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Frequently Asked Questions
Our debt settlement program is designed for people who have had a severe financial hardship and want to avoid filing for bankruptcy. Below is a description of how the program works. Before you make any decisions, however, we strongly recommend that you read and review all of your options. Speak with one of our experienced debt consultants who can explain the program in detail and see if you qualify.
Our FAQ List:
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Meridian Debt Relief’s debt settlement programs are primarily for those facing financial HARDSHIP. Financial hardship means you are unable to pay your debt obligations in a timely fashion. This also means you will not be able to improve your payment performance in the near future. People with financial hardship have debt obligations that surpass their income levels. As a result, their debt continues to grow since they are unable to pay the minimum balance, resulting in late fees and high interest rates. In other words, you are treading water, or perhaps even drowning, in a pool of debt.
Meridian Debt Relief is here to help people who find themselves in such a situation. If you are in such a situation, your creditors know that you may declare bankruptcy. They are, therefore, willing to negotiate with our counselors since a reduced debt obligation is better than your declaring bankruptcy. If you declare bankruptcy, they may receive nothing. Through negotiating a lower debt obligation, your creditors will at least receive part of the debt you owe them. This is why you must truly be facing financial hardship, and considering bankruptcy. Otherwise, our counselors will not be successful in negotiating a lower debt obligation.
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Meridian Debt Relief does not advocate that anybody default on his or her debts. This program is not designed to negotiate debts for people who have sufficient means to meet their debt obligations. If you have the ability to pay your minimum payments in a timely fashion, then it is in your best interest to do so.
Paying at least your minimum payment on time will help you maintain a high credit rating. Debt settlement is the superior alternative to bankruptcy. It is not a superior alternative to on time minimum monthly payments. Besides, creditors are not interested in negotiating debts of those people that are in the position to make minimum payments. In short, this program is NOT for people who are gainfully employed, have high credit ratings and can meet their monthly debt obligations.
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Complete the form online. A debt consultant will review your information and call you to review your situation. After a debt consultant has reviewed your financial situation, they will determine if you are qualified for our program.
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First, our counselors will request that you set aside a set amount of “settlement funds” on a monthly basis. This amount will be based on the amount of debt you carry and your income to expense ratio. Once you have accumulated enough settlement funds to make a reasonable offer to your creditors to settle the debt, Meridian Debt Relief will begin the negotiation process.
Each person's situation is different and the negotiation process will begin at different times depending on the amount of your debt. Once the creditors agree to a settlement amount, we will present this offer to you. If you approve of the settlement, we will instruct the creditor to fax the settlement offer in writing for your review. Our counselor will then host a three way recorded conversation between you, the creditor and Meridian to settle the account. Debts can be settled in two different ways.
1. One lump sum: one single payment, after which the debt is considered “settled.”
2. A term settlement: payments over an extended period of time until the agreed upon debt amount is paid for.
Our counselors will negotiate with each of your creditors until a debt settlement method has been agreed upon for all your outstanding debts.
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Meridian Debt Relief debt settlement programs are for those experiencing severe financial hardship. This program is only for people who:
• Are late paying their unsecured debts
• Have no ability to make payments in the future
• Bankruptcy is their only other option
Examples of qualifying hardships are a loss of income, medical emergency, death of a member of the household who provided financial assistance, or a divorce. If you are currently meeting your monthly debt obligations, and will be able to continue doing so in the long term, then our debt settlement program is NOT for you.
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Anyone considering our program should also contact a bankruptcy attorney to determine if their situation warrants filing for bankruptcy. Using the debt settlement process does not guarantee that you will not have to file for bankruptcy in the future. Depending on the severity of your financial hardship, bankruptcy may be a more appropriate form of action. Yet it should be an action of last resort. Bankruptcies severely damage credit ratings, which will make applying for any sort of loan significantly more difficult in the future.
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YES. Your credit score will decline due to entering this program. How much it will decline depends on the amount your debt is reduced by. Most of the debts you place into negotiation will most likely be “charged off”, which will reflect negatively on your credit score. However, once this charged off debt is settled, the settlement is reported to the credit bureaus. Settled accounts are positive compared to unresolved delinquent debts or bankruptcy. After all, the debts have been settled and paid.
Debt settlement is evidence that you, as a debtor, are making an honest attempt to pay your debt obligations to the best of your ability. Your credit score should begin to improve since eventually, your debt will show as being resolved, or paid. A high credit score is desirable to have, but if you are experiencing financial hardship and are unable to pay your debts, then your first priority should be to settle your debts to the best of your ability. With a fresh start, you will be able to adopt a debt free lifestyle.
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NO. All credit cards in your debt settlement program will be deactivated and you will no longer have credit privileges. Any cards you do not put into the program should NOT be used. Our programs are designed to get our clients out of debt. By incurring more debt, one is only digging his or her hole deeper. The only way to achieve debt free status is to practice the discipline necessary not to incur any more debt, and to diligently pay off current debt obligations.
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Meridian Debt Relief has a 15% fee which is calculated based on the total amount of debt involved in the debt settlement program. The program involves one to two down payments, and the remaining payments are paid throughout the first year of the program.
All costs and fees are always fully disclosed, and you will be required to sign a contract outlining all payment details before you commit to our program. Our counselors can go over payment terms with you in more detail, as it depends on your financial situation.
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YES. Your creditors certainly have the right to sue you in order to recover the money which you owe them. But usually the purpose of the lawsuit is to force a settlement of the debts. In our experience, most creditors would rather not incur the legal expenses necessary to settle debts in court. They would instead rather negotiate an out of court settlement. This is where Meridian Debt Relief steps in, to facilitate this process.
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NO. Your creditors have every right to try and contact you in order to collect debt which you owe them. However, historically we have been successful in eliminating most harassing telephone calls from creditors. If your account is in collections, however, collections agencies are obligated to adhere to FDCPA Guidelines. By law, agency representatives must communicate with you in a certain way that is not threatening or overly invasive. To learn more about these guidelines, research the Fair Debt Collection Practices Act.
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NO. When a delinquent account is settled, this will be favorably reflected on your credit report. A settled account imposes less damage on your credit score than an unresolved delinquent account. Your ability to secure a loan should improve after successfully completing our program. Since your debts will be eliminated, your debt-to-income ratio will improve. Debt-to-income ratios are not part of a credit score. Yet they are an important measure by which lenders evaluate applicants for auto and home loans.
Meridian Debt Relief does not engage in credit repair services. No company can remove legitimate negative items from your credit report. Negative items will remain on your credit report according to the conditions imposed by the credit reporting agencies. The goal of a debt settlement program is to settle your delinquent accounts.
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YES. However, this can be a long arduous process for your creditors. Your creditor first has to sue you, successfully obtain a judgment, and then file a garnishment action. If you are willing to work with your creditors, and negotiate an out of court settlement, wage garnishment can usually be avoided.
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YES. You should note, however, that the debt settlement process can be a long and complex process for the average debtor. Our debt negotiators have the skills and knowledge on how creditors negotiate, and they have many years of experience negotiating the largest possible debt reductions. With Meridian Debt Relief on your side, you don't have to spend all your time and effort trying to negotiate with your creditors. You can rely on our experience to achieve the best debt reduction possible.
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Your creditors will report cancelled/settled debts exceeding $600 to the IRS, and you are required to report the settled debts as income on your annual tax return. However, the IRS permits you to write off any income from canceled debts up to the amount by which you were insolvent at the time. Please contact your tax advisor for specific details regarding such a write off.
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