Debt Settlement DIY or Hire The Guy

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

POST #8
Should I do it myself or hire a company?
At first I thought, if I can’t manage my finances, how can I handle the debt settlement process?  After more research, (am I getting my point across about research? :-)) I realized there were several good reasons for DIY.
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  1. The banks respond to real people and their authentic story.

  2. ?

  3. Why should I incur MORE debt by hiring someone? Won’t the bank ask why I am paying someone $10k but not paying my $10k credit card bill?

  4. ?

  5. I decided to take control of my life. Why would I HAND OVER CONTROL to a company I hardly knew?

  6. ???

  7. It didn’t seem difficult.

  8. ??

I almost went with Credit Solutions. They tried to hard sell me by saying they had an advantage because they negotiate a huge amount of debt with banks. They also have relationships which makes the process easier.  The bulk debt reason, I understand. Relationships with the bank??  Wait a second?
At Credit Solutions, the client pays a HUGE upfront fee based on total debt. What is their incentive to get a better deal for the client? Since the bank is their primary relationship, won’t they pad the in favor of them?
People! Don’t fall for it!!!
There is so much information out there. Granted, it can be overwhelming. As such, I chose a cross between DIY and hiring a company.
With Consumer Recovery Network, after you purchase the DIY CDs for $495, and pay $100 per account you enroll,

CRN charges only $50 per month for unlimited phone and email support.

I know it sounds crazy, and you’re probably thinking I am just selling you here, but it’s true.

  • $495 for the DIY CDs
  • $400 to register my accounts (4 accounts at $100/each)
  • Total upfront fee: $895.

Each month I paid $50 and if they had to step in to negotiate for me, ALL the fees thus far would be applied to their commission.  Let me tell you, this is a steal. My first call with my CRN counselor was 3 hours long! I spoke to her again probably 4 more times that month and exchanged over 20 emails.
For $50/month I got:

  1. Unlimited phone and email support.

  2. ?

  3. Training on the language to use when speaking to the bank.

  4. ?

  5. Coaching on making my phone calls at specific times during the month – YES THAT MATTERS A LOT!!

  6. ?

  7. Advice on how to structure the negotiations in a way that allowed me to leverage my hardship position.

I am a big fan of this hybrid. You have complete control of the process, but if you get stuck, you have a bailout.
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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