At BankFin, we believe in full and honest disclosure regarding all aspects of our debt settlement program. Our goal is to negotiate your debts and have those debts settled in less than 3-4 years** The following responses to Frequently Asked Questions are provided to better assist clients in understanding our service. If you have any additional questions or would like additional information, please don't hesitate to call us toll-free at 800-311-3039. One of our professional representatives will be happy to assist you with a FREE no obligation consultation..
Q: Why should I choose BankFin?
Q: How does BankFin’s Debt Settlement program work?
Q: What kind of debt can be negotiated?
Q: Are there debts that can’t be entered into the program?
Q: How can this program work for me?
Q: How long does the debt settlement process take?
Q: What are the differences between Debt Settlement and Credit Counseling?
Q: Will all of my creditors be open to debt settlement?
Q: Will creditors continue to contact me after joining a debt settlement program?
Q: Who is responsible for the savings fund necessary to settle my debt?
Q: Who is responsible for payment to my creditors?
Q: What if a creditor won't negotiate?
Q: Is this legal?
Q: Will the creditors take legal action against me?
Q: What are the tax consequences?
Q: Why shouldn't I just declare bankruptcy?
*Note: This should not be considered legal advice. BankFin does not provide legal or tax related advice. If you need any type of legal or tax related advice, you must contact a licensed attorney or a qualified accountant.
** Disclaimer - Not available in all states. Individual results may vary and are dependent on successful completion of program and ability to save funds. BankFin does not assume or pay any debt, nor does it provide legal advice or offer credit repair. Read and understand the contract terms before enrolling.
Q: Why should I choose Bankfin?
Bankfin is an industry-leading debt settlement services provider. With over 20yrs combined service, our Certified Debt Arbitrators possess a solid understanding of the laws governing the Debt and Credit Industry and fully understand each individuals unique current financial situation. BankFin provides debt settlement services for consumers with overwhelming unsecured debt balances. An alternative to credit counseling, debt consolidation, and bankruptcy, the company's 24-48month Debt Settlement Program helps clients get out of debt at the lowest personal cost. We maintain relationships with numerous consumer-lending institutions and can arbitrate settlements with Creditors and Collectors on your behalf. By negotiating with unsecured creditors on the consumer's behalf, the Bankfin Debt Settlement Program often obtains resolutions that are lower then current debt balances*. The program works within consumers' budget constraints to lower monthly payments and free up additional cash, while still paying off debt balances, and - unlike debt consolidation - does not shift unsecured debts to secure debt. We facilitate a win/win resolution to your debt related problems by reducing the amount you owe, your monthly payments and assisting with the handling of any collection calls . Additionally, we do not have any negative reporting with the Better Business Bureau, Better Internet Bureau or Dun & Bradstreet, We are very proud of our good standings over the past 8 Years and we intend to keep it that way. Bankfin is committed to helping you establish and maintain your financial future.
Q: How does this program work?
Debt Settlement works by reducing the balance owed (principal) on your unsecured personal debt accounts through the time-honored process of creditor negotiation. Refer to the step’s below. This is different from simply reducing the interest rate as with Debt Consolidation and Credit Counseling, which do not affect the total debt balance. By reducing the balance itself, Debt Settlement provides a much faster means of becoming debt-free. Most creditors are willing to accept 50%, 40%, sometimes as low as 20% of the balance owed in order to close out an account rather than lose the entire amount in a bankruptcy proceeding.
First: The first step in our program is to obtain a free consultation from one of our professional Debt Analysts. This can be done by filling out a request form or calling us at 1-800-311-3039. Our Debt Analyst will assess your financial situation and determine whether you qualify for our debt settlement program. In general, we accept individuals who are in a state of financial hardship and are struggling to keep up with their monthly payments. A "hardship" is broadly defined and could be any number of financially damaging events, such as loss of employment, injury, job downsizing, sudden loss of income, catastrophic theft. medical problems, and much more.
Second: Upon acceptance, your Debt Analyst will help collect and gather the information and documentation that is needed for us to assist you. After a complete financial analysis, your Debt Analyst will help you establish an affordable monthly payment, which, after enrollment fees, will be placed into a personal savings account that you maintain and control. This savings account will be used for future debt settlement purposes. During enrollment, we'll help you set up a bank account in your name
Third: You will be assigned a Certified Debt Arbitrator who will help in the effort to get you back on track to financial stability. While your fund grows, month by month, your Debt Arbitrator will approach each of your creditors, one by one, and negotiate settlements, typically a lower amount you owe on each account**. Due to our scale, relationships, and knowledge of the creditors' own processes, we are in a prime position to negotiate on your behalf.
Fourth: Once we negotiate an acceptable, written, settlement offer, we will arrange for you to send funds from your settlement account to pay off that debt. This process will be repeated for each creditor until all of your debts have been repaid. As each of your creditors receives payment, you will receive written confirmation documenting that your debt has been paid in full.
Fifth: Upon successful completion of our program, we will provide you with proven ways to maintain a financially stable lifestyle. This will help you regain control of your finances and increase your financially viability.
Of course, different creditors have different policies, but as a rule, discounts of 50% or greater are routine offered in the industry. As a consequence of this approach, money that was previously spent on endless minimum payments (most of which went toward interest and late charges) goes toward reducing the actual debt balance. That's why Debt Settlement through negotiation is the fastest debt elimination method short of a Chapter 7 bankruptcy. * **
Q: What kind of debt can be negotiated?
As a general rule, any type of unsecured debt can be successfully negotiated. An unsecured debt is one that is not tied to a specific material item that could be repossessed by the creditor. We accept most types of unsecured debt.
This includes:
· Credit card accounts
· Department store cards
· Personal loans
· Medical bills
· Accounts with collection agencies
· Signature loans
· Unsecured lines of credit
· Revolving charge accounts
· Private student loans
Q: Are there debts that can’t be entered into the program?
Secured debts cannot be entered into our debt settlement program.
Accounts types we cannot work with include secured debt of any kind such as:
Auto loans
· Mortgages
· Second or Third Mortgages
· Equity Lines of Credit
· Child Support
· Alimony Debts
· Federal Credit Unions
· Federal Student loans
· Payday advances
· Public utility bills
· Military accounts (Star, Omni)
Q: How can this program work for me?
The programs flexible nature makes it applicable to a wide range of financial circumstances. For individuals and families seeking an alternative to bankruptcy or trying to keep up with late payments, there is simply no better option to get out of debt. Here are a few guidelines to help you determine whether or not debt settlement is something you should consider:
A. Do you have a legitimate financial hardship condition?
Most debt problems are caused by loss of job and income, medical issues, or divorce / separation. These are legitimate financial hardships that can happen to anyone through no fault of their own, and any one of these situations can put strain on a household budget. The important point is that debt settlement is not for people who don't feel like paying their bills. If you are behind or can’t make ends meet and you'd prefer to work things out with your creditors rather than declare bankruptcy, or not pay anything, then debt settlement can provide an honest and ethical debt relief alternative.
B. Are you committed to avoiding bankruptcy?
Debt settlement is best viewed as a bankruptcy alternative, one that allows you to keep control over the process and maintain privacy while working through your financial difficulties. As with most things in life, success is determined by your level of commitment to staying the course, even when the road gets a little bumpy. If you are likely to give up at the first rough spot, then debt settlement is probably not the best choice for you. But if you are determined to avoid bankruptcy, debt settlement will likely be the most attractive debt solution for you.
C. Do you owe more than $10,000 in unsecured debt?
We are the first to admit that debt settlement is a strong action, and it should be reserved for serious debt problems. While everyone's budget is different, most people can work their way out of smaller debt obligations. If you only owe $5,000, for example, unless you are really in dire straits you can probably deal with that obligation the old-fashioned way - by paying off the debt and interest in full, over time. In other words, smaller debt loads are more of a budgeting problem than a serious financial hardship. If you still aren't sure whether you meet the requirement, please call one of our knowledgeable representatives at 800-311-3039 for a free, no-obligation consultation.**
Q: How long does the debt settlement process take?
As with any program of this nature, the time to completion will depend on several factors. During your initial, no obligation consultation, the time necessary to complete our program will be discussed. The average client can achieve debt relief in as little as 12 - 48 months. The amount of time it takes to resolve your debts is largely dependent on your current financial circumstances. Every situation is different. We will be happy to discuss yours with you during your free consultation **
Q: What are the differences between Debt Settlement and Credit Counseling?
The most important difference between these two programs is that with credit counseling, you pay back all of the debt balances, plus interest and fees, whereas with debt settlement, you pay back only a portion of your debt load. That's why debt settlement is a much faster path to debt freedom (2-4 years) than Credit Counseling (5-9 years). This means a lot less money out of your pocket is used through the debt settlement approach. Another key difference is that your debt settlement firm works solely for you, the consumer, and receives no compensation from the creditors. So we are truly on your side. With a credit counseling agency, there is a dual relationship, where part of their income comes from the client and the majority of it comes from kickbacks paid by the creditors. This creates a built-in conflict of interest and creates doubt as to whose side the agency is really on. Also, debt settlement provides much more flexibility than credit counseling in both the monthly budget level and the types of accounts that may be enrolled. An example is, if you have a really tough month and need to skip a payment, that situation can be absorbed by a debt settlement program, whereas it will cause serious problems with a credit counseling program. Further, if your accounts have "charged off" and gone into the third-party collections cycle, you can still enroll those obligations in a debt settlement program where they will be rejected by a credit counseling agency. **
Q: Will all of my creditors be open to debt settlement?
No, creditors do not all settle. But assuming that you meet our criteria and are able to accumulate settlement funds, creditors are almost always willing to settle your unsecured debts. The amount that they settle for varies depending on the creditor as well as on your particular situation.* BankFin evaluates each client’s situation on an individual basis. We maintain relationships with numerous consumer-lending institutions and traditionally know which ones are willing to settle and typically at what percentage. We will not accept into our program debt from creditors or collectors that have proven difficult to work with or situations that will hinder our ability to settle your debts. **
Q: Will creditors continue to contact me after joining the program?
Once enrolled in the BankFin program, our team of professional debt arbitrators, at its discretion, will assist you with your creditors and instruct them to direct communication to us. However, you must be aware of the fact that there is a difference between original creditors and collection agencies. When dealing with collection agencies, you will request that all communication involving your accounts be directed to our offices only. Original creditors, on the other hand, can continue to call you if they so choose. Many original creditors will abide by a request not to call you and respect your privacy. * **
The answer depends on your particular situation.
Typically there is no permanent damage done to the credit report from going through debt settlement, it is not made a public record like bankruptcy. Very few people with debt troubles have excellent credit when starting this program. In general, your credit score (usually called the FICO score) will decline during the program, and will begin to improve again after you have become debt-free. Good news is that the account/s will appear on your credit as “settled for less than full value.” It will reflect as if you handled the pay off of debt on your own, which will look more favorable for you.
There are several key points to bear in mind here. We recommend against applying for new credit while going through the program. It simply doesn't make sense to take on new debt while you're trying to tackle your existing debt problem. So the short-term decline in credit score is rarely a problem for our clients. Also, the credit score system does take into account ones debt-to-income ratio, which is used by lenders (especially in the mortgage industry) to determine whether you qualify for a loan and the applied interest rate. In other words, you can have a high credit score due to a clean payment history (even though it's been killing you financially to keep up those payments) and still be denied a new loan because you already carry too much debt. By completing a debt settlement program, your debt-to-income ratio will improve dramatically and you will be DEBT FREE! Any way you look at it, the effects of Debt Settlement on your credit will certainly be less damaging than the 10-year derogatory mark made by filing for bankruptcy. **
Q: Who is responsible for the savings fund necessary to settle my debt?
You are responsible for your own savings account. A savings account is set up and maintained by you. The program requires that you make your agreed monthly deposit into this savings account each month. This monthly payment is normally considerably less than the total monthly payments you are currently making. When you have accumulated sufficient funds we can begin the negotiation and settlement process. After a settlement has been agreed upon, you will receive a letter from the creditor signifying the dollar amount needed to settle your debt. The funds from your savings account will be used to settle your debt. This is the preferred method for our clients, because you have complete control of your own account. Additionally, you have the last word in the settlement process. By this we mean that no settlement can be completed unless you send the check. Additional details will be provided upon enrolling in the program. **
Q: Who is responsible for payment to my creditors?
You are. BankFin does not and will not disburse funds to your creditors at any time. Upon successfully negotiation and a satisfactory settlement amount for one or more of your debts, you will make the payment directly to your creditors from your settlement account. Once the payment has been applied to your account, it will be considered a settled debt and you will be one step closer to meeting your financial goals with regard to debt reduction. More good news is that the account will appear on your credit as “settled for less than full value.” It will reflect as if you handled the pay off of debt on your own, which will look more favorable for you.
Q: What if a creditor won't negotiate?
In the course of business, we have established contacts with the major banks, collection agencies, and collection attorneys. Debt settlement is recognized as a viable solution by collection industry professionals, and at BankFin we pride ourselves on the professional reputation we have established by dealing fairly with creditors. In the rare instance where a creditor declines accepting a reasonable settlement at the time it is proposed, it is often a matter of simply waiting for a different phase of the collection process. Some creditors are more inclined to play "hardball" than others, but virtually all of the major institutions eventually sell their accounts to collection agencies in order to get what they can for the account. Since the collections agencies acquire these accounts for pennies on the dollar, they are more inclined to accept a reasonable settlement offer, which still represents a profit on their purchase. * **
Q: Is this legal?
Absolutely. This is a completely legal process. For most of our clients, it is the only effective way to become debt free. Without the use of debt negotiations, bankruptcy would be the only option left for many our clients. Through our negotiation efforts, the creditors do recover a portion of the amount owed. So this is a win-win situation for both client and creditor. Keep in mind however, that BankFin is not a law firm and we do not give legal advice.* **
Q: Will the creditors take legal action against me?
Creditors do have the legal right to pursue a debtor in a court of law to collect the debt. Usually this is a last resort after much effort to collect the debt without response or satisfactory results. Taking a client to court is a costly and time-consuming activity which most creditors would prefer to avoid if given an alternative. If a creditor does take legal action, we continue to try to negotiate a settlement or payment plan; we also attempt to slow down the legal proceedings. While we cannot appear in court on your behalf, or provide legal advice, we can suggest legal representation to file the correct papers so that we can continue the negotiation process.* **
While creditors have the legal right to bring a lawsuit for non-payment of a debt obligation, such lawsuits are far less common than most people think. It costs money to sue someone, and a legal judgment is simply a piece of paper unless there is a way to collect money against it. The threat of litigation, on the other hand, is all too common, even though debt collectors are not supposed to threaten legal action unless they are specifically authorized to bring suit. In general, lawsuits can normally be avoided, provided you are willing to work out suitable arrangements with your creditors through the negotiation process. Contrary to popular belief, most creditors would rather work things out amicably in a negotiated settlement than spend more money taking a customer to court (with no guarantee of being able to collect on a judgment). That's why thousands of litigation-free settlements are transacted every month all across the country. Creditors won't admit it publicly, but our method works much better for them than forcing people into bankruptcy through overly-aggressive collection techniques. While BankFin is not a law firm and does not provide legal advice, we do want our clients to understand that the worst-case scenario is that a client might be required to pay a debt balance in full in the event of legal action by a creditor. This is little different from the starting situation most clients find themselves in, and again, it is a fairly rare occurrence. * **
Q: What are the tax consequences?
Financial institutions are required to report canceled debts over $600 (the portion forgiven during the settlement transactions) to the IRS, and the debtor is required to report that as income on their tax return. However, the IRS permits you to offset any "income" from canceled debts up to the amount you were "insolvent" at the time the debts were canceled. You are "insolvent" if you owe more than you own, or in other words, if you have a negative net worth. If you're deep in debt, it's not likely that you have a positive net worth, so it's rare that a client would have to pay taxes on the forgiven debt balance. The exception might be an individual with a high level of home equity, which might make the overall net worth positive and thereby eliminate the insolvency exclusion. However, this is the exception rather than the rule. Our view is that even in the unlikely circumstance that you might owe tax on the forgiven debt balance, you'll still be way ahead of the game by eliminating your debt balances sooner rather than later. *
If you listen to some debt collectors, you might be fooled into thinking that they will seize your very next paycheck unless you make a payment right then and there. The threat of losing part of one's wages to a garnishment action is truly frightening to someone already struggling financially. But this is mainly an intimidation tactic used by collectors to scare people into committing to a payment schedule whether or not they have the funds available. Actual garnishment actions are relatively rare, and do not happen without advance warning. First, a creditor must bring a lawsuit, obtain a judgment, and then take an additional step to obtain authorization for the garnishment. Plus only one creditor can garnish your wages at a time. No one can take your paycheck without court approval, and you must be given notice of such court action through formal documentation. So don't be fooled by one of the oldest collection tricks in the book. *
Chapter 7
While this option might meet some individual needs the credit repercussions are great. A bankruptcy may stay on your credit for up to 10 years and should only be looked at as a last option.
Bankruptcy not only affects your credit but may even affect your ability to secure certain job promotions or positions. Chapter 7 also includes possible significant up front costs for a lawyer to represent you in bankruptcy court. This program does not guarantee acceptance even after payment of your lawyer's fees. *
Chapter 13
This debt option is for 5 or more years, while our program is between 2-4 years with similar monthly payments. Like a chapter 7, credit repercussions may be significant. A chapter 13 bankruptcy will also stay on your credit for up to 10 years and should only be looked at as a last option. This option may also require significant up front costs while our upfront costs are zero. *
Home Refinance
With the downfall and uncertainty of today's housing market and depreciation in home values, consolidating unsecured debt into a secured mortgage debt can be an uncertain option. Also remember, this will not significantly reduce your debt and you will be paying on this interest and debt for 15 to 30 years, while the goal of our program is designed to have you out of debt in 2-4 years.
Refinancing is a less desirable option, because people may get turned down or not qualify based on income, time on job and equity in their home. Between the up front appraisal fee, title fees, escrows fees (taxes and insurance) and origination fee-which could end up costing you a total of up to $15,000-you are not getting rid of your debt but only transferring it from your credit cards to your home, while losing equity. If you hit a hardship and can't afford the new higher monthly mortgage payment you are now in risk of losing your home to foreclosure.
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Q: Why shouldn't I just declare bankruptcy?
That is a choice you must make. For many people bankruptcy is considered a drastic last measure. While bankruptcy may seem to be the most expedient method for removing your unsecured debt, it is not, by any means,the best answer. A bankruptcy will remain on your credit record for up to10 years and seriously affect your ability to rebuild your credit. Even after a bankruptcy has been removed from your record, you are still required to disclose it on forms and applications; even some applications for employment. If you fail to answer this question truthfully it can be considered a crime. Additionally, certain types of bankruptcy can require a court-appointed trustee to control and oversee all aspects of your personal estate. Bankruptcy can have an adverse affect on your credit rating and lifestyle long after the legal matters are over. This is not a decision to be taken lightly. Bankruptcy is an option that should only be explored as an absolute last resort to solving your financial problems. Contact a licensed attorney for additional information.*
*Note: This should not be considered legal advice. BankFin does not provide legal or tax related advice. If you need any type of legal or tax related advice, you must contact a licensed attorney or a qualified accountant.
.** Disclaimer - Not available in all states. Individual results may vary and are dependent on successful completion of program and ability to save funds. BankFin does not assume or pay any debt, nor does it provide legal advice or offer credit repair. Read and understand the contract terms before enrolling