged interest and late fees on my debts?
Part of your agreement with your credit card companies allows them to continue to add interest and late fees to your debt any time you fail to make payments. This means while you’re getting your Dedicated Account set up and funded, your credit card debt could go up. However, the goal of the debt resolution program is to arrange settlements that reduce your debt balances no matter what kind of interest charges or late fees were added when you began the program.
What happens if any of my creditors won’t budge on a settlement?
In extreme cases when a creditor refuses to settle, the only option may be to remove the creditor from the program. If a settlement can’t be reached, your fees will be adjusted.
What about calls from collectors? How should I handle them?
Creditors hire collectors to pressure you into paying as much as they can get, and they’ll then pocket a percentage of whatever you pay your creditors. Collection calls are a natural part of debt resolution programs, and are actually a key indicator that your debt resolution program is working! It’s ok to answer calls from your creditors, but it is not mandatory.
Thanks to federal and state laws, you have rights against collection harassment. If you accidentally end up speaking to a collector, you should let the collector know you’re working with negotiators, so they should call them instead of you.
What happens if my creditors take legal action against me?
Legal action by creditors could occur. If you do receive a legal notice, please send it to customer service so they can prioritize this creditor or lender and work to settle it first (this is all based on available funds).
Rather than taking legal action, a more common step creditors take is selling your debt to third-party collection agencies and/or law firms.
If a lawsuit does get filed against you, the settlement negotiators can attempt to resolve that creditor or lender’s account by setting up a specific settlement agreement. They also may be able to refer you for further help if needed.
In a debt settlement program, you voluntarily stop making payments to your creditors. When you stop paying your creditors, there is a chance they may choose to take legal action to collect the debt. Although we are not lawyers or licensed to practice law, we know our clients might need legal assistance.
If a creditor takes legal action on one of your enrolled debts, and if you have enough funds or have made all your program deposits on time and in the full amount, we will provide access to legal representation through the Legal Partner Network to an attorney who can represent you.
Note: We are not a law firm and can’t offer any legal advice.
Am I going to owe taxes on whatever debt was forgiven?
While the answer can be different for everyone, in general, forgiven debts can be taxable. When tax time rolls around, you’ll likely receive a Cancellation of Debt form (1099-c) from the lender that forgave your debt.
To find out about your specific situation –and understand the potential tax implications of any debt that’s been forgiven through a debt relief program– it’s a good idea to talk to your tax advisor.
How could a debt resolution program impact my credit?
Most client credit is already being negatively impacted by poor payment history and amounts owed, which are the two largest factors that make up a credit score. Whether your credit is maxed out or you have a high debt-to-credit or debt-to-income ratio, chances are that your score is on the low end.
Our goal is to help you resolve your debt quickly, so that you can start building a brighter financial future (including a more positive credit score) as soon as possible. Everyone’s specific credit situation is different, but in general, enrolling in any debt resolution program could impact your credit score. In the short term, the impact could be negative. Higher credit scores tend to fall further than lower credit scores, which can seem like a terrifying prospect at first, especially for those who aren’t prepared for a drop in their score.
The good news is that, while you may take one step back with your credit score, you’ll take five steps forward with resolving debt. In the long term, the credit effect could be much more positive; once your debts are resolved, you can practice positive credit behavior to build your credit score back up over time.