Debt settlement process ripened my debt like a sweet mango

If you are new to the blog, click HERE to start at the beginning of my story.
POST #15
Before I start today, I want to mention that I did a radio interview with Marc Pearlman on YourMoneyMattersRadio. It is set to air on Monday, May 3, 2010 on AM radio, podcasts and iTunes Radio. Marc is a top-notch financial advisor and runs an excellent consulting firm and radio show. Please visit YourMoneyMattersRadio and find out where you can hear the show.
Now back to my story.
After 100 days past due, things started heating up. As they say in the debt settlement business, “The debts are getting ripe.”

Ripe Red Apples - Ready for Picking - Filoli G...
Image by Jill Clardy via Flickr

Essentially, the debt moved to another department whose representatives (salesman!!!) were responsible for cutting settlement deals in the 50%-85% range.
On November 23, 2009 I was 132 days late on one of my accounts.
I called the bank for the 15th time and told them my story. However, since it was over 90 days passed due and the debt had been transferred to a new department, it was time to float the word “settlement”. I took a deep breath before I mentioned that word, thinking it would come at great resistance. I felt like a hospice nurse asking the family if it was okay to “pull the plug” on their dear loving family member. I expected the rep to be outraged by my egregious and forthright suggestion. Instead, the conversation didn’t skip a beat and the rep said we could work something out.
Wow! That was easy…..almost.

Their offer was for 85%.

HUH?

I said that would be impossible but I MIGHT be able to come up with $10K if I can make 3 payments over 3 months. The rep was hesistant and then put me on hold.
I was filled with excitement at the prospect of settling my first account. The fact that they were even considering a debt settlement was amazing!
But……
The rep came back on the line, and instead of addressing my offer, tried to get me to make a payment of $500.  He said if I make a payment of $500, it would prevent my account from going to “charge off” and give us more time to negotiate a deal.
Charge off is when the bank writes off your account as a bad debt and a business loss.  This is seemingly bad for me as a consumer because it hurts my credit rating. However, the ship had sailed on trying to protect my credit rating. I had already come to terms with that reality once I committed to debt settlement. Rebuilding my credit was another task to address once the debt settlement process was complete.  Sorry bank….you can’t lord that over me anymore!  As for making a payment to prevent charge off, that was another story and my CRN rep gave me some advice.

DON’T GIVE IN!!!

CLIFFHANGER!!!!!!
In the next post, I’ll discuss why that is good advice and how it worked out for me.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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Debt Settlement Lies

Grainy B&W image of supposed UFO, Passoria, Ne...
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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 – The Good Ones

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

POST #6
Consumer Recover Network
In this case, the title should be singular. There are other good companies out there, but only a few. For this discussion, I will focus on CRN because they are the one I know.
After weeks of research and hours on the phone, I finally landed at the website of Consumer Recovery Network.  The information made sense so I called them up. Within minutes I was on the phone with Michael Bovee, the man behind CRN.  This wasn’t some salesman trying to enroll another customer. This was a highly informed consumer advocate with real solutions to my problems. We spoke for about an hour and let me tell you 2 extraordinary things that happened:

  1. He listened to me

  2. He made sense.

INCREDIBLE!
In a nutshell, this is why I went with CRN:

  • When I called CRN, I spoke with their president, not some sales guy.

  • He encouraged me to do this myself through their DIY program – the cheaper route!

  • If I had trouble on my own, CRN would step in and negotiate with the bank.

  • If, and only if, CRN did step in and negotiated for me, I would pay them a 15% commission based on the amount they saved me – in other words, they are invested in my results.

  • 100% of my DIY enrollment and membership fees would be applied to their commission  – NO DOUBLE DIPPING

  • I pay their commission fee AFTER I pay the bank.

  • Every logical misgiving about the other debt settlement companies was addressed in my conversation with Michael.

  • And finally – it felt right.

Remember when I said that something felt wrong when I spoke with the other companies? Well nothing felt wrong when I spoke to Michael. In my mind, he was “the guy”. With CRN, I knew things would turn around for me.
AND THEY DID!!!
By now, you are probably wondering if I work for CRN.
No and yes.
I am not an employee of CRN.  However, if you end up hiring CRN as a result of reading this blog, they will give me an affiliate commission of 15% of the initial membership fee.
But let’s do some math, shall we?
According to Michael, the average DIY client has an initial membership fee of $795. Based on that figure, I would make $120 referring someone through their affiliate program. (15% of $795 is $120) Do I want to make $120? Sure!!  But, let’s be clear, my intent for you to call CRN isn’t to make $120. No one is getting rich (or paying for their kids’ college) by making $120.
My intent is to help you. Or should I say – for you to help yourself!!!!
Please continue to do your research AND make sure that Consumer Recovery Network is part of it. They changed my life. They can probably change yours.
Stay tuned, stay afloat. WEALTH AND FREEDOM ARE IN YOUR FUTURE!
Jonathan Grossman

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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 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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