Personal and Business Debt
- What makes D.W. Scott Financial Services different?
- What is the Debt to Prosperity Power Plan?
- What are the differences between Debt Settlement and Credit Counseling?
- How does Debt Settlement work?
- Will Debt Settlement work for me?
- What are the tax consequences?
- What about lawsuits?
- Can my wages be garnished?
- What kind of debt can be negotiated?
- What if a creditor won't negotiate?
- Are there debts that can't be entered into the program?
- Can I do this myself?
Bankruptcy
- What Is Bankruptcy?
- Will I Lose My Property if I file Bankruptcy?
- Who Will Know? Will I Lose My Job?
- Do I Need an Attorney?
Consumer Protection: Fair Debt Collection
- What debts are covered?
- Who is a debt collector?
- How may a debt collector contact you?
- Can you stop a debt collector from contacting you?
- May a debt collector contact anyone else about your debt?
- What must the debt collector tell you about the debt?
- May a debt collector continue to contact you if you believe you do not owe money?
- What types of debt collection practices are prohibited?
Credit
- What is a credit score?
- Will ordering a credit report hurt my credit?
- How often do credit scores change?
- Does having too many credit cards affect a credit score?
Mortgage
- How long do I plan to stay in the house?
- How much are the costs of getting the loan?
- How long will it take to break even?
- Is my credit good enough to get that attractive rate?
Personal and Business Debt
Q: What makes D.W. Scott Financial Services different?
Our goal is to revolutionize Debt Relief-one client at a time! We believe in putting your needs first and focusing on financial solutions that are in your best interest. Our mission is to go beyond just enrolling you in a “debt relief” program. Our mission is to help you actually stay debt free and protect or insulate yourself from future financial problems. Our Mission is to empower you to become FINANCIALLY FREE!
RAM Financial Services prides itself on customer service, the quality of that service, and full disclosure. Full disclosure means there we present this program in its entirety and lay out not just the positives, but the negatives as well. We don’t sugar-coat the process like all other companies do in this industry. D.W. Scott Financial Services sets itself apart also by:
1. We care about the health of your credit
Most if not all companies in the settlement industry has no regard for your credit score and its effects. To the best our knowledge RAM Financial Services is the only company that implements a credit repair program as you go through our debt settlement program.
2. Customer Service
The main goal of companies in this industry is to sign up as many clients in a month as possible. There are horror stories of clients not being contacted after enrollment 3-5 months into the process. Customer Service is priority number one for RAM Financial Service. We contact our clients twice a month. Clients have the ability to check on their accounts online via a user name and password anytime. And more importantly there is always a live person to talk to if you ever have a question or concern.
3. Full Disclosure
Our goal is to inform you of all your options to get out of debt. We do not sugar-coat any of the processes. We present the negatives and the positives in its entirety so that when you are ready to make the next step, you are informed and can make the right decision.
Q: What is the Debt to Prosperity Power Plan?
The Debt to Prosperity Power Plan TM is a proprietary system that is being used by people all over the country to regain control of their financial lives. It is laser-focused on helping you accomplish your goals to get out of debt, stay debt free and build a prosperous and secure financial future. The Debt to Prosperity Power Plan TM was created through countless hours of research and analyses. We analyzed the lives and financial behaviors of our wealthy clients, investors, and business owners to determine what common strategies they used that worked. We also analyzed the lives of hard working middle class families to see what common strategies did not work. We even examined our own personal lives and businesses, searching for truths that would help us create real and workable solutions to solve these problems. We wanted real solutions that would produce real results and help people protect themselves from the destructive effects of a turbulent economy. Most companies limit their focus to "debt relief" or "debt elimination." They only offer one solution and their "counselors" (aka salespeople) try to make your financial problems conform to their solution in order to meet their sales quotas. We aren't salespeople and we have no quotas. What we do have is a strong commitment to help people find the debt relief strategies that are best suited to their unique and individual needs. Then to provide them with the tools and support they need to not only survive but actually thrive and prosper - even during a tough economy. We also have a multitude of real life and workable solutions to almost any debt problems.
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 (1-2 years) than Credit Counseling (4-7 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 directly from the creditors. In other words, your debt settlement firm is 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. For example, 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: How does Debt Settlement work?
Debt Settlement works by reducing the balance owed (principal) on your unsecured personal debt accounts through the time-honored process of creditor negotiation. 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. From a business perspective, it is a matter of the creditor receiving something rather than nothing, as would be the case in most bankruptcies. Of course, different creditors have different policies, but as a rule, discounts of 50% or greater are routine in the industry. As a consequence of this approach, money that was previously wasted on endless minimum payments (most of which went toward interest charges) goes toward reducing the actual debt balance. That's why Debt Settlement through negotiation is the fastest debt elimination method short of Chapter 7 bankruptcy.
Q: Will Debt Settlement work for me?
While the debt settlement approach is not suitable for everyone, its flexible nature makes it applicable to a wide range of financial circumstances. For individuals and families seeking an alternative to bankruptcy, 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:
1. Do you have a legitimate financial hardship condition?
Most debt problems are caused by loss of 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 wreak havoc on a household budget. The important point here is that the debt settlement system is for those who don't feel like paying their bills. If you are over your head due to a hardship circumstance, and you'd prefer to work things out with your creditors rather than declare bankruptcy, then debt settlement can provide an honest and ethical debt relief alternative.
2. 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.
3. Do you owe more than $10,000 in unsecured debt?
We are the first to admit that debt settlement is strong medicine, 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 in full, over time. In other words, smaller debt loads are more of a budgeting problem than a serious financial hardship. At D.W. Scott Financial Services we use the benchmark of $10,000 for evaluating whether or not a prospective client qualifies for our program. (Note: Exceptions are sometimes made based on hardship circumstances, so the $10,000 figure should be used as a rule of thumb or guideline.)
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 (Form 982). 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.
Q: What about lawsuits?
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. Though we work with a nationally recognized law firm, RAM Financial Services 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: Can my wages be garnished?
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.
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. So an auto loan, for example, could not be included because the creditor could legally repossess the vehicle. Credit card debt, medical bills in collections, department store cards, signature loans, unsecured lines of credit, and revolving charge accounts are all types of accounts that can be included in our program. The main exception here are student loans, which in most cases are government backed loans that cannot even be discharged in a bankruptcy proceeding. (Private student loans that are not sponsored by the government can be included.)
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 D.W. Scott Financial Services we pride ourselves on the professional reputation we have established by dealing fairly with creditors. In the rare instance where a creditor balks at 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: Are there debts that can't be entered into the program?
Secured debts cannot be entered into our debt settlement program. This includes home loans, second or third mortgages, equity lines of credit, auto loans, and financing contracts tied to a specific piece of property that may be legally repossessed by the creditor. Federal student loans, although unsecured, must also be excluded from the program. In addition, Federal and State taxes cannot be included.
Q: Can I do this myself?
Yes, it is certainly possible for a consumer to negotiate his or her own debts. However, there are several important factors that should be taken into consideration before making such a decision. First, do you have the time? For individuals with serious debt problems, the complexities of the negotiation process can be very time consuming. Many people simply do not have the time to add this labor-intensive task on of an already busy work schedule.
Second, it requires a certain kind of psychological toughness to haggle with creditors. The average consumer is hampered by the embarrassment and shame they feel over having gotten into trouble. With all the tricks, traps, and pressure tactics used by creditors, most people will find themselves better off with professional assistance. Third, as with any profession, there are techniques not easily mastered by an amateur. Without professional coaching, the likely result will be high-percentage settlements in the best case and outright failure in the worst case. When you consider that the total payout including professional fees will still be far less than your original balances, it makes more sense for the average person to obtain debt help from D.W. Scott Financial Services.
Bankruptcy
Q: What Is Bankruptcy?
Bankruptcy is a federal program established to offer a way out of seemingly insurmountable debt. There are two types of personal bankruptcy. Chapter 7 allows discharge of debts without requiring payments to the court and usually allows keeping items like houses, cars, and household goods. A Chapter 13 bankruptcy is for people who earn more money or who are delinquent on things they want to keep like houses or cars. Chapter 13 requires 36-60 payments to the court to repay the delinquency or a percentage of the debt.
You can determine the chapter appropriate for you by determining your gross income or by completing a federal means test. If you earn more than the mean income in the state you may still be eligible for a Chapter 7 if you pass the means test. If you fail them both you may be better suited for a Chapter 13 partial repayment plan.
Q: Will I Lose My Property if I file Bankruptcy?
Bankruptcy is designed to give a fresh start, not to leave you destitute. You are entitled to keep certain property. This property is commonly referred to as exempt.
Q: Who Will Know? Will I Lose My Job?
No employer – government or private – can fire you or discriminate against you because you file for bankruptcy protection. However, bankruptcy will not prevent an employer from firing you for other reasons and there are a very few jobs that are allowed to consider creditworthiness in hiring. No federal, state, or local government agency can take your bankruptcy into account when making a hiring decision, but there is no such bar for private employers.
Employers and others usually are not informed of a bankruptcy. It is a public filing, but unless they are in some way involved in the bankruptcy they will not receive notification. If you owe money to a party or otherwise list them in your petition, they will receive notice. This usually does not include your employer unless you are being garnished or a creditor has involved your employer in their collection activities. The same holds true for your family. Unless they have some stake in the bankruptcy, they are not sent notice. Unfortunately, any party can learn of a bankruptcy through an easy internet search or any public record report.
Do I Need an Attorney?
Determine your comfort level with the bankruptcy procedure. If you feel you can represent yourself with the trustee or that your bankruptcy is not that complex you may be safe simply consulting an attorney to have your petition prepared and representing yourself from that point. Most people would rather have representation throughout the entire process and the additional expense is minimal. It does cost money to file bankruptcy, but our PPN has the most lenient payment plans and other suggestions to help fund your representation.
Consumer Protection: Fair Debt Collection
Q: What debts are covered?
Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.
Q: Who is a debt collector?
A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.
Q: How may a debt collector contact you?
A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.
Q: Can you stop a debt collector from contacting you?
You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.
Q: May a debt collector contact anyone else about your debt?
If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.
Q: What must the debt collector tell you about the debt?
Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.
Q: May a debt collector continue to contact you if you believe you do not owe money?
A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
Q: What types of debt collection practices are prohibited?
Harassment - Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:
- Use threats of violence or harm;
- Publish a list of consumers who refuse to pay their debts (except to a credit bureau);
- Use obscene or profane language; or repeatedly use the telephone to annoy someone.
- False statements - Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:
- Falsely imply that they are attorneys or government representatives;
- Falsely imply that you have committed a crime;
- Falsely represent that they operate or work for a credit bureau;
- Misrepresent the amount of your debt;
- Indicate that papers being sent to you are legal forms when they are not; or
Indicate that papers being sent to you are not legal forms when they are.
Debt collectors also may not state that:
- You will be arrested if you do not pay your debt;
- They will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
- Actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.
Debt collectors may not:
Give false credit information about you to anyone, including a credit bureau;
Send you anything that looks like an official document from a court or government agency when it is not; or Use a false name.
Unfair practices - Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:
- Collect any amount greater than your debt, unless your state law permits such a charge;
Deposit a post-dated check prematurely;
Use deception to make you accept collect calls or pay for telegrams;
Take or threaten to take your property unless this can be done legally; or
Contact you by postcard.
Credit
Q: What is a credit score?
A credit score is a complex mathematical model that evaluates many types of information in a credit file. A credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service. Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service -- specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents.
Q: Will ordering a credit report hurt my credit?
No. Consumers have the right to look at their credit report without it affecting their credit or credit score. When you request your credit report it's called a "consumer pull" and has no affect on your credit. Only when you ask a possible creditor to inquire about your credit can it affect your score. For example, if you go out looking for a new car and you let a dealership request a copy of your credit report. That could affect your credit score because it implies you're looking to open new lines of credit.
Q: How often do credit scores change?
Your credit score is a fluid number that changes as your credit report changes. Therefore, any change to your credit report could impact your score. However, most credit scores do not change more than 30 points in a quarter.
Q: Does having too many credit cards affect a credit score?
Having too many credit cards with either high balances or large amounts of credit available can negatively impact risk scores depending on the overall credit history.
Mortgage
Q: How long do I plan to stay in the house?
That's often a hard question to answer. Try anyway because a lot of your decisions depend on the answer.
"I always say, 'What's the game plan? How long do you plan to be in the property?'" says Ellen Bitton, CEO of Park Avenue Mortgage Group in New York.
The answer affects whether you would be better off paying points to lower your rate, whether you should get a fixed-rate or adjustable-rate loan, whether you should accept a prepayment penalty. If you're thinking of refinancing, the answer helps you decide whether you should refinance at all.
If you have no idea how long you'll live in the house, keep in mind that homeowners stay in one residence for a median duration of 8.2 years, according to 1998 U.S. Census data. In other words, half of homeowners move within 8.2 years. The other half, naturally, stay in their homes longer. Do you feel "average"? If so, maybe it means you'll stay home for about eight years or so.
(FYI, with renters, the median stay in one residence is 2.1 years.)
Q: How much are the costs of getting the loan?
When you apply for a loan, you'll get a federally mandated document called the Good Faith Estimate of closing costs. It estimates how much the lender will charge you for origination and discount fees, an appraisal, a credit report, document preparation, title insurance, a pest inspection and myriad other costs. Compare good faith estimates and especially take note of the line that reads "Estimated cash at closing." That's an educated guess of how much you'll have to pay out of your checkbook to get the loan.
Q: How long will it take to break even?
If you're buying a home, how long will it take to break even if you pay discount points to get a lower rate? If you're refinancing, how long will it take to recoup the closing costs from your monthly savings?
Q: Is my credit good enough to get that attractive rate?
The advertised rate isn't necessarily the rate you'll get. If your credit history is merely OK instead of excellent, you'll be quoted a higher rate than your chum with flawless credit. To be more specific, if you have been more than 30 days late with your mortgage payment anytime in the last couple of years, you are unlikely to get the best rate. Ditto if you've been more than 30 days late three or four times in the last couple of years on other types of debt, such as credit cards and auto loans.
People with less-than-perfect credit won't be turned away. They'll just have to pay a higher rate.