Debt settlement or debt negotiation is a process by which a debt settlement company works directly with a consumer’s creditors to negotiate a reduced principle balance repayment of unsecured debts.

Unsecured debt is a debt that did not require collateral to incur. Examples of unsecured debt include: credit card debt, store card debt and unpaid medical bills.

No, Debt Consolidation consists of obtaining a loan in an amount that would cover your existing debts and consolidating those debts into one loan repayment. Debt Settlement addresses each account individually and negotiates for a reduction in principle balance.

Yes, you may be able to negotiate with your creditors and we do not discourage you from trying. Many consumers prefer to use a professional Debt Settlement service to avoid “going it alone” for many reasons. 1) It can be very time consuming and stressful if the consumer has multiple accounts. 2) Many consumers prefer leaving delicate negotiations to an experienced negotiator that is more familiar with the process and the expectations. 3) Successfully navigating the debt settlement process demands knowledge, understanding and self-discipline.

Yes. Debt Settlement is not appropriate for all consumers seeking debt relief. It is important to educate yourself about all of your debt relief options, including debt consolidation, credit counseling and bankruptcy.

No, monthly payments will not be made to your creditor by the Debt Settlement company. The individual consumer is responsible for saving sufficient funds, pursuant to your Debt Settlement Plan, to ensure that funds will be available for you to release to your creditors once a settlement has been secured.

Each Debt Settlement Program is unique to the individual it was created for. Many Debt Settlement Companies will be able to give you an estimate of savings. That estimate will be determined using factors such as who your creditors are and what your specific economic situation is.

Yes. Enrollment into a Debt Settlement Program does not freeze or otherwise stop the accrual of interest, late fees and penalties. Your individual program will reflect the additional fees and interest and is incorporated into the Settlement Plan.

While the purpose of a Debt Settlement Program is to get you out of debt, not improve your credit, it is important to understand some basics. Any time you do not make required minimum payments to your creditor you may be breaking the terms of your agreement with them and your actions can be reported to credit reporting agencies as late, delinquent, charged-off or past due. After settling an account a creditor may report that the account was “settled for less than full amount” or something similar. Depending on the condition of your credit report and score at the time of enrollment, a Debt Settlement Program may have an adverse effect on your credit report and score. Please visit www.myfico.com to learn more about how credit reporting and scoring.

Your creditor may report the amount of forgiven debt to the IRS as Discharge of Indebtedness income. It is important to visit www.irs.gov (Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness) and consult a CPA or tax attorney to determine the likelihood of your forgiven debt being taxed.

Enrolling into a Debt Settlement Program will not automatically stop your creditors from contacting you. Your creditors have the right to attempt to collect on delinquent accounts.

Some collection efforts can be very aggressive but there is a difference between aggressive and harassing. Please visit Debt Collection FAQs – A Guide for Consumers on the Federal Trade Commission’s website for more information on the rules creditors and collectors have to follow.

Yes. Litigation can be an avenue your creditor or collector chooses to take. Clients that are sued represent a very small percentage, but the risk still exists.

For your wages to be garnished, a creditor or collection agency first has to sue you and lose, obtain a judgment and then file for a garnishment action. However, each state has garnishment laws that vary and some states do not allow the garnishment of wages. It is also important to note, in some instances, that judgments can also be filed against personal property, not just wages. Please contact an attorney licensed to provide legal advice in your state in order to determine if garnishment is a risk for you.

In an unfortunate turn of events, the BBB recently implemented a new ‘scoring model’. This scoring model dictates that certain industries be graded as a whole. Unfortunately in the case of debt settlement companies, this model is quite severe, and has any company, regardless of their best-practices operations or good track record, restricted from achieving any rating above C-. USOBA supports the theory behind the BBB; a consumer should have a resource to compare companies in any industry based on the company’s merits alone. At this time, the BBB ratings of Debt Settlement companies tells a consumer little or nothing about a company’s ethics or reputability. Several USOBA members and other Debt Settlement entities were asked to “give back” prestigious awards and achievements such as the BBB Accreditation and BBB Torch Award. Prior to the scoring model change, the companies were exemplar in the eyes of the BBB. If you wish to include the BBB in your research of a Debt Settlement provider, we suggest you look carefully at the complaint resolution and not at the arbitrary score.

Finding a reputable provider in any in industry can be challenging. We suggest the following: 1.Shop around and compare. There are a variety of Debt Settlement programs available and you should choose the one that makes the most sense for your particular situation. 2.Always verify claims made by the provider. If they say they are members of or affiliated with certain organizations, call the organizations to verify membership or affiliation. 3.Ask the company if they have standards they adhere to and request a copy of the standards. Oftentimes, a company will also be accredited to those standards. (see next FAQ for Accreditation information.) 4.A reputable company will always discuss the potential challenges as well as the benefits of their Debt Settlement program before enrolling you as a client. 5.A reputable company will not make claims about “Government Bailouts”, “Obama Funds”, “Consumer Stimulus Programs” or any other false claims about debt settlement being part of any government programs. Neither the White House nor President Obama have sanctioned, created or otherwise endorsed any national debt relief or forgiveness program or initiative for consumers that are offered by Debt Settlement companies. 6.Ask the company for a written explanation of their cancellation or refund policy. 7.A reputable company will display their physical location address on their website. 8.A reputable company will conduct a thorough review of your financial situation including all expenses and income before determining eligibility for their Debt Settlement program. 9.A reputable company will provide a consumer with a copy of their service agreement prior to requiring the consumer to provide complete banking information, accounting information or social security number.

USOBA created the first standards and accreditation program in the Debt Settlement industry. Accreditation refers to being certified as compliant to certain standards or codes. USOBA Accredited Member Companies have gone through an independent, internal audit and it has been certified that they adhere to the best industry practices set forth in the USOBA Standards. For a referral to an Accredited Member Company, please contact us via phone 1-877-76-USOBA (87622) or send an email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Click Here to review a copy of the USOBA Standards.