Frequently Asked Questions

About Debt Settlement, Tax Relief & Debt Resolution Programs

Frequently Asked Questions of Financial Rescue have been compiled here to help you understand debt relief, debt settlement, debt resolution, tax relief and the programs that can help you unburden yourself. Read through these Frequently Asked Questions about our programs and let us know how we can help you.
What types of debt qualify for debt settlement?

Our debt settlement program can help to settle a wide range of debt issues, but not all debts will qualify for settlement.

Most debts are categorized as either "secured" or "unsecured" debt. Secured debt - credit cards, medical bills, and unsecured loans - are the types of debt that qualify for settlement. 

Unsecured debt often takes up a significant portion of the average consumer’s overall debt. The good news is that it can be resolved as part of a debt settlement program. If you are faced with high balances on credit cards, medical bills or unsecured loans, the program may be able to contact the creditors and negotiate for the account to be paid off for a lesser amount.

If the debt is based on collateral such as a vehicle, house or piece of property; it is considered a secured debt. Specific examples of secured debt include a secured line of credit, mortgage, home equity loan and motorcycle loan. Unfortunately, this type of debt cannot be settled because the creditor can simply relinquish the asset in order to recover the funds.

Another type of debt that cannot be included in a debt settlement are federal or government backed student loans.

Reducing your total debt burden will be a solid step in working toward your financial goals. We walk you step by step through the settlement process and make sure that you are deciding on a payment plan that works for your budget.

How do I know that debt settlement will work for my situation?

The first qualifying factor is that you are falling behind on credit payments, most often caused by a financial hardship or unexpected event.

Debt settlement is meant for those individuals who are unable to make the payments on credit cards, medical bills, and other unsecured loans and are looking for an alternative to bankruptcy. Every individual situation is different, so enrolling in a debt settlement program must make sense for your personal circumstances. Our certified debt consultants take all variables into account to determine each individual's ability to qualify and recommend a best course of action. 

We only offer to help when we can stand behind our services to reduce your debts through negotiation.

Why choose Financial Rescue? Why not just call the creditors myself?

Calling the creditors yourself can be time consuming and stressful. Financial Rescue has 10 years of experience providing custom programs that have helped thousands of people overcome the burden of unmanageable debt. Whether it's debt relief services, debt settlement, a debt resolution hardship program, or a legal plan, our expert advisors have the experience and long-standing relationships with financial service providers, collections companies, and law firms to help you reduce your debt and get on the path towards financial freedom. 

How are you sure you are getting the best settlement for your situation?
Leave it to skilled negotiators in dealing with these situations, which makes a huge difference when it comes to the settlement amounts.

The program’s specialty is reducing your overall debt. You can trust that your best interests are in mind.

Are there any tax implications that go with debt settlement?
If the amount of forgiven debt exceeds $600, the IRS will consider it as taxable income. For example, if you owe $10,000 on a credit card and we settle the account for $6,000, the difference of $4,000 will be taxed. The creditor will issue a 1099-C form which will be used when filing your taxes to record the amount of debt forgiven. Depending on your financial situation, you may be able to write off the forgiven debt with IRS. Make sure to contact your tax professional or accountant to find out the best option for your tax filing.

Disclaimer: Financial Rescue does not provide tax or bankruptcy advice and no communication should be considered legal advice.

Where will my money be held during the settlement process?
While you are contributing to your debt settlement program, your money will be deposited into a third party account that only you have full control over.

It will be securely held at Global Client Solutions, one of the largest federally insured escrow institutions in the United States, or the FDIC insured bank of your choosing.

Until the account balance reaches an amount that is reasonable to begin negotiations, your money will be safe in your designated bank for settlements.

Am I able to choose which accounts are included in the debt settlement?
Yes, absolutely, it is completely your decision which debts you would like to resolve. Although many consumers benefit from enrolling all eligible accounts, it is important for you to determine the next steps based on your personal situation.

It is very possible that there will be secured debts that you want to enroll, but they unfortunately do not fit under the terms of our program. We work with you to determine which accounts are eligible for settlement.

You are not obligated to enroll all debts, even if all of your accounts qualify.

What is the difference between debt settlement and bankruptcy?

Your credit can influence many areas of your life including insurance, housing and even employment; hence the importance of understanding how debt settlement differs from bankruptcy.

While bankruptcy is an option to deal with overwhelming debt issues, it can have a very detrimental effect on your credit standing. Debt settlement can still impact your credit due to delinquencies and settling for a portion of the full balance, but the adverse repercussions are far less and long-standing than the long-term impact of bankruptcy.

Bankruptcy will stick around on your credit bureau reports for 7 to 10 years which means that you will have to deal with the consequences much longer than with debt settlement.

Chapter 7 and Chapter 11 bankruptcies stay on your credit report for 10 years from the original filing date. A Chapter 13 bankruptcy which is the most common type of bankruptcy will remain for 7 years. Additionally, a permanent public record will be created when you file for bankruptcy.

With a Chapter 11, you often end paying the full amount for some accounts since the debts are set over a 5 year period. While debt settlement can still show the closed accounts for several years, the advantage is that the creditors record the accounts were paid and resolved.

In addition to debt settlement having a lesser impact on your credit score, generally speaking it may be extremely costly to file bankruptcy in comparison with a settlement.

We make sure to disclose all fees in order for you to make an informed decision and conclude that settlement is a favorable alternative to bankruptcy.

Disclaimer: Financial Rescue does not provide tax or bankruptcy advice and no communication should be considered legal advice.

What is a debt collection?
Debt collection is when a financial account has been sent or sold to a third-party company to collect the funds owed on the account.

The original creditor will often forward your account to the collection company after the account is severely delinquent, which happens when several payments are missed.

Many creditors use the method of hiring debt collectors to attempt to obtain payment without having to continue pushing their own resources.

Essentially, collectors collect unpaid debts that are owed to creditors or other companies.

What debt collection tactics are prohibited by law? What protections do I have as a consumer while going through the debt settlement process?
The Federal Fair Debt Collection Practices Act defines which practices are illegal when it comes to debt collection. Here is an outlined list of the restrictions established to protect consumers from harassment, abusive and deceptive behavior:

  • Collectors cannot call you at an unreasonable hour -- presumably before 8 am or after 9 pm.
  • Repeated calls or not identifying themselves as a bill collector is prohibited.
  • They cannot threaten to harm you or your property, this includes your threatening your family members or any other person you are acquainted with.
  • Collections agencies can not list your debt for sale publicly.
  • If your employer does not allow collections calls or personal calls, they are not allowed to contact you at work.
  • Using explicit, abusive or profane language in any context is not allowed.
  • Your request to cease communication cannot be ignored by collectors.
  • Collectors do not have the authority to threaten to garnish wages or seize property.
  • They are not allowed to misrepresent themselves by claiming to be affiliated with a government agency or claim that you’ve violated the law.
  • The amount that you owe or the compensation due to the collections agency cannot be falsely represented.
  • Misrepresenting credit information or claiming to be a credit bureau employee is prohibited.
  • They cannot threaten you with prosecution if you fail to make a payment.
What can I do if a debt collector violates the FDCPA restrictions?
If you believe that the collector did not abide by the Fair Debt Collection Practices Act (FDCPA) rules, you are entitled to sue them in state or small claims court.

There is the potential to recover any damages you may have experienced as a result of the prohibited behavior. You may also be able to collect statutory damages depending on the offense.

There are certain courts that will grant reimbursement for your attorney’s fees if you win the case. You can also decide to report the collections companies actions to a government agency.

The Federal Trade Commission is directly responsible for overseeing collector actions in adherence with the FDCPA. The Consumer Financial Protection Bureau is another place that you can file a formal complaint.

Frequently Asked Questions about Debt Settlement and Tax Relief | Financial Rescue


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