Frequently Asked Questions

• What are the Fees for this program? Back to top
  • AMG charges a flat 15% fee on the total debt to be settled.  The 1st three monthly payments go directly towards the 15% settlement fee.  The remainder of our 15% fee is spread out over the next 9 to 12 months as a courtesy to our clients.  It is important that we build up a balance in the trust account so that we have funds to negotiate with.  There is also a small monthly maintenance fee of $49, which includes the $9.50 Noteworld third party trust account monthly fees.  However, these fees and the 15% settlement fee are all included in the settlement figures stated above.  There are no hidden fees or upfront costs.
• Can you guarantee a 40% negotiated settlement? Back to top
  • No. Our national average for settling debts is 40%, but some banks will settle for much lower, some higher. We will not know what the final settlement offer will be but nothing will be accepted until you personally agree to the settlement. The summaries above reflect the minimum amount that we have estimated you will need to save to put yourself in a position to reach your goals. Actual settlement amounts, necessary savings and the period required to reach your goal may vary based on creditors actions and other factors that may affect or prevent the realization of your goals.
• Should I stop paying my creditors each month? Back to top
  • AMG’s Debt Settlement program is only for our clients suffering from a financial hardship and cannot afford to make the minimum payments to their creditors. Because you will be making payments into a third party savings account that will be used to negotiate your settlements, it is expected that you cannot also continue to make payments to your creditors. If you can easily afford to make the minimum payments on your credit cards then this program is not for you. No bank will settle with us if you continue to make the minimum payments to them. Why would they, they love the minimum payment customer? (explanation above)
• Will this affect my Credit? Back to top
  • Let’s make sure you understand what “credit” actually means first. A credit score is not the same as a credit report. Your credit report simply shows a listing of all of your loans (student loans, mortgage, home equity loans, credit cards, installment loans, etc.), the amount outstanding, and how well you make your payments (whether you are routinely late, pay on time, etc.).

    Your credit score, on the other hand, is a three-digit number that gives lenders a snapshot of how much you owe and whether or not you pay your bills on time.  Your credit score is the most important number, but not the only number, that lenders use to evaluate whether or not you get a loan and what interest rate you will be offered. In essence, the higher your credit score, the lower the interest rate you can get.

    So what's a good credit score? According to Fair Isaac, the company that invented the credit score, the median credit score in the U.S. is 723.  Generally, banks will offer the best interest rates to people with credit scores above 750. That is considered an excellent credit score. In fact, in most cases, a consumer with a credit score of 770 will be offered the same interest rate as a consumer with a credit score of 800, so aiming for a credit score higher than 770 is not necessary.

    A good credit score is generally somewhere between 680 or 690 and 720. And an average credit score is around 650 to 680.  A credit score below 620 will typically get you a high-risk label and require you to go to the sub-prime market (read: much higher interest rates) for a loan.

    Typical Credit Score Composition:

    35%  Past payment history
    30%  Outstanding debt
    15%  Length of credit history  
    10%  Recent credit applications
    10%  Types of credit and loans you have
    100% 

    But wait, there’s more to credit than just your credit score.  An important but often overlooked indicator is your Debt-to-Income ratio.  Your DTI ratio is exactly what it sounds like: the amount of debt you have in the form of mortgages, car loans, student loans and credit card debt, as compared to your overall income.

    To calculate your overall debt-to-income ratio add up all of your monthly debt obligations -- often called recurring debt -- including your mortgage (principal, interest, taxes, and insurance) and home equity loan payments, car loans, student loans, your minimum monthly payments on any credit card debt, and any other loans that you might have. Do not include expenses such as groceries, utilities and gas. Take this total and divide it by your gross monthly income from all sources.  You'll want to keep the resulting number below 36 percent -- a threshold that loan officers and credit card issuers will use as a factor when they determine if or how much they're willing to lend to you.  Even with a great credit score, a high DTI ratio may prevent you from getting that loan you want..

    Keep in mind that most people that join our program have a good credit score but, unfortunately, also have a high debt-to-income ratio.  You may fit in this category.  This means that even with your good credit score, the $15,000, or $30,000, or $60,000 that you owe in credit cards will prevent you from receiving another mortgage, auto loan, or credit card offer.  But hey, with that much debt, do you even want to be approved for more debt?  No!  What does that good credit score do for you besides get you pre-approved for more credit cards that you can’t afford?  Stop worrying about your credit score and get on the road to a happier, debt free life.  It will involve some commitment on your part, but it’ll be a lot easier with our help.

    So now that you understand Credit Reports, Credit Scores, and Debt-to-Income ratios, you can better understand how our program will affect your credit.  The Debt Settlement Program will have a short-term adverse effect on your credit score during the program; there is simply no pain-free way out of debt, so to speak.  Monthly payments will no longer be made to the creditors while we are negotiating, and they may report you as late to the credit bureau until the account is settled, which is typically 36 months or less.  However, we are not just negotiating on the balance of the account but the entire account. We negotiate that your creditors report the accounts as "paid as agreed”, “settled as agreed” or “paid in full” with a balance of $0.00.  However, the creditor may comment that the account was “settled for less than the full amount”.  Once you have completed the program and you are free of that debt forever, you will find that your credit will begin to take care of itself. 

    Again, becoming free of your burdensome and stressful debt should always take priority over your credit score.  Once you take care of your debt, your credit will take care of itself. 

• Are your negotiators Certified Debt Specialists and Arbitrators? Back to top
  • Yes. Our negotiators are members of both the United States Organizations for Bankruptcy Alternatives (USBOA) and the International Association of Professional Debt Arbitrators (IAPDA) and are trained and Certified Debt Specialists and Arbitrators. Many of our negotiators are former employees of the banks and collections companies that we now negotiate with.
• When does American Mitigation Group begin my debt relief? Back to top
  • Upon enrollment, we typically contact each of your creditors and let them know that we are now representing you, and also let them know of your interest in settling your debt with them. With some creditors, on the other hand, it may be necessary to delay contact for several months after you are enrolled. We can only settle a debt once the full funds are available in your settlement account. It may take six months, a year, or the entire length of the program to achieve the first settlement. Each settlement is unique and patience on your part is critical.
• Are my creditors going to continue to call me? Back to top
  • We notify your creditors that we are representing you and demand they stop contacting you. It usually takes about 30-60 days for them to stop contacting you. In the meantime, you will keep a creditor log of every phone call or letter that you receive from a creditor and report it to us.  However, we cannot guarantee that the phone calls will stop or that the creditors and collectors will stop collection activities.
• Why should I use American Mitigation Group to settle my debts as opposed to handling it myself? Back to top
  • Our team has extensive experience in negotiating debt and working with creditors. We have over 300 employees including 51 attorneys and arbitrators in 45 states. We negotiate, on average, over $13 million in debt every month. We have an impeccable relationship with creditors and collection agencies, who are usually unwavering in negotiating with the consumer directly. Our team has extensive knowledge in consumer debt and the Fair Credit Reporting Act, as well as the Fair Debt Collection Practices Act.

    Creditors deal with thousands of people who are in financial difficulty every day and have a vast array of sophisticated (and some rather blunt) methods of intimidating you into financial arrangements you cannot keep. The settlement process is usually very emotional and stressful, especially when you are the one being attacked by collectors over the phone. Most people prefer to leave these tasks to experienced people who earn their livelihood doing that particular kind of work.

    We have a staff of debt negotiators whose only job is to negotiate the settlement of unsecured debt, every day, five days a week. By letting AMG do what we do best, you will get better settlements with a fraction of the stress. AMG knows how to deal with creditors and have in-depth knowledge about how these institutions work. We can potentially save you thousands of dollars and free you from a considerable amount of stress.

• How is my settlement account handled? Back to top
  • We use Noteworld Servicing Center, a third party service provider that collects, processes, and disburses payments for our customers. Customers’ savings are maintained securely in an FDIC insured trust account. Any contractual fees owed to AMG and our affiliates are disbursed as part of the service. This trust account is managed by you and access to your money is available 24/7. AMG does not control this trust account, you do. For more information on Noteworld, see www.noteworld.com/noteworld_pas/consumer.shtml
• What if my creditors won't settle? Back to top
  • It is extremely rare for a creditor not to settle. Due to the fact that you have a legitimate financial hardship, creditors realize that a settlement is in their best interest because if you file for bankruptcy, they can be left with nothing. Creditors lose billions of dollars per year from consumers filing bankruptcy.
• Will American Mitigation Group stop late fees and interest from accruing on my account? Back to top
  • American Mitigation Group cannot stop a creditor from adding interest or late fees to an account. However, your individual program will reflect those fees and/or interest, and is incorporated into the Settlement Program. Because we negotiate the debt down to a fraction of what you owe, your savings are far greater than any interest or late fees that could accrue. If negotiations are unsuccessful, you could be called upon to pay the entire balance
• Will I owe money to the IRS for my reduced settlement? Back to top
  • Creditors are required to report canceled debts exceeding $600 to the IRS and you are supposed to report the same as income on your annual tax return. However, the IRS permits you to write off any "income" from canceled debts up to the amount by which you were "Insolvent" at the time. Therefore, unless you have a positive net worth, then you ordinarily will not be obligated to pay taxes on the forgiven amounts. Additionally, if you do not qualify as insolvent non principal amounts such as fees accumulated on the account may be deducted from the amount reported. Refer to: www.IRS.gov Publication 908- “Bankruptcy Tax Guide” and IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness
• Will your program stop legal action against me? Back to top
  • Creditors have the right to use legal means to collect a debt. Creditor lawsuits are NOT COMMON but they do happen. It is also a common tactic of third-party creditors or collection agencies to threaten you with a lawsuit (which is illegal if they do not intend to sue). The reality is that third-party creditors or collection agencies rarely ever sue. 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 wage garnishment takes time and always hinges on your employment and may not be applicable in your state. If you own a home it is difficult for a creditor to attach the equity in your home and it may be protected by your state's homestead act. It is typically more cost effective for a creditor to settle than to pursue legal action. While we cannot guarantee that legal action will not be taken, we are confident that our experience in dealing with creditors can reduce the possibility of this happening.

    Despite any legal action that may or may not be taken, your account can be settled before, during or after the suit. Just because an account goes to legal action does not mean that we cannot settle it. The threat of legal action can be the scariest of all, but IT CAN BE HANDLED.