How New Day’s Debt Settlement Program Works
Get fully informed on the process, so you know what to expect At New Day Financial Solutions, our goal is to make sure you’re fully informed on your debt and our process. We believe full transparency gives you peace of mind that you’re making the right choice to work with us. So, here’s what you can expect when you work with our team.
1 Enjoy a no-cost, no-obligation consultation
A certified debt resolution specialist will review your debts, budget, and financial situation with you to see where you stand.
2 Receive a complementary savings estimate
Your specialist will help you understand how much a debt settlement program can help you save and how it will work in your situation.
3 Decide if it’s right for you
The specialist will help you understand how this program compares to other solutions, so you can weigh your options. Then take all the time you need to decide.
4 Set aside your settlement funds
Once you’re ready, we’ll set up a trust account in your name where you can set aside the funds we’ll need to settle your debts.
5 We negotiate on your behalf
We’ll contact each of your creditors to negotiate a settlement. Our goal is to get you out of debt for the lowest percentage possible.
6 Approve your settlement
Our team will contact you once we’ve reached an agreed amount with each creditor, so you can approve the offer.
7 Settlement and fees are paid
Once you approve a settlement, we’ll pay the creditor and take our fees out of the trust account. You only pay as each debt gets settled.
Frequently Asked Questions
Here are answers to the most common questions that our team receives about debt settlement and New Day’s program.
What are the fees?
Fees are calculated based on the amount we save you. Thus, fees are not paid until each debt is successfully settled. Your debt resolution specialist can explain what fees you can expect during your no-cost consultation.
How will this affect my credit?
Once each settlement is paid, the creditor will update the balance on the account to zero and change the status to “Settled in Full.” The account will remain on your credit report for seven years from the date it first became delinquent.
While this is considered negative information in your credit report, be aware that accounts that are already past-due, as well as payments that you’ve missed also count as negative information.
What’s more, the effect of these notations on your credit score will vary based on where your credit stood before you enrolled in a debt settlement program. The impact is much lower for consumers with fair or poor credit, as opposed to those with excellent credit.
How do I get funds for settlement offers?
This depends on your situation. If you have funds in savings or from a tax refund or property sale, you can use that money to quickly generate the funds you need.
If you don’t have money available, don’t worry! We’ll help you set up a budget to determine a monthly set aside amount you can make. This will help you generate the funds you need gradually in a way that works for your budget.
This table shows typical monthly set aside amounts based on how much debt you need to settle:
|Debt to Setttle||Estimated Monthly Set Aside|
*Monthly set aside amount based on a term of 48 months. All set-asides include fees, which are not earned until settlement offers are agreed upon by both you and the creditor. Illustration purposes only as individual situations will vary.
How long does it take to settle my debt?
This also depends on your situation. A debt settlement program typically takes 12-48 months to complete. The time will vary depending on how quickly funds for settlement offers can be generated. Extending the program time allows you to make lower monthly payments, which may work better for your budget.
Also, be aware that the process is ongoing. Once you have enough funds to make one settlement offer, we’ll get to work right away. Most clients reach at least one successful settlement with five months of enrolling in the program, according to an independent study.
What types of debt can you settle?
The program is best used for credit card accounts where you’ve fallen behind. If you are a few months past-due, the credit card company would expect you to pay everything due before they will bring the account current. In many cases, it is better to simply settle.
Debt settlement can also help with accounts that are in collections. This may include credit cards, medical collections, payday loan collections, and old utility or service accounts.
What other options do I have?
There is a range of options that you can use to address challenges with debt, including:
- Debt consolidation
- Debt management program through a credit counseling agency
- Home equity loans or home equity lines of credit (HELOCs)
- 401(k) loans
- Life insurance loans
- Chapter 7 or Chapter 13 bankruptcy
Debt consolidation can be a viable option to repay everything you owe. However, it requires you to have good or excellent credit, so if you have past-due debt that’s hurt your credit you may not qualify.
Borrowing against home equity, a retirement plan, or a life insurance policy work better for people that have taken some hits to their credit. However, they can all be risky. You essentially put yourself in a weaker financial position just to pay off your debt.
If you default on a home equity loan, you can lose your home. If you lose your job, a 401(k) loan could be due in full within 90 days. And life insurance is there to protect your family in case something happens to you. In most cases, these options are not worth the financial risk you assume.
A debt management program through a non-profit credit counseling organization repays everything that you owe in full. So, while it can help you avoid credit damage if your accounts are still current, it means you typically pay significantly more than you would with debt settlement.
Bankruptcy can get you out of debt for less than you owe, but you may risk assets like your home or car in Chapter 7. In Chapter 13, you’re looking at a 3 to 5-year repayment plan that will pay back a portion of what you owe. However, unlike debt settlement, the court will decide what you can afford to pay.