DebtCrusherPro FAQs | Expert Answers on Debt Relief & Credit Repair

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Frequently Asked Questions

1. Lump Sum Payment – When is the Money Due?

Since the account is already in default, we can begin negotiations starting next month.

You should have the settlement funds ready by the end of February, as that is when we anticipate finalizing the settlement. We can also have the “down payment” as the second or third payment in a structured settlement.

For example, this month we negotiate a 41% settlement with Navient over 4 years. The lender accepted one of the settlement monthly payments as payment #1, and the down payment is paid next month, with the regular settlement payments resuming monthly after that. This helps lock in the settlement.

2. Can We Hope for a Larger Margin of Savings?

The estimates we provided earlier were on the higher end, as we always take a conservative approach.

However, we consistently beat our estimates, and given that your account has been in default for a while, there is definitely a strong chance of securing an even better deal. We do want to be realistic with expectations though, and even with the all of our efforts and expertise, settlements are usually only going to be a few percentage points lower at best.

3. Impact on Credit Score – Will the Charge-Off Go Away?

Once the settlement is finalized and reported as paid with a zero balance, your credit score will start to improve over time.

To help with this, we also provide a 17-page credit-building guide and can refer you to a couple of trusted credit repair experts who have successfully helped many of our clients – including Andrew and myself – remove negative marks and rebuild their credit. This is a key part of our strategy. The charge-off will be updated to “settled in full”, which will look much better than an unresolved charge-off even without using credit repair.

4. Will We Receive a Letter of Release?

Yes. Andrew will personally execute the settlement with Navient to ensure everything is handled properly.

Once the payment is complete, you will receive a clearance letter confirming that the debt has been settled in full. This will take up to 60 days

5. Will the Settlement Amount Be Taxable as Income?

Generally, when you settle a debt can be considered taxable income. We cannot provide direct tax advice. However, there are exceptions, one is the overall student loan forgiveness exemption from the American Rescue Plan of 2021. This is for settlements that are executed prior to Jan 2026.

The IRS even strongly encouraged lenders not to file the 1099-C or send them to borrowers. As a result, we’ve seen very few 1099-C’s since 2021 – most of our clients just don’t get them.

The other major exemption is called the Insolvency Exemption – this is when someone’s total assets are less than their total debts. We provide resources for both in our final resource email once the settlement is completed, which you can discuss with your CPA.

We recommend consulting a tax professional to determine whether this applies to your situation.