Has it gotten to the point where debt is in collections now? If you’re overwhelmed with your options and don’t know who to trust for affordable solutions, you’re not alone.
According to Urban Institute, 71 million American adults, or one-third, have debt in collections. Unpaid medical bills are the largest type of debt owed to collections agencies over the past decade. According to the American Medical Association Journal, medical debt totaled $140 billion in the last year alone.
These unpaid bills negatively impact credit reports and scores, making it harder to get mortgages, car loans, credit cards, and possibly an apartment or job. You can resolve your debt in collections.
What to do About Your Debt?
People are often overwhelmed by the sheer number of “get-out-of-debt” options out there, and there is no shortage of horror stories from those who sought help, only to find themselves deeper in the hole some weeks or months later. For many, debt settlement is considered the solution of last resort. Unfortunately, debt settlement can be expensive because companies often charge a high percentage of the total debt as part of the solution.
For example, if an individual has $100,000 in debt among five credit cards, a debt settlement company could charge them 25% of that debt ($25,000) in exchange for negotiating with the five creditors. It’s an expensive proposition to deal with and doesn’t always work in people’s favor.
That’s why the company Resolve was born.
What Is Resolve?
Resolve was founded by Alex Mooradian and debt expert Michael Bovee in 2017, with empowerment as its founding principal. They provide an affordable and effective alternative with a holistic approach to help people, not solely profit from them. The company is on a mission to provide people with flexible solutions while improving their overall money management skills to build better financial habits.
Using an interactive app, people can easily see all of their credit accounts, access budgeting tools, and with the help of Resolve’s financial counselors, they can also negotiate with creditors. All in one convenient place.
This holistic approach to each person’s financial situation allows Resolve to provide effective and multiple solutions across different types of debt. So whether they reduce interest rates, handle growing debt levels, or settle a debt, you can find solutions to various debt challenges with one company.
In 2019, Resolve officially became a Public Benefit Corporation which means that they must consider their customers’ needs and interests while engaging in for-profit activities. In addition, Resolve is an accredited company with an A+ Better Business Bureau rating.
How Resolve Is Different?
Resolve will help you settle your debt if that is your best option, but they will prioritize your debt needs and work with you to provide the best choices for your specific situation. Resolve is a membership program, and users pay a monthly subscription fee and elective “tips” when the company delivers results. Resolve’s debt experts will work with you based on your needs, such as:
- Contact creditors to refund fees.
- Defer monthly payments.
- Reduce interest rates.
- Stop collection calls.
- Secure debt forgiveness.
How Does Resolve Make Money?
Costs to members are reasonable when compared to traditional debt settlement companies. Resolve makes money from three sources:
- Membership Program. Resolve members pay a monthly subscription and may choose how much they pay.
- The company encourages the payment of “tips” based on successful creditor offers and asks that you “Pay us what you think is fair.” On average, Resolve members pay 15% of the debt amount saved. So, for example, if a member saved $200 through Resolve’s negotiation with a creditor, the tip would be about $30.
- Some people may go on to file for bankruptcy or use other debt relief services. Resolve may refer consumers to accredited third-party resources, in which case those organizations might pay a referral fee.
How Does Resolve’s App Work?
Resolve’s feature-rich app for members is broken into three primary areas: :
- Creditor Offers
- The Resolve Budget
- Credit Status
When appropriate, Resolve serves as an intermediary between people and their creditors, helping to negotiate a reduction in the amount owed. Resolve starts the process by organizing members’ debt and answering any debt-related questions. Next, they pull their Transunion credit report (in a way that won’t harm the person’s credit) and reviews all the outstanding debts and amounts with the member.
Once the debt expert has confirmed all relevant account information, they will seek to open dialogue between the debtor and the creditors to get “no-obligation” debt reduction offers.
The offers from creditors will vary based on the type of debt and stage of delinquency.
Some accounts may be in “good standing,” meaning the borrower has been making on-time payments. However, others may be in various stages of delinquency (30, 60, or 90 days late). Depending on your situation, Resolve’s debt experts will help solicit relief, which could include a reduction in the amount owed, fee refunds, lower interest, or payment deferments.
Resolve’s experts typically start by contacting the creditors holding the most significant balances or most delinquent accounts. They may receive offers within a week or two.
The Resolve Budget
At the same time, your debt expert is working on offers from creditors; Resolve’s helpful budget tool can help track your spending and provide insights into your day-to-day purchase decisions.
The monthly bills tracker allows you to connect accounts to monitor recurring bills and ensure none go unpaid. The tool also helps you calculate projected income less regular expenses, so you estimate what you have “Left to Spend” after you pay monthly bills. This helps users decide how to allocate money appropriately and avoid overspending.
The app will send you budget alerts to give a heads-up on posted transactions and daily balance notifications with updates from each connected account. Finally, the budget tool will provide an analysis of how you spend money across different categories. For example, you’ll know how much you spend at restaurants versus grocery stores. This type of awareness is an essential money management skill.
Members can stay on top of their credit, their debt, pay down status, and the factors that may impact their credit score. Resolve will show you your credit score, total debt balances across categories (mortgage, auto, credit cards, etc.), as well as the details of each particular debt.
Sometimes members may be concerned about the accuracy of the information on their credit reports. Still, it’s important to keep in mind that there’s often a lag between when an individual has paid a bill and when that payment gets reported to a credit bureau. Therefore, to ensure you get an accurate payoff amount, you should contact your lender directly.
Members will also get alerts when credit scores are updated and notifications about essential transactions or late payment charges. These alerts are an excellent way to catch your debt problems proactively.
How Resolve Differs From Traditional Debt Settlement:
Like traditional debt settlement companies, Resolve helps consumers negotiate lower balances and payments with creditors. But that’s where the similarities end.
Whereas traditional debt settlement companies charge consumers around 25% of the total balance of all their debts (which often amounts to thousands or tens of thousands of dollars), Resolve does not.
Instead, their model is based on a monthly fee ($17 or even lower if you’re facing severe financial hardship) and a completely voluntary “tip.” Plus, they will seek more than just one settlement offer from creditors, and they work with a variety of creditors who may not work with traditional debt settlement companies.
If you tried to work with other companies but were turned off by a pushy salesman, you can resolve that fear and finally address your debt for real with a holistic personal finance partner.
As a fintech company, Resolve works with all sorts of creditors that may not work with debt settlement companies.
Resolve provides credit counseling and money management to their customers, like debt management companies. The company offers feature-rich budget tools to its members, providing daily money management. Daily budgeting is a valuable benefit for members to improve their personal finance skills.
For those who are debt-laden and need a solution, Resolve may be an excellent alternative to traditional debt settlement or debt management companies that provide limited options.
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This post originally appeared on Your Money Geek.
With a passion for investing and personal finance, I began The Cents of Money to help and teach others. My experience as an equity analyst, professor, and mom provide me with unique insights about money and wealth creation and a desire to share with you.