Credit Card Debt Consolidation Program - Important Disclosures

CarePlus Financial's Credit Card Debt Consolidation Program is an education and coaching program designed to help our members consolidate their debts themselves using debt settlement techniques. We do not represent our members in negotiations with their creditors. See the FAQ concerning the availability of representation services.

1. If you fail to make your monthly payments to your creditors some (or all) of the following are likely happen. It is important to note that these things can happen regardless of the reason for the delinquencies. If you fall behind due to choosing to enroll in a debt settlement program or you fall behind simply because you just can’t afford to pay, these things can happen as a consequence.

• All delinquencies of 30 days or more will be reported to the credit bureaus. These delinquencies are negative items on your credit report and will reduce your credit score.
• Creditors will charge late fees.
• If an account has a credit limit and that limit is exceeded, the creditor will charge over-limit fees.
• Credit card interest rates will be raised to the highest “default” rate allowed by the card member agreement.
• Your account balance will rise due to the added interest and fees described above.
• Collection calls will be made to the borrower's home and/or work.
• If an account remains delinquent for an extended period of time the creditor may charge off the account and send it to a collection agency or law firm for collection.
• These actions are usually reported to the credit bureaus as well. They are negative items on your credit report and will reduce your credit score.
• Law suits may be initiated to collect the debt. We recommend you seek legal advice if you are sued. It is important that you protect your legal rights.
• Depending on the particulars of the cardholder agreements, arbitration proceedings may be initiated in lieu of lawsuits. We recommend you seek legal advice if a creditor initiates arbitration. It is important that you protect your legal rights.
• If a creditor is successful in obtaining a judgment against a debtor various steps may be undertaken to enforce the judgment. The specific actions that can be undertaken vary from state to state. Such actions can include wage garnishment or bank account levies if they are allowed by state law.

No debt relief service can prevent any of the above from occurring if you are not making payments to your creditors. To be clear, your enrollment in CarePlus Financial's Credit Card Debt Consolidation Program can not prevent your creditors from taking any of the above actions.

2. When a creditor agrees to forgive a portion of a debt and amount forgiven is greater than $600, the amount forgiven must be reported to the IRS on form 1099C as "forgiveness of indebtedness income." This may or may not result in a tax liability for the debtor. If the debtor is insolvent at the time the debt is forgiven it may be able to be excluded from the debtor's taxable income. If the debtor is solvent this income may be taxable. See the IRS website for details, www.irs.gov. You may be able to exclude Discharge of Indebtedness income if client can show you are insolvent. For more information on tax ramifications of this program consult a tax preparer, CPA or Tax Attorney or refer to IRS Publication 908 - "Bankruptcy Tax Guide" and IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness available on the IRS website.

3. The key to success in our program or any debt settlement program is your ability to save money for settlements. The more you can save the faster you will be able to reach settlement agreements with your creditors. Since we do not determine how much you put aside each month we have no way of estimating or predicting the length of time it will take to reach your first settlement or how long it will take to settle all of your debts. Generally we recommend that you begin negotiating with your creditors when you have 30-50% of the outstanding balance saved. If you work from lowest balance to highest you can estimate the shortest time to your first settlement as follows. Multiply your account balance by 30% then divide that amount by the amount you are saving toward settlements each month. The result is the lowest number of months before you would start negotiating your first settlement. This does not necessarily mean you will be able to reach a settlement at that time. You can use a similar procedure with your total debt amount to get the number of months it may take to settle all of your debts. For this case we recommend using 50% or a little higher instead of 30%.