General Questions:
1. What is a Debt Freedom Program? How does it work?
A Debt Freedom Program (DFP) is a simple, efficient, and money-saving way to pay off your debt many years earlier than you would on your own. We look at all your unsecured debt (unsecured means the debt is not tied to something you own-house, boat, car, etc.) and your budget to see if the program is a fit for you. We know what the creditors will allow on this type of program, so we are able to give you good direction as to the benefits, costs and timeframe of your DFP.
If the DFP is a fit for you, we start the process of setting up the program with you and your creditors. We will pay your creditors on your behalf after we receive a payment from you. The single payment is made by you to us on the same day each month (we have 8 dates to choose from). The easiest way for you to allow us access to the program funds is by using an automatic deduction from an account. We then take the payment and send the required amount to each of your creditors.
You will still receive your statements from the creditors each month so you can manage your progress on the program. Also, we will send you a monthly summary statement showing the payments we have made to your creditors on your behalf.
2. Are most creditors willing to work with you?
As a Debt Freedom Program, we have developed a relationship with thousands of creditors. Based on our relationship and the creditors pre-arranged requirements, we know exactly what is required for you to receive the maximum benefit from our Debt Freedom Program.
3. Can I just keep paying off my creditors on my own?
Yes you can. Chances are most of your debt payment has been going to interest. The balance you have on your accounts has not gone down or has gone down very little. The banks are concerned with your efforts to minimize interest payments and that is why they work with DMPs like us to help you "refinance" your credit card debt. If you continue to make the minimum payments as required by the creditor, it will take you many, many years to pay off your debt, if ever. Banks are more willing to lower your interest rate and extend this rate indefinitely when you enroll in a DMP; knowing that monthly payments will be made on time.
4. Why can't I just negotiate with creditors on my own?
In some cases you can negotiate with your creditors. The arrangements you will make with them will be for a limited amount of time. This could be anywhere from 6 months to a year. Generally this means a lower payment which in turn means a much, much longer pay off. Unfortunately, if for any reason the creditor decides not to honor that arrangement, you will be stuck right back where you started, or worse. Most creditors will not allow you on a Debt Management Program for a minimum 5 years after you have been on a program either through the creditor or other debt program.
5. Should I try to get a loan?
Obtaining a loan to pay off your debt is just swapping debt for debt. It may have a minimal change on your monthly payment or even your interest rate, but most importantly, it has no change on your budgeting habits. This is an area, among others, that needs to be altered in order to become debt free.
6. How does a Debt Freedom Program differ from Debt Settlement?
In a debt settlement, you pay only a portion of the total debt owed. This is done through negotiations with the creditors. During this time, no payments are made to your creditors. There is also no guarantee that the creditors will accept the terms of the negotiations. This process has a dramatic impact on your credit score. There is also a high cost involved with debt settlement. Generally the cost is 15%-30% of the total debt owed. Also, the amount not paid is viewed as taxable income by the government at the end of the year.
The Debt Freedom Program is a 100% pay back to all your creditors. You will be making payments through our credit office to your creditors on time each month. Creditors look at our service as an alternative for consumers to solve their financial problems rather than suffer the stigma of bankruptcy.
7. Do you think I'd be better off declaring bankruptcy?
Bankruptcy should only be considered after every other option has been exhausted. With the new laws on bankruptcy that took effect October 17, 2005 it is no longer an easy process to declare bankruptcy. Additionally, believers are still required by God to repay their creditors even after bankruptcy (Psalm 37:21).
8. How does enrollment into your program impact my credit rating?
This is an excellent questions and one that is most commonly asked. Being on a Debt Management Program (DMP) does not impact your credit score at all. What does happens is a notation is placed on your credit report that you're in a DMP. Now, when a creditor looks at your credit report, they will see this notation and have to make an interpretation of it. Some creditors will see this as a positive step. They see a person taking responsibility for their debt and taking action to resolve their debt in a strategic manner. They like this. Other creditors see it differently. They see it as someone who is or was in trouble and may be more of a risk than someone who is not in a DMP program. Most creditors never fully read the credit report and only look for the scores.
While many are concerned about the impact of being in a DMP, those who truly need the program have credit scores that have already been damaged. The main issue for most folks needing a DMP, is not the impact of credit, but getting out of debt. DMPs actuallly help improve credit scores, because credit scores are, in part, based on faithful and consistent payments over time. Well, this is exactly what a DMP does. If you still have concerns please give us a call and we can discuss this further with you.
9. Is there a fee to participate in your program?
There is no charge for contacting us and thoroughly reviewing your current situation. We are blessed to have the Lord lead you to us and give you our input.
All fees are regulated by each state. We do not set these fees. These fees are also based on whether the DMP is a non-profit or for-profit. For-profits are allowed to charge more. There is no fee cap for them.
If you do become a Debt Freedom Client, there is a one-time setup fee based on each individual state regulation (please call to get more details). This fee does not exceed $100. The initial counseling fee covers the cost of thoroughly reviewing your financial situation, preparing your application for joining the program and providing all the administrative functions necessary to ensure your program’s success. The initial counseling fee is non-refundable.
Lastly, there is an ongoing monthly fee. This fee is calculated by the new monthly payment amount multiplied by a percentage which varies from state to state (call for more details). This fee allows TPFC to continue as a ministry by covering the costs we incur each month. It also allows us to help out those less fortunate by providing the services to them at a reduced cost. The monthly amount varies state-by-state and is dependent on many factors, including your current payment to your creditors. As a reference, it is rare for the fee to exceed $50 a month on our program.
Be sure to read One Key Truth about our industry to get a better perspective one why it appears there may be different fees from different debt management programs.
DFC can help you save those court costs and attorney fees. Please call one of our Certified Credit Counselors at 800-624-9747 if you are considering bankruptcy to find out about alternatives.
A Debt Freedom Program (DFP) is a simple, efficient, and money-saving way to pay off your debt many years earlier than you would on your own. We look at all your unsecured debt (unsecured means the debt is not tied to something you own-house, boat, car, etc.) and your budget to see if the program is a fit for you. We know what the creditors will allow on this type of program, so we are able to give you good direction as to the benefits, costs and timeframe of your DFP.
If the DFP is a fit for you, we start the process of setting up the program with you and your creditors. We will pay your creditors on your behalf after we receive a payment from you. The single payment is made by you to us on the same day each month (we have 8 dates to choose from). The easiest way for you to allow us access to the program funds is by using an automatic deduction from an account. We then take the payment and send the required amount to each of your creditors.
You will still receive your statements from the creditors each month so you can manage your progress on the program. Also, we will send you a monthly summary statement showing the payments we have made to your creditors on your behalf.
2. Are most creditors willing to work with you?
As a Debt Freedom Program, we have developed a relationship with thousands of creditors. Based on our relationship and the creditors pre-arranged requirements, we know exactly what is required for you to receive the maximum benefit from our Debt Freedom Program.
3. Can I just keep paying off my creditors on my own?
Yes you can. Chances are most of your debt payment has been going to interest. The balance you have on your accounts has not gone down or has gone down very little. The banks are concerned with your efforts to minimize interest payments and that is why they work with DMPs like us to help you "refinance" your credit card debt. If you continue to make the minimum payments as required by the creditor, it will take you many, many years to pay off your debt, if ever. Banks are more willing to lower your interest rate and extend this rate indefinitely when you enroll in a DMP; knowing that monthly payments will be made on time.
4. Why can't I just negotiate with creditors on my own?
In some cases you can negotiate with your creditors. The arrangements you will make with them will be for a limited amount of time. This could be anywhere from 6 months to a year. Generally this means a lower payment which in turn means a much, much longer pay off. Unfortunately, if for any reason the creditor decides not to honor that arrangement, you will be stuck right back where you started, or worse. Most creditors will not allow you on a Debt Management Program for a minimum 5 years after you have been on a program either through the creditor or other debt program.
5. Should I try to get a loan?
Obtaining a loan to pay off your debt is just swapping debt for debt. It may have a minimal change on your monthly payment or even your interest rate, but most importantly, it has no change on your budgeting habits. This is an area, among others, that needs to be altered in order to become debt free.
6. How does a Debt Freedom Program differ from Debt Settlement?
In a debt settlement, you pay only a portion of the total debt owed. This is done through negotiations with the creditors. During this time, no payments are made to your creditors. There is also no guarantee that the creditors will accept the terms of the negotiations. This process has a dramatic impact on your credit score. There is also a high cost involved with debt settlement. Generally the cost is 15%-30% of the total debt owed. Also, the amount not paid is viewed as taxable income by the government at the end of the year.
The Debt Freedom Program is a 100% pay back to all your creditors. You will be making payments through our credit office to your creditors on time each month. Creditors look at our service as an alternative for consumers to solve their financial problems rather than suffer the stigma of bankruptcy.
7. Do you think I'd be better off declaring bankruptcy?
Bankruptcy should only be considered after every other option has been exhausted. With the new laws on bankruptcy that took effect October 17, 2005 it is no longer an easy process to declare bankruptcy. Additionally, believers are still required by God to repay their creditors even after bankruptcy (Psalm 37:21).
8. How does enrollment into your program impact my credit rating?
This is an excellent questions and one that is most commonly asked. Being on a Debt Management Program (DMP) does not impact your credit score at all. What does happens is a notation is placed on your credit report that you're in a DMP. Now, when a creditor looks at your credit report, they will see this notation and have to make an interpretation of it. Some creditors will see this as a positive step. They see a person taking responsibility for their debt and taking action to resolve their debt in a strategic manner. They like this. Other creditors see it differently. They see it as someone who is or was in trouble and may be more of a risk than someone who is not in a DMP program. Most creditors never fully read the credit report and only look for the scores.
While many are concerned about the impact of being in a DMP, those who truly need the program have credit scores that have already been damaged. The main issue for most folks needing a DMP, is not the impact of credit, but getting out of debt. DMPs actuallly help improve credit scores, because credit scores are, in part, based on faithful and consistent payments over time. Well, this is exactly what a DMP does. If you still have concerns please give us a call and we can discuss this further with you.
9. Is there a fee to participate in your program?
There is no charge for contacting us and thoroughly reviewing your current situation. We are blessed to have the Lord lead you to us and give you our input.
All fees are regulated by each state. We do not set these fees. These fees are also based on whether the DMP is a non-profit or for-profit. For-profits are allowed to charge more. There is no fee cap for them.
If you do become a Debt Freedom Client, there is a one-time setup fee based on each individual state regulation (please call to get more details). This fee does not exceed $100. The initial counseling fee covers the cost of thoroughly reviewing your financial situation, preparing your application for joining the program and providing all the administrative functions necessary to ensure your program’s success. The initial counseling fee is non-refundable.
Lastly, there is an ongoing monthly fee. This fee is calculated by the new monthly payment amount multiplied by a percentage which varies from state to state (call for more details). This fee allows TPFC to continue as a ministry by covering the costs we incur each month. It also allows us to help out those less fortunate by providing the services to them at a reduced cost. The monthly amount varies state-by-state and is dependent on many factors, including your current payment to your creditors. As a reference, it is rare for the fee to exceed $50 a month on our program.
Be sure to read One Key Truth about our industry to get a better perspective one why it appears there may be different fees from different debt management programs.
DFC can help you save those court costs and attorney fees. Please call one of our Certified Credit Counselors at 800-624-9747 if you are considering bankruptcy to find out about alternatives.
