FAQ

Q. Who is qualified for our program?

A. BlueChip Debt Relief debt settlement program is only for people facing financial HARDSHIP. This means people who are late on paying their debts, have little or no ability to pay their debts in the future and are facing a possible bankruptcy.

Q. Who is NOT qualified for our program?

A. BlueChip Debt Relief does not advocate that any person default on their debts. This program is not designed to negotiate debts for people who have reasonable means to pay off their debts. If you have the ability to pay your debts in the normal fashion, then you should honor your debts. This program is NOT for people who have high credit ratings and can meet their monthly debt obligations.

Q. How do you apply?

A. Complete the form online. A debt consultant will review your information and call you to review your situation. After a debt consultant has reviewed your financial situation and hardship they will determine if you are qualified for our program.

Q. How will BlueChip Debt Relief settle my debts?

A. You will be asked to put aside and save a set amount of settlement funds on a monthly basis. This amount will be determined in your initial analysis based on total amount of debt and will be in line with your income and expense budget. Each person's situation is different and the negotiation process will begin at different times depending on the amount of your debt. Once the creditors agree to a settlement amount, we will present this offer to you. If you approve of the settlement, we will instruct the creditor to fax over the 'settlement offer' in writing. Then have a three way recorded conversation with you, the creditor and us to settle the account. Debts can be settled in two different ways; one lump sum or a term settlement. One lump sum is just that, one payment and the account is paid. A term settlement is a settlement which is paid over an extended period of time until the account is paid. BlueChip Debt Relief then moves through each debt until all of your debts have been paid and you are debt free.

Q. Who can join BlueChip Debt Relief program?

A. BlueChip Debt Relief debt settlement program is a hardship program. This program is only for people who:

• have a financial hardship
• are late paying their unsecured debts
• have no ability to make payments in the future
• bankruptcy is they only other option

Examples of qualifying hardships are a loss of income, medical emergency, death of a member of the household who provided financial assistance, or a divorce.

If you are currently meeting your monthly debt obligations and are able to continue to do so, then our Debt Settlement program is NOT for you.

Q. Is bankruptcy a better option for me?

A. Bankruptcy should always be considered as a last resort. Our debt settlement program is designed to help you avoid bankruptcy.

Q. Does Debt Settlement have a negative impact on my credit?

A. Your credit score will decline due to entering this program. How much it will decline depends on your original circumstances. Most of the accounts you place into negotiation are likely to "charge off", which will reflect negatively on your credit. However, once this charged off debt is settled, the settlement is reported to the credit bureaus. Settled accounts are positive compared to unresolved delinquent debts or bankruptcy. After all the debts have been settled and paid, the credit score should begin to improve since the negative items have been resolved. A high credit score is desirable to have, but if you have a financial hardship and are unable to pay your debts, then your first priority should be to pay your delinquent debts and get back on your feet financially.

Q. Can I still use my credit cards?

A. NO. All credit cards in the debt settlement program will not be active and you will not have credit privileges. Any credit cards you DO NOT put into the program should not be used. This program is for you to get out of debt.

Q. Do you guarantee that you settle all of my debts?

A. There is no guarantee that your creditors will negotiate with us or that your debts will be reduced.

Q. Can I be sued?

A. Your creditors certainly have the right to sue to recover their money. But usually the purpose of the lawsuit is to force a settlement on the matter. In our experience, most creditors would rather not go to the expense of suing and simply try to negotiate a settlement.

Q. Do you begin negotiating with my creditors right away?

A. We will contact your creditors right away (typically within approximately 1 week of your joining our program) to let them know that we have Power of Attorney and to request that future collection calls come to us and not you. The actual negotiation activity is typically very limited until you have saved up enough in your settlement account to make reasonable offers to your creditors. Most (but not all) creditors do not want to spend time negotiating an account unless they know there are funds available. The first settlement typically happens in month 6 to 9 of a client's program (this varies greatly and depends on your monthly payment and the number of creditors you have enrolled in the program as well as the balance of each individual account).

Q. Can BlueChip Debt Relief stop my creditors from calling?

A. Your creditors have every right to try and contact you in order to collect a debt. However, we have been successful in eliminating most harassing telephone calls. If your account is in collections; collections agencies have to adhere to the FDCPA Guidelines. If you would like to learn more please read Fair Collection Practices Act.

Q. Does BlueChip Debt Relief repair my credit?

A. Companies cannot remove legitimate negative items from your credit report. Negative items will remain on your credit report according to the conditions imposed by the credit reporting agencies. The goal of a Debt Settlement program is to settle your delinquent accounts. When a delinquent account is settled this is reflected on your credit report. A settled account is better than an unresolved delinquent account. Your credit score should improve after successfully completing our program. Since these debts are paid your debt-to-income ratio should improve. Debt-to-income ratios are not part of a credit score however; they are an important measurement by which lenders evaluate applicants for auto and home loans.

Q. Can creditors garnish my wages?

A. This can be a long process for the creditors. The creditor first has to sue you, successfully obtain a judgment, and then file for a garnishment action. If you're willing to work with your creditors, wage garnishment can normally be avoided.

Q. What are the tax consequences?

A. The IRS considers a forgiven debt as taxable income, so at the end of the year, they will expect taxes to be paid on the settlement. The IRS, however, has a form (Form 982) available for certain hardship situations that may exempt you from this tax. Please contact a tax advisor to discuss this issue further.

Q. Can't I negotiate my debts with my creditors on my own?

A. You can negotiate your debts with your creditors on your own just like you can fix your own car. However, most people prefer to leave these tasks to experienced people who earn their livelihood as specialists in those lines of work. Our team of debt negotiation specialists has only one job - negotiating reductions on our clients' unsecured debts, each and every day of the week. Our knowledge and experience puts us in a strong position to stand up to your creditors and fight for the best settlement possible.

Q. Do interest and late fees accrue on my accounts?

A. If you let your accounts go delinquent, your creditors will continue to add interest and late fees onto your balances. Keep in mind that the interest is going to accrue regardless of whether you make minimum payments or not. BlueChip is highly focused on negotiating substantial reductions to the balances on your accounts, even after the interest and late fees have accrued.