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Deposits

Deposits summary:

  • In a debt resolution program, deposits are regular transfers of money into a Dedicated Account. This account is where you’ll save up funds to make settlement offers. You own and control the account. Deposits are usually automated monthly payments

  • The deposit amount is customized to be affordable. It may be lower than the total of all your current monthly debt payments.

  • Once a negotiator reaches an agreement with your creditor and you approve it, money is transferred from the Dedicated Account to the creditor. 

Deposits definition and meaning

Deposits are amounts you put into a Dedicated Account when you’re enrolled in a debt resolution program. You own and control your Dedicated Account. It’s where you’ll build up funds that will later be used to negotiate agreements with your creditors. 

Your debt resolution company works with you to determine an appropriate amount for deposits and how often they're made to your Dedicated Account. Funds are only withdrawn from this account to pay your creditors with your approval. 



More about deposits

Deposits are used to pay your creditors when enrolled in a debt resolution program. Debt resolution allows you to pay your debts for less than what you owe. 

The debt resolution company negotiates with your creditors to reach an agreement for payment to satisfy the debt. Meanwhile, you make regular deposits into a Dedicated Account. 

Funds to pay your creditors come from those deposits as they accumulate in your account. You make deposits monthly, typically through an automated transfer from your bank account, until all the debts enrolled in the program are resolved. 

How much are debt resolution deposits?

Debt resolution deposit amounts are specific to the enrollee's situation. When you join a debt resolution program, you'll work with a debt expert to determine:

  • Which debts to enroll

  • How much your monthly deposits will be

  • An estimated timeline for resolving debts

For most people, monthly deposits work out to be less than the total of their monthly debt payments. Deposits stay the same for the entire time you're enrolled in the debt resolution program. 

The debt resolution company manages the deposits you make to your Dedicated Account. When a creditor agrees to a negotiated amount, you have the final say over whether to release funds from your accumulated deposits to pay the debt. 

Before you enroll in a debt resolution program, it's important to evaluate the deposits you're expected to make against your budget. You'll need to be certain that you can make your deposits as scheduled to get the most benefit from your debt resolution efforts. 

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Deposits FAQs

Start by saving up the amount of money you want to offer, then call your creditors, explain your hardship, and ask them to agree to the lower amount. Creditors might agree if they believe you can’t afford to repay your debts in full. Because negotiations can be lengthy and stressful, some people let a professional debt resolution company help. Expert negotiators can contact creditors on your behalf and work out an agreement to pay less than what's owed. As a bonus, negotiators may already have a relationship with your creditors, and might get a better outcome than you could get for yourself. You’re then free to focus on other things without dealing with the hassle of calling creditors.

Simply being enrolled in a debt resolution program doesn’t affect your credit score. But your credit standing could be affected in other ways as you navigate to the other side of your debt.

The greatest credit damage usually comes from missing payments and going into default on your debts. This is true no matter why you miss the payments. 

Also, resolved debts are reported to the credit bureaus as “settled,” which is better than delinquent but less favorable than “paid in full.” 

The higher your credit score is, the more points you could lose when negative information hits your credit file, particularly at the time it’s happening. But since the most recent information has the greatest impact on your credit, as those negative events fall further behind you, they hurt your credit profile less and less.

You can go a long way toward rebuilding healthy credit by paying your bills on time and keeping credit card debt low (or zero).

No. Although debt management plans from credit counselors require you to cancel your credit cards, debt resolution companies don't require this. 

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