FAQ's
Frequently Asked Questions
Q. Will I be totally debt free when I have completed the program?
New Horizons Debt Relief main focus is on clearing up your unsecured debt. We cannot help you with debt that is secured by collateral. For example: home loans, car loans, boat loans, and student loans. However, after completing the program, if you continue to use the savings plan that is part of your debt settlement program, and you continue to apply the savings to your secured obligations, then you should be able to pay off your secured debt ahead of schedule.
Q. Can I shorten the scheduled timeframe for the settlement of my accounts?
In many cases, yes, you can speed up the process by increasing the amount of money in your savings. The availability of settlement funds is one of the two principal factors that determine the pace of your settlement program. That pace is primarily controlled by the combination of: (1) the availability of funds and (2) the willingness of the creditor to settle an account (no two creditors are alike, and creditors decide how to handle accounts on an individual basis).
Q. Should I put all of my credit cards in the program?
YES. We suggest you put all credit cards into the program so you can become 100% debt free in 36 months or less with the monthly payment we give you. If you feel you must keep a credit card, personal loan or any other unsecured debts open for emergency purposes or any other reasons please keep a debt that has a balance of $750 or lower. However the program will not work unless you enroll all of your high balance credit card accounts. Creditors will not negotiate favorably with people they find picking and choosing the obligations they are going to pay and not pay. This is even more the case if you are past due with one account and creating new obligations with another.
Q. Will my accounts continue to accrue Interest, Late fees and Penalties?
Your debts will accrue interest, late fees, and penalties until they charge-off. When you stop making monthly payments to creditors, it will cause your account to become delinquent and late fees, penalties, and interest may continue to accrue on your debt. Creditors may also raise your interest rates. Creditors have the legal right to continue accruing interest, late fees, and over-limit penalties while your debts are in our program. There are a few things to remember: Increase of the debt will usually stop at the point of charge-off, which varies from creditors and your specific situation and your contact with the creditors. The amount of money involved is usually insignificant when compared to the total amount of money saved over the duration of the program. We attempt to negotiate on the original balances you owed at the time you enrolled into our program.
Q. Will I receive phone calls from collectors?
Chances are that you will. Although a very few of our clients are completely ignored until they have money to settle, most of our clients experience some collection calls. We will assist you to manage those calls so that, as much as possible, the callers will contact you by mail. This tends to strengthen your negotiating position.
Working with the large number of clients we serve, we have learned a variety of responses for managing collection activities. We have also learned that there is no one method of responding to collection activities that is best for everyone. We have a staff of client relations personnel who assist our clients to handle these issues in ways that strengthen their negotiations.
Q. How does your program work?
In your initial, free consultation your Debt Relief Representative will see if debt negotiation and settlement can help you resolve your problem debt. If it appears suited to your circumstances the representative will explain the program in more detail and prepare you to enroll. Together we make a team, and the client’s connection with us helps them keep the focus and determination needed to stay the course until they are free of unsecured debt. The cornerstone of that activity is the negotiation process that takes place each time one of our clients accumulates funds sufficient to reach a settlement. Over the course of some 15-36 months the savings/settlement cycle is repeated until all of the client’s unsecured debt has been resolved.
Q. How does this affect my credit?
If you do not make required minimum payments to your creditor you may be breaking the terms of your agreement with them and your actions will probably be reported to consumer reporting agencies as a late, delinquent, charged-off or past due balances. This is true anytime you fail to make your minimum payments in a timely manner. After settlement your creditor may comment that the account was "settled for less than the full amount" on your credit report. Depending on the condition of your credit report at the time of enrollment, a Debt Settlement Plan may have an adverse effect on your credit report and credit score.
Q. How aggressive will my creditors get with their collection efforts?
Consumer Debt Settlement Companies cannot force any creditor to stop working to collect money owed to them. Your creditors will continue collection efforts on delinquent accounts while you are enrolled in a Debt Settlement Plan. Such collection efforts can include phone calls and letters to you, charging off the account, sending accounts to collection agencies or attorneys, lawsuits and even garnishments of your wages if a judgment has been obtained. It is possible for this to occur even if your Consumer Debt Settlement Company makes its best efforts to negotiate your debt with a minimum amount of unpleasantness. To Summarize: A Debt Settlement Plan can be a very effective way to resolve your debt, but it is not a painless process and individual results may vary. As with any type of debt repayment plan, failure to complete a Debt Settlement Plan is likely to have negative consequences on your financial situation.
Q. Will I have to pay taxes on the debt forgiven by my creditors?
If your creditor settles your debt for more than $600 less than what you owed, the savings may be reported by your creditor to the IRS as Discharge of Indebtedness income. You understand that a Consumer Debt Settlement Company assumes that you enrolled in its Debt Settlement Plan because you are insolvent, having financial difficulties with your unsecured debts, and/or have used a Debt Settlement Plan to avoid filing for bankruptcy. The IRS website www.irs.gov says that you may be able to exclude Discharge of Indebtedness income if you are insolvent. For more information on tax ramifications to you personally please consult a tax preparer, CPA or Tax Attorney or refer to IRS Publication 908- "Bankruptcy Tax Guide" and IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness available on the IRS website.
