A Straight Talk on Debt

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Is Debt Settlement Right for Me?

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If you find a Debt Management Plan (DMP) does not fit your budget and you do not want to file bankruptcy or do not qualify, Debt Settlement may be the best option.


Debt Settlement usually offers a lower monthly payment than a DMP and works towards negotiating with a creditor to accept a lesser amount than what is owed as opposed to only lowering interest rates.

The amount of time required for Debt Settlement varies based on your payment amount and what the creditors may be willing to accept.


This is not a quick fix but instead requires a commitment of three to five years, patience, and faith.




  • Lower monthly payment
  • Reduce overall amount of debt
  • Potential to get out of debt sooner
  • Access to an attorney if a creditor pursues litigation




  • Increased collection activity including collection calls, and letters
  • Possibility of being sued, wage garnishment, and legal action.


How Debt Settlement Works


Debt settlement plans are designed to negotiate with creditors to accept a lesser amount that what is truly owed on the account. For settlements to be considered the accounts must become delinquent, this may increase creditor collection activity. Creditors are not willing to accept a lower amount when the accounts are current because they are receiving full payment. Why accept less when you are getting the full amount?  


CareOne's process differs from several competitors because they complete a detailed budget analysis to identify any potential areas you can make spending adjustments. The fee structure is also set up differently from our competitors. Many competitors require full payment up front before they begin to work on a customer's account.

CareOne collects a one time activation fee, a monthly service fee, and then collects contingency or success fees based on the amount saved when a settlement is completed.  


Your monthly payment is deposited into an escrow account and as the account builds value settlement offers will be issued to your creditors. Most creditors accept settlements, it just becomes a question of how much and when. The quicker your escrow account builds value, the sooner your negotiator may be able to set up settlements with your creditors. The important thing to remember is that this type of plan takes time. Someone must be entirely committed to the plan and be willing to stick it out.  


Debt Settlement is not the Easy Way Out


Debt Settlement of any kind is never easy and in fact can be very stressful and aggravating. Creditors and collection agencies will call incessantly during the first few months because the accounts are delinquent and they think the best way to get you to pay is to call! If it did not work, they would not do it.


Creditors will tell you they have not received any notice from CareOne and they will tell you they do not accept settlements or they do not work with settlement companies. These statements are intended to intimidate you and scare you into making a payment. It is important that you do not give in to these statements and have faith that CareOne is working on your behalf to get your accounts settled.  


On average, most creditors will accept 45 - 60% of the original balance over 1 - 6 payments. It can take months or years to build up the necessary amount of money in your escrow account. The amount of time it takes to settle an account may vary based on the balance of the account, the creditor, and how quickly funds are built up in your escrow account. In most cases our clients can expect to receive a settlement in months 6 - 8 if they engaged a creditor with a smaller balance of less than $1,000.


Again, settlement takes time. Years, not months. 


Rob Taylor    

Rob Taylor is a contributing author for A Straight Talk on Debt. Rob tells it like it is when it comes to the latest debt industry news and shares his advice on personal finance.

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  • Please Note,

    In responding to any pressure from accounts that were under Debt Settlement should I refer them to CareOne for resolution?

  • We were first in the DMP which turned out to be costing us more than our original payments, so we talked to CO & they advised us to do debt settlement which was a even bigger mistake! As of today we have termintaed our program. We called all 13 creditors & they all worked with us - 0% ,no late fees , 60 months to repay. So instead of giving our money to Persels & Assoc. all of it will be going towards our debt.Persels does not send any payments to the creditors until their fee is paid in full which in our case was $11,147.00!!

    Our beginning debt was approximately $80,000.00 as to date it is up to $85,000.00 from all the late fees & interest tacked on.Please check into the program very carefully before you sign Persels on. Good luck to all.

  • Good morning Karyn and thank you for posting a comment to my blog. It would depend if your settlement plan is administered by CareOne or by Persels & Associates. Please dial 1-800-227-3123 and they will be able to offer advice. Thank you and please let us know what happens.

  • Good morning deno721 and thank you for posting a comment on my blog. It sounds like you were able to contact the creditors and work out favorable repayment terms. Congratulations! Many times it does not end the same way for people who come to CareOne for help with their debt. We always advise our customers to fully understand the aspects of the program before they enroll. We look forward to hearing from you when you completley pay off your debt. Thank you,


  • Very scared.  Anyone out ther have any success on the debt settlement program????  Just getting started and not sure if it's going to be the right thing for us.

  • Hi rjsmom99

    We are having success with the dmp with care one, but it takes time.  We started in April 09 and all of the creditors accepted to the program by July 09.  All the late fees/ overlimit fees were waived and now our balances are going down. Be patient and it will work.

  • mkman,

    Are u in the dmp or the dsp, this blog is about the dsp. I was wondering if it really works also.

  • I have been successfully enrolled in the DMP for over a year.  Last week I was laid off from the full time job that I have been at for 6 years.  I am terrified that I'm not going to be able to keep up with my payment.  Is DSP or bankrupcy a better option for me now?

  • Is it true that Persels & Assoc. do not pay untill they are paid in full ? We are enrolled in the DSP and our first payment is scheduled for January Just wondering how long untill my creditors start getting paied and not call me for the payments.

  • If you are in DSP, your creditors will not get paid until it is has been long enough to make them decide to settle for a lesser amount.  That is what makes them want to forgive part of what they owe, better to get some than none at all.  I suggest you read the Blog Post explaining the Debt Settlement program - it is not an easy program and you should know what to expect.    

  • Hello, it is true, it is a hard program, but so far it has worked for me.  I had 7 cards and 3 have settled.  Last 4 big ones are still in negotiations...of course I need to build up my escrow account.

    I think it depends on each person and each situation.  It takes patience and hard work.  I will be on the program for a 1year this January.  I remember when I got my first summons, I just about had a heart attack, but PA and Care One walked me through it...

    Just Hang in there.

  • I started DSP in Dec. I was not late on any of my accounts. Owe 4500.00 on 2 accounts wells Fargo and GE moneyand 8000.00 on one Wells Fargo total 16000.00 Payments 550.00. I have a chase that did not enter 145.00 a month could not afford the 700 a month any longer lost job and son in college.. I settled and payments 288.00 a month. I am scared. Will this work. I am getting calls stating I have to pay etc...How long will it take to settle on one account year? What do I do? When they call give number and state lawyer handing? I know not a quick fix, how will I know if settle and what they tell creditors if the call Persels & Associates. Not sure if I did the right thing? Will Persels call my companies and get the int. rate decreased and late fees stopped?

  • I am scared to death of getting sued, I've never been a person to get into any kind of trouble.  What happens if one of my creditors does sue me on the debt settlement program?  Will they garnish my checks, and what if I'm still drawing unemployment at that time?  When I apply for jobs will their be a record of a judgement of some sort against me that I will have to report?  Can creditors try to put liens against my home (in my and husbands name) or vehicles (in his name only) if they are jointly being paid upon by my husband and I, even if he is not in the DSP?  I'm scared out of my mind.  At first I felt like I was taking a positive step in the right direction, but I don't feel too protected the more I think about possibly getting sued.  Why wouldn't they all sue so they can get their money back?  My unsecured debts total around $16,000, but I can't afford a debt management program and the court scare has got a terrible grip on me.  Someone pleaase advise.

  • We felt very strongly that DMP was right for us, although we were advised to file bankruptcy.  We WANT to pay the debts, but because of the hit the logging industry took 2 years ago, we just could not make all the necessary payments with unemployment and my disability.  You guys are SO WONDERFUL and understanding with us, and I can proudly say that after a year we have never missed a payment and even a couple of our creditors have been paid off already!  BUT---now CapitalOne has decided that they w ant to go to court and are suing me.  We go to court on January 22 for a summary judgment (?) and I am scared to death.  Although I worked in the criminal court system in my county for over 23 years, I have no clue about civil law.  Of course everyone in the court system here knows me very well, including the judges.  But I am still afraid that they can have my husband's wages garnished or even my SSI disability (I have MS, FMS, Osteoporosis, Osteoarthritis, RLS, CFIDS, and some other stuff I can't remember) garnished!  Then we would not be able to pay you or our mortgage.  Our attorney is so very nice and is very patient with me so far.  I can be a definite pain in the ass.  It is so scary for us, and I imagine scary for others who are in the same situation as we are.  Why do the credit card companies make it so hard for us who try to be honest enough to pay what we owe?  I just don't get it.  It is very discouraging, and now there is talk of bankruptcy again in order to -get this- protect ourselves from garnishment and harassment.  Does it ever get better?

  • Some of these posts are scary, but I am satisfied so far.  Can you answer my question as to whether creditors who don't want to settle can garnish wages or SSI disability?

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