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 (https://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

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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 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 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...
Image via Wikipedia

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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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 Department Psychosis

If you are new to the blog, click HERE to start at the beginning of my story.
POST #19
Debt settlement is a very interesting process.

  • On the one hand it is simple: you negotiate a lump sum payment with your bank at a fraction of the amount owed and you both go your separate ways.
  • On the other hand, you are dealing with a corporation and as you may know from the movie The Corporation.

“If the dominant institution of our time [the corporation] has been created in the image of the psychopath, who bears the moral responsibility for it’s actions?”

This is the crux of the problem with debt settlement. It isn’t that the bank doesn’t want to settle, it’s that they behave like psychopaths.  Let’s remember:

  • In October, the credit department told me the never for less than 85%
  • In November the collection department told me the never settle for less than 60%
  • In December the recovery department told me they never settle for less than 40%

So how did I get a settlement for 35%?
Simple answer: Corporations are psychotic!

The Interior of Bedlam (Bethlem Royal Hospital...
Image via Wikipedia

But really, it came down to this. I discovered that when dealing with a corporation like a bank, I have to understand that different departments have different standards and quotas. The collections department is supposed to stonewall you at 60% because they know most consumers will be intimidated and settle. The bank also knows that once your account is in the recovery department, they have to make a better offer or will likely get nothing. Your credit will suffer once your account is in recovery, and they will use this as a bargaining chip. I already knew that credit repair was in my future, so I couldn’t let a few more points get in the way of a good deal.  Playing chicken with the bank!
Additionally, the deal can be contingent on the personality and mood of the rep with whom you are speaking.  Does this sound arbitrary and unfair? Yes. And it is.
With this information, I was able to navigate through the psychosis of the bank.

Top 5 points that helped me get good deal

  1. I didn’t get riled up by the reps who tried to incite me.

  2. I waited until the account went to the recovery department.

  3. I timed my negotiation at the end of the month, when reps were trying to meet quotas.

  4. I timed my negotiation at the end of the year, even bigger quotas on the line.

  5. I understood that the bank is a psychotic being and can (and will!) change it’s mind at the drop of dime…..or a few thousand bucks! 🙂

In the coming posts, I’ll discuss how I settled my 2 biggest accounts on December 31st, 2009. Last day of the last month of the year.  Let’s just say, that helped.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt Settlement Mathematics: 2 + 2 = delinquent

If you are new to the blog, click HERE to start at the beginning of my story.
POST #17
So here I am in the middle of the story.  It’s a waiting game, but not without excitement. The collections calls have accelerated to 3-4 times a day and the letters come 2-3 times a week.
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I have repeated my story dozens of times to dozens of different representatives.  After consulting with my CRN rep, we decided to pursue one of my accounts more actively because it was accelerated to charge off .
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The bank normally delays putting accounts into charge off for about 150 days, BUT they have the option of doing it earlier.
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I kept track of how the accounts were progressing but the rules seemed to keep changing. I’d call on Monday and they’d say I was 120 days late and charge off was in 30 days. Then I’d call again on Friday, 5 days later, and they’d say the account was 143 days late and charge off was in 17 days. If you ask me, that’s funny math…..and we all wonder why our numbers in Quicken or Quickbooks never match the bank’s numbers!  The reps were just playing games to scare me into making a payment. Nice try!!!
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Regardless of their math, I kept calling every couple of days and kept careful notes. I knew a settlement was imminent. This account had a balance of about $20,000.  I would offer $5,000 as a settlement, and they would counter at $15,000. Every rep said that even if they could get a manager to approve a lower offer, they had never seen a settlement for lower than 60% or in my case, $12,000.
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That was a BLATANT lie.  Banks regularly make debt settlements for 25%-35%, but each department has certain restrictions. The Collections Department usually can’t go lower than 50%. However, once your account moves to charge off, the rules change.
On November 25, 2009, I made my final call to the Collections Department.
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WASHINGTON - NOVEMBER 20: A turkey named 'May'...

Then next day was Thanksgiving.
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I decided to take the day off from calling the bank, knowing that on Friday, I would call the Recovery Department. Truthfully, I was hoping to cut a deal prior to Thanksgiving so that I would have something to celebrate, but it all worked out for the best. In fact, my CRN rep encouraged me to fold my Thanksgiving dinner into the next conversation with the bank.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt Settlement is like playing chicken with the bank

If you are new to the blog, click HERE to start at the beginning of my story.
POST #16
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REMINDER:  Today is my interview with YourMoneyMattersRadio. Click on the link to locate an AM station, podcast or iTunes radio station to hear the interview.
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So here I am in the midst of my first debt settlement conversation and the rep is trying to get a payment out of me in order to avoid charge off. This scenario had come up in prior conversations with my CRN counselor.
What CRN explained is that making a payment to avoid charge off is like hitting the reset button on the debt settlement process. I am still in debt for the full amount, but now out 500 bones. Even worse, the bank knows they can stronghold me into making payments again. The whole idea of debt settlement is to explain to the bank that you can’t afford to make payments, but you can afford to borrow money from another source to pay off the debt at a compromised sum.
My CRN rep also explained that the bank is MORE willing to settle for a lower amount once the account goes to charge off.  Yes, there was a risk that the bank will escalate my case and take me to court, but this was a small risk since I had been in such close contact with them.
As such, I decided to roll the dice. I ONCE AGAIN told the rep that since I am in a financial hardship, I can”™t come up with $500.  I won’t ask a family member to borrow $500 to only get current on my debt. The loan from a family member was contingent on eliminating my debt with the bank.  Reluctantly, the rep wished me luck and said they would stay in touch.
I want to acknowledge an important point here.  The tide had shifted. I was more in control. The bank was willing to settle. They couldn’t scare me with bad credit ratings and charge off threats. I knew the longer we both waited, the more likely that I would get a lower settlement offer.

Image by Blondie5000 via Flickr

Yes, I was playing chicken with the bank.
thunderbirds
BUT, I felt very confident and informed due to my personal focus, steady education and CRN’s expert coaching.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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