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Debt Settlement FAQs

The debt settlement process can be confusing, even overwhelming at times. Here are some frequently asked questions about debt settlement and how it works.

What is debt settlement?

Debt settlement is a process of negotiating with a creditor to accept an amount that the debtor can reasonably afford to pay either through lump sum payments or a payment plan.

How does settlement differ from a debt management plan?

Debt settlement is designed to negotiate settlements based on what a debtor can afford to pay his creditors, usually less than the full amount of the debt owed. A debt management plan is based on paying back the entire amount owed. Most debt management plans are sponsored by credit card companies.

Why should I use a law firm to settle my debts as opposed to handling it myself?

Representation by a law firm for purposes of negotiation of your debt provides you with many benefits. For example:

1. Lawyers have been negotiating debt settlements for clients for hundreds of years;
2. You will be assigned to an attorney in your state who fully understands state law and analyzes your situation to form a solid legal strategy;
3. You have full access to the assigned attorney to answer legal questions as they arise throughout the representation;
4. Once a third-party collection agent receives notice that you are represented by the law firm, the collector must cease attempts to contact you;
5. If one or more of your creditors become aggressive, the law firm will be there to advise you of all of your legal options and to assist you in asserting your rights.

What happens to my accounts?

Your monthly payment will be deposited into a lawyer's trust account instead of being sent to your creditors. When this happens, your accounts will become delinquent. As funds in your trust account grow, the firm's negotiators will begin to contact your creditors to attempt to work out a settlement.

When do my creditors receive money?

Your creditors will receive payments only after they accept a settlement offer from the law firm. These funds can either be paid in a lump sum or as a payment plan depending on the agreement reached.

If I miss a monthly payment, will I be dropped from the representation?

No. Simply call us and we will work with you. It is understandable that circumstances may arise and we will help you get back on track with your payment schedule.

How will you communicate with my creditors?

After you have made your first payment, a Cease and Desist letter will be sent to each of your creditors letting them know you have hired the law firm of Persels & Associates to negotiate your debt and asking them to no longer contact you and to direct communications regarding your accounts to Persels & Associates


When does my attorney begin settling my debt?

Once you have retained the law firm’s services by making your first payment, your creditors will be notified immediately and the law firm will begin the settlement process. However, we can only settle a debt after sufficient funds have accrued in your lawyer trust account.

Will creditors keep calling me?

Creditors may increase their collection activity during the first few months of representation. Persels & Associates sends a Cease and Desist letter that notifies the creditors you have hired a law firm to help you with these debts and to stop contacting you.

Can my creditors take legal action against me while I am represented by Persels & Associates ?

Creditors may take legal action against you and they may also increase collection activities. Persels & Associates will assist and advise you should you find yourself in this situation during the course of the representation.

Will my attorney stop late fees and interest from accruing on my accounts?

Persels & Associates cannot stop a creditor from adding interest or late fees to an account. Because we negotiate the entire debt, your savings are projected to be far greater than any interest or late fees that would accrue.

What if my creditors won't settle?

While some creditors may be more difficult than others, the law firm is committed to settling all of your debt. If a creditor refuses to settle and gets aggressive in pursuing its legal rights, Persels & Associates will be here to assist you.

How much will I pay in fees?

For more information on our fee structure, please contact us.

Will the representation have a negative effect on my credit?

Your credit will be adversely affected because you are unable to pay your creditors. You will be using your disposable income to save funds in your trust account that will enable the firm to attempt to compromise your debt when the time is right.

What if debt settlement isn’t working out for me?

You have the right to terminate our representation at any time. Any funds remaining in your trust account will be returned to you within 10 days of us receiving notification of your desire to terminate.

Should you decide that you do not want to or cannot complete the debt settlement representation and need immediate relief, Persels & Associates, LLC, may be able to represent you in Bankruptcy. The firm represents its clients for the purposes of filing Chapter 7 Bankruptcies and maintains relationships throughout the nation to quickly match you with an attorney should your situation demand you file a Chapter 13 Bankruptcy.

Can I enroll secured debt in my debt settlement representation?

We do not enroll secured debt because if you discontinue making payments on your secured obligations, the property securing the debt is at risk.

If my debts are successfully settled will I have any tax liability?

If the firm is successful in settling some or all of your debt, you may receive a 1099-C from any creditors who have settled your debts for more than $600 less than the full amount owed. That may or may not create a tax liability for you depending on your financial condition at the time. We recommend you take the 1099-C to your tax advisor to determine if the forgiven debt creates a tax liability for you.

What if debt settlement isn’t working out for me?

You have the right to terminate our representation at any time. Any funds remaining in your trust account will be returned to you within 10 days of us receiving notification of your desire to terminate.

How will the Florida Class Action Lawsuit impact me?

Announcement regarding the Notice of Pendency of Class Action,
 Proposed Settlement and Hearing 

You may have received a notice from the United States District Court, Middle District of Florida Miranda Day vs. Persels & Associates, LLC. et al and may have questions.  Currently Persels & Associates, CareOne Services and the other Defendants are in the process of settling a class action lawsuit in the state of Florida. The lawsuit stems from the accusation that the firms provide credit improvement services, and misled consumers in regards to the service provided.

Persels and Associates and Care One deny all allegations of wrongdoing and liabilities asserted in the amended complaint and maintain that they have conducted their respective dealings with the Representative Plaintiff and all members of the putative classes in a lawful manner in all respects. Defendants maintain that they each have a number of meritorious defenses to the Representative Plaintiffs various claims. Nevertheless, Defendants recognize the risks and uncertainties inherent in litigation, the significant expense associated with defending class actions, the costs of any appeal, and the disruption to their business operations arising out of this litigation. They also recognize the danger that a successful trial on class wide claims might present to them. Accordingly, Defendants believe that settlement is likewise in their best interests. The Court has made no finding that any Defendant has engaged in any wrongdoing or wrongful conduct or otherwise acted improperly or in violation of any law or regulation or duty in any respect.

The lawsuit will have absolutely no impact on P&A’s ability to negotiate settlements on your behalf. All active P&A clients will continue to receive the same service that, and active clients will still have access to their assigned field attorney as needed.  We apologize for any inconvenience and we want to assure you once again that this settlement will not have any impact on your representation.

We cannot provide you with advice regarding this settlement, if you have further questions regarding your rights you may seek independent counsel from an attorney of your choosing or from class counsel as listed in the Notice.


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