A consumer contacts a debt settlement company and speaks with an experienced debt settlement consultant. The typical client owes more than $25,000 in unsecured debt and is already behind on at least one, and, in many cases, most of the seven or more accounts they hold. Debt settlement consumers are suffering a severe financial hardship, such as a household loss of income, a medical event or a life event like a divorce. Under FTC rules, the consumer pays nothing to enroll in a debt settlement program.

Following an underwriting process, the company creates a personalized plan for the consumer based on their unique financial position. The consumer creates a separate bank account dedicated to addressing their debts; this bank account is, at all times, under the complete control of the consumer: debt settlement companies never touch consumer funds.

Once the consumer has set aside sufficient funds in their dedicated account, debt settlement specialists negotiate settlement offers with each of the client’s creditors.

When the debt settlement company obtains a settlement offer from a consumer’s creditor, the consumer chooses whether or not to accept it. Consumers are under no obligation to accept any settlement, and, under FTC rules, can reject it without being charged anything.1 The average consumer’s first account is settled four to six months after enrollment.

If the consumer accepts a settlement, payment to that creditor will be made from the consumer’s dedicated account. Only when the consumer has made at least one payment in furtherance of a settlement offer will the consumer be charged a fee, and that fee may only be assessed for the one debt for which a settlement has been agreed.

The process restarts for each of the consumer’s creditors until each account is settled. No fees are charged until each settlement is agreed to by the customer. Consumers can withdraw from the debt settlement process at any time, for any reason, without penalty – they are totally in control throughout the entire process.