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...
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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 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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