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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Debt Settlement Purgatory – Part 1

If you are new to the blog, click HERE to start at the beginning of my story.
POST #23

Lost title card
Image via Wikipedia

What is debt settlement purgatory?  It’s kind of like the sideways time line in the final season of “Lost“.  Confusing, frustrating, but does ultimately lead to nirvana. My account had left the Collections Department, but wasn’t yet in the Recovery Department.
Apparently, there is a dead time after collections but before recovery. The account is technically charged off, but doesn’t appear in any particular department. It’s like when you send an email and it leaves your sent box but never hits your outbox.  You know that just a moment ago it DID exist, but due to technology, you can’t find it. Well, this was a nut to crack. I had come this far and wasn’t going to let the critical last 2 weeks of the year get away from me.
Someone would have the answer. Someone would be able to wrangle my account. I just hadn’t found that person yet.  Where was my Jacob?  But remember what I had said at the beginning of the journey:

TENACITY AND HARD WORK

So I put my nose to the grindstone and called, and called, and called again. I kept telling my story over and over to rep after rep. I kept getting the same answers over and over again, “I am sorry Mr. Grossman, your account is not in my dept. It is on its way to the recovery dept, but won’t show up on their system for another day or so.”
According to the Recovery Department, the absolute latest it would hit them was 1/1/10. But that would be the beginning of a new month and a new fiscal year and this would likely hurt my negotiation.
It went on and on like this for 10 days. I had prepared myself for the big day of settling these 2 enormous accounts.  Settling $100,000 seemed almost within my grasp. I could taste the relief. Each day I woke up, I said to myself, “This is the day!”  I would get all amped up and prepared, then make the call only to find that I had to wait another day.  Time was getting thin.
It was December 22 – dangerously close to December 31st, the end of the year.
How would I get “unLost”?
Stay tuned…..
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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Debt Settlement Weapon of Choice – Consumer Recovery Network

If you are new to the blog, click HERE to start at the beginning of my story.
POST #21
I have shared with you, again and again, that debt settlement is a process. It forced me to do a lot of research, tested my patience and resolve and challenged my brain. But I want to make one thing clear, I am not an expert. I am a FIRC (former irresponsible recovering consumer) who successfully followed the coaching and guidelines of the Consumer Recovery Network DIY program.
Several times I have looked back on this experience and wondered if I could have done it all on my own without the help of a DIY program.  There is a lot of free info on the internet. Heck, this blog itself shows you many of the techniques used to navigate the process.  After careful review, I have concluded that you CAN do it without the help of a company…..but I don’t recommend it.
Here are a few pitfalls of going solo:

Ozzfest 2007: Zakk's Solo 3
Image by LuvataciousSkull via Flickr
  • Every situation and bank negotiation is different. You will have to improvise along the way. A wrong choice can kill the deal.

  • Timing is everything. Not all banks process the collections in the same time line. You will be doing some guessing.

  • The reps will lie to you. How will you sift through the BS?

I followed CRN’s DIY program. I listened to the CDs, read the workbook and had about 30 hours of phone calls with my CRN coach. Guess which was the most indispensable aspect?

The advice from my coach.

There were a zillion forks in the road during my debt settlement. All of the solutions came from discussions with my coach. I have shared many of these solutions already, but I want to add one last thing.
I knew was getting close to a settlement on these 2 big line of credit accounts. It would take a bit of fancy footwork, negotiating and quick thinking. There was critical phone call I had to make and decided to add an extra safety measure. This technique, appropriately called the Debt Settlement Weapon of Choice, can only be done when you have a coach. Hang on, this is a good one!
I called my CRN coach, put her on mute, then conferenced in the bank.  While I was talking with the bank, my CRN coach was listening in and emailing me questions to ask the bank rep. GENIUS!
We only did this once, during a critical call. It was a great help because, despite all of my preparedness, the flow of this particular conversation was beyond my expertise. I couldn’t distill the truth from the BS, nor could I determine the best questions to ask.
In short, you can do a full on “free” DIY by using info on the internet.  But for me, I concluded it was best to have an expert coach offering advice and counsel specific to my situation.  Especially when that advice was in real time during the conversation, via email!!!
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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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 Collections Calls – the first 30 days

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

POST #11
In mid August, I made my first calls to the bank explaining my situation. Was I nervous?

HECK YEAH!!!

This was the first of many pro-active calls I made.  I had written a cheat sheet to make sure the call went smoothly.  Here’s what was on it:

  1. Stay calm, sincere and friendly.

  2. Keep the call short and direct.

  3. Explain that I am experiencing a financial hardship.

  4. Explain that I am father of 2 and husband, doing my best to take care of my family.

  5. Don’t offer any information regarding my specific place of employment.

  6. Don’t make a payment. Never. Ever. Ever. Ever. JUST DON’T DO IT. This will kill the process and you’ll have to start over again.

  7. Don’t allow the rep to get me angry or defensive.

  8. Don’t mention debt settlement yet!!!!

All of the above was true for me. This is an important aspect of the debt settlement process. You are telling the bank a TRUE story. If you start lying, they will likely catch you and the process will crumble. As a reminder, debt settlement is NOT a way to avoid your debts. It’s a way to recover from financial hardship while attempting to offer your bank a portion of the money owed.

Image by oceandesetoiles via Flickr

During the call, I expected to be scolded by the teacher for being extremely tardy to school.
But really, it was more like, “We understand. Thank you for your call. Let us know when you are back on your feet.”
Keep in mind, this was during the first 30 days – not serious delinquency yet.
I don’t imagine it will be this smooth for everyone, but it was for me.
Good thing I was being coached by my CRN rep, Dayna. She gave me a reality check, “Don’t get too comfortable.  IT WILL GET NASTY!” And she was right, it took another 3 months, but it got there.  And once it got nasty, it got really nasty.
Surprisingly, not all of the reps were nasty, but when you’re dealing with people, you are subject to good and bad moods. When you catch someone in a good mood, you’ll get a better deal. Bad mood, bad deal. Sounds arbitrary, but it makes sense. Sure there are settlement rules for the bank, but there is also leeway. Ask yourself this question:

Who do you think will get a better deal?

The angry indignant customer?

or

The father of 2 who is calling every 2 weeks, telling his story with humility and offering to pay a portion of the debt?

In an upcoming post, I’ll share with you what happened when I got on the phone with a collections rep who was not having a good day. Let’s just say, I used every technique in the book to land that settlement.  🙂
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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