What is Debt Reduction or Debt Settlement?

Is our Debt Reduction the same as debt consolidation?

How does this compare with consumer credit counseling?

Why shouldn’t I just file for bankruptcy?

Shouldn't I try to get a loan?

Who is your ideal client?

What kind of Debt can be helped?

What is Unsecured Debt?

What is Secured Debt?

Can a Secured Debt become an Unsecured Debt?

Is there a minimum amount of debt I must have in order to work with Knockout Debt?

Does my debt have to be bad to be put in your program?

How do I qualify for the program?

How do I know if my case will be accepted?

How does the program work?

Will all of my creditors settle?

You negotiated a settlement for me; now what happens?

What if I do not have the money to pay the settlement?

What are your qualifications?

Do I have to include all of my debts or can I select which ones I want to resolve?

How does this program affect my credit?

How will your program affect me when I file my taxes?

Why would a creditor want to settle on my account?

Do you pay my creditors?

What happens to my open accounts when they are put into the program?

How long will the program take and when will I be out of debt?

Will all of my debt be eliminated after I finish your program?

Can my creditors continue to call me when I’m in the program?

Can my creditors sue me?

How do I know I will be able to make it through your program?

I own a home with equity. How can this be used to help with debt settlement?

What is your interest rate?

So what does the program cost and how do you get paid?

How much money can I save?

Will my information be kept private?

Will you answer my general debt questions even if I am not a client?

How do I get started?

What is Debt Reduction or Debt Settlement?

Countless people and businesses experience difficulties paying their debts on time. The idea of continuously paying monthly minimums may seem appetizing for some, but can lead to a lifetime of debt payments. Staying current on payments can also be difficult in times of financial hardship. We are trained and licensed debt arbitrators who negotiate with creditors on your behalf to reduce your debt by 40 to 60 percent. Unlike credit counselors, we do not represent creditors. Rather, we work for you to help avoid bankruptcy and get you out of debt fast.

Is Our Debt Reduction the same as Debt Consolidation?

No. Debt consolidation is simply the combination of all outstanding loans into one payment with a lower interest rate. Debt reduction can both reduce your interest rate and significantly reduce the amount you actually owe while also combining your outstanding loans into one easy payment. Our program also addresses people with all kinds of problems while debt consolidation if often limited to those with very little debt and good credit.

How does this Compare with Consumer Credit Counseling?

Credit counseling has no effect on the amount you owe but instead works to simply lower your interest rate. Since credit counselors work on behalf of creditors instead of on behalf of you, they are more interested in extracting money from you than reducing the amount you owe. Therefore, they will often offer longer payment plans that extend your debt payments for 5 or 6 years. While credit counseling doesn’t affect your FICO score, you will receive a CC or Credit Counseling mark on your credit. This is a negative sign for most lenders and may limit your ability to refinance a home or get a loan.

Why Shouldn’t I Just File for Bankruptcy?

Bankruptcy is intended to be an absolute last resort and requires the advice of a licensed attorney before filing. It will have a very negative and lingering affect on your credit report for 7 to 10 years while also carrying a horrible stigma in your everyday life. Working individuals who are serious about resolving their debt and have discretionary income should try our free consultation to see if Debt Reduction is right for you.

Shouldn't I Try to Get a Loan?

Borrowing more money at a high interest rate is almost always just compound an existing debt problem. Additionally, many of those in debt find it difficult to qualify for loans and may need to secure the loan with an asset that can be easily seized by the bank. For other options, try our free consultation to see if Debt Reduction is right for you.

Who is Your Ideal Client?

Our ideal client:

1. Has a debt problem that they have tried to resolve but failed.
2. Is having trouble staying current on payments, delinquent on their accounts or is close to litigation.
3. Has some discretionary income that can be used to pay off some of the debt.
4. May be considering bankruptcy but wants to avoid it.
5. Is not denying that they owe money, but rather just have problems paying it.
6. Has a minimum of $10,000 in unsecured debts.
7. Has some type of hardship (ie. Divorce, illness, job loss, reduction in pay, etc)

What Kind of Debt Can Be Helped?

Our program is capable of accommodating most types of unsecured debt including credit cards, personal loans, medical bills, store cards, repossessions and back rent. We do not work with secure debt problems or car loans, student loans, mortgages, or IRS tax liens.

What is Unsecured Debt?

Unsecured debt is simply debt that is backed by a promise rather than an asset. The debt typically includes: credit cards, medical bills, commercial debt, personal loans and consumer debt. When you fail to make payments, these creditors typically take legal action to get their money back instead of simply seizing an asset.

What is Secured Debt?

Secured debt is simply debt that is backed by a security interest in an item of real or personal property such as a house or automobile. Creditors typically look to repossess collateral in order to mitigate their damages if you fall behind in paying this type of debt. However, you can still be liable for any balance owed after property has been repossessed and sold. The only exceptions are with home mortgages, which can be subjected to different rules depending on the state.

Can a Secured Debt Become an Unsecured Debt?

Yes. A secured debt can become an unsecured debt when the property securing the original loan has already been repossessed and sold and there is a remaining balance on the loan. This “deficiency balance” is now an unsecured loan owed by the consumer. There are, however, certain exceptions to this rule, particularly when it comes to mortgages.

Is There a Minimum Amount of Debt I Must Have in Order to Work with Knockout Debt?

Yes. We require a minimum total of $10,000 of unsecured debt and require that any individual debt have a balance of at least $1,000.

Does My Debt have to be Bad to Be Put in your Program?

No. Our program is designed to work with debt in all stages.

How do I Qualify for the Program?

We offer a free consultation with our Senior Debt Consultants that includes a detailed financial analysis to determine if an individual or business would benefit from the program. Our primary goal is to ensure that our program is a realistic solution to your particular situation. The last thing we want to provide is temporary relief – our goal is to eliminate your debt as quickly and cheaply as possible.

How Do I Know if My Case will be Accepted?

You will be advised during your free consultation whether or not we can help you. If you are in debt, serious about resolving your debt and currently employed, we will most likely assist you. However, we do have limitations and do not accept everyone into the program.

How Does the Program Work?

Our goal is to reach a quick settlement with a creditor, attorney or collection agency representing your creditor. After the settlement is made, you will be able to make a single monthly payment into your own personal bank account at a bank of your choice. As this account grows, we negotiate settlements with your creditors, which often enable you to escape debt at a fraction of the original amount owed. Finally, once a settlement is reached, the payment is made directly to the creditor from your own bank account.

Will All of My Creditors Settle?

Knockout Debt analyzes each person’s unique situation. Established relationships with many creditors enables us to know exactly which ones are willing to settle and typically at what percentage. Our Senior Debt Consultants tailor a program to your particular needs based upon your budget. Then they will review the percentages of similar deals and base their estimates on these. Note, however, that we will not accept into our program creditors that we cannot work with or other situations that will hinder our ability to settle.

You Negotiated a Settlement for Me; Now What Happens?

The first thing we will do once a settlement is reached is seek your approval while providing you with guidance on whether or not we believe you should accept the offer. If you approve it and your funds are confirmed, we will deliver the terms and conditions of your settlement. Finally, you send payments directly to the creditor electronically per the terms and conditions. Once your last payment is made, you will no longer owe this creditor anything.

What If I Do Not Have the Money to Pay the Settlement?

We have a variety of programs that are designed to work within your budget. You are in complete control of when and what debt gets settled. If you are unable to secure the funds to pay the settlement, we will work on your behalf to keep your creditor at bay until you have accumulated the funds. The purpose of our program is to get you out of debt. You need to make a legitimate effort to eliminate your debt following the plan we develop for you – it’s a partnership to help solve your problems. Your debt cannot disappear automatically; rather, it takes hard work and effort by both parties.

What Are Your Qualifications?

We are a team of trained and dedicated professions with certification and training in Debt Reduction. Our principles are professionals who have worked in Public Accounting, Venture Capital and prominent Los Angeles law firms. Collectively, they have earned degrees in Masters of Business Administration (MBA), Certified Public Accounting (CPA), and Juris Doctorate (JD). Over the past decade they have settled millions of dollars in customers, commercial and tax debt. We also employ experienced negotiators to work on your behalf. We are also certified by I.A.P.D.A. (International Association of Professional Debt Arbitrators) – one of the largest professional debt associations in North America. Other qualifications include membership in the Better Internet Bureau, Chartered member of the NACDSC, and the National Association of Consumer Debt Settlement Companies.

Do I have to Include All of My Debts or Can I Select Which Ones I Want to Resolve?

You may choose which debts you would like to resolve; however, we recommend that you include all or most of your unsecured debt. It is important to discuss all unsecured debt because it may hinder our ability to negotiate if you are making regular payments to a creditor that is not included in our program while not paying the creditors in our program.

How Does this Program Affect My Credit?

We do not report any of your activity to the credit bureaus; however, your creditors may report your participation in a debt management program. No form of debt reduction will have a positive effect on your credit, while clients with no history of late payments may experience adverse affects. In debt settlement, you will receive an “open delinquency” on your credit as regular payments are not made to your creditors. However, once we negotiate a settlement, you will be paying the creditor directly and the late marks with stop. Your credit will then show “settled in full”. It is also worth noting that our program will improve your debt to income ratio by eliminating the debt. Improvement in this ratio is important because it is a key metric used by lenders giving our loans. Creditors will also notice that you made an effort to reduce your debt instead of declaring bankruptcy. In the end, however, our primary goal is to get you out of debt as quickly as possible.

How Will Your Program Affect me When I File for Taxes?

Debt settlements should be reported on your tax filings. Your creditors may or may not report it, but law requires that debtors include the canceled amount of debt in gross income for tax purposes; it is considered forgiven debt and taxed at your normal rate. For example, if you owe a creditor $10,000 and settle it for $4,000, you have saved $6,000. If you tax rate is 25%, then you would owe $1,500 in taxes (which is still a savings of $4,500!). Depending on your financial institution, you may be able to claim insolvency and would be able to avoid these taxes. For more information visit the IRS website or contact your local accountant.

Why Would a Creditor Want to Settle On My Account?

Creditors are well aware than approximately 30% of the 1.66 million bankruptcies last year occurred on debt that was current. And once a person files for bankruptcy, the creditor receives nothing. It also costs creditors time and money to hire outside lawyers and collections agencies to recover any delinquent debt. As a result, it makes sense for creditors to decide to settle in order to save them time and money.

Do You Pay My Creditors?

Knockout Debt does not distribute funds to creditors during the program. We are not a credit counseling program. The purpose of our debt reduction program is to settle your debts at a discount to the principle balance that you owe. We cannot negotiate meaningful settlements on current accounts, so if you can afford to keep paying off your debts on your own, you should do so. While in our program, regular payments are not being made to creditors until after a settlement is reached. The settlement account is then funded by you and payments are deducted electronically and sent to your creditors.

What Happens to My Open Accounts When They Are Put Into the Program?

Accounts put into our program are automatically closed to future use. Creditors usually require accounts included in debt management programs to be closed in order to allow special terms like substantial lump sum reductions, lower monthly payments or lower interest rates. This is designed to stop the cycle of charging and eventually eliminate your debt. However, we may recommend that you maintain one minimum balance credit card to use for emergency purposes while you are in the program.

How Long will the Program Take and When will I be Out of Debt?

Program length varies from case to case and depends largely on the funds available to resolve your debt. Our Senior Debt Consultants will discuss this with you during your free consultation and assist you in forecasting how long it will take to eliminate your debt. A typical program takes 12 to 36 months; however, some programs have taken as short as 120 days. In the end, the amount of time to get out of debt is a function of how much you owe, your available monthly income and how much you can pay to your creditors in a lump sum.

Will All of My Debt be Eliminated after I Finish Your Program?

You can expect to be free of all contracted unsecured debt that you have reported to us at the conclusion of our program, assuming you have followed all of our procedures.

Can my creditors continue to call me when I’m in the program?

Yes they can, but most will not. The majority of first party creditors are cooperative and will update your records to indicate that you are participating in a debt management plan. Our program includes representation by our in-house legal department. We send cease and desist letters to creditors. This compels third-party creditors or collection agencies to only communicate with us. However, you may still have to put up with calls for 30 to 60 days while the program is being set up as the amount of time it takes for their records to update varies by creditor. Usually, the calls will cease after the creditor receives notice from us that you have entered our program. Your Senior Debt Consultant will explain how various creditors are handled. Be aware that despite our best efforts, there are unscrupulous collection agencies that will not abide by a cease and desist letter and will continue to call you. This is against the law and you can formally complain should this continue. You should also know that accounts are frequently sold. We may prevent one collection agency from contacting you. However, they may sell your account to a new agency and the process will unfortunately have to be repeated.

Can my creditors sue me?

Creditors maintain the right to use legal means to collect a debt. Some creditors are more litigious than others. However, most creditors will only sue if there is a lack of communication or they feel that a consumer can afford to pay them and is simply trying to ‘beat the system.’ If you are earning six figures, own a home with equity, or can afford to pay off your debts in full, then you may be sued if you fall behind on payments. Lawsuits are not common but they do happen. You should be aware that a creditor can only sue you if it retains an attorney that is in your state. Furthermore, it takes time and costs money to file. Lastly, even if a creditor is to take legal action, they can only collect what you have. A garnishment takes time and always hinges on your employment. If you lose your job, the garnishment will temporarily cease. It is not easy for a creditor to attach to equity in your home and it may be protected by your state’s homestead act. In summary, it is usually more cost effective for a creditor to settle than to pursue legal action.
If a creditor takes legal action we have experience in negotiating and settling debt during the entire legal process. However, we are not lawyers and cannot provide you legal advice. We recommend that our clients seek competent legal counsel in certain situations and may recommend an outside firm in some instances. Our trained negotiators have settled accounts for clients who have had a summons, judgments/liens and wage garnishments before entering the program. We work with your creditors to find a solution that will satisfy everyone before legal action is taken. While we cannot guarantee that legal action will not be taken, we are confident that our experience in dealing with creditors can avoid it.

How do I know I will be able to make it through your program?

During your free consultation, we carefully review your situation to determine what program is right for you. You decide how much you can afford to pay each month and what resources you have available. Our program is a partnership. Your success in this program depends on your ability to set aside the prescribed funds and to keep an open line of communication with us. If you can follow these guidelines we know you will succeed in our debt reduction program.

I own a home with equity. How can this be used to help with debt settlement?

If you have available equity in your home we may be able to help you use this as a means to gather money for settlement more quickly. We have affiliations with several mortgage companies that are experienced in working with debt settlement companies. They are often able to help people who normally may not be able to secure loans to refinance with a cash-out. This money can be used to pay off creditors after we negotiate a settlement for you.

What is your interest rate?

We are not a loan company, so we do not charge interest.

So what does the program cost and how do you get paid?

Our fee is among the lowest in the industry and is based on a percentage of your overall debt. We earn our Fees as follows: Thirty percent (30%) of the total fees are earned when we perform budget review, debt analysis and file setup. Thirty percent (30%) of the total service fees are earned when we have prepared initial correspondence to the contracted creditors. Thirty percent (30%) of the total fee is earned when we have received notification from you to begin settlement of the contracted accounts. The final ten percent (10%) of the service fee is earned when you complete the program. If for any reason, you fail to complete the program, you shall be entitled to a reimbursement of all unearned fees. Our program is very affordable and far less expensive than costly legal fees or attorneys which may charge hundreds of dollars per hour. We receive our fees through an electronic funds transfer from whichever bank account you want to use.

How much money can I save?

In extreme cases, as much as 80% of the principal balance can be eliminated, but on average creditors will settle for $.40 to $.60 for every dollar owed. Factors that influence this include: who the creditor is, your situation, whether you have a balance transfer or cash advance, and how quickly you can come up with settlement funds.

Will my information be kept private?

We are 100% committed to maintaining complete confidentiality and privacy. Feel free to read our comprehensive privacy policy found on this site. Of course, your creditors will be advised by us that you have contracted our firm to assist you.

Will you answer my general debt questions even if I am not a client?

Absolutely, we welcome the opportunity. Often we answer questions about debts, credit reports, taxes, income and other topics on a daily basis. If we do not have the answer, we can refer you to someone who does. Remember, however, that we are specialists in debt reduction. For tax advice, you should contact an accountant. For legal advice, contact an attorney.

How do I get started?

There are several ways to begin. The simplest is for you to accurately fill out our simple "Free Consultation" form found on this web site. We will review it promptly and get back to you. For immediate attention, contact us toll free at 888-443-3328 and we will be happy to answer any of your questions. There is no risk, cost, or obligation to receive your Free Debt Consultation.