Debt Settlement Lies

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

POST #9
What the heck has happened to your country that every decision we make is based on FEAR?
I am afraid I will go broke?  I am afraid I will die? I am afraid I will get sued? I am afraid of being abducted by aliens!
Really? Is this what our society has come to? What ever happened to personal power and positive thinking? I am not talking about head in the clouds Voo-Doo thinking. I am just talking about common sense, clear thinking backed by research (!!!) and reasoning. Put it all together and strive for a positive outcome. Okay, I am ranting. Let me get to the point.
Debt settlement doesn’t have to be scary. But the debt settlement companies want you to think otherwise. They use half truths to manipulate you (scare you) into thinking you can’t do this without them.
Here are my top 10 lies I heard from debt settlement companies. My commentary is beneath each statement.
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#10 You can’t do this without us.

There are thousands of people like me who are proof that this is not true.
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#9 We can get you a better deal because we have a relationship with the bank.

Really? Then what will prevent them from cutting a sweetheart deal with the bank?
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#8 We can get the banks to stop calling you.

Sorry folks. The banks will not stop calling. No matter what.
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#7 It is cheaper to do it with us than any other company.

Unless they are doing it for $1200 or less, you can bet there is a cheaper way.
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#6 We charge more because we are the best.

Love this one. I would immediately hang up the phone.
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#5 Debt settlement is always better than bankruptcy.

True for some people but not all. This is a sales tool.
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#4 We use an escrow account because it’s a safer place to keep your money.

Baloney! The best place for your money IS WITH YOU!   Also, I thought hiding money under my mattress was the safest place.
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#3 We guarantee to get you a settlement of 50% or less.

By now, we all know there are no guarantees in life, especially those told to us by salesman.  If the company is so sure they are the best and warrant the high fees, they should take their cut AFTER THEY PERFORM THE PROMISED SETTLEMENT!!!!
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#2 This is your only way to recover.

ABSURD. There is never just one way to do anything.
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#1 Just sign up with us and we will take care of the rest!!

This is by far my favorite. RUN don’t walk from a company that says this. Single biggest lie you will hear. If you sign up with this company, there is good chance they will take your money and not pay your creditors. You will likely get sued and end up declaring bankruptcy. Debt settlement has run amok with fraudulence and the FCC is reworking the federal guidelines.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt Settlement Companies, Some Incur More Debt

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

POST #4
Research! Research! Research!
You will hear me say this dozens of times. As a consumer, it is our responsibility to be educated and informed. The lack of education, laziness, or in my case, DENIAL, gets us in trouble.
I vowed to never again be an uninformed consumer. With that in mind, I put all of my efforts in to finding the best debt settlement options.  I spent 4 weeks and about 40 hours on the phone talking with different companies.
There is a barrage of information out there. Just by typing debt settlement into Google, you will get 8,650,000 results. Click HERE.

Insane. It is daunting to cull through these resources and decipher what the hell they are offering. I took my time to understand my options. My first calls were to the obvious big companies like: Credit Solutions, Ameridebt and CuraDebt.  But I also looked into some of the lesser known companies like Pacific Debt.  Here was the standard offer:

  • 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.

At first, I was very excited and relieved about a solution to my problem.
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Below are the estimated savings and expenses from 2 of the companies I spoke with. As you can see there is an incredible amount of variance. A lot of that deals with the fees and the length of time you take to settle.

CuraDebt Plan

If they got a 50% savings on my $130,000 of debt, it would take 41 months of $2000/month payments to get out of debt. Total cost including settlements and fees:$81,900.
If they got a 60% savings on my $130,000 of debt, it would take 36 months of $2000/month payments to get out of debt. Total cost including settlements and fees: $71,500.
If they a 75% savings on my $130,000 of debt, it would take 28 months of $2000/month payments to get out of debt. Total cost including settlements and fees: $55,900.

PacificDebt

With $130,000 of debt, it would take 46 months of $2000/month payments to get out of debt. Total cost including settlements and fees: $90,995.
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Pretty interesting stuff, right!?!
After a few days, I saw something that didn’t make sense:

  • Before I would decrease any of my debt, the debt settlement company would increase my debt on average of $12,000 because they get paid first!
  • All of the companies say the bank offers their best deals during the first six months – but according to their suggested schedule, I would have no money left in my escrow account at 6 months because all of that $12,000 would go towards paying the debt settlement company their fees. Which by they way, is for a service they haven’t even performed. Let me repeat this because it is critical.

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THE BEST OFFERS COME AT THE 6 MONTH MARK.  EVEN THOUGH I WOULD HAVE ACCUMULATED $12,000 IN MY ESCROW ACCOUNT, I WOULDN”™T HAVE ANY MONEY LEFT IN THERE TO PAY THE SETTLEMENT OFFER BECAUSE THAT MONEY ALREADY WENT TO PAY THE DEBT SETTLEMENT COMPANY!!!!

Talk about the contradictions!? In many cases, clients get discouraged at that point. They drop out of the program and declare bankruptcy. These debt settlement companies thrive on our falling out of the program. They are predatory companies much in the same way the credit cards are predatory lenders. Remember what I said about educating myself?  I would not be a victim a second time around.
So let’s review…. this is why most debt settlement companies are scoundrels:

  • I pay the debt settlement company $12,000.
  • In 6 months, the bank makes an offer.
  • Since I have no money in my escrow account, I ask the bank to spread the payments out over the next 6 months so I can have time to accumulate some funds.
  • The bank declines because most of their settlement offers have a 90 day payment time-frame.
  • Threatened by liens and judgments, I drop out of the program and declare bankruptcy.
  • The bank writes off my debt.
  • The debt settlement makes pure profit.

I proposed this contradiction to the reps, but their response was foggy at best. Since I was using the information they gave me to explain this contradiction, they didn’t have an answer that made sense. Instead, they deflected my question by saying they can get a better deal than I can get myself. WHICH IS TOTALLY UNTRUE BY THE WAY!
It became clear that the rep was just a sales person and had no REAL idea about this process. Once enrolled, I would never talk to him again.
As I said before, lets take ownership and take control. I fell into the debt trap, but I was not going to fall into the debt settlement companies’ trap.
Please don’t be so desperate and incur more debt when you are trying to get out of debt. If you take the time to run the numbers, you will see most programs don’t make sense.  An effective debt settlement company will charge a nominal start up fee, base their commission on performance AND take their commission AFTER you have paid the bank. Sound too good to be true? Stay tuned!
In the next post, I will discuss how some debt settlement companies are true consumer advocates.
Stay tuned, stay afloat. WEALTH AND FREEDOM ARE IN YOUR FUTURE!
Jonathan Grossman

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Debt Relief- So Many Options

POST #3
Research. Research. Research.
Once I finally realized that the end was near, I started doing extensive research on my options. Of course the first thing I thought of was bankruptcy. It was all I knew. I thought if you got behind on your bills, your only option was the big B.
With a few clicks on the web, I soon found a zillion companies offering many options. In the next post I’ll share some of my observations on the different companies, but today we’ll focus on the five most likely options you have:

  1. Bankruptcy – Chapter 13 or 7

  2. Debt Consolidation

  3. Consumer Credit Counseling

  4. Debt Settlement

  5. Nothing…which usually gets you back to the top of this list. Not a real option.

For a complete explanation of these options and an analysis of which option is best for you, CLICK HERE.
Here’s what I discovered for my situation:
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Bankruptcy

For me, bankruptcy felt like the death of my soul. A complete failure and announcement to the world that I had screwed up so badly that my only option was to wave the white flag. I had regular conversations with my wife about this option. Was this our destination? How could I face my family and friends? Just 2 years ago I was flying high. Now….death. Thinking back on it, the reason I did so much research was because I was compelled to find another way. I wasn’t going down without a fight. There MUST be another option.

Consumer Credit Counseling

I was familiar with consumer credit counseling. In fact, I had done this about 9 years ago. When my band, Dogwood Moon, got off the road we had accumulated a bit of debt. In order to gain some sense of control and balance in my life, I got a company to manage my debt. I made a lump sum monthly payment to them and they distributed it to my creditors. They tried to get the bank to lower my interest rates, but none of them actually could. Of course they took a fee, and although it was modest, there was really no significant benefit from the company. They just held my hand throughout the whole thing. I could have done it myself, had I been more disciplined. I soon realized this and when I made a bit of money, I paid the whole thing off early. Wasn’t a bad option then, but I wouldn’t do it again. In 2009 consumer credit counseling wasn’t really an option. I couldn’t afford to pay my bills, so it wouldn’t help me if they collected my money and distributed it. The money wasn’t there.

Debt Consolidation

My credit wasn’t good enough to get a decent loan for $130,000. Even if I did, I’d be making payment for the rest of my life. This would take too long and ultimately cost too much. I wanted to take action, rectify my situation and start over. This would be a slow process. I am not a slow kind of guy. I had finally decided to take action and I wanted to get it done….NOW!

Debt Settlement

When I came across the idea of Debt Settlement for the first time, it was a real eye opener for me. I hadn’t even considered the prospect of negotiating with the banks in this way. I never thought of the bank as a collection of real people. It just seemed like a monster I had made a bad deal with and was now sucking up all my money. With Debt Settlement, you call your bank and negotiate a lump sum payoff of the account that is less than full balance. This negotiation can be done in 3 different ways:

  1. You do it on your own

  2. You do it while being coached by a debt settlement specialist.

  3. You hire a company to negotiate on your behalf and pay them a fee. BEWARE: THESE FEES CAN VARY DRASTICALLY! I will discuss this in the next post.

After careful thought, I chose Debt Settlement, option 2. At the heart of Debt Settlement is the ability to negotiate. This was very appealing to me because I love negotiating. My father is a retired lawyer. Growing up was like a series of scenes from that Albert Brooks movie, Defending Your Life. At an early age, I was trained to ask for things in a diplomatic way, stick to my guns and be prepared for the inevitable interrogation. Maybe I should have been a lawyer! You will think I am crazy when I say this, but I have actually enjoyed the Debt Settlement process. I chose a company that was a true consumer advocate. They didn’t charge exorbitant fees and the debt settlement specialist assigned to my case was nothing short of awesome. In my humble opinion, critical to your success with Debt Settlement is the company that assists you. Some of them actually will save you money. Others will take advantage of you and PUT YOU FURTHER IN DEBT.
In the next post, I’ll discuss the companies I chose to avoid and the company I ended up using, Consumer Recovery Network.
Stay tuned, stay afloat. WEALTH AND FREEDOM ARE IN YOUR FUTURE!

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$130,000 of Credit Debt – The Beginning: How could I Let It Happen?

POST # 2
When I look back on what happened, the writing was on the wall. If I had been smart enough to have a business manager, this would have never happened.
In 2004, things were going great. I was newly married, had no kids, no debt and had just bought my first home. I was composing music for the hit television show Joan of ArcadiaMoney was no object. I was like a kid in candy store. Just 4 years earlier, I was living in a mini-van with my wife (then girlfriend) touring the United States as a folk rock duo, Dogwood Moon. We were lucky to make $5,000/month and if we did, we felt like we had money.
All of sudden I got a lucky break and I was making well over $400,000/yr. I had no debt aside from my home.  My savings account was steadily growing and about to hit $100,000. Neither my wife, nor I, could spend all the money. It was nice, to say the least.
We went about our business for the next 2 years. Saving a bunch and spending a bunch. I justified my spending because I had a great job and was saving a butt-load of cash every month. Why not spend!?!?
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Mistake number 1:

ASSUMING THE GOOD TIMES WILL LAST FOREVER

Fast forward to 2006.

  • My TV show got canceled.

  • The economy tanked.

  • The real estate market tanked.

  • My interest only 2 yr ARM was about to be called.

  • My wife gave birth to our first beautiful child.

  • None of my contacts in the biz were working.

  • I went thru all of my savings…..yup ALL $100,000 of it.

  • I borrowed another $80,000 from a line of credit on my house.

There were a lot red flags….but I ignored them.
I kept thinking that big gig was right around the corner.  Well guess what? It wasn’t.

But that didn’t stop me. I kept acting like I was still making a lot of money. I had the POTENTIAL didn’t I? Why severely adjust my lifestyle when things will pick up any minute?
By the end of 2006, I finally made some changes. Here’s where I stood:

  • I sold my home for a profit.

  • I paid off the $80,000 line of credit.

  • I had about $80,000 in cash profit from the sale.

  • No job, but lots of prospects.

  • Ignorant hope that everything would just work itself out.

Instead of socking that money away and downsizing to an apartment within our means. I did what any wide-eyed monkey with a little bit of money and the ignorant hope of future success would do:

I BOUGHT ANOTHER HOUSE AND SUNK ALL OF THAT MONEY INTO REMODELING IT.

You see, I had turned a nice profit from my first house. That was easy, right? It would happen again, right. WRONG. That wrong assumption was the straw the broke the camel’s back.

From July 2007- July 2009 I dug myself into the deepest financial hole of my life.

Here were my other BIG MISTAKES:

  • I lived beyond my means.

  • Instead of saving some of my small real estate profit, I put it back into the sagging real estate market.

  • I continued to spend most of my time trying to get gigs in the TV market – which had crashed.

  • And finally:  DENIAL, DENIAL, DENIAL!

In July 2009, things came to a head. I was $130,000 in debt and living off my lines of credit. I had 2 more months of that until there would be no choice other than bankruptcy.
Desperation is the mother of invention. I would feel humiliated to go bankrupt, foreclose on our house. I couldn’t let myself be a Hollywood statistic……even though I already was!
After 6 weeks of research I came to the conclusion that debt settlement was the right choice for me. In the next few posts I’ll discuss:

  • Why I chose debt settlement over bankruptcy, consumer credit counseling or debt consolidation?

Stay tuned, stay afloat. WEALTH AND FREEDOM ARE IN YOUR FUTURE!

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Debt Settlement – The Gory Details

POST # 1
You are about to read a very personal story about me.
I am a happily married, 40 year-old father of two precious little kids. I live in Los Angeles, California and my name is Jonathan Grossman.  This sounds like an introduction to an AA meeting.  In some ways it is!
Back in 2004, I was making a great living as a TV composer and enjoying the high life with my wife. By 2006, we had our first child and I was unemployed, living off savings and hoping things would turn around. By 2009, I had 2 kids, went through all of my savings and managed to accumulate $130,000 in debt. Things were not getting better and I had to make a move.
This story is a lot of things. First off, it’s true. But even more than that, it is a brutal examination of the American economy from the point of view of the consumer. In many ways, I am the typical Hollywood story combined with the typical real estate boom home buyer. I was irresponsible and wreck-less and the financial climate was my gracious enabler.
This story will tell the tale of how I got myself into this financial mess, and I how I chose to get myself out of it.  For the record, I take 100% responsibility for creating all of this debt. I am not for a second blaming anyone but myself!
The story has a horrific beginning, but a great ending. Without further delay, here are some details.
In July 2009 this is where I stood:

→$104,000 in unsecured personal lines of credit

→$26,000 in credit card debt

  • Owned, or rather “owed”, my home which was fully financed at $880,000 and it was underwater.

→If I sold it, I wouldn’t even be able to pay off my mortgage.

  • Monthly bills:                 $18,000
  • Monthly net income:    $12,500

→Monthly deficit:  $6,500

  • I was drawing from my personal lines of credit to help pay the bills each month.
  • I was drawing from those very same lines of credit to make the minimum payments on them each month.
  • I had 2-3 more months before the credit ran out…MAXIMUM DEBT VELOCITY.

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HERE WERE MY FEARS!

  • Foreclose on my house.
  • Feel humiliated with my family and friends.
  • Declare bankruptcy.
  • Look into the sweet little eyes of my 4 year old son and explain why we have to move from our home, leave pre-school, make new friends.
  • Admit to my wife that I had let the family down.
  • Admit to myself that I was a failure.

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HOW DID I LET IT GET THIS BAD?

NYC: National Debt Clock

I’ll tell you.

  • I didn’t save enough for a rainy day.
  • I kept hoping things would turn around.
  • I ignored the obvious downward spiral.
  • Once I started to fall into the pit, I passed the threshold of caring.

I LET MYSELF GO DEEPER BY SAYING “I AM ALREADY $100,000 IN DEBT. WHAT’S ANOTHER $5,000 AT THIS POINT?”
Here’s my story of how I got into $130,000 in debt and how I am getting myself out of it. I am not yet done by the way.

BIG DISCLAIMER!!!!

Let me be clear up front.  I am not a debt settlement counselor. I do not work for any of the debt settlement companies. I do not profess to be an expert or in any way imply that you are guaranteed to have the same results I am having.
Things that can or will happen if you choose Debt Settlement include:

  • A lot of HARD WORK.
  • A lot of time, focus and resilience.
  • Rhino skin and tenacity.
  • You MIGHT be threatened with law suits.
  • You will have creditors calling you all the time.
  • Your credit will suffer.
  • You MIGHT have to pay taxes on the amount of debt that the bank forgives.

It is NOT easy. As I just said, you need rhino skin and tenacity. But, if you are willing to do your homework, you may find that debt settlement is the right road for you.
I did A LOT of research and ended up using a debt settlement company that was extraordinary. I will wholeheartedly recommend them because I believe they are fair, supremely skilled and a true consumer advocate. My intention is to give back to the very company that gave me so much.

Here’s the deal about this blog:

  • Take what is useful.
  • Toss what isn’t.
  • Call my recommended company if you are inclined…..BUT…..do your research. Call a dozen of them.
  • You may discover what I discovered.
  • There are only a few debt settlement companies that are really there to help.

The one I used, Consumer Recovery Network, was incredible for me. I imagine they could help you as well. Throughout this blog you will notice that I keep mentioning Consumer Recovery Network (CRN). They are the only company that I have worked with and therefore the only company with which I have first-hand experience.
As I said, I highly recommend them. Definitely call them to see if they can help you the way they helped me.

But please, please, please. DO YOUR RESEARCH!
So here it goes…..my debt settlement story.
Stay tuned, stay afloat. WEALTH AND FREEDOM ARE IN YOUR FUTURE!

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