Thought you all would like to see this. A friend of mine took it upon himself (I really had no hand in it!) to play test rat with a debt negotiation company and see what they would tell him about their services and fees. Here are his results:
For fun I called an 800 number for debt settlement and spoke to the gentleman below. the only fee he ever mentioned was the 7% (!) fee. Notice how he conveniently “forgot” about the other fees when he was talking to me. He hasn’t responded yet to my request for lower fees.
Here is the email correspondence:
From: Leonard the Debt Settlement Guy
Subject: Credit Card Relief
To: Joe Test Rat
Date: Monday, December 29, 2008, 11:48 AM
Hello Joe,It was my pleasure to speak with you today. Attached (link to flier was removed)1 is the information you requested about our program .
Preferred Financial Solutions has been in business for over 9 1/2 years now and has settled over 130 million in credit
card debt and unsecured debt. Check out the company’s file with the Better Business Bureau by following the link
below.http://indy.bbb.org/WWWRoot/Report.aspx?site=93&bbb=0382&firm=1000045
We are a part of: http://www.usoba.org/consumers.html
All of our attorneys are members of: http://www.abanet.org/
If you are interested in Enrolling into our program all you’ll need is your account number(s) and balance(s) from each creditor and then call me and I’ll fill out the application for you.
—–Original Message—–
From: Joe Test Rat
Sent: Monday, December 29, 2008 11:10 AM
To: Leonard the Debt Settlement Guy
Subject: Re: Credit Card ReliefLeonard, thanks for the info. I read the pdf and came across the second to last page. I was under the impression there was only a 7% fee, but the Credit Card Relief summary page indicates a $49.95 fee and and 25% settlement fee. Can you explain those to me a little bit more? I just want to make sure my math is correct on $70,000:
7% enrollment: $4900
$49.95 for 48 months: $2397.60
25% Settlement fee on $24,500 (I think that’s 35% of $70,000) savings: $6125.00Total Fees: $13,422
48 months at $1050: $50400
I understand that the interest stops accruing and all that, just want to be sure that I completely understand the fee
structure.Thanks for your help–really appreciate it!
—–Original Message—–
From: Leonard the Debt Settlement Guy
Subject: RE: Credit Card Relief
To: Joe Test Rat
Date: Monday, December 29, 2008, 12:16 PM
You have the fee’s calculated, exactly. I’m sorry I got side tracked and didn’t get specific. I get hung up
on ‘all the fee’s are built in to your monthly payment’ $1050 per month for 40-50 mos.
Everyone…every fee will have been paid.Lenny
—–Original Message—–
From: Joe Test Rat
Subject: RE: Credit Card Relief
To: Leonard the Debt Settlement Guy
Date: Monday, December 29, 2008, 12:42 PMNo problem Leonard. I know I get the benefit of an attorney, but the $13K in fees on $24500 savings seems really excessive. Can you do anything that about those fees?
Feel like running to one of those debt settlement/debt negotiation companies now? I hope not. You can do this yourself. Read how to settle your debts yourself here.
The company referred to here was Credit Card Relief (www.ccrnow.com) aka:
Preferred Financial Solutions, Inc.
C C R Now
Credit Card Relief
Credit Card Relief Now
Credit Card Rescue
Debt Settlement Program
Enrollment Trust Services
Preferred Community Services
Preferred Companies, Inc.
Address: 5656 W. 74th Street Indianapolis, IN 46278.
1At the time of this post, the company was handled by Dakich & Associates of Indiana. Thomas Dakich contacted me and wanted me to remove the flier, presumably removing evidence he was involved in this company. He is now a lawyer with Baldwin & Dakich, a law firm handling “Criminal Defense, Sports Law, Telecommunications Law”.
Email sent to me threatening legal action if I didn’t take it down:
From: Tom Dakich
Sent: Mon, May 17, 2010 7:52:48 AM
Subject: Thomas P. DakichKristy-
You and I have had a conversation about the page that refers to me on your web site being on your service. Rod Miller has had repeated communication with you about this matter. Yet the page is still up.Amazingly, you have no problem misinforming the people who somehow find your web site. It has become obvious that you have no interest in actually helping people and that your real interest is in promoting yourself.
The paperwork that is on your site is outdated and probably violates the newly reconsituted laws of at least 6 states and possibly 15 states. That paperwork is NOT VALID. I demand that you take that page down immediately. If you refuse to do so, I am going to sue you.
I really did not want this issue to go this far but I cannot continue to permit you to misinform people who go to your site and place me in peril. This paperwork is wrong in today’s credit environment, we have told you that repeatedly and yet you have no intention to get it right.
If that page is not removed from your web site, we will take action. This action will include a review of all the other paperwork on your site to try to figure out how many other pages on your web site include outdated information and it will include litigation.
You have until the close of business on Tuesday, May 18, 2010.
Thomas P. Dakich
Baldwin Dakich & Maxwell
No related posts.
Incredible! But Test Rat is lucky. He could have given his money to Bernie Madoff!
Actaully, like Kristi, I am grateful for these debt settlement companies. I work with so many people who make their first stop to one of these, only to find quick disillusionment.
Get educated, then find someone you can meet face to face, or have real contact with, and start the process.
Hey Tony! Fear not, Test Rat was not actually in debt, he just decided to call these guys for fun.
This is no surprise. The debt settlement industry is full of unethical people like this. It is a shame because debt settlement companies are generally a lot more successful at reducing debts than individuals are and from my experience (I work in the industry) there are a handful of excellent companies that provide an ethical and highly valuable service.
If You’re Looking for an Alternative to Bankruptcy an IVA Could be the Answer
For many people the idea of going bankrupt feels them with horror- and it’s not difficult to understand why. Going bankrupt has all sorts of social stigmas associated with it, not to mention a whole host of disadvantages and disqualifications. No wonder then that the IVA, introduced by the government in 1986, is so attractive since it offers a good and legitimate alternative to bankruptcy.
It annoys me to no end how quickly people call someone “unethicial”.
There was nothing unethicial about the guy’s response..(Leonard). You asked a question and he answered. Its up to you to take it or leave it.
Its always important for a sales rep/counselor to be knowledgable and upfront about the fees incurred. I don’t see that Leonard said anything wrong. I found the 25% fee plus the attorney fees to be very overpriced. The industry standard is 15% of the debt amount plus monthly attorney fees if an attorney network is used. Debt settlement is an excellent alternative to bankruptcy and by far cheaper. I have plenty of solid PR on debt settlement on my debt management guys blog. Its worth it to read up on it.