Attorney supervised debt settlement program

Until recently, Navient had a contract with the US Department of Education to service federal student loans, but the company decided to end that contract late last year. Earlier this month, it transferred its federal student loan portfolio to a servicer called Aidvantage. Navient continues to originate private student loans. The settlement covers borrowers who live in 38 states and Washington, DC. Those who qualify for relief under the settlement don't need to take any action and can expect to automatically receive notification from Navient later this year after the court approves the agreement.

Suitable for: The programs can make sense for people with modest financial stress who need an affordable payment plan featuring lower interest rates on credit card balances. However, participants in a debt management program also need sources of income so that they can start paying off those balances and other IOUs. Consumers need income to pay down their obligations, and they must have the discipline to stick with these programs. At Take Charge America, the typical debt management customer stays with the program for 38 to 40 months or so.

That might create a conflict of interest, but it also provides a way to make the model work. They encourage borrowers to stop making credit card or other payments. The idea is to divert this cash into a savings account that can be used to fund an eventual settlement.

But the process can be nerve-wracking. Consequently, they might agree to cut your debt. What you spend building up that settlement fund is often less than the minimum payments on credit cards or the monthly payment in a debt management plan, said Michael Micheletti, a spokesman for Freedom Debt Relief, a company with a large operation in Tempe.

Debt settlement companies work on behalf of clients, without receiving subsidies from banks or other creditors. The American Fair Credit Council is one place to look for reputable firms. Those like Freedom Debt Relief that have operated for many years often have good working relationships with creditors, which can help in negotiations.

These companies are for-profit, unlike the many nonprofit debt management entities. Types of debt included: Settlement programs deal with unsecured debts including credit card balances, personal loans and unpaid medical bills.

Fees: Debt settlement companies charge fees, usually based on the amount of debt enrolled or reduced. These costs can be sizable, though fees are supposed to be charged only after a lower debt has been negotiated. Impact on credit scores: People who pursue debt settlement usually see their credit scores drop after they stop making payments to creditors and their accounts go delinquent.

But once consumers reach a settlement and start paying down their reduced debts, their scores often rise. Creditor phone calls: Bothersome calls from creditors or collection agencies continue, and often intensify, once borrowers stop making payments, until a negotiation deal has been reached.

Settlement firms including Freedom Debt Relief coach their customers on how to deal with calls, Micheletti said. Suitable for: These programs are most appropriate for individuals who are struggling with serious debt, perhaps exacerbated by a job loss, divorce or other hardship, but who also have income to dig out.

Hudson, who worked with Freedom Debt Relief to have her debt reduced, said the company gave her an honest assessment of her predicament. Hudson, who now works in pharmacy benefits management, also resolved to live within her means. Hudson said she had a good experience with Freedom Debt Relief, though the Consumer Financial Protection Bureau fined the company last year for not clarifying certain policies to consumers and for other business practices.

Micheletti said those problems were corrected. Potential drawbacks: Besides lower credit scores, higher fees and other drawbacks, some creditors might not agree to settle and, instead, could pursue legal action against a consumer for unpaid bills.

Also, debt settlement programs require a lot of discipline. Bankruptcy is the court-supervised process of wiping clean certain debts or dealing with them through a debt repayment plan. Details vary depending on the type of filing. Filings under Chapter 7 of the bankruptcy code eliminate most unsecured debts, though consumers can retain some protected or exempt assets such as a vehicle, necessary clothing, furnishings, appliances and other goods.

Nonexempt assets subject to forfeiture include second homes, money in bank accounts and various investments though generally not pension or retirement accounts. Nonprotected assets are sold, with proceeds distributed to pay off creditors. It is more difficult than it used to be to qualify for a Chapter 7 filing, with a means test that eliminates higher-income individuals. These include any charges stemming from a DUI arrest, such as reckless driving or refusal to take a test, the mandatory license suspension period, mandatory ignition interlock requirements, probation or parole requirements, the potential for jail time, and fines.

An experienced DUI attorney can help get a conviction reduced or dismissed if they can prove that your actions were unintentional. They will also know how to present your case in court and prepare for your plea. DUI defense attorneys understand the issues and how to get the charges dismissed or reduced. They know the laws and procedures that will apply to your specific situation. A DUI attorney may represent you in court or at the hearing on your behalf. They will discuss your case with the judge and can advise you about any concerns you may have that will affect your chance of having your case dismissed or reduced.

Your DUI attorney will discuss any alternative to jail time, rehabilitation programs, drug counseling, and probation that may be more appropriate than going to jail for a DUI. They can discuss other alternatives that will not include jail and can be used in lieu of jail time.