Frequently Asked Questions
What is Debt Negotiation?
What types of debts can be enrolled in a Debt Negotiation Program?
How long does a Debt Negotiation program last?
How do I qualify for the Debt Negotiation program?
How are my debts negotiated?
Can I negotiate my debts on my own?
Will monthly payments be made to my creditors?
Will my creditors still call me?
Will this affect my credit rating?
Can I still use my Credit Cards?
Can my creditors pursue litigation against me?
Does Cambridge Life Solutions have a refund policy?
Can I meet with a consultant one-on-one to discuss the debt negotiation program?
When will you contact my creditors?
What is unsecured debt?
What is a secured debt?
Is there a penalty for paying my debt off sooner or saving money faster than my program requires?
What is Debt Negotiation?
Debt Negotiation is the process of reducing your unsecured debt through the act of negotiating with your creditors for a reduced settlement amount as payment in full on the debt you currently owe. For example, Cambridge Life Solutions represents John and he owes Creditor A $10,000; he has just started to fall behind on his payments. Cambridge Life Solutions contacts Creditor A and explains John is having difficulty paying because he is experiencing a financial hardship; his overtime was eliminated at his job. Cambridge Life Solutions negotiates with Creditor A and Creditor A agrees they will take a negotiated settlement of $3,000 as payment in full on John's debt. The payment must be paid by a specific time and John must no longer use that credit card. Cambridge Life Solutions contacts John to confirm the negotiated offer for John's final approval. If John agrees, John sends $3,000 to Creditor A and the debt is considered paid in full. John saves $7,000 from what he owed, hundreds if not thousands of dollars in interest and Creditor A can no longer harass him for any further payments. This program is a strong alternative to debt consolidation and credit counselling. While those programs are designed to simply reduce your interest rates and late fees, they do not lower the overall principal amount of the debt owed. Only debt negotiation can reduce the principal amount of what you owe. Debt Negotiation is an excellent program for consumers that need significant monthly savings and are experiencing financial hardship. The question is commonly asked, "what motivates the creditors to settle the debts?", this is a very good and important question. From a business perspective the creditor knows that in your current situation you may have to ignore the debt completely and pay them very little or file bankruptcy where they will typically get no payment at all. Through the act of debt negotiation the creditor is able to recoup a portion of the debt and you are able to avoid bankruptcy and other negative ramifications of not paying your bills at all. Another strong benefit of debt negotiation is the elimination of creditor harassment. Once a creditor has agreed and accepted the settlement payment they can no longer harass you for payment.
What types of debts can be enrolled in a Debt Negotiation Program?
Most unsecured debts can be enrolled in debt settlement.
Examples of unsecured debts are:
- Credit cards
- Department Store Cards / Retail Cards
- Collections
- Unsecured Personal Loans
- Unsecured Lines of Credit
- Balances owed on repossessed property ... to name just a few.
Contact one of our debt consultants to review your specific debts for eligibility.
How long does a Debt Negotiation program last?
The length of the program is unique to each consumer based on their situation. A debt consultant will walk through every aspect of your situation in order to determine the best schedule for you. A few of the variables that affect the term of your debt negotiation program are:- Your type of financial hardship and how hard it is affecting you
- The age and balances of your accounts
- The willingness of your creditors to settle on the account
- The amount you are able to set aside for negotiated settlements based on your monthly budget
- And many other variables.
This question is best answered by a debt consultant who can evaluate your specific situation and hardship. Programs range from 12 to 36 months.
How do I qualify for the Debt Negotiation program?
Individuals that are eligible for a debt negotiation program have experienced a hardship situation in their life that has prevented them from being able to pay off their unsecured debt.
Examples of such hardships are:
- Medical illness
- Reduction in income
- Divorce
- Lost job
- Family emergency
- And much more.
Each consumers hardship is unique to that individual and may not be listed above. To verify your hardship for the debt negotiation program, please contact one of our debt consultants to discuss.
How are my debts negotiated?
Debts can be negotiated in two different ways; one lump sum or a term settlement. One lump sum is just that, one payment and the account is paid. A term settlement is a settlement which is paid over an extended period of time until the account is paid. You will be asked to put aside and save a set amount of settlement funds on a monthly basis. This amount will be determined in your initial analysis based on total amount of debt and will be in line with your income and expense budget. Cambridge Life Solutions will then begin to contact your creditors on your behalf, explain your current financial hardship and make offers of settlement as payment in full. Cambridge Life Solutions will work diligently to negotiate and achieve the greatest amount of savings on each debt. Once the creditor submits a formal settlement amount, we will present the offer to you. You will then instruct Cambridge Life Solutions to either accept or reject the offer with that creditor. If the settlement offer is accepted, instructions will be given to you to submit payment to the creditor. Once you have sent the payment and the creditor has been paid the amount is considered paid in full. Then the process repeats itself until the final creditor has been paid.
Can I negotiate my debts on my own?
Yes, but by no means is debt negotiation an exact science. What Cambridge Life Solutions brings is a management team with experience in the debt negotiation industry. Cambridge Life Solutions has a fully staffed department solely devoted to handling inbound and outbound calls to creditors all day. Trained and experienced negotiators whose sole purpose is to contact and negotiate with creditors all day. For many people handling creditors calls and the harassment is simply something they are unable or uninterested in doing, especially with the daily complexities and pressures of managing a job, household or family at the same time. Cambridge Life Solutions also offers our clients a greater position of leverage with their creditors when it comes to negotiating. Cambridge Life Solutions negotiates on the behalf of many clients; of which share the same types of debts. What does this mean for you? Let's take a look:
Example A:
John owes Creditor A $10,000. He decides to contact Creditor A on his own in order to settle the debt. He deals with constant phone calls back and forth while managing his life, after months of negotiating Creditor A finally offers John a settlement of $7,500. John exhausted over the process and not knowing historically what good settlement percentage are agrees with Creditor A and pays. John saves $2,500.
Example B:
John owes Creditor A $10,000. He decides to use Cambridge Life Solutions to negotiate with his creditor in order to settle the debt. Cambridge Life Solutions negotiates back and forth with Creditor A, except Cambridge Life Solutions has a greater position of leverage with Creditor A than John ever did. Cambridge tells Creditor A, not only does Cambridge represent John's $10,000 debt but also 50 other Cambridge clients holding debts with Creditor A. A combined portfolio of $250,000 outstanding with Creditor A. Creditor A looks at the portfolio and says they will agree to settle that $250,000 down to 30 cents on the dollar. Which means for John and the other 50 Cambridge Life Solutions clients that owe Creditor A they only have to pay back 30%. John would only have to pay $3,000. Creditor A works with Cambridge Life Solutions because the amount of work entailed in reaching 51 of their customers is extensive, contacting one source makes it beneficial to them as well. Even with the fees Cambridge Life Solutions charges for performing negotiating services John still saves more than if he negotiated the debt on his own. This method is called "bulk negotiating". Greater portfolios typically lend to greater savings. It's similar to shopping at a warehouse store. People shop there because if they buy in bulk they get greater savings.
Regardless to whether you decide to use Cambridge Life Solutions to negotiate your debt or you decide to do it on your own we wish you success on your road towards financial freedom. We respectfully understand how important it is that you weigh all of your options. Please feel free to contact and speak to one of our consultants regarding any questions about our services at any time.
Where will my money be held while I'm accumulating funds for settlements?
You will hold your funds for settlement in a bank account that you either open specifically for these funds or one of your own existing bank accounts. As settlements are approved by you, you will be given instructions for submitting payment to your creditors. It is important to us that you always have control of your money.Will monthly payments be made to my creditors?
Debt negotiation companies do not make any monthly payments on your accounts. Your set aside savings will result in a lump sum payment or a pre-negotiated settlement payment plan to your creditors after the debt has been negotiated.
Will my creditors still call me?
You may receive collection calls and letters from your creditors while you are enrolled in our debt negotiation program. We ask that you forward any information you receive from your creditors so we are always fully informed on your accounts. Most often, creditors will continue to attempt to contact you while they are working with Cambridge Life Solutions. We understand no one wants to receive creditor calls which can be both annoying and inconvenient. Please understand however that this process has led to clients becoming debt free and it takes a determined client to stay focused on completing their program.
Will this affect my credit rating?
Yes, your credit will be negatively affected during the program just as any other debt relief options such as credit counselling or consumer proposals.
If you are already behind on your payments, near or over your credit card limits, your credit is most likely already impaired. Most people believe if they have stayed current on their minimum payments then they have good credit. This is not necessarily the case, only a portion of your credit score is determined by your on-time payment history. There are other areas that affect your credit rating such as: (1.) how long you have held the debt (2.) how high you are on your credit limit (3.) your debt to income ratio (4.) whether debt is secured or unsecured. (5.) how many times you have applied for credit over a given period time and (6) the amount of inquiries regarding your credit; just to name a few.
Many clients want to know how much their credit score will be affected, but the fact is no person or company can predict how much your credit will be affected. A credit score is unique to an individual's situation and there are many factors that comprise your credit rating. Even each credit bureau has different equations and guidelines on how these items translate into your creditor score.
A good credit rating gives you the opportunity to accumulate more debt. Many of our customers realize this and understand their primary focus should be on getting out of the debt. Your credit score is like an elevator. When you join a debt negotiation program the elevator may go down, however as your debt is paid off and upon competition of your program, you then can work on rebuilding your credit and the elevator can go back up. Only this time you can have a great score without the high interest debt!
Can I still use my Credit Cards?
Any accounts you enroll into the debt negotiation program should no longer be used. This goes for every debt relief options available like credit counselling or consumer proposal. Many of our clients are already maxed out or over the limit, so this really isn't a concern or issue. Remember, the goal is to get out of debt, not accumulate more of it.
Can my creditors pursue litigation against me?
While a creditor might have a legal right to pursue a lawsuit against you on a debt, our experience has been that this is far less common than it is believed. The creditor must weigh out the legal cost of taking a lawsuit to court, obtaining a judgment and then pursuing the judgment against you versus negotiating a settlement on the debt and receiving guaranteed payment on that debt. Cambridge Life Solutions cannot provide legal advice however these statements are based on actual experience with clients and creditors.
Does Cambridge Life Solutions have a refund policy?
Yes and it is clearly defined in your enrollment package. Any enrolled account which remains "unresolved" (meaning: does not receive a settlement offer) within 30 days of the Client's completion date of their program is entitled to a FULL REFUND calculated based on the amount of service and monthly maintenance fees paid for that specific unresolved account.
Can I meet with a consultant one-on-one to discuss the debt negotiation program?
Cambridge Life Solutions currently has 3 locations; with more coming in the future soon. We have a Vancouver Branch, Toronto Branch and Orange County Branch. You can call to schedule an appointment to meet with a Cambridge Life Solutions representative at any one of these locations.
When will you contact my creditors?
We will contact your creditors as soon as you have been enrolled in the program to notify them that you have enrolled in our debt settlement program. During this contact we will let them know you have given us permission to communicate and negotiate with them on your behalf.
What is unsecured debt?
Any debt that is NOT tied to a piece of property or collateral. If you fail to pay your creditor on an unsecured debt they can not immediately seize a piece of property or asset you have for non payment.
What is a secured debt?
A debt on which a creditor has a lien. The creditor can institute a foreclosure or repossession to take the property identified by the lien, called the collateral, to satisfy the debt if you default. An example is your house or car.Is there a penalty for paying my debt off sooner or saving money faster than my program requires?
Absolutely not. There are no pre-payment penalties and generally the quicker you save funds available for settlement the great the savings with the creditor and less fees paid for administrating the program.
