1. How does the program work?
2. Is debt settlement the same as debt consolidation?
3. Is debt settlement the same as consumer credit counseling?
4. Can you settle your debt on your own?
5. How long does the debt settlement program take?
6. What can I expect as a result of your debt settlement program?
7. Are your debt settlement services guaranteed?
8. How will debt settlement affect my credit?
9. How does debt settlement compare to bankruptcy?
10. Does State Capital Financial keep my information confidential?
11. What is the difference between unsecured debt and secured debt?
12. Will I continue to get calls and collection letters from my creditors?
13. Will fees and interest continue to accrue?
14. Will your program stop legal action against me?
15. What if I'm sued and they get a Judgment?
16. Will I owe money to the IRS for my reduced settlement?
17. Who controls my personal savings used for settlement?
18. So what does the program cost and how do you get paid?
19. Who is an ideal candidate for Debt Settlement?
20. How does Debt affect my Credit Rating?
21. Who Pays my Creditors?

Q: How does the program work?

A.    If you regularly pay monthly minimums with high interest rates, it could take 30 – 40 years to pay off your debts. Or maybe, you had a decrease in income, disability, or lost a job; you are likely already behind on payments or cannot afford to stay current due to a financial hardship. Our certified debt negotiators will negotiate with your creditors on your behalf, not on your creditor’s behalf as is the case with credit counseling.  SCF gives you an alternative to bankruptcy and your unmanageably increasing debt due to high interest rate. So how does settlement work?

·         SCF has an affordable monthly service plan put together for you in order to obtain settlements with your creditors.

·       The settlement process in our program typically takes about 36 months or less. SCF™ has assembled an impressive team of dedicated individuals who work with one common goal… to save you money. 

·      As a new client, SCF™ starts working for you right away. Your creditors are contacted and informed that we are working for you and that all communications should be directed to SCF™.

·       Our expert certified debt negotiators are paid a bonuses based upon lower settlement percentages.  That means the better settlement they arrange for you, the more compensation they receive.  This ensures the settlement team is working directly for YOU and not the creditors.  As a result, the absolute best settlement deals are achieved with your best interest in mind.

·       We have created a win-win relationship, by implementing procedures to ensure the best results for our clients.  As always, getting you out of debt is our job… keeping you out is our mission.

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Q: Is debt settlement the same as debt consolidation?

A.     No. The goal of the debt settlement is to reduce the overall amount of the debt, by negotiating agreed payoff amounts with your creditors. In Debt consolidation you acquire a loan to pay off your unsecured debt with secured debt.

·         Debt Consolidation loans transfer the debt from one account to another and typically takes an unsecured debt(s) and changes it into a secured debt (usually your home).   If you do not have enough equity (typically 25 – 30% LTV), bad credit, or too much debt, it is not likely that you will be approved for a debt consolidation loan. 

·         Statistics are that about 70% of the people who obtain a debt consolidation loan find themselves in deeper debt than they were originally within a two year period.  You cannot borrow your way out of debt.  Ask yourself why you would want to go from an unsecured loan to a secured loan over a longer period of time? 

·         The main problem with consolidation loans is that once you have paid off the credit cards you have a whole new source of spending power: $0 Balance credit cards.  It does not take long before these cards are credit balanced out again leaving you in a worse financial situation. You end up not only having to pay back the cards but also the consolidation loan.

·         If you start missing payments on the consolidation loan, you stand to lose the asset (usually your home) that the loan is secured against.

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Q:  Can you settle your debt on your own?

·         Sure you can, but we would not recommend it.  You may be able to make your own plumbing repairs or install your own computer network, but most people don't have the time or expertise to deal with it.

·         Creditors deal with thousands of people who are in financial difficulty every day and have a vast array of sophisticated (and some rather blunt) methods of intimidating you into financial arrangements you cannot keep.

·         The settlement process is usually very emotional and stressful, especially when you are the one being attacked by collectors over the phone. Most people prefer to leave these tasks to experienced people who earn their livelihood doing that particular kind of work.

·         We have a staff of debt negotiators whose only job is to negotiate the settlement of unsecured debt, every day, five days a week. By letting SCF™ do what we do best, you will get better settlements with a fraction of the stress.

·         SCF™ knows how to deal with creditors and have in-depth knowledge about how these institutions work. We can potentially save you thousands of dollars and free you from a considerable amount of stress.

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Q: Is Debt Settlement the same as Consumer Credit Counseling?

No. Debt settlement does not work like consumer credit in most respects.  The goal of the debt settlement is to reduce the overall amount of the debt, by negotiating agreed payoff amounts with your creditors.  Debt Settlement can save you thousands of dollars and years of repayment.  

Consumer Credit Counseling Companies typically have a non-profit status.  Many consumers confuse "non-profit" with "no charge for services", or charity.  Non-profit Consumer Credit Counseling Companies generate millions of dollars each month and employ thousands of people.  The way Credit Counseling works is that you typically meet with a Credit Counselor, who analyzes your unsecured debts, other obligations, and your monthly income. A credit counselor then formulates a monthly budget and presents a plan that includes lowering of credit card interest rates and sometimes, the monthly payment.  The Credit Counseling Company then contacts all your unsecured debt Creditors of unsecured debt and requests that the consumer be permitted to enter the bank's hardship repayment plan at a lower interest rate.  Most hardship plans are for a 12-18 month period.  Note: most Consumer Credit Counseling programs run 48 – 60 months.  During the program a single payment is sent to the Credit Counseling company and they in turn make payments directly to all your creditors for the next 48 – 60 months.

The consumer credit counselor charges what seems like a relatively small fee.  What you are not told is that the Credit Counseling companies act as a surrogate of the Credit Card Company.  They make most of their money from "donations" from your Creditors based on the amount they "collect" from you while in the program.  An arrangement very similar to how collection agencies are paid by creditors.  So a credit counseling company may not have your best interest at heart.  These donations are the primary purpose for these companies organizing under a "non-profit" status (for-profit companies cannot receive donations).

The downside to credit counseling is as follows:

·       In a Credit Counseling program you pay the full amount of debt owed at a hopefully reduced interest rate. 

• Credit counselors don't always make timely payments resulting in late fees and a derogatory credit history.
• Not all Creditors agree to reduce your interest.
• Almost all Creditors require you to be at least 30 days late before entering hardship programs (late payment history);

·       Payments are still high and it typically takes 5 or 6 years to pay off the debt.

• Credit Counseling companies frequently advertises 50% lower monthly payment, but this almost never happens. Even if it did happen, smaller monthly payments would only string out the program period and not get you out of debt;
• Most Credit Counseling programs have a high failure rate.

·       Many these companies are funded by your creditors – the very people to whom you owe money. In other words, they may not represent your best interests.

·       Additionally, your credit will have a CC or Credit Counseling mark on it. This is viewed negatively by most lenders and may hinder your ability to refinance a home or get a loan.

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Q: How long does the debt settlement program take?

A.    The length of time necessary it takes to complete the debt settlement program varies from case to case and is primarily based upon how much money you will be able to set aside each month to eliminate the debt of your enrolled accounts. During your initial free consultation, the time to complete the debt settlement program for your individual case will be discussed with you by our debt specialist. SCF’s™ average client can be debt free in 12 - 36 months. The amount of time it takes to clear your debts is largely dependent on your current financial situation. If your budget is extremely limited results may take longer. Every situation is different and we will be happy to discuss this during your free confidential phone consultation.

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Q:  What can I expect as a result of your debt settlement program?

A.     SCF™ has assembled an impressive team of dedicated individuals who work with one common goal… to save you money.  Remember, SCF’s™ debt settlement program is set up to work with your best interest in mind.  We have created a win-win relationship, by implementing procedures to ensure the best results for our clients.  As always, getting you out of debt is our job… keeping you out is our mission. You can expect a substantial reduction in what you owe to your creditors.  Although individual results will vary, you can typically expect a reduction of 40% to 60% of the balance owed on your total debt.

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Q:  Are your debt settlement services guaranteed?

A.     Yes, if State Capital Financial is unable to settle an enrolled account, SCF™ will refund back to you or adjust your service fee by an amount equal to the service fee charged on that particular account balance at initial enrollment.  Note: You must have sufficient funds to settle the account in order to be eligible for the guarantee.

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Q: How will debt settlement affect my credit?

A Debt Settlement Program will have a negative effect on your credit while in the program.  If your accounts are already delinquent it may not have much effect.  For consumers with unpaid delinquent accounts this makes debt settlement an excellent option over ignoring the delinquent past due account, considering the savings versus paying the past due account in full.  The question is; does debt settlement make sense for those who have current accounts, and a good credit rating.  Those with a high credit score must weigh the negative impact on credit rating versus a potentially very negative bankruptcy or the promise of being debt free for less than the full balance.  Note: even if your accounts are current your credit score may already be negatively impacted by your total debt and debt to available credit in this case negotiation of the accounts may still be a better alternative than to continue making minimum monthly payments for the next 30 years and still having bad credit.

·       While in a debt settlement program, you will receive late marks on your credit as you are not making regular payments to your creditors.  Your consumer credit score will be negatively affected during the delinquency period. This occurs for two reasons. The account is late and as the delinquency period extends (60, 90, 120 days) the way the account is reported by the creditor to the credit bureau has a continuing derogatory effect on the calculation of the credit score. Secondly, the amount listed in the payment due column increases as past due payments stack up. If the accounts are current but the credit score is low due to high balances or a history of late payments, this is not much of an issue.

·       Once your account balance and payment due is reported as zero if you have not added more debt your debt to income ratio will be reduced. Low debt to income ratios typically have a positive impact on the account and the credit, particularly over the long-term. The reason is that paid/settled accounts that are negotiated are much better than unpaid past due accounts. The history of the delinquency may remain, but the account moves from the current derogatory section of the credit report, to the closed account section. As months pass any derogatory history has less and less bearing on the credit score. Some lenders believe that after 12 months the accounts are given very little consideration. It appears that provided all other debts are paid in a timely manner (house, car, other accounts kept current) that the effects of the settlement process are temporary. Remember if you are considering chapter 7 & 13 bankruptcy it will stay on your report for 10 years.

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Q: How does debt settlement compare to bankruptcy?

Filing for bankruptcy has many negative implications, and should be considered only as a last resort. Bankruptcy may seem to be the quickest solution to removing your outstanding debt and bankruptcy attorneys will tell you it will only remain on your credit for 10 years.

Both Chapter 7 and Chapter 13 will represent a major negative mark on your credit rating. In Chapter 7 bankruptcy it will stay on your report for 10 years and in the case of chapter 13 bankruptcy the clock does not start ticking to remove the bankruptcy mark from your credit report until the chapter 13 bankruptcy plan is completed.

·       Bankruptcy can cost up to $2,500 to file and additional attorney’s fees. Additionally in Chapter 13 there is a 5% trustee fee to administer your chapter 13 banckruptcy

·       In Chapter 13 bankruptcy the court decides what you can pay and what your budget is.

·       Bankruptcy may affect your ability to get a job if you work in security or financially sensitive job.

·       Bankruptcy will likely result in higher interest rates on future loans and credit.

·       Carries a negative stigma, mental stress, and other burdens.

Besides being a devastating hit to your credit, it can also potentially affect current and future employment opportunities for financial and security related jobs.  Additionally, Home lenders are now asking, "Have you ever filed for bankruptcy?" Even if the bankruptcy has fallen off your credit report, to answer this question untruthfully is considered a federal offense. Which means bankruptcy will follow you for the rest of your life. Bankruptcy is a permanent decision that should only be considered as an absolute last resort to solving your debt matters. If you decide to file for bankruptcy, first seek the advice of a licensed attorney. If you have enough discretionary income and wish to work on resolving your debt over time, our Debt Settlement Program may be a better alternative.

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Q: Does State Capital Financial keep my information confidential?

A.    Yes. State Capital Financial maintains your confidentiality at all times and are bound by "Rules of Professional Conduct." We only disclose information to those persons that you have authorized. All creditors that you have contracted us to settle with on your behalf will be contacted by us and advised that you have retained State Capital Financial to represent you. All information is considered highly confidential and personal. Please see our Privacy Notice.

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Q: What is the difference between unsecured debt and secured debt?

A.   Unsecured debt is any loan or debt that has no tangible assets or property attached to it. The most common types of unsecured debt are credit cards, department store cards, medical bills, utility bills, and personal loans. Should you fail to make timely payments, the lenders only recourse is to pursue legal action.

      Secured debt is debt for which the creditor has collateral in the form of a security interest in personal and/or real property. Should you fail to make timely payments on a secured debt, the creditor is entitled to repossess the property and sell it. Please keep in mind that you may still be liable for any deficient balance remaining after the sale of the property. When dealing with secured debt, it is important to obtain advice from a licensed attorney in order to protect your interests.

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Q: Will I continue to get calls and collection letters from my creditors?        

A.    Yes you may, but most creditors will not if SCF sends them an engagement letter to contact us only.  In the case of more aggressive creditors we will not engage them until you are in a position to settle.  Most original creditors are cooperative and work with settlement companies because it makes economic sense for them versus the higher cost of hiring collection companies to collect on the debt. Depending on the creditor and SCF's relation we will send an engagement letter to your original creditors and third party creditors and collection agencies.  This compels third-party creditors or collection agencies to only communicate with us.  However, you may still have to put up with calls for 30 to 60 days while the program is being set up as the amount of time it takes for their records to update varies by creditor. In the meantime, you will keep a creditor log of every phone call or letter that you receive from a creditor and report it to us.  Our Debt Negotiations Group will contact them and make every attempt to redirect their calls to our office.  Usually, the calls will cease after the creditor receives notice from us that you have entered our program. Your Senior Debt Specialist will explain how various creditors are handled. Be aware that despite our best efforts, there are dishonest collection agencies that will not abide by a cease and desist letter and may continue to call you. This is against the law and you can formally complain should this continue. You should also know that accounts are frequently moved or sold over time.  We may prevent one collection agency from contacting you. However, they may sell or move your account to a new agency and the process will unfortunately have to be repeated.

·         See your rights under the Fair Debt Collection Practices Act & Debt Collection Laws for your State

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Q:  Will fees and interest continue to accrue?

·         Most creditors will continue to charge fees and interest until the account is written off (typically 120 – 210 days) in hopes of making more profits from you in your time of financial hardship.  When our debt negotiators work out a settlement offer we attempt to negotiate from a position of the principal amount you owe less any fee accumulated during the settlement process. 

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Q:  Will your program stop legal action against me?

·        Creditors have the right to use legal means to collect a debt.  Some creditors are more likely to file suit than others. 

·       Creditor lawsuits are not common but they do happen. It is also a common tactic of third-party creditors or collection agencies to threaten you with a lawsuit (which is illegal if they do not intend to sue).  The reality is that third-party creditors or collection agencies rarely ever sue.  You should be aware that a creditor can only sue you if it retains an attorney that is in your state. Furthermore, it takes time and costs money to file. Lastly, even if a creditor is to take legal action, they can only collect what you have.  A wage garnishment takes time and always hinges on your employment and may not be applicable in your state.  If you own a home it is difficult for a creditor to attach the equity in your home and it may be protected by your state’s homestead act.  In conclusion, it is typically more cost effective for a creditor to settle than to pursue legal action.  While we cannot guarantee that legal action will not be taken, we are confident that our experience in dealing with creditors can reduce the possibility of this happening.

·       Despite any legal action that may or may not be taken, your account can be settled before, during or after the suit. Just because an account goes to legal action does not mean that we cannot settle it.  The threat of legal action can be the scariest of all, IT CAN BE HANDLED.  We recommend that our clients seek competent legal counsel in certain situations.

·       Note: We cannot provide you with legal advice.  We work with your creditors to find a solution that will satisfy everyone before legal action is taken.

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Q:  What if I'm sued and they get a Judgment?

A.    Here are some facts; Right now in the United States there are between 200 and 300 billion dollars of uncollected (Money Judgment debt). The court does not require the debtor to pay, and will not even help collect. Very few people know how to find these assets or what to do when they are found. The result is that millions of Judgments are just sitting in files. "Four of five winners of a Judgment never see a dime."  We negotiate all unsecured debts, which include judgments.  Regardless of what stage of collections a debt is in, it can be negotiated.

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Q:  Will I owe money to the IRS for my reduced settlement?

A.   Creditors are required to report canceled debts exceeding $600 to the IRS and you are supposed to report the same as income on your annual tax return.  However, the IRS permits you to write off any “income” from canceled debts up to the amount by which you were “Insolvent” at the time. Therefore, unless you have a positive net worth, then you ordinarily will not be obligated to pay taxes on the forgiven amounts.   Additionally, if you do not qualify as insolvent non principal amounts such as fees accumulated on the account may be deducted from the amount reported. Refer to: www.IRS.gov Publication 908

·      Note: You should consult a tax advisor for advice specific to your situation. This should not be considered tax advice.

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Q: Who controls my personal savings used for settlement?

·        Your personal savings account is a bank account that you control and at the bank of your choice.  SCF will contact you monthly to ensure that you are depositing the minimum program savings amount as set out in your settlement program.  When you have accumulated enough funds in your account our debt negotiators will begin the negotiations process with your creditors.

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Q: So what does the program cost and how do you get paid?

·        Our fees are very competitive and are based on a percentage of your overall debt.  We earn our fees as follows: when we perform a budget review, analysis of your accounts, and file setup.  Additional fees are earned when we have prepared initial correspondence to the contracted creditors and then when we send initial engagement letters to your creditors and cease & desist letters to 3^rd party collections companies.  The remaining fee is a service fee earned as we engage creditors for settlement, handle creditor client creditor calls, and negotiate a final settlement of your contracted accounts.  If State Capital Financial is unable to settle an enrolled account, SCF™ will refund back to you, an amount equal to the service fee charged on that particular account balance at initial enrollment.  

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Q: Who is an ideal candidate for Debt Settlement?

·      Someone who has some type of hardship such as (illness, disability, divorce, job loss, or a reduction in pay) and is having difficulty making payments.

·      If you have past due credit card debt in excess of $10,000, with high interest rates and are looking for a way out without filing bankruptcy, debt settlement (also known as debt negotiation) may be the best alternative.

·      Someone with a debt problem that he or she cannot resolve.

·      Someone who is having trouble staying current and is delinquent on their accounts and \ or is close to having suit for a judgment filed against them.

·      Someone considering bankruptcy, but would like to avoid it.

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Q: What is the affect of Debt on my Credit Rating?

Many people assume that making payments on time means they have good credit and being late with payments causes bad credit.  Making consistently late payments will cause a bad credit rating, but your payment history only accounts for 30% of your credit score.  Your make up of debt plays an almost equally important role.

The make up of your debt can have a negative affect on your credit score. Many people think they have "perfect credit" but in fact have low credit scores and to a Creditor they have "bad credit".  We recommend you get a copy of your credit report before you commit to any program.  State Capital Financial offers to refund you the cost of your credit report if you enroll in our debt settlement program and use our preferred credit reporting company “CreditReports.com” through our site. 

Credit card accounts are the most common cause of negative impact on your credit report:

• Making minimum monthly payments for several months will decrease your credit score.
• Credit cards charged to their credit limit has a major impact on your credit score.
• Too many open accounts will decrease the credit score.  Note: If you close your open but zero balance accounts this may also negatively impact your credit score if it causes your Total Debt to Total Available Credit to be greater than 50%.
• Too many recently opened accounts cause a decrease in credit score.

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Q: Who pays my Creditors?

·       State Capital Financial DOES NOT disburse funds to your creditors during the program.  The purpose of our debt settlement program is to settle your debts at a reduce amount to the principal balance that is owed.  While in a debt settlement program, you are deciding to not make regular payments to your creditors.  If you can afford to keep paying off your debts on your own, you should do so. Once you approve a negotiated settlement offer, you will then make the payment directly to your creditors from your personal savings account. Once the payment has been made the account will now be considered settled in full.

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Learn more >> Use our 30 minute free phone consultation. A valuable asset offered by State Capital Financial in order to help educate consumers. Simply fill out our application by clicking Start Now! or
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