Frequently Asked Questions

Is this is going to affect my credit?

Yes, your credit will be affected negatively.  When you join our Debt Reduction Plan, instead of sending your monthly payments to your creditor(s), you will be sending monthly payments to our law firm.  Our law firm will hold and aggregate your monthly payments, and we will use the monies to pay lump sum settlement(s) to your creditor(s).  Because monthly payments are going to the law firm instead of your creditor(s), you will miss payments to your creditor(s), and in effect, your creditor(s) will report late fees, missed payments and charged-off status to the credit reporting bureaus.

Even if you join our Debt Reduction Plan, we strongly encourage you to continue paying your bills and obligations.  For example, pay your mortgage, car note, and cell phone bill on time.  By making such payments on time, you can potentially prevent your score from decreasing more.  

Remember, once your creditor(s) agree to a settlement and the debt is paid-in-full, you will be able to rebuild your credit.  You must choose whether to get out of debt first and then focus on rebuilding your credit.  

How far will my credit score go down if I join this program?

No one can predict how far your credit score can go down. 

What types of debts do you work with?

Credit cards, collections, medical bills, unsecured personal loans, and balances remaining on repossessed property. Typically, we assist with any type of debt that is unsecured (i.e., not backed by a specific asset); like credit cards.  What is secured debt?  A debt that is secured/backed by something.  For example, if you purchased and financed a car, then the loan is secured/backed by the car.  If you miss your car payment, your creditor can take your car. 

How long is your program?

Our Debt Reduction Plan lasts typically between twelve (12) and thirty-six (36) months.  The length of the program is determined by you based on your monthly budget.  If you can save more money and apply the savings toward the Debt Reduction Plan, you could be out of debt faster.  Of course, there are no prepayment penalties.

Will I get collection calls or calls from my creditors?

No, if your creditor(s) follow the law.  Once you enroll into our Debt Reduction Plan, our law firm will send Cease and Desist Notices to your creditor(s) informing them that you have retained our law firm to represent your rights and any and all future communications must be directed to us.  Unfortunately, sometimes, a creditor may try to break the law – so you may still get harassing phone calls.  Simply ignore them or if you take the call – get the caller’s name, identification number, who he/she represents, and record the date and time of the call.  But this is part of the process.  Worse case, change your cell phone number and give you friends and family your new number; as well as us too.

Will interest and late fees be added on my debt?

Yes, interest and late fees will be added onto your debt while in our Debt Reduction Plan. 

For example, your credit card balance is $1,000 and you stop making payments.  Next month the creditor charges you a late fee & interest and now your balance is $1,300.  Our law firm will contact your creditor and say “I represent Mr. Client, he/she is experiencing a financial hardship and they would like to settle this debt, so each party can go their separate way.  Currently, your statement shows Mr. Client owes $1,300 – will you take $400 as payment in full?”  The creditor may say “NO,” but our law firm will continue with negotiations to arrive at a mutually settlement.   Finally after months of negotiation your creditor agrees to accept $600 as full and final payment.  Even though the debt had accrued late fees and interest, your settlement will take into account those added late fees & interest your creditor charges you during your financial hardship.  

Late fees and interest will continue to be added to your debt until settlement and payment, so your credit score will go down.  However, the negative impact on your credit report is part of the process and you need to understand that. 

What’s the difference between you and someone else or another company?

Unlike most debt settlement companies out there, we are a law firm.  You will be hiring our law firm to negotiate and settle your debt on your behalf, and even defend you in litigation, if it comes to that.  Most debt settlement companies do not have a lawyer on retainer and they would refuse to help you once a lawsuit has been filed and served.  Which do you think has more power?  A law firm that understands the Federal and State Fair Debt Collection Practices Act OR a company without any legal knowledge or legal assistance.  There is a huge advantage to having our law firm negotiate with your creditor(s).

Is a Debt Reduction Plan the same as bankruptcy?

No, our Debt Reduction Plan is not a bankruptcy.  In the Debt Reduction Plan, we negotiate and settle with your creditor(s), and we hold your monies for the future lump sum payment(s).  In a bankruptcy, you will either pay back the debt in full or the debt is erased, depending on what chapter bankruptcy you file.  In a Chapter 7 bankruptcy, your debt is erased, but your credit will take seven (7) or more years to rebuild.  In a Chapter 13 bankruptcy, you restructure your debt and pay it back within three (3) to five (5) years, but your credit will take seven (7) or more years to rebuild.  Our Debt Reduction Plan could allow you to get out of debt before three (3) years and rebuild your credit quicker.

Bankruptcy is public record and on your credit report for seven (7) years after the date it was discharged.   Our Debt Reduction Plan is not public record.  Any and all successful settlements will reflect on your credit report as “settled for less than owed”, “0 balance”, “settled”, etc.  Bankruptcy should be considered as a last option because of its strong negative effect on your credit report.  If bankruptcy is your only option, we can too help you with that. 

Can my creditors decide to sue me?

YES, your creditors can sue you.  But that is exactly why you are retaining our law firm.  If a creditor sues you, which may happen, our law firm will represent you at court and handle the paperwork.  Remember, creditors want to get paid something rather than nothing, so when creditors sue, they are paying attorneys’ fees and court filing fees.  We have found that unsecured creditors rather get paid something rather than paying attorneys’ fees and wasting time at court. 

Just to let you know, if you were to hire a company over a law firm, the company will more likely than not drop you as a client or advise you to go hire an attorney, which is not the case with us.  Our law firm will represent you in the small chance your creditor(s) sue you. 

Do I have to put all my credit cards in the program?  

We recommend you keep one small balance credit card for an emergency.  However, if all your credit cards are maxed out or over the limit, those credit cards should be enrolled into our Debt Reduction Plan.  You should stop using any enrolled credit cards.  You must be willing to cut up those cards. 

Let’s say you have 2 creditors with ABC bank.  The 1st card you owe $5,000 with a credit line of $5,500 and the 2nd card you owe $250 with a credit line of $1,000.  Both credit cards are with the same creditor, so if you want to enroll the 1st card into the program, you have to enroll the 2nd card as well.  If you were to keep an emergency credit card, that credit card should be with a different creditor than the creditor(s) you are enrolling into the Debt Reduction Plan.

Who is my attorney and what guarantees do I have?

You will be hiring Newstart Law Group, P.C.  The two primary attorneys are Andrew Phan and Julie H. Lin.  Mr. Phan is licensed by the California State Bar and Nevada State Bar.  Julie is licensed by the California State Bar.

We cannot make any guarantees.  There are no guarantees that your creditors will take less than what you owe and we cannot guarantee that you will not be sued.  Typically, we only accept clients experiencing financial hardships because creditors are more receptive to settlement negotiations when we can show our clients’ financial hardships.  Remember, your creditors know you have the right to file for bankruptcy and if you file for Chapter 7, your creditors typically get Zero Dollars ($0.00) because your debt will be erased. 

Where does my monthly payment go?

Your monthly payment is deposited in our law firm’s Interest on Lawyer’s Trust Account – as specified by the California State Bar.  While your money is accruing in our law firm’s trust account, we will be negotiating with your creditor(s).  Once a settlement is reached, your attorney will notify you for your approval and get the settlement agreement signed by you and the creditor.  Next, our law firm will send a lump sum payment from our trust account to the creditor to satisfy the settlement agreement. Once the debt is paid off, we will receive a release letter from your creditor showing you no longer owe that creditor any money.  Please be aware that if not enough money has accrued in our law firm’s trust account to pay off one or more creditors, then you will need wait until enough monies is accrued to satisfy the agreed upon settlement. 

Can I get taxed on the savings you save me?

Believe it or not, yes you can get taxed on the savings we obtained for you. 

For example, you owe $10,000 and our law firm settles your debt for $5,000.  That means we saved you $5,000, which you can then be taxed on.  But let us put that into perspective.  If your tax rate is 20%, then 20% of $5,000 (your saving) is $1,000.   Therefore, after our Debt Reduction Plan, you would pay $6,000 in total ($5,000 + $1,000).  You saved $4,000 in principal, which is 40% savings.  With our Debt Reduction Plan, we were able to save you 40%, not including the hundred or thousands of dollars in interest that would have accrued if you kept making only the minimum payments. 

We are not tax professionals, so please consult with a tax professional (i.e., certified public accountant, enrolled agents or tax preparers). 

Is this a loan or do I take out a loan to cover my debt?

No.  Our law firm is not giving you a loan to pay off your debt.  We are negotiating on your behalf and helping you save your monies in our trust account in order to pay the settlement amounts in the future.