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What To Expect While On A Debt Settlement Program

Posted By:  |  September 23, 2014  |  1 Comment(s)

What to expect from settlement

Author: Anthony Manganiello

Author of The Debt-FREE Millionaire and creator of

The debt settlement process – on average – can take about 36 months. But, what happens during that time, and what can you expect while you’re working with a settlement company to settle your debt?

In another article I’ve written called “How Debt Settlement Works,” I outline how the collection process is basically what leads to the settlement discounts you’re hoping for. But how does the collection process work? And how can you be prepared for it since it’s something you should expect?

At the onset of a settlement service, you’ll begin to receive calls from your creditors asking you about the lack of payment. As the months progress, these calls will most likely increase. Keep in mind that, depending on the number of accounts you’re intending to settle, these calls can become rather frequent.

According to the Fair Debt Collection Practices Act (FDCPA), which is federal law regulating collection activity, you can be called – at home – between 8 a.m. and 9 p.m. your time. The law prohibits collectors from harassing you, but the law doesn’t provide any specific limit on the number of times each collector can call you within a day. To keep it simple, if you have 6 accounts intended for settlement, it’s reasonable to expect at least 6 calls per day (one for each account). And, while the FDCPA doesn’t generally apply to original creditors, some states have adopted the FDCPA and require original creditors to comply.

I’m not a lawyer and I don’t play one on TV. So, I’m not going to spend time splitting hairs on the letter of the law versus the spirit of the law.

While you’re on a debt settlement program, and you have accounts still in the queue for settlement, those accounts are each going through their own individual collection process. And the creditor or collector who has that account at any particular time couldn’t care less about the other accounts you’re trying to deal with.

Instead, if they know you have other accounts in collections, they’re trying to get to you first. They all know they’re battling for the same dollars, and their attitude is, “if you snooze you lose.” So they’re trying to not get caught sleeping.

Creditors and collectors have become technologically savvy. They use things called “auto-dialers” and have reps sitting in cubicles waiting for the auto-dialer to connect with a live body – you. If and when that happens, the system then connects you with their rep, and the rep’s computer screen pops up with your information. If you’ve ever answered a call and experienced a slight delay of a second or so between you saying “Hello” and the other party responding, that’s what I’m talking about.

Usually, settlement companies have some form of protocol they advise you to follow when this occurs. So, you should inquire to find out what steps they prefer you to take in the event Carl Collector comes a callin’.

There are a couple other items you should be aware of as your settlement program matures. The first is how your account can move from one collector to another.

Since it’s likely that your financial situation requires you to accumulate funds over time in your settlement account, your accounts are probably going to move from one collector to another. What this usually means is that the current collector sells your account as one of many in a portfolio of bad debt to another collector. If this happens, the subsequent collector then views your account – along with the others – as “fresh meat” and the process begins all over again.

So, you should be aware that while you’re working to settle your accounts, those accounts can change hands a number of times. This means you may have to walk through the process of dealing with more than one collector per account.

The other item you should be aware of is that there are many law firms that focus on collections. Let’s face it; if you receive a letter from a law firm about one account, and a letter from a collection agency on another, which letter will get more of your attention? The letter from the law firm.

Letters from law firms can lead to something called a judgment. A judgment is something they get when they sue you for the balance owed, plus any additional fees they’re entitled to add. Judgments can lead to wage garnishments, and the seizure of bank accounts in your name.

Am I trying to scare you into avoiding settlement? In some ways… yeah. But only if you’re thinking that you can afford other options. These days, the ability to afford other options has become increasingly difficult. In those cases, settlement is indeed a good option so long as you’re working with a reputable company. Fortunately, reputable companies can be found on the home page of We have ratings for debt settlement companies that will help you choose the right one.

Good settlement companies will be able to provide you with support and direction when it comes to navigating the collection activity that comes with the settlement process. But, make no mistake about it. If you’re settling your debt and money is tight, collection activity is what you can expect. So you should also expect appropriate support and direction while you’re dealing with it.


  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
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  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
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  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
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