MENU
CALL TODAY: 860-449-1308 CLICK TO CALL: 860-449-1308
Reduce Debts Image

Contact us for your Free Assessment

First Name *

Last Name *

Email *

Phone Number *

Brief Background

Frequently Asked Questions

If you’re considering debt settlement or debt consolidation, you probably have a lot of questions. Below are 25 common questions that most people have regarding settling their debts and their answers to follow.

  1. “Q1. Will all of my creditors accept a Debt Settlement Plan?”
  2. “Q2. What is the cost of a Debt Settlement Plan?”
  3. “Q3. Is my information confidential with AA Debt Settlement?”
  4. “Q4. What happens to my credit during a Debt Settlement Plan?”
  5. “Q5. How long is the typical Debt Settlement Plan with AA Debt Settlement?”
  6. “Q6. How is the AA Debt Settlement different than any other Debt Settlement Company?”
  7. “Q7. What is the difference between Debt Settlement and Debt Management?”
  8. “Q8. What is a secured debt versus an unsecured debt?”
  9. “Q9. How can I be assured that your Debt Settlement Plan will work?”
  10. “Q10. Do you offer any guarantees with your Debt Settlement Plan?”
  11. “Q11. What should I expect from a Debt Settlement Plan?”
  12. “Q12. Will all my debts be canceled once I finish my Debt Settlement Plan?”
  13. “Q13. Are all my debts included in a Debt Settlement Plan?”
  14. “Q14. Do I have to be approved for a Debt Settlement Plan?”
  15. “Q15. Do my debts have to be delinquent in order to do Debt Settlement?”
  16. “Q16. Can I try using Debt Settlement and if it doesn’t work, can I convert my file to a bankruptcy filing?”
  17. “Q17. Can I simply do debt settlement by myself without the help of anyone?”
  18. “Q18. Will interest charges, and late fees accumulate on my credit cards while I’m doing Debt Settlement?”
  19. “Q19. Does AA Debt Settlement contact all of my creditors?”
  20. “Q20. When I am doing a Debt Settlement Plan, will creditors continue to harass me?”
  21. “Q21. I understand and have heard that Debt Settlement Companies have a bad reputation. How do I guard against scam artists and fraud?”
  22. “Q22. Why is AA Debt Settlement different with any other Debt Settlement Company? What about my credit score?”
  23. “Q23. What is Chapter 7 bankruptcy and what is Chapter 13 bankruptcy?”
  24. “Q24. What are the pluses and minuses of Debt Settlement vs. Bankruptcy?”
  25. “Q25. Why can’t the Better Business Bureau stop scam artists from using their name? And what you should know.”

“Q1. Will all of my creditors accept a Debt Settlement Plan?”

Answer:
The vast majority of creditors are willing to accept a debt settlement. However, we can’t guarantee that ever creditor will accept a debt settlement proposal.

So far, we have never failed to have a creditor accept a debt settlement proposal but some creditors who take an extra-amount of time to convince to accept a debt settlement proposal. And, of course, a creditor who has previously accepted a debt settlement proposal could change their policy and take the position that no debt settlement proposals will be accepted.

Then you probably would only have a bankruptcy option to consider. Recently, 40 banks are considering offering ‘debt forgiveness’ on credit cards. They are experimenting with a pilot program of ‘debt forgiveness’ which is a type of ‘Chapter 7 Bankruptcy’. Chapter 7 Bankruptcy has been called, ‘debt cancellation’ which is what some banks are considering.

But in the bank’s case, it’s a partial forgiveness of approximately 40% of the debt outstanding. Therefore, you would make payments on the remaining 60% of the debt. This would be called in Chapter ‘a 60% dividend to unsecured creditors’ plan.


“Q2. What is the cost of a Debt Settlement Plan?”

Answer:
Our fee can vary depending on the nature and complexity of your debts. For example, you could have lawsuits pending against you before you come to our office and your wages are attached and there are judgment liens against your home.

In our propriety software, when we analyze your options, we calculate what our fee would be in conjunction with a total plan to resolve your financial issues. Give us a call at (860) 405-1000 and we’ll gladly estimate all fees and costs and present them to you in writing.


“Q3. Is my information confidential with AA Debt Settlement?”

Answer:
Your information with us is totally and completely confidential because it is guarded and protected by the attorney-client privilege.

We contacted all of your creditors and explain that you are not to be called and/or visited by the credit counseling agencies.

We do not sell, transfer or convey any of your personal information because we are bound under the attorney-client privilege to safeguard all of your confidences.


“Q4. What happens to my credit during a Debt Settlement Plan?”

Answer:
I tell clients that while you are doing debt settlement, your FICO credit score will be poor. YOU WILL NOT HAVE A GOOD CREDIT RATING OR SCORE. Many times people will have an artificially good FICO score because they are current on all their bills but they are borrowing on their credit cards to pay the bills.

Further, many clients are borrowing on one credit card to pay on the other credit card and they have a FICO score of over 700. I call these credit scores ‘false scores’ because they are really artificially maintained. Or we have clients who are paying on all their credit cards and they are simply struggling.

With these clients, it’s just a matter of time before they become financially exhausted. When a debt is settled, your credit report will often reflect ‘settled for less than full amount’ , ‘paid not as agreed’, etc.

These reports will not help your credit score but will reduce it. AA Debt Settlement does not offer credit counseling service. We don’t help you with credit reports and/or credit score.

After your Debt Settlement Plan is completed, we will give your our 2 hour seminar on credit score improvement along with our materials to improve your credit score and will advise you that it will take 1–2 years to obtain a FICO score of 625 which is considered a passing score.

But you will have to follow a very strict program for budgeting and monitoring your credit score.

We don’t offer individual counseling for credit score improvement but rather offer you a do-it-yourself approach. We have an E-Learning website, www.PennyWatchers.org which you can have complete access and there’s no additional fees or charges for the use of this e-Learning website. But again, this is really a do-it-yourself program.

If you have a good credit score before entering our Debt Settlement Program, you must realize that creditors won’t offer you settlements unless you are delinquent on your accounts. When you are delinquent on your accounts, your credit score will drop or be reduced.

It’s important, therefore, for you to understand the difference ‘debt management’ a/k/a ‘credit counseling’ versus ‘debt settlement’.

You can see our matrix chart which compares the pluses and minuses in order to fully understand and appreciate these differences. In debt management, a/k/a credit counseling, you might or might not get a good credit score. Whereas, in debt settlement, you will only achieve a poor credit score.


“Q5. How long is the typical Debt Settlement Plan with AA Debt Settlement?”

Answer:
The length of time for a Debt Settlement Plan depends on your financial resources. We have some clients who can pay in one lump-sum their entire Debt Settlement Plan.

And typically, we tell these clients it can take 6–8 months and even one year to satisfactorily settle all of your debts. But most clients can’t pay one lump-sum to settle all of their debts. They just don’t have the money.

Most clients have to use a payment plan to settle their debts. These payment plans range from 2–5 years. The length of the Debt Settlement Plan depends on the amount of your debt and your ability to make monthly payments.


“Q6. How is the AA Debt Settlement different than any other Debt Settlement Company?”

Answer:
We believe in explaining your options to you in a clear and down to earth style. We help you weigh the pluses and minuses of any and all options for settling your debt. Therefore, we offer the most comprehensive and fair analysis and help you select the best option for yourself. We explain in detail and compare and contrast the 4 major options, namely, debt management, debt settlement, Chapter 7 and Chapter 13.

Each one of these is a choice and when the choices are analyzed from the perspective of monthly payments, length of time to complete the option, total cost of each option, and affect on your credit score, and numerous other factors, then you the consumer can make the most informed decision. No one compares all of these options with only your best interests to guide them.

As an attorney, I am obligated to explain the pro’s and con’s of all the options, analyze them in terms of monthly payments and total amounts paid, and make a recommendation to you.

Debt Management and Debt Settlement Companies will not begin to discuss with in detail your bankruptcy option and compare it to what they are offering you. Many, many consumers use a Debt Settlement Company because they feel that if they file for bankruptcy ‘they are a failure’ and ‘they are embarrassed’.

Therefore, ironically, they will select the most expensive and impractical alternative and they shy away from bankruptcy because they just don’t want to look at it. On the other hand, there are consumers who just want to file for bankruptcy and will not consider any other alternative even though they don’t qualify for bankruptcy.

We professionally and objectively weight and explain all the options and present the reasons why someone should use debt settlement or debt management and/or we explain all the issues and problems of filing for a bankruptcy. We view the informal or out of court options of Debt Settlement and Debt Management as just as valid as the formal options of Chapter 7 and Chapter 13.

To our knowledge, there is no one that dispassionately weighs and compares all options and presents that analysis in a comparison summary report.


“Q7. What is the difference between Debt Settlement and Debt Management?”

Answer:
In a Debt Settlement Plan you pay 40% to 60% of your outstanding debt to settle your debts. In Debt Management, you pay 100% of your debt and you pay a reduced interest charge on your debts. There are pluses and minuses for Debt Management versus Debt Settlement and you should see our matrix chart.

With Debt Management, you pay considerably more money to get out of debt; whereas, with Debt Settlement you pay considerably less money and it’s faster. However, Debt Settlement is a ‘rockier road’ to travel than Debt Management. Again, you have to see our chart.

Sometimes, people obtain a debt consolidation loan to pay-off their debts but really they just substitute a number of small debts into one large monthly payment. This is an example of ‘Robbing Peter to Pay Paul’ which really doesn’t improve your finances.


“Q8. What is a secured debt versus an unsecured debt?”

Answer:
Since AA Debt Settlement only can deal with unsecured debts, client ask me: What is a secured debt and what is an unsecured debt. Secured debt is a car loan or a mortgage on a home. If you don’t pay on the debt, the creditor can collect its money by selling your car or home because the ‘car’ or ‘home’ is security for the debt; hence, it is called a secured debt.

On a secured loan, the creditor can, of course, try to collect any money due and owing by attaching your wages, banking accounts, etc. Unsecured debts are credit cards, personal loans, medical bills, rent payments or any debt which doesn’t have property as ‘security for the debt’.

The only remedy available for the creditor when you haven’t paid on an unsecured debt is to collect the money due and owing from your wages, and/or your bank accounts. Only Chapters 7 and 13 of the Bankruptcy Code can deal with secured debt.


“Q9. How can I be assured that your Debt Settlement Plan will work?”

Answer:
The best assurance you have that our Debt Settlement Plan will work for you is that I have been doing non-bankruptcy options for a considerable period of time (10 years) that I’m honored to tell you that people known that I’m here to help them the best financial advice for the consumer.

I have been recognized as a an Expert in Consumer Bankruptcy because I have been Board Certified by the American Board of Certification and have worked successfully in the past with clients using non-bankruptcy options in order to solve financial problems. So I would have to say that my reputation in the community is your assurance that your Debt Settlement Plan will work for you.

For example, since I am not licensed to practice law in any other state except Connecticut, I only offer my ‘debt settlement’ plans to residents of Connecticut. I have been in the community practicing law for 26 years and I’m still standing and I guess that is my claim to fame.


“Q10. Do you offer any guarantees with your Debt Settlement Plan?”

Answer:
No one can really offer you a 100% guarantee that our Debt Settlement Plan will work for you. The most our law firm or any law firm can say is ‘based upon past experience, our Debt Settlement Plan should work for you’.


“Q11. What should I expect from a Debt Settlement Plan?”

Answer:
You can expect to become debt free from credit cards for considerably less money and time than you would in a Debt Management Program where you pay 100% + % on your total debt.

The savings are considerable with Debt Settlement versus Debt Management. We will give you a comparative financial analysis between Debt Settlement and Debt Management which are your ‘informal options’.

And we will, also, include a comparative financial analysis between Chapter 7, Chapter 13 Bankruptcy and Debt Settlement and Debt Management so you can see the cost and potential savings.


“Q12. Will all my debts be canceled once I finish my Debt Settlement Plan?”

Answer:
At the conclusion of your Debt Settlement Plan, all your debts you listed with us will be canceled.

Sometimes it might take longer than we expected due to changing policies with creditors and our attempts to obtain for you the best possible settlements. But there are no additional fees or costs if it does take longer to secure good settlements.


“Q13. Are all my debts included in a Debt Settlement Plan?”

Answer:
You don’t have to include all of your debts in a Debt Settlement Plan. First, our Debt Settlement Plan only deals with credit debt and general unsecured debt like personal loans, medical bills, etc.

Our Debt Settlement Plans don’t deal with mortgage arrearage, car payments and other secured debts.


“Q14. Do I have to be approved for a Debt Settlement Plan?”

Answer:
After we objectively and thoroughly explain your options in handling debt, we have to jointly agree with you that a Debt Settlement Plan is your best option. First, we have to ‘run the numbers’ and analyze what your monthly payment will be in Debt Management versus Debt Settlement versus Chapter 7 versus Chapter 13.

We have not found one company which is capable of this financial analysis. We have a special, proprietary program which I have developed where we can enter your income and expenses and then enter your total amount of debt and can obtain a detailed computer analysis of all 4 major options and compare them. This involves analyzing your income and expenses. Then we review the 12 Basic Reasons Why People Either Can’t or Won’t File a Bankruptcy Petition. We, also, have a matrix which presents all the Pluses and Minuses of each Option.

We will make a recommendation as to the best option for yourself and explain the reasoning. Our mission is to help you make a knowing and informed decision and we guide you in making that decision but ultimately once you are fully informed and the options objectively analyzed, you make the decision whether to use Debt Management, Debt Settlement, Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.

Many times clients want to use a Debt Settlement Plan because as no one wants to go to the hospital, people do not want to file bankruptcy.

But if we determine that you really can’t complete a debt settlement plan and that it’s not in your best interest, we won’t recommend it and will respectfully decline to enroll you as a client. And please note there are at least 5 basic reasons why people can’t file bankruptcy even when they want to file bankruptcy.

We consult with clients and help them weigh options and make certain that false information about these options doesn’t cloud their judgment.

We do a detailed Income and Expense Statement for you. We accurately develop what is your exact income and what are your ordinary and necessary expenses.

Once we have accurately developed your income and expenses, in many cases we will do the long form ‘Means Test‘ analysis under Chapter 7 Bankruptcy to see if even though your income is over the medium income, could you rebut the presumption of abuse in filing a Chapter 7 petition.

We have had clients come to our office from other attorneys who told them that they couldn’t file for bankruptcy and found that they did rebut the long form of the Chapter 7 Means Test and consequently, they filed a Chapter 7 bankruptcy petition through our office.


“Q15. Do my debts have to be delinquent in order to do Debt Settlement?”

Answer:
Many clients with whom we start working do not have delinquent accounts. However, before creditors will offer settlement deals, you have to be delinquent on your accounts.

Here’s where the analysis of your income and expenses becomes critical in deciding whether or not you really can continue to pay on your accounts. If your income is exceptionally strong and either you can’t or won’t use a bankruptcy option, then we recommend that you use Debt Management a/k/a Credit Counseling and will usually refer you to Consumer Credit Counseling Services (CCCS) or Money Management International because they are licensed and bonded with the State Banking Department. In this option, you pay 100% of your debt and you do not become delinquent with your payments.

They will reduce your interest charges and usually they have a 5 year plan for you to pay-off all your debts. Without the reduced interest rates which they can obtain, you usually will have to take 10–15 years to pay-off your debts with the same monthly payments which will be in your debt management /credit counseling plan. (Note that they don’t do any ‘credit counseling’ but they are referred to as ‘credit counselors’ which is really a misnomer.

They are debt managers and not credit counselors because they don’t advise you under the Federal Credit Organization Act (CROA). We do inform you that Debt Management Companies such as CCCS/ Money Management International were established by the credit card industry and; therefore, they tend to have a bias toward only offering ‘debt management’ and really don’t analyze and evaluate the legal options of bankruptcy.

However, they will argue and rightfully so, that they aren’t attorneys and can’t practice law which is correct. Many times if someone isn’t a suitable candidate for debt management, they so inform the potential client but really they can’t function in the full capacity of a debt and credit counselor because either they don’t have the background and/or they aren’t licensed to practice law.

AA Debt Settlement has extensive experience with debt management and will fully and impartially weigh that option with you. And, indeed, if CCCS’s program is best for you, we will refer you to them.

But, to answer the question, “Do I have to be delinquent on my accounts in order to use Debt Settlement’? the answer is ‘Yes’ because unless you are delinquent on your accounts, the creditors will not agree to any settlement. And why should they? If you aren’t delinquent there will be motivation on the part of the credit card company or the creditor to negotiate a settlement.

And now this is one of the negatives of Debt Settlement, namely, if you have a good credit score and if you have to go delinquent on your credit cards because your Overtime has expired and/or you are tired and run-down from your second job, your credit score will suffer.


“Q16. Can I try using Debt Settlement and if it doesn’t work, can I convert my file to a bankruptcy filing?”

Answer:
Yes, we have many cases where a person can’t under the ‘Means Test’ or under the ‘Totality of the Circumstances Test’ or under the ‘Asset Test’, file a Chapter 7 petition. But then events in people’s lives change. They become sick, unemployed, divorced, separated etc. And they then can qualify for a Chapter 7. I tell clients that ‘in their weakness is their strength and in their strength their weakness’. In the Bankruptcy Court, you can file a Chapter 13 which is a Debt Reorganization and then convert to a Chapter 7 which is a Debt Liquidation.

The same is true with an informal or out-of-court Debt Settlement Plan. You can convert it to a formal bankruptcy. And we have clients who are in a grey area of what option is best for them. Some clients, the numbers are so definite, there’s only one answer for them. But there are many clients who are in a ‘greay area’ and there is no obvious, and absolute answer.

And if the client makes a completely informed decision to use Debt Settlement, and then they really get to ‘try it on’ and after awhile it becomes too burdensome, they are free to convert to a formal debt cancellation program.

And I have had many client tell me, ‘You told me that you didn’t think I would be a happy camper in debt settlement and you were right. But it was good that I got to try it.’ This applies to people who to me are in the ‘grey area’ regarding their options.


“Q17. Can I simply do debt settlement by myself without the help of anyone?”

Answer:
Yes, you can be your own attorney and do debt settlement and you don’t have to use an attorney-at-law. You can represent yourself and you’ll be ‘pro se’ or ‘for yourself’. But when you receive a settlement from a company, I have seen where 5 years later, another bill collector representing the same creditor starts trying to collect on the same debt.

And they report to the credit bureau that you still owe on this debt!! Now what are you going to do? And let’s suppose it’s one of those debt scavengers who purchased debt which has been discharged in bankruptcy and/or debt which has been settled. (And these companies are ferocious!) (You could ask me,’How can anyone purchase debt that was discharged in bankruptcy? And expect to collect on it!

And can anyone attempt to collect on a settled debt?! Yes, they can! And what about the tax ramifications of settling debt? Many tax preparers believe that debt which is settled or compromised, represents ‘imputed income’ to you and you have to pay taxes on the discharged or settled debt.

Yes, you can represent yourself but as Abe Lincoln said, ‘A lawyer who represents himself, has a fool for a client’.


“Q18. Will interest charges, and late fees accumulate on my credit cards while I’m doing Debt Settlement?”

Answer:
Once you are enrolled in a Debt Settlement Plan (DSP), creditors continue to increase your interest rates, charge you late fees, yearly fees, and anything else they can concoct.


“Q19. Does AA Debt Settlement contact all of my creditors?”

Answer:
Once you are enrolled in our Debt Settlement Program, as I indicated above, I will send a letter to all your creditors and advise them that I represent you and to direct all their calls to my office. By law, once an attorney informs a creditor that you are represented by that attorney, the creditors can’t call you.

They can continue to send you mail but they can’t call you. There’s a high compliance rate with the Federal Debt Collection Practices Act because they have been sued so many times, that they have finally gotten the message.


“Q20. When I am doing a Debt Settlement Plan, will creditors continue to harass me?”

Answer:
Creditors and bill collectors seem to be constitutionally disposed to violating the law.When you enroll in our Debt Settlement program, we send letters to all your creditors directing that all your bills be forwarded to our office.

It will take a little time, but we are able to stop the harassing phone calls. Further, when you are enrolled in our Debt Settlement Plan, we’re going to give you my booklet entitled, ‘A Consumer Combat Manual for Handling Harassing Phone Calls’.

I tell my clients to simply read it and use it. And do you want to know a secret? You simply write them a letter return-receipt requested telling them not to call you and if they call you that violated the law. My booklet has all this and more. Further, under the law, once an attorney represents you, no one can call you about your financial matters. All your calls come to my office after you tell them simply,’ Call my lawyer’.

I have far more strategies than I can discuss on my website but in a private consultation, I’ll make you aware on how to enforce the law against harassing phone calls by bringing a law suit under the Federal Debt Collection Practices Act or under Connecticut’s law which prohibits harassing phone calls and possibly be compensated for the harassing phone calls.

It is our experience that by using my booklet and the procedures where we direct all your bills to be delivered to our office, your harassing phone calls go away. But that doesn’t prevent the creditors and/or the bills collectors who have purchased your debt from bringing law suits. You simply bring those law suits to our office and we’ll review them with you.


“Q21. I understand and have heard that Debt Settlement Companies have a bad reputation. How do I guard against scam artists and fraud?”

Answer:
On television there are constant ads for debt settlement companies. First, all of those ads are from companies in California, Texas and Florida. They have websites and toll free numbers. And they promise you the sun, the moon and the stars. And as a rule, if something sounds too good to be true, it usually is.

Here are the basic questions to ask:

  1. Do they have a local office that you can go to and talk to a person?They don’t have any local offices.
  2. Are they licensed and bonded by the Connecticut Banking Department or the Connecticut Judicial System?You can checked out if they are licensed by the Connecticut Banking Department by going to: http://www.ct.gov/dob. Then click-on Verify a License. Next click on Debt Adjuster. You’ll find all the licensed and bonded Debt Adjusters on this website. They will tell you that they aren’t debt adjusters and; therefore, they don’t have to be licensed and bonded with the banking department. Call the Banking Department’s toll free number (800) 831-7225 and ask to speak to the Consumer Credit Department and ask the staff person if the company should be licensed and bonded by the banking department. The Debt Settlement Companies will tell you that they aren’t ‘Debt Adjusters’ but rather are ‘Debt Settlers’ and don’t have to be licensed and bonded by the Banking Department BEWARE!!!
  3. Do an Internet Search and using Google or Yahoo, enter the company’s name followed by the word ‘Fraud’ or ‘Scam’ and see what you find.
  4. Go to the Internet to www.ripoffreport.com and do a search on the company’s name.
  5. Go to the Internet and type in ‘Debt Settlement Fraud’ in Google and Yahoo and see what you find.
  6. Go the Federal Trade Commission website and search about Debt Settlement Companies: www.ftc.gov.
  7. Ask the Debt Settlement Company for the list of names of people in Connecticut they are servicing and ask for their telephone numbers for references.
  8. They have slick websites but usually do not have names of anyone responsible for the website. See if you can find a name and picture of the person responsible for offering the debt settlement services.

I have had many, many horror stores from clients who finally discovered us and came to my office after they had been ripped-off by out-of-state debt settlement companies.

Now you should ask: What about yourself, Dave Falvey and AA Debt Settlement? What are your references? Are you licensed and bonded by the Banking Department?

My Answer: Attorneys don’t have to be licensed and bonded by the Banking Department because we are licensed by the Judicial Department and the way to check on myself as being in good standing with the Connecticut Judicial Department is as follows:

I’m Dave Falvey, 1 Crouch St., Groton, CT 06340; Tel: 866-518-6409 and I have been attorney with the State of Connecticut for 30 years and my State Juris Number is: 101894 and my Federal Juris number is : ct08516 and I am in good standing with the Bar Grievance Committee and you can contact them at: www.jud.ct.gov/SGC/; Statewide Grievance Committee, 287 Main St., Second Floor, Suite Two, East Hartford, CT 06118-1885; (860) 568-5157; Fax (860) 568-4953.


“Q22. Why is AA Debt Settlement different with any other Debt Settlement Company? What about my credit score?”

Answer:
I know of no attorney who regularly weighs all basic options of handling your debt other than ourselves. I know of no debt settlement or debt management company which even has the understanding to analyze and explain the different options. And notwithstanding their lack of understanding, they actually can’t explain and contrast the informal options with the formal options because they aren’t attorneys.

At AA DebtSettlement, we constantly guard against making any judgments as to what is the best route or option a client should take until we have completed the following:

  1. The client is explained the pro’s and con’s of all the basic debt option strategies of debt management, a/k/a credit counseling; debt settlement or debt negotiation; Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
  2. The client has to understand the 10 Basic Reasons why someone can’t or won’t file a bankruptcy petition.
  3. The client has to have their individual circumstances evaluated for doing using one of the basic 4 options. They have to have their income and expenses evaluated.. Some times they have to have their income evaluated in the ‘Means Test’ when they are over the medium income for bankruptcy. And then the client has to receive a print-out to compare the financial aspects of debt management, debt settlement, Chapter 7 and Chapter 13. AA Debt Settlement has developed a unique and proprietary program for financially comparing and contrasting all 4 basic options. Frankly, there is no one to my knowledge who can give you this type of analysis. I’m able to give you this type of analysis because I have represented clients in debt management, debt settlement, Chapter 7 and Chapter 13. And I took all my understanding and with a programmer, developed an amazing and proprietary system for instantly comparing and contrasting all the financial aspects of the 4 Major Options.
  4. Once the client is fully informed about the options and their finances analyzed, then in consultation with the client, an Action Plan is agreed upon.

I see our professional responsibilities as helping a client understand their options. Dispelling myths and propaganda of the credit card industry and other organizations. Assisting the client in making the most informed choice or decision in dealing with their debts and credit scores.

Finally, as I have indicated in other questions, we have extensive educational materials to assist our clients in obtaining a good credit score. I have defined as ‘fresh financial start’ as not just cancelling debt. I define a ‘fresh financial start’ as a good credit score. I have worked with many individual clients to help them improve their credit scores.

And from those experiments, and my reading of the Federal Fair Credit Reporting Act, and other readings and investigations, I have an extensive 2 hour seminar on DVD on how to improve your credit score within 12–24 months. Further, I have an e-Learning website to assist my clients and you can find it at www.PennyWatchers.org.

I’m Dave Falvey, 1 Crouch St., Groton, CT 06340; Tel: 866-518-6409 and I have been attorney with the State of Connecticut for 30 years and my State Juris Number is: 101894 and my Federal Juris number is : ct08516 and I am in good standing with the Bar Grievance Committee and you can contact them at: www.jud.ct.gov/SGC/; Statewide Grievance Committee, 287 Main St., Second Floor, Suite Two, East Hartford, CT 06118-1885; (860) 568-5157; Fax (860) 568-4953.


“Q23. What is Chapter 7 bankruptcy and what is Chapter 13 bankruptcy?”

Answer:
A Chapter 7 Bankruptcy is called a ‘liquidation’ and, therefore, many people think that they are going to be ‘liquidated’. A Chapter 7 takes 90 days from the date of filing to the date of discharge. After 90 days, you receive a Notice of Discharge. In a Chapter 7, you make no payments to creditors.

All your debts are liquidated or discharged; however, there are debts which can’t be discharged in bankruptcy some of which are: student loans, child support, alimony, sales taxes, employee withholding taxes, fines, orders for restitutions, willful and malicious injury to another person, crimes, injury caused to another due to alcohol or drugs are some of the major non-dischargeable debts in Chapter 7.

Some of the debts which are dischargeable in Chapter 7 are: credit card debts, car loans, repossessions, personal loans, medical bills, mortgages, deficiency judgments, personal income taxes if they meet 3 criteria, utilities, and back rent, to name a few.

Chapter 7 is the fastest and least expensive option of getting rid of your debt. And with good exemption planning, you usually can keep your home, car and other assets. Pensions are not considered an asset of the bankruptcy estate and; therefore, they are protected from creditors.

A Chapter 13 is called a ‘Debt Reorganization’ and you will see many similarities between debt management and debt settlement with a Chapter 13. But a Chapter 13 has more powers than any informal debt management strategy. Chapter 13 can deal with mortgages and car loans.

Chapter 13 takes 3–5 years to complete and every month you make payments to a Chapter 13 Trustee. You don’t receive a Notice of Discharge until you complete your Chapter 13 which is usually 3–5 years. Usually, you use a Chapter 13 when you are seriously behind on your mortgage payments or your house is in foreclosure. But Chapter 13 can be used just to repay on credit card debt.

I advise clients that usually, Chapter 7 is the best option for obtaining a ‘fresh financial start’ because it’s quicker and less expensive as compared to a Chapter 13, debt management or debt settlement. But again this is just a general rule and one rule doesn’t fit all clients.


“Q24. What are the pluses and minuses of Debt Settlement vs. Bankruptcy?”

Answer:
You will find on our website a matrix chart which gives the pluses and minuses for all informal and formal options in handling your debt. Informal options are ones where you don’t go to Court. Informal options are debt management and debt settlement. Formal options are when you go to Court and they include Chapter 7 and Chapter 13 Bankruptcy. You should go to our Matrix Chart Section which compares options and read it. Also, it’s very important to read our chart on the 12 Reasons You Can’t File for Bankruptcy.

Essentially, I tell clients that usually Chapter 7 is the best option in dealing with debt. And I don’t say that because I’m a bankruptcy attorney.

I have had extensive experience in operating a non-profit debt management company or a 501 ( c) (3) corporation for many years. I have intimately dealt with clients’ credit reports and credit scores both with Chapter 7, Chapter 13, debt management and debt settlement.

And I want to report to you that the reason the credit card industry spent millions of dollars to enact the latest bankruptcy law (called: BAPCPA-Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) is because they wanted to deny you a ‘quick fresh start’ in Chapter 7.

To some degree, the credit card industry was successful in preventing people from filing a Chapter 7 and forcing them into a formal ‘debt settlement plan’ or ‘debt management plan’ called a Chapter 13 Bankruptcy petition.

Now granted, the creditors haven’t had all the success that they wanted in preventing people from filing a Chapter 7 bankruptcy (in Chapter 7, you don’t make any repayments on debts) , but they have prevented some people from filing a Chapter 7 petitions.

Indeed, some critics of BAPCPA take the position that the credit card companies ultimately failed in their attempt to turn the Bankruptcy Court into their private ‘collection agency’.

However, they have driven-up the cost of filing bankruptcy with all the ‘new requirements’. But there is a percentage of people who can’t file Chapter 7 under BAPCPA and have to seek other options or avenues, namely, debt management, debt settlement or Chapter 13.


“Q25. Why can’t the Better Business Bureau stop scam artists from using their name? And what you should know.”

Answer:
First, let me say the goals and purposes of the Better Business Bureau are absolutely worthwhile. They want to protect the public by having businesses subscribed to a code of ethics and want to report businesses who do not follow a code of ethics. There’s no argument to me that they efforts are very worthwhile.

But I have discovered how some slick scam artists use the Better Business Bureau to further their scams. How? Let’s say that the scam artist starts with XYZ Debt Settlement Company and advertises that they subscribe to the ethics of the Better Business Bureau. After awhile, they get many bad marks or reports about XYX Debt Settlement Company.

The scam artist realizes they have many legitimate bad marks against the company so what do they do? They open another company called the ABC Debt Settlement Company and register the new company with the Better Business Bureau and since they are a new company, they won’t have any bad marks against them.

Therefore, one important factor to look for is how long has the business been in operation!!

I have had so many clients tell me, ‘And I checked them out on the Better Business Bureau and they didn’t have any bad marks against them. The scam artists are slick!!

And as I told you above, if you ask the Debt Settlement Company if they are licensed with the Connecticut Banking Department or any department or branch of government, they will piously tell you that they don’t have to be licensed nor bonded. They will tell you that they aren’t DEBT ADJUSTERS!

And, I say, if they aren’t adjusting debts and they are telling you they are getting creditors to settle their claims for $.50 on the dollar, what are they doing? I call this Debt Adjustment.

But they will tell you that since they don’t hold your funds in a trust account, they aren’t Debt Adjusters. This is the technicality they use to try to circumvent the law.

However, there’s a major proposal called, The Uniform Debt-Management Services Act as drafted by the National Conference of Commissioners on Uniform State Laws (WWW.NCCUSL.ORG), which is designed to close this loophole and you should ask the debt settlement company what is their position regarding this proposed law that they are lobbying and spending big money to defeat.

By knowing of this law, you can be well versed and understand what is happening in the world of debt settlement. I have posted this law on our website so if you take the time to read it, you’ll be a highly informed consumer and will be able to ask very good questions.