Why would Merit Consumer Services provide these services for no charge?
Everyone deserves a helping hand to deal with the challenges of debt collectors and poor credit scores – usually the result of losing a job or a family emergency. Our goal is to give you the assistance and tools so that you can recover from your financial stress:
• Negotiating with your creditors to pursue a discounted settlement or payment plan that better fits your financial situation.
• Helping you find a new or better job.
• Helping you deal with short term crisis needs through our social services program.
Trying to do all of this yourself can be very difficult -- but we work to make the process simple and less painful.
Merit Consumer Services will always be free. We have contacts with numerous non-profit and for-profit corporations that help fund our operations. Additionally, we have a process to help you secure financial products and services that will help you meet your needs.
We analyze your situation to give you a personalized recommendation. When we can present to you a new financial product (credit card, loan, etc.) with a good value, then everyone is a winner.
How does debt mediation work?
Merit Consumer Services gathers information from you about your debts, finances, and your family and their needs. We analyze this information and present it to your creditors in a way they will better understand your hardship. The better they understand what you are struggling with, the faster they respond to our proposed solution and the more likely you will get a satisfactory answer.
Sometimes creditors will respond with a counter-proposal. We present their proposal to you and you decide what you want to do. If you reject their counter-proposal, we will gather more information and repeat the process until you and the creditor reach a final agreement. If you accept their proposal, you will make the payment(s) directly to the creditor as you have agreed.
Using the information we gather and analyze, we submit to creditors a proposed settlement plan that is within your means. Creditors will evaluate your situation and respond with an acceptance or rejection of the proposal. Sometimes creditors will respond with a counter-proposal. We then deliver the creditor response to you for a decision to accept or reject. It’s important to know that you are always in the driver’s seat—we are only there to advise you.
You are always in control of the final decision and you are always in control of your money.
How much discount can I expect?
There is no single answer to this question. Every person’s situation is different. Our goal is to clearly explain your hardship to the creditor. The more information you provide us, the better service we can provide. Depending on your individual financial situation and the number of past due payments, the discount will vary. On average, we see discounts of about 50% of the balance.
Remember, you always control the final decision to accept or reject any offer we present to you.
What types of debts can you mediate?
The most common mediations relate to credit card debts, medical debts, some student loans, and personal loans.
Does debt mediation affect my credit score?
There is no single answer to this question. Determining a credit score is a complex and continuously changing process. Virtually everything we do as consumers affects our credit score in one direction or another.
Fixing your credit is a methodical and disciplined process - there is no secret answer that will change your credit overnight. But you will be surprised how quickly you could make a positive impact. Some Merit Consumer Services customers have seen improvements in their credit score by as much as 100 points in only six months.
The first step is to find out exactly what your credit report says. Merit Consumer Services can help you obtain your credit report and information about your delinquent debts. You may also want to request a copy of your credit report from each credit bureau. You can order your credit reports at no cost from www.annualcreditreport.com.
There are a lot of factors that go into determining a credit score. The most important factors are:
• The amount of credit you use
• Your payment history
• The length of your credit history
I have a debt and the payments are current but I don’t think I can keep up the payments. Can that debt be mediated?
Not likely. It is very difficult to mediate a reduced payment arrangement of a debt that is not delinquent. A successful outcome requires a thorough presentation to the creditor of the circumstances and why they should consider a reduced payment arrangement.
If you are current on your obligation, we encourage you to keep making payments while you mediate. It is never a good idea to intentionally choose to be delinquent on your obligations just so you can receive a reduced payment arrangement.
Will the creditor continue to call me during the debt-mediation process?
The goal is to stop the creditor calls or at least slow them down as much as possible. One of the documents you will be asked to sign is the appointment of Merit Consumer Services (MCS) as your representative, this gives us permission to communicate with your creditors and it asks your creditors to work with MCS and not contact you directly. Many creditors will stop making phone calls to you directly.
Some creditors will ignore the agreement for MCS to represent you, and they may continue to call you. In this case, we suggest that you accept the calls from the creditor, but inform them that you are working with MCS and would prefer that the creditor contact MCS, and not contact you directly.
Can I be sued?
Every creditor has the legal right to use the courts to collect a debt that is in default. Lawsuits are not as common as many debt collectors would like you to think. Most creditors would rather work out a reduced payment arrangement than spend money to take a customer to court and perhaps be unable to collect on the judgment.
A proactive offer of a reduced payment arrangement from you to the creditor will almost always be viewed as a positive by the creditor.
Can my wages be garnished?
Yes, but no one can take a part of your wages without court approval. You must be given advance notice of any court action through formal notification.
Actual wage garnishment actions do not happen without advance warning. First, a creditor must bring a lawsuit, obtain a judgment, and then take an additional step to obtain authorization for the garnishment.
There are some notable exceptions for the IRS and federal student loans.
What is the difference between debt mediation and credit counseling?
Credit counseling agencies usually set up payment plans where you eventually repay the full amount due to the creditor. They work more for the interest of the creditor because credit counseling companies receive a percentage of each payment you make.
Debt mediation is intended for people who have more debts than they have the ability to repay. Merit Consumer Services is a unique type of debt-mediation company because we don’t charge you any fees at all. We also help with employment and other needs you may have.
Our staff has many years of experience in working with creditors for consumers just like you.
Can I file bankruptcy?
There are two types of bankruptcy: Chapter 7 is often described as a “fresh start” because unsecured debts are wiped out. Chapter 13 is a plan for reduced monthly payments for a period of time. Each type of bankruptcy has specific requirements and requires advance fees to be paid to your bankruptcy attorney.
As a rule of thumb, bankruptcy should be your last option for a solution. After evaluating your information and specific situation, Merit Consumer Services might recommend that you consult a bankruptcy attorney; first let’s see if we can find a solution that works better for you.
Can I do debt mediation myself?
Yes, it’s possible for you to mediate directly with creditors, but it is usually not a fair mediation. Debt collectors are trained to deal with consumers who try to negotiate on their own behalf. They understand how to apply psychological pressure to lower your resistance and how to frustrate your efforts.
An independent mediator, like MCS, has specialized skills and can take a “just the facts” approach with creditors and usually can get to a decision faster.
I heard that I might have to pay more taxes. Is that accurate?
Federal law requires creditors to send you a tax form, called a 1099C, if they forgive more than $600 of your debt. In some situations you might be required to include that amount on your tax return.
There are also situations where you are not required to include that amount from the 1099C. Those situations usually relate to taxpayers who have had financial problems and where the total of all their debts is greater than the market value of everything they own (called “insolvency”).
Your best advice will come from a tax preparer or accountant.
Is debt mediation right for me?
Debt mediation is the process of helping a creditor understand your financial situation so that an arrangement can be made for a reduced payment plan. In many cases a creditor will allow you to pay off the loan for less than the full amount due.
Debt mediation can be a great strategy, but does not fit the needs of everyone. After essential family expenses, do you have enough income to pay your bills on time each month? If not, you have a hardship that may qualify you for a discount or new payment arrangement with a creditor.
If you are in over your head financially, and you would prefer to work things out with your creditors instead of considering bankruptcy, debt mediation is an honest and ethical strategy.
Last date of revision: February 3, 2019
Why are we doing this for free?
We want to help you get back on your feet and potentially become a long term customer. After you're finished paying off your debt, you may need to purchase the products and services we recommend.
In the long run, we will help you now and we will assist you in the future. Merit Consumer Services wants to provide financial guidance without any cost.
