Frequently Asked Questions

Will all of my creditors accept a debt settlement plan?
  • most creditors will accept a debt settlement proposal
  • not all creditors are guaranteed to accept a proposal
  • the time to convince a creditor to accept a plan can vary
  • creditors who have previously accepted plans may change their position on future proposals

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, 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.

What is the cost of a debt settlement plan?
  • fees can vary based on the nature of your debts
  • fees can also very based on the complexity of your debt situation
  • pending lawsuits can affect the costs of a debt settlement plan

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.

Is my information confidential with your debt settlement services?
  • with our law firm your information is protected and confidential
  • it cannot be guaranteed that all debt settlement companies keep customer information private and confidential
  • if you hire an attorney your information is protected under attorney-client privilege

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

We contact 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.

What happens to my credit during a debt settlement plan?
  • while in the debt settlement process your FICO score will generally be poor
  • if you’re in debt settlement and using credit cards to pay bills your FICO score will generally be poor
  • there is a problem of false scores where credit scores are artificially high

We tell clients that while you are doing debt settlement, your FICO credit score will be poor and you will not be considered to have a good credit rating.

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. Bay State Debt Consolidation does not offer credit counseling services. We don’t help you with credit reports and/or your credit score.

After your debt settlement plan is completed, we will give you 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, which you can have access to with 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.

How long is your typical debt settlement plan?
  • the length of time for debt settlement varies depending on financial resources
  • if you pay a lump sum settlement your plan will be quicker
  • the average length of debt settlement can be from 6 months to 5 years
  • the length of time for the plan will also vary depending on the amount of debt owing

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.

How are your debt settlement services different from others?
  • all your options are laid out and explained in terms you can easily understand
  • all the pros and cons of all your options are examined, considered and conveyed to you
  • we provide a comprehensive and fair analysis of your options
  • if a debt settlement or debt management plan is not your best option, we can provide legal services in the form of Chapter 7 and Chapter 13

Bay State Debt Settlement explains all 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 effect 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 pros and cons 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 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 weigh 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.

What is the difference between debt settlement and debt management?
  • in debt settlement you pay 40% to 60% of your debts
  • in debt management you pay 100% of your debts at a reduced interest rate
  • debt settlement generally takes less time to complete over debt management

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. You can view our debt options comparison chart which will give you more important information as to which plan would be right for you.

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.

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.

What is a secured debt versus an unsecured debt?
  • an example of a secured debt would be your car loan, or a home mortgage
  • an example of an unsecured debt would be your credit card debt, or personal loans
  • creditors can collect money owed from a secured debt by selling the object you owe money on
  • creditors can collect money owed from an unsecured debt by garnishing your wages
  • Chapter 7, and Chapter 13 deal with secured debts

Since we only can deal with unsecured debts, client asks 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 they’re 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.

How can I be assured that your debt settlement plan will work?

The best assurance you have that our debt settlement plan will work for you is that we have been doing non-bankruptcy options for a considerable period of time and people know that we are here to help give you the best financial advice possible.

I have worked successfully with clients using non-bankruptcy options in order to solve financial problems. My reputation in the community is your assurance that your debt settlement plan will work for you. I have been practicing law for 21 years.

For example, since I am not licensed to practice law in any other state except Massachusetts, I only offer my debt settlement plans to residents of Massachusetts.

Do you offer any guarantees with your debt settlement plan?

No one can really offer you a 100% guarantee that our debt settlement plan will work for you. The most any law firm can say is based upon past experience, our debt settlement plan should work for you.

What should I expect from a debt settlement plan?

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.

Will all my debts be canceled once I finish my debt settlement plan?

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.

There are no additional fees or costs if it does take longer to secure good settlements.

Are all my debts included in a debt settlement plan?

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 arrears, car payments and other secured similar type of debts.

Do I have to be approved for your debt settlement plan?

Debt settlement plans do not require an approval process. They’re generally geared towards deciding if debt settlement is actually your best option for your situation.

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 and versus Chapter 13.

We have not found one company that is capable of this financial analysis. We have a special and proprietary program that I have developed where we enter your income and expenses, and then enter your total amount of debt to obtain a detailed analysis of all 4 major options and compare them.

This involves analyzing your income and expenses. We then review the 12 Basic Reasons Why People Either Can’t or Won’t File a Bankruptcy Petition. We, also, have a debt options comparison chart which presents all the pros and cons of each option available.

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, you could rebut the presumption of abuse in filing a Chapter 7 petition.

Do my debts have to be delinquent?

Yes. Unless you are delinquent on your accounts, the creditors will not agree to any settlement. 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.

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, we recommend that you use Debt Management a.k.a. Credit Counseling and will usually refer you to a Consumer Credit Counseling Services (CCCS), or specifically to Money Management International because they are licensed and bonded with the State Banking Department.

In this option (Consumer Credit Counseling Services), 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 Credit Repair Organizations Act (CROA).

We do inform you that debt management companies such as CCCS and Money Management International were established by the credit card industry and; therefore, they tend to have a bias toward only offering debt management. They don’t analyze and evaluate the legal options of bankruptcy.

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 inform the potential client of this but 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.

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

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. It’s repairable, but it will suffer, even slightly.

Can I convert my file to a bankruptcy?

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 (Chapter 13) 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 gray 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 gray area and there is no obvious and absolute answer at the beginning.

If you make a completely informed decision to use Debt Settlement, but after a while it becomes too burdensome, you are free to convert to a formal debt cancellation program.

Many clients tell me, ‘You told me that you didn’t think I would be comfortable in debt settlement and you were right. But it was good that I got to try it.’ This applies to people who in my opinion are in the grey area regarding their options.

Can I do debt settlement myself?

Yes. You can be your own attorney and do debt settlement. You can represent yourself and you’ll be pro se or for yourself.

One drawback is that I have seen, where 5 years later, another bill collector representing the same creditor starts trying to collect on the same debt that you already settled. Further, they even go so far as reporting to the credit bureau that you still owe on this debt. Situations like this don’t stand a chance of happening when using an attorney for your debt settlement.

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. These companies are ferocious! You would 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. There are also tax ramifications of settling debts.

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.

Will interest charges and late fees accumulate on my credit cards while I’m doing debt settlement?

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.

Does your debt settlement service involve contacting all of my creditors?

Once you are enrolled in our Debt Settlement Program, I personally will send a letter to all your creditors and advise them that I represent you, and to direct all their calls, letters and emails 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 of not harassing people in debt because of the Federal Debt Collection Practices Act because they have been sued so many times, that they have finally gotten the message.

Will debt settlement stop creditors from harassing me?

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.

Here’s a secret to dealing with creditors that won’t stop calling you. You simply write them a letter return-receipt requested telling them not to call you. If they do call you they have violated the law.

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. You would give them our office phone number.

I have far more strategies than I can discuss during private conversation where I’ll make you aware of how to enforce the law against harassing phone calls by bringing a law suit under the Federal Debt Collection Practices Act, or under Massachusetts’ law which prohibits harassing phone calls. Under these laws you can be compensated for the harassing phone calls.

It is our experience that by following these procedures where we direct all of 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. If that’s the case, you simply bring those law suits to our office and we’ll review them with you.

How do I guard against debt settlement scam artists and fraudsters?

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. 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:

  • Do they have a local office that you can go to and talk to a person?
  • Are they licensed and bonded by the Massachusetts Judicial System?
  • conduct an Internet search using Google or Yahoo, and enter the company’s name followed by the word Fraud or Scam and see what you find
  • go to the Internet to and do a search on the company’s name
  • go to the Internet and type in ‘Debt Settlement Fraud’ in Google and Yahoo and see what you find
  • go the Federal Trade Commission website and search “debt settlement companies”
  • Ask the debt settlement company for the list of names of people in Massachusetts they are servicing and ask for their telephone numbers for references
  • 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 heard many horror stories from clients who finally discovered us and came to our office after they had been ripped-off by out-of-state debt settlement companies.

Now you should ask: What about yourself, Peter Daigle and Bay State Debt Settlement? What are your references? Are you licensed and bonded by the Massachusetts Judicial Department?

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 being in good standing with the Massachusetts Judicial Department is as follows:

  • my name is Peter M. Daigle
  • 1550 Falmouth Road – Suite 10, Centerville MA 02632
  • I have been attorney with the State of Massachusetts for 21 years
  • my State and Federal Juris Number is: 155753
  • I am in good standing with the Bar Grievance Committee

You can contact them at: Office of the Bar Counsel, 99 High Street – 2nd Floor, Boston Massachusetts 02110 Phone (617) 728-8750

Why are your options different than others?

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, explain, and offer 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.

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:

  • the client is explained the pros and cons 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
  • the client has to understand the 10 Basic Reasons why someone can’t or won’t file a bankruptcy petition
  • 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. Sometimes 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.
  • 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 responsibility 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 is the right way to serve a person who’s going through financial difficulties.

Finally, as I have indicated in other questions, we have extensive educational materials to assist our clients in obtaining a good credit score. 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.

What are the pros and cons of debt settlement vs. bankruptcy?

You will find on our website a debt options comparison 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.

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 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. 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.

Why can’t the Better Business Bureau stop scammers from using their name?

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 that 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 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 a while, 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 persistent and very unethical. Be very aware.

The take home

A successful debt settlement can be quite tricky to come by whether doing it alone or through a so-called debt settlement company. In the end it’s easy for me to advise you to use an attorney to take you through debt settlement because you’ll be 100% legally covered, and creditors take attorneys much more seriously.