Debt Settlement on Today Show

The Today Show recently did an expose on debt settlement companies. While I agree wholeheartedly with their negative opinion on most debt settlement firms, they have failed the test of fair and balanced journalism.

Investigative Today Show reporter, Lisa Myers, spent all of her time uncovering the ugly truth about one company, Credit Solutions. If you remember an earlier post on my blog (http://debtsettlementstory.com/debt-settlement-companies-some-incur-more-debt/), I had also contacted this company.  I was almost desperate enough to fall for their sales pitch. Luckily I didn’t. Here’s a review of their pitch in a nutshell:

• I was to deposit $2000/month into an escrow account.
• The first 6 months of these payments into that escrow account would go towards paying the debt settlement company for their services.
• I would continue to make $2000 payments for approximately 36 months.
• As settlement offers came in, they would consult me.
• The banks would be paid from this settlement account.
• In 36 months, I would be out of debt.

In reality it doesn’t work this way. Most consumers never finish the program. In fact, once the settlement offers come in from the banks, most clients don’t have enough money in their escrow account to pay the offer. Most of their immediate monies have been used to pay the debt settlement company’s fees. Most consumers file bankruptcy.

This is the exact conclusion Lisa Myers came to. However, she fails to see the bigger picture. Not all debt settlement companies have such egregious practices. In fact, there are about half a dozen or so that are true consumer advocates.

She got it right when she said the FTC will soon pass laws banning the upfront fees. Why didn’t she go on to say there are debt settlement companies out there who ALREADY take their fees on the back end?

Unfortunately, Ms. Myers’ article is the typical sensational reporting that we have come to expect. There is nothing positive about her piece. No real help to the desperate consumer. Only doom and gloom.

Had the Today Show really wanted to investigate debt settlement companies and actually disperse useful information to help those in need, she would have mentioned companies like Consumer Recovery Network, Zip Debt, Hoffman Brinker and several others who really make a difference in this sector. Here’s what’s great about these debt settlement companies:

• No hard sell of their program.
• You talk to a real debt settlement counselor, not sales person, when you call the company.
• Performance based commissions that are paid AFTER YOUR CREDITORS GET PAID!!!
• DIY programs offered for those consumers who are industrious.

In fact, all 3 of the companies I mentioned ENCOURAGE the consumer to do it themselves. They make less money per client with this business model, but they know the success rate is much higher and the benefit to the economy is much greater.

Here is Today’s video.

http://today.msnbc.msn.com/id/26184891/vp/38123545#38123545

Stay afloat. Stay focused. Wealth and freedom are in your future.

Jonathan

Debt Settlement Scoundrels

And the beat goes on…..

How long will it be until Federal regulation appropriately addresses these problems?  Senator Schumer got the ball rolling on April with S.3264 but it didn’t get passed. Hopefully legislation will be under way during the Fall session. In the meantime, we can continue to raise awareness.

Here are a few indicators that change is in the air.

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Debt Settlement Firms Peddle Relief But Actually Put Debtors In Deeper Hole

“State attorneys general from New York to California and consumer watchdogs, such as the Better Business Bureau, say that debt settlement firms’ proceeds come at the direct expense of financially troubled Americans who are being swindled out of their last dollars with dubious promises, The New York Times has reported.” ….read more HERE

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Be wary of promises from debt relief companies

Millions of Americans are drowning in debt. If you believe the ads — with their bold claims of success — a debt relief company will help you pay off your bills for pennies on the dollar.

The ads are everywhere:

• “Be debt free in as little as 24-48 months!”
• “Erase debts 50 to 70 percent or more!”
• “Legally get debt down to zero.”

It sounds so easy……read more HERE

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Stay focused. Stay afloat. Wealth and freedom are in your future.

Jonathan

Wealth of Debt Settlement Opinions

The more I read about debt settlement, the more I realize how much misinformation is flying about.  Since the potential customer for debt settlement is usually in crisis, they are more apt to believe the unbelievable.

PEOPLE! Do your research.

Here is an article I came across that succinctly explains the trappings of debt settlement companies. The author also suggests a simple way to avoid the trappings of debt. Be frugal!!

Check it out.

RIPPING OFF DEBTORS

This guy has a great take on the psychology of debt and money.

Stay focused. Stay afloat. Wealth and freedom are in your future.

Jonathan

Debt Settlement Reform

And the trend continues….

In the coming months, we will likely see more regulation for debt settlement companies.  You can be sure that those companies speaking the loudest against the regulations are most certainly the most egregious debt settlement companies scamming the consumer.

Here are a few articles..

Debt settlement companies face new rules in Indiana

In a piece for legal information website Lexology.com, law firm Loeb & Loeb LLP said that starting on July 1, debt settlement companies will have to get a $25,000 surety bond. They will also have to present a copy of the bond to the state’s attorney general’s office while making disclosures to consumers in the Hoosier State……….to read more click HERE

Stay tuned. Stay afloat. Wealth and freedom are in your future.

Jonathan

View Comments to “Debt Settlement Reform”

1. jen says:

   September 23, 2010 at 9:27 am

   There might be some debt settlement companies that try to be as legitimate as possible, but looking at the whole picture and pointing out the obvious negative impacts of working with them is not just fortelling doom and gloom. Most creditors DO NOT work with debt settlement companies of any kind any more. There are more options out there, such as, Credit Counseling Agencies, and, OH!, working with creditors yourself. In my opionion, debt settlement companies should be illegal, or your accounts should already be charged off and with a 3rd party collector already.
2. admin says:

   October 7, 2010 at 10:52 am

   You are making some very broad claims here.

   First off, I would like to know how you discovered that most creditors won’t work with debt settlement companies. In my experience, this was not true at all.

   Secondly, my blog specifically deals with gathering information, through research and counseling, and the negotiating directly with the creditor yourself. Consumer Recovery Network is a debt settlement company that teaches you how to do it on your own. In fact, their presidenet Michael Bovee, would rather you do it on your own. The program his company offers is geared toward self help.

   Thanks for your interest in the blog.

Debt Settlement Regulation

If you are new to the blog, click HERE to start at the beginning of my story.

I am out of the woods with my debt settlement tribulations. Having successfully navigated the crazy road, I am intent on paying it forward and providing information for consumers struggling with unsecured debt.

One of the biggest aspects to consider is this:

Only 30% of those people enrolling with a debt settlement company successfully complete the program.

That means 70% of those enrolling end up paying fees to the debt settlement company, but never getting out of debt. Obviously the system is broken and something needs to change. The articles below are an indication of what’s to come.
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Debt Settlement Firms: Promises too Good to be True

“…less than one of every three customers successfully completes these programs. At one firm – National Consumer Council, which was shuttered by the FTC in 2004 – less than two percent of customers successfully completed their debt settlement programs.” to read more click HERE
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“State attorneys general and consumer watchdog groups say the debt settlement industry takes advantage of Americans whose lost jobs and lost income is pushing them towards bankruptcy, making dubious promises and fleecing them of their last dollars, The New York Times reported Saturday.” to read more click HERE
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Credit Card Debt Settlement Companies Prepare for Coming Regulation

“Owners of debt settlement companies meeting at a Florida resort anticipate major changes to their industry, according to a recent profile in the New York Times. Writer Peter S. Goodman interviewed members of the United States Organizations for Bankruptcy Alternatives, a debt settlement trade organization whose own studies indicate that only about a third of Americans seeking debt settlement successfully complete their programs.” to read more click HERE
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Peddling Relief, Firms Put Debtors in Deeper Hole

“State attorneys general from New York to California and consumer watchdogs like the Better Business Bureau say the industry’s proceeds come at the direct expense of financially troubled Americans who are being fleeced of their last dollars with dubious promises.” to read more click HERE

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Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

A Debt Settlement Miracle – Part 2

If you are new to the blog, click HERE to start at the beginning of my story.

POST #31?

Per my conversation with Billy, I called on March 2nd to speak with his manager, Bucky.

While on hold to talk with Bucky, I knew this was the final moment. My last move. Everything I had done for the last 10 weeks had lead to this.

When Bucky got on the phone, I took a deep breath and for the umpteenth time told my story. He listened. Asked all the same questions Billy had asked. I kept my story straight. Explained where the money was coming from and why this was my best offer.

Bucky was very considerate and calm during the call and seemed to really hear what I was saying. He said he would talk to the VP who gets out of a meeting in 2 hours. I thanked him for his time and consideration on behalf of myself and my family. Every time I said those words, I really did get choked up. Even though the debt settlement process does require some manipulation and hard-nosed negotiation, there was a simple truth behind all of this:

I was doing all of this for my family.

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And that was it….my last effort. If Bucky declined my offer, there would be no other option than to scrounge up another $1300 and settle for $9800. Not sure where the dough would come from.

And then…..four hours later my phone rang.

Was this the call? Was this the “DAY”?

It was Billy. I could tell from his tone of voice that he had good news.

” I am happy to say that your offer has been accepted.

Did you hear me?

They said yes!”

I was ecstatic, a bit speechless. I thanked him for his tenacity and sympathy. We both acknowledged that in the past 2 days I accomplished more than I had in the last 2 months. True to form, Billy offered an honest piece of insight. He said he likes working in Recovery because he can really help people.

He really helped me. His willingness to let me speak to his supervisors and managers allowed me to get the deal I needed. Unlike so many reps, he got out of the way. Yes, he was patient and attentive, but his most important role was to NOT interfere with my personal momentum.

He kept me on the phone as we prepped the letter, then faxed it to me. When we got off the phone, I screamed for joy as loud as I could. I ran in to tell my wife! It was a beautiful embrace. We looked into each other’s eyes and she said, “You did it, baby!”

Nope, we did it.

If not for the love of my family, I never would have spent the hundreds of hours of time and energy to go through this debt settlement process.

Here are the final stats:

• $141,655.56 worth of debt settled for $40,449.11.

• 28% or 28 cents on the dollar.

This is the end of my deb settlement story, but not the end of my financial recovery story. There are still 3 things I need to do:

• Loan mod on my 1st mortgage.

• Settle or loan mod my 2nd mortgage.

• Build personal wealth and financial security.

More to come…….

Stay tuned and stay afloat. Wealth and freedom are in your future.

Jonathan

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View Comments to “A Debt Settlement Miracle – Part 2”

1. admin says:

   December 20, 2010 at 4:43 pm

   I just finished the process about 2 weeks ago. I was successful and will be blogging about it soon. Short story – 30 year fixed @ 4.65% principal and interest. I didn’t get a principal reduction, but my interest rate went down by 2 percentage points and the loan wasn’t re-aged.
2. rose tin says:

   December 21, 2010 at 2:05 pm

   That’s great!!! looking forward to your blog. thank you.