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

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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A Debt Settlement Miracle – Part 1

If you are new to the blog, click HERE to start at the beginning of my story.
POST #30?

Mafia spaghetti with seafood and tomato sauce

How do we create an airtight counter offer?  An offer they can’t refuse….not because of the threat of a bloody horse head or anything “silly” like that. More like an offer where the numbers make so much sense that they are realistically un-movable.
Here’s where we stood:

  • Their offer:            $9808

  • My current offer:  $7500

  • My goal:                $8600

After several conversations with my CRN coach, we came up with the silver bullet.
My current offer was $7500. If I deferred March’s car payment of $514, that would bring us to $8014 – payable today.  Then I make an additional payment 30 days from now by deferring my April car payment of $514. Total offer: $8528. I can’t go beyond that amount because:

  • I have already borrowed from EVERYONE I could.

  • I have deferred as many other bills as possible.

  • I can’t defer my mortgage because that would jeopardize the loan mod process.

  • If it weren’t for the loan mod potential, I would just declare bankruptcy and fore-go all of this effort.

NYC - Queens - LIC: 5 Pointz - Roadrunner and ...

There were so many aspects about this offer that made it genius – in fact it was super genius.
I can say this without bragging because I didn’t come up with it –  my CRN coach did. Obviously not her first rodeo. It was exactly this type of creative bargaining that can make or break a deal.
I called Billy in Recovery and made this counter offer. He was impressed by our creativity and resolve, though not AT ALL confident.
He went to the sup and very quickly came back with the same $9808.00 offer from yesterday.
I thanked him for his time and reiterated my intention for doing all of this was 3 fold:

  • To shield my family from anymore hardships.

  • Hold on to my house.

  • Offer a good faith settlement to the bank.

He was again sympathetic.  I asked him to bypass his sup and PLEASE talk to his manager. He agreed.
Two hours later, he called me back to say the manager had denied my offer.
It seemed like I had played my last card. What was left to do?
Then it hit me:

  • Maybe Billy’s compassion for me was a direct result of how I was telling the story.

  • Maybe if I spoke directly with the manager he would “get it” too?

Lucky for me, Billy agreed to make that happen.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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A VISA Debt Settlement Offer

If you are new to the blog, click HERE to start at the beginning of my story.
POST #29
This is the day!!!!
Famous last words…..well it wasn’t THE day, but it was a BIG step forward.
I got on the phone with my contact in Recovery, let’s call him Billy. I had done my dance of the purgatory fairies the night before. Apparently they heard me because my account was in his system.
Billy was a down home kinda guy. A slow, calm droll to his voice – focused, smart and confident, but no attitude.  Quite frankly, I felt lucky to have found him. He seemed to understand my plight and was willing to work with me. Usually, I don’t believe in bonding with your “salesman” but with Billy it was different.  He was authentic, so I trusted my gut and trusted him.
He reiterated that $7500 was extremely unlikely. He had seen offers of 40% ($11,200), but only in extreme circumstances.  From his experience, my account was likely to be in his department for about a month and it would take that much time to get the supervisor to consider a deal that even came close to my offer of $7500.  That said, he was a man of his word and agreed to send it up the flag pole.
He put me on hold for less than 2 minutes, came back on and said he couldn”™t reach any sups but would try a manager.
In what seemed like 10 seconds, Billy came back on the phone.  He wasn’t the excitable type, but there was a smile in his voice.
Apparently, he had never seen an offer this low and this quick.
$9809.87 or 35%

We were in business!!!!!!

I calmly thanked him, showed my appreciation, but said this was still $2300 over my offer and I had to consult with my credit counselor (CRN coach).

Giant House of Cards
Image by Tjflex2 via Flickr

At this point, it was critical that my story stay consistent. In reality, I had access to about $8600, but our financial story had been a complicated one of borrowing (true), and deferring payments (true). We had allowed ourselves a little bit of wiggle room without telling the bank.  Now that we were going to counter offer above our most recent offer of $7500, we had to mathematically explain how and why it would happen. If there was a hole in the story, it could all fall apart like a house of cards.  The domino effect of which could make my real house fall like a house of cards. Not good.
Luckily, Billy added a little piece of magic to their offer. Unlike so many scoundrels in the collections and recovery departments, he took the pressure OFF of me.
“No one is putting pressure on you to decide today. The offer is good for 2 weeks.”
This is really unheard of!
So close…..but not quite there.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Trying To Avoid Charge Off

If you are new to the blog, click HERE to start at the beginning of my story.
POST #28?
I was content to let my account charge off at the end of February and go to the Recovery Department until my CRN coach tried to talk me out of it.
There was a complication that she wanted to avoid. Very soon, I was going to apply for a loan mod on my house (yes my story continues!). She thought it might be risky to play chicken with the bank this one last time. There were for 2 reasons:

thunderbirds
Image by Blondie5000 via Flickr
  • If I got sued by my VISA account, it would destroy my chances at a loan mod.

  • My mortgage bank would be less likely to grant a loan mod if I had outstanding unsecured debt.

With the loan mod on deck, her advice was to not screw around. Let’s land this last deal and move on.
I trusted CRN implicitly so I went along with the advice. I called the VISA department 6 times between 2/25-2/28 in an effort to settle. My CRN rep even decided to step in and make the calls for me. This would end up costing me a bit more money if she landed the deal, but it would be worth it.
We called on Friday, Saturday, Sunday – multiple times each day. We re-told the story over and over. We spoke with call centers in Iowa and Oregon. We weathered threats of judgments and law suits.

PEARL HARBOR, Hawaii (May 4, 2007) - Chief Min...
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Unfortunately, nothing worked. The VISA collections department was firm. And when I say firm, I mean” firm like the buttocks of a body builder” firm.
THEY DID NOT BUDGE.
After our last ditch effort failed on Sunday 2/28, we resolved ourselves to charge off. But not all was lost.
On Sunday evening 2/28 we called the Recovery Department. Apparently, the account would be there on Monday morning. We wanted to get a head start so we called them. We told the rep that our prior offers were for $5000, but I put my ego aside and asked one more friend to loan me $2500. This would make our total offer $7500. The rep was impressed with my tenacity. He was sympathetic, smart and straight forward. He listened.
From his point of view it was a long shot – a BIG long shot. But he read through my notes and could tell I was sincere and up front. As long as the account hit his system in the morning, he agreed to bring it to his supervisor first thing.
We could only pray that the account would appear in his computer the next day and NOT end up in purgatory.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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VISA Settlement Not In Sight

If you are new to the blog, click HERE to start at the beginning of my story.
POST #27
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A woman giving birth on a birth chair, from a ...
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Here we are, 2 weeks into 2010 and I am still flying high from settling over $100K of debt.  It is hard to describe the feeling, but I imagine the relief is equivalent to that of my wife’s when she pushed out our 9 pound son.
Now on to the VISA.
I was prepared for the VISA to be a bit different. First clue was their charge-off schedule was much longer than the lines of credit. I am not exactly sure how they do their math, but they wouldn’t have done well in my 5th grade math class.
Here are a few ways the VISA differs from the Lines of Credit:

  • Jacked up my APR to 29.9% after I was 30 days late.

  • Charge off schedule was much longer.

  • Not at all interested in negotiating until we got to the recovery department.

  • More aggressive phone reps.

1/11/10
I called the the VISA department to make another offer. Current balance was $28K, with a whopping $2500 of fees, penalties and interest.  This was 5 times the amount of excessive charges I experienced on my Lines of Credit.  Scoundrels!
I had been calling them all along, low balling, and they had stone-called me at 50% -$14K.

Ginsu!
Image by Mat Honan via Flickr

Today was no different. The rep wanted 50% divided into 3 “easy” payments of $4671.36.  I wanted to ask if it came with a Ginsu knife set.
Up until now, my offers had been for $7500. However, since I had used some of my savings for the other settlements, I decided to lower my offer to reflect that. In other words, since Visa didn’t play ball (but the Line of Credit department did): they lost out on getting more of my available funds!
This time I offered $5000.  The rep just about laughed at me. My notes showed my prior offers of $7500 had been declined so he knew my offer of $5000 would not fly. I explained that I do have $7500 (in borrowed money) but $2500 is now spoken for with my 5 payments of $500 to the LOC settlement I recently landed.
He said he would submit it, but didn’t look promising. Then he mentioned that my account was 146 days passed due. It was “subject to charge” off tomorrow.
You are probably wondering what “subject to charge off” means. I did, too, so I asked.
Upshot: NOTHING.
It was a scare tactic designed to get a payment out of me. Technically, the bank can charge off the account any time after 90 days   – and maybe even earlier.  So really, it had had been “subject to charge off” for a while now!
We ended the call.
It went on like this for 3 weeks. I’d call, offer $5k, they’d say no but try to get a payment. I’d ask for a supervisor. One wasn’t available, but they’d have him call me back. No one called, so I called back in a few days and started the process again.
We were back in junior high school playing hard-to-get with each other. Everyone knew where this was headed…..yup: the Recovery Department – where the real deals are had.
Again, it hurts your credit. But since I already had 3 accounts hit the Recovery Department, I figured I might as well go 4 for 4 and get a great settlement.
By the way, charge off didn’t happen until the end of February – about 50 days after that rep threatened me that it was “subject to charge off”
Scoundrels.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt Relief Resources – 10 best sites for information

If you are new to the blog, click HERE to start at the beginning of my story.
POST #22
I have a lot of people ask:

Where can I do my research? What are the best resources?

There are many great resources on the internet. I’d like to think this blog is one of them! 🙂
Out of the hundreds of resources, about 10 of them are really worth your time. Here is my hit list. If you read the info at each of these sites, you will have a great foundation for understanding debt settlement.

Top 10 Debt Settlement Resource Sites

  1. Federal Trade Commission: A wealth of information on what is currently legal, illegal or yet to be determined. If you missed the Senate Committee hearing 2 weeks ago it is worth a viewing.
  2. National Association of Consumer Advocates: Know your rights
  3. Legal Advice Line: Get inexpensive expert legal advice.
  4. National Association of Consumer Bankruptcy Attorneys: Find an attorney in your area that has expertise in bankruptcy and debt settlement.
  5. About.Com:Credit: A collection of forums and blogs covering everything credit related.
  6. Credit Info Center: Great forums, articles and opinions on debt settlement.
  7. Zip Debt:  Charles Phelan is an extraordinary resource on the topic of debt settlement. His DIY program has gotten incredible reviews and results. His blog is indispensable.
  8. Hoffman Brinker: Contains step by step videos explaining the pros and cons of debt settlement.  Easy to understand and a great starting point for your education.
  9. Get Out Of Debt: Steve Rhode’s blog and resource site. Steve is an expert in the credit/debt field. His site is very well trafficked and he has a major presence there. If you post a question, you will get an answer.
  10. Consumer Recovery Network: Saving the best for last. Michael Bovee is the MAN.  He is the consummate expert in this field. Always on the cutting edge of this industry and very generous with his time. ’nuff said!

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

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Credit Card Debt: 7 biggest mistakes I made

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

POST #13
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The first 90 days of debt settlement are fairly uneventful.  You are making a lot calls to your creditor, retelling the same story over and over and logging everything that is said. The action in debt settlement starts to happen around 100 days.
This post will address some of the bone-head mistakes I made with my credit cards.
Let me say upfront, credit cards are not evil. Neither are guns. But both can be abused and both can kill you. I was one of those consumers that loved to charge stuff. Never did I consider the true cost.
When I was making tons of money, my thinking was, “I will pay this in full at the end of the month.” And I did.  When I was NOT making tons of money, my thinking was, “I need this now. Money will come in and I’ll pay for it later.” But the money never came fast enough. Never does when you think this way.
There was a fundamental idea I was misunderstanding. We have all been told this, but it doesn’t make sense until you are facing bankruptcy and you try to figure out how you got there.  Here is the simple truth.

CREDIT CARDS ARE VERY EXPENSIVE –

UNLESS YOU PAY IT OFF EACH MONTH.

First 4 digits of a credit card
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You have heard the following explanation before, but if you are reading my blog because you in trouble, it’s likely you didn’t absorb the idea.

Let’s say you have $10,000 on a credit card at 15% interest (a modest rate these days!)

If you make the minimum payment plus 1% of principal, you will pay $225/month. At that rate,

It will take you 335 months to pay it off.

You will pay $11,979.29 in interest.

That is absurd. So that jacket on sale for 50% off that I just HAD TO HAVE really cost 20% more than retail. I would have been better off paying full price in cash. Wow cash, what a concept!

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TOP 7 MISTAKES I MADE WITH MY CREDIT CARD


  1. Spent more money on my card than I earned that month – I ACTUALLY DID THIS!!!

  2. Opened as many cards as I could, just in case I needed them.

  3. Played the shell game with 0% cards

  4. Justified spending because of airline points – completely idiotic!

  5. Used them on luxury items for retail therapy.

  6. Used them for business expenses that I didn’t really need for my business.

  7. Yo Yo spending. Maxed out the card. Paid it down. Maxed it back up.

There are million ways to abuse credit cards. Now, I have 3 credit cards with minimum balances and low APRs. I have them strictly to build my credit and use in case of an emergency. Everything else is paid for using my debt card or checks. There is no overdraft protection on my bank account. So, if I don’t have it, I don’t spend it!  What a concept!
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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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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