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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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 Settlement Breeds the Un-dead

If you are new to the blog, click HERE to start at the beginning of my story.
POST #25
It was Monday 12/28.
Like so many days during the past 2 weeks, I woke up and said to myself, “This is the day!!!!”
I hit the phone, called the rep and was ready to cut a deal. I had prepared for this day in a zillion different ways – not the least of which was borrowing money from my retirement account.
Everyone says to NEVER EVER touch your retirement account. Between taxes and early withdrawal fees, you can get killed. This is true. But in my case, a killer settlement on $100K would far out weigh the downside of pulling from retirement. It was a good decision both financially and psychologically. This may not be true for most people, but I knew it to be true for me.
Back to the phone call……
I dialed the number and sure enough, got the rep on the phone…..soooooo close.
Thankfully, he remembered me and my case.

Simulated view of a black hole in front of the...
Image via Wikipedia

Unfortunately, my account was still in the collections black hole I call:
DEBT SETTLEMENT PURGATORY.
I really did feel like one of the undead. My CRN coach had prepared me in so many ways.

  • Be patient.

  • Stay focused.

  • Keep consistent.

But never did she mention that I would be the caretaker for a zombie account roaming the debt world in search of a home. At this point, hell, bankruptcy, seemed like it would be a relief. At least I would know where I was!
I just wanted these accounts to be killed. I actually had empathy for the zombies from those cult films.

A participant of a
Image via Wikipedia

The rep told me to call back the next day.

December 29, 2009

………..Still a zombie.
….and the next day…..still no luck. In fact, I was told my account was frozen. It would definitely not be released to the Recovery Department until January 1st or 2nd of 2010.

Somebody kill me!!!!!!!!!

It was December 30, 2009. If I was to benefit from the timing of the last day of the last month of the year…..I had one more day to do it.
I prayed to the zombies of purgatory to take pity on me. Delivery me from this fire!
Just like a good horror film, we’ll leave this post on a cliff-hanger.
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan

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First Debt Settlement Deal

If you are new to the blog, click HERE to start at the beginning of my story.
POST #18
On Friday, November 27, I made my first call to the Recovery Department. Knowing they would offer a better deal, I was quite optimistic.
As a conquering hero, I picked up the phone like a sword ready to slay my first debt dragon.

St George Slaying the Dragon

In this conversation, I integrated a technique that CRN had suggested – make my story real to the bank. If they see me as a family and not a number, they will be more likely to settle.  I re-told my back story with one addition – Thanksgiving dinner. It went something like this.
“At Thanksgiving dinner yesterday, I was really thinking about my debt.  I am so grateful for my family and I want to do everything I can to take care of them. As I said before, with my mortgage, child care etc”¦really struggling to get by. I want to do everything I can do avoid bankruptcy….”
This may seem manipulative, but it is also true for me.  Thanksgiving is my favorite holiday. It was authentic for me to talk about its meaning and how the imminence of bankruptcy reminded me what I am thankful for. I was sure my authenticity would help my case and make a settlement that day a sure thing. GUESS WHAT!!!!???

IT DIDN’T MAKE A SINGLE BIT OF DIFFERENCE THAT DAY.

But that didn’t deter me.
On 12/2, I finally made some headway.
I offered $5k to settle my $20k line of credit.  There was something different this day. This rep was the stereotypical bill collector. He had attitude and was attacking my credibility. He fired out questions like a machine gunman at a firing line.

  • How much are you making?

  • Your numbers don”™t add up? Who’s giving you money?

  • Why are you paying your other creditors and not us?

bull-dog

Had I been unprepared, I would have crumbled. This rep was like a bull dog.
He DID NOT believe me, nor did he like what I was saying. However, I just stayed calm. Explained my story again, as I had dozens of times before and waited for him to come around.
After 20 minutes of grilling, he finally agreed to take my $5K offer to his supervisor and then…………..play the victorious music…….

He came back on the line and to say his supervisor had approved a settlement for $6924.11, or 35% of the total.

I was ecstatic, though I didn’t let him know this. I couldn’t just jump at the offer because according to my story, I had to come up with another $2K. I thanked him for the generous offer, but said I needed to make a call to see if I could arrange for the additional funds.
In reality, I had saved and borrowed money in advance so that when this moment came I would have funds on hand.  I asked him to fax the offer so I had it writing. True to bullish form, this rep gave me a hassle about faxing a letter.
Hear me when I say this:

Without anything in writing, your verbal agreement is at jeopardy.

If you send in funds without an agreement in writing, they can apply those funds to principal, deny that a deal was cut and hold you on the hook for the balance.  Seems egregious, but it does happen.
After what seemed like hours of haggling, this bull dog faxed the letter. Per our agreement, I called back 2 days later and paid by check over the phone.
This was one of the greatest days of my life. It was a rush and definitely inspired me to move forward with my 3 other accounts. Holy cow! This method really works. I jumped for joy, hugged my wife, called my CRN rep……and then went back to the drawing board.
This was only 1 of 4 accounts and by far the smallest account. I still had another $110,000 to deal with…..but I was optimistic. And for good reason.
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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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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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
Image via Wikipedia

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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Credit Card Withdrawal

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

POST #12
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At this point I am on the path to becoming debt free.

  • I acknowledged that I needed to make a change.
  • Chose debt settlement.
  • Found the right debt settlement company for my needs.
  • Stopped making payments.
  • Called my bank to let them know I was in a financial hardship.

NOW WHAT?

This next step in the process was probably the biggest shocker of them all. You see, since I had committed my lines of credit and credit card to a settlement program, I could no longer use them.

day 76 - credit cards
Image by JudeanPeoplesFront via Flickr

uh-oh.

I can’t charge anything?

How will I live?

This was a real wake up call. I soon realized that I couldn’t actually afford my lifestyle. The first change I made was to either pay cash or use my debit card for all of my purchases.  This forced me to make hard decisions. If I didn’t have the money in my account, I wouldn’t buy it.
Simple enough………to say that is.  But not that simple to do. I had to undo decades of habitual overspending.
Time to start making choices. So what would I cut out? There were dozens of adjustments I made, but here are a few:

  • No more Starbucks
  • No more impromptu lunches out with friends.
  • Probably don’t need that Netflix subscription.
  • Say goodbye to HBO.
  • Whole Foods is WAY TOO EXPENSIVE and off the hit list.
  • Costco is my friend.
  • Instead of turning on the heat, I put on a sweater.
  • Cancel the cleaning lady and the gardener. Sunday is family cleaning day.
  • Do I really need the extra soft toilet paper?
  • I LOVE generic everything! 🙂

The most interesting by-product of these changes was that I started living more consciously.  Every decision was challenged. A distinction was made between my needs and my wants.
I have a greater appreciation for the thriftiness of my grandparents. I used to make fun of my grandmother for delicately unwrapping presents in hopes of trying to re-use the wrapping paper……well….I still laugh about that one. Some things really are ridiculous!!
Stay tuned. Stay afloat. Wealth and freedom are in your future.
Jonathan
P.S. As an aside, I did keep a few low balance, low interest credit cards out of the program for emergency purposes. I have kids, so I do need a safety net. That said, I made a promise to myself, and my family, that these cards were to be used for emergencies only. No frivolous usage.

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