Jump to content

Should i go this route?


BALLOONBOY
 Share

Recommended Posts

Hi everybody, great forum. I'm debating whether or not to enroll in a Debt Settlement program, for about 21K in credit cards. I'm thinking of going with "Credit Solutions". Is anyone familiar with this type of solution? I did my research on debt settlement, so i'm very familiar with how it works. I'm now to the point where i'm wondering if i should try to settle myself and save the $3000 fee, or would it be too much of a hassle with 4 credit card accounts? As of right now all the accounts are current except one, but that won't be for long. I 'm at the point where i can't pay other bills. So should i let them go delinquent, for several months and try to negotiate myself or go with the settlement company. I will be in a position to pay almost the entire negotiated balance of in several months.

Link to comment
Share on other sites

Sorry, in my opinion, ALL debt settlement companies are scams. None of them do anything you can't do on your own and most don't do anything at all but take your money and ruin your credit. Paying $3000 for that is just not a good idea.

If you honestly think your money situation will improve, then call the OCs yourself and see if you can get on their hardship programs. You need to be careful and be sure that you understand what you're agreeing to, but they MIGHT give you reduced payments and lower interest for 6-12 months.

Link to comment
Share on other sites

Thats funny you guys mentioned that. I talked to Advanta bank today, and was told them i was almost positive i was turning the account over to a debt settlement company and they said they don't even work with settlement companys, and then said i could settle with them without paying someone else to do it. Thats a good sign. I don't know how lucky i will be with the other creditors. Thanks for the feedback so far.

Link to comment
Share on other sites

Guest sifxpert

If you were to call every credit card card individually, they will each tell you the same thing..."we do not work with these types of companies". They tell you this because the banks would much rather deal with a consumer who knows nothing about settling their debts than a professional negotiator.

Don't believe everything hear. Youy would have to be severely naive to think that the same people who have been robbing you with interest for the last however many years will tell you an easy way to get out. You can settle debts on your own. Anyone can. But, can you deal with the harassment over the next 3 years or so as you settle your own debts. People have no idea what goes into a debt settlement program. Fees are high yes. But, imagine not having to make the calls, not getting collection calls at work, not having to respond to the letters, not having to worry about being sued or having your wages garnished....

Yes, anyone can settle a debt. But there is also a price for peace of mind. Finding a good co. is very difficult as well. Make sure the co. has been in business for at least 3 years and has no BBB complaints. There are very few you have a clean BBB record.

Good luck!

Link to comment
Share on other sites

Willing is not in the business, he's just been there. BK, FC, you name it.

Grim's never been in the debt business but from what I've read and the frequency these new debt management companies come and go leads me to the one conclusion: They are scams.

Not-for-profit means they can accidently turn a profit. Or in the case of United Way - the executives at the top can siphon off 90% of the donations and only 10% actually goes to the charities.

Link to comment
Share on other sites

Not - for - profit refers to the corporation or entity RETAINING moneys in access of its expenses and Capitializing such funds into assets owned by the entity.

NFP entitys earn as much as they can and then either:

1. Give it away to a charity/assistance for a special cause.

2. Hold more programs functions that eat up the money.

3. Disburse excess earnings to its employees.

NFP doesn't mean they don't earn a profit, it means they don't keep it at the end of the year.

Link to comment
Share on other sites

Okay, folk, I posted this several times before, but here it is again...

Here's the text of a post I found on another forum that pretty much sums it all up Incidently, from what I've seen sfixpert's company falls somewhere under item 2:

Let me try one more time to explain this: there are 4 types of debt correction / elimiination / collection companies. NONE of them are on your side. They all work for the original creditor or the debt collection industry in one form or another. They're known by a bunch of different names and descriptive phrases so it sometime hard to determine what you're dealing with, but here's the way they work.

1. Non-profit, debt settlement company. They call themselves and may even register as non-profit or not-for-profit organizations so that they can take advantage of certain tax laws. They tell you they will arrange for your creditors to charge less interest and eliminate late fees, etc. You're supposed to send them one large check each month, and they will divide it up among your creditors and make your payments. In order to do this, these places actually have agreements with some creditors. They've told the creditor that "some money is better than none" and the settlement company will see to it that you pay every month. In effect, they're collection agencies that work for the creditors...but you pay them. Also, they may not have agreements with all your creditors. The ones that are not included, don't get paid. The ones that don't get paid wind up suing you anyway. Okay, so instead of having 10 bad marks on your credit report, you only have 5. Big deal...your credit is still trashed. And, for the creditors that don't play along, you get to go through the collection process...see item 3.

2. Debt elimination companies. These are the ones that tell you to stop paying creditors, put what money you can afford in a savings account and at some point down the line they will negotiate a settlement with your creditors for a smaller amount. You give them money up front, and they say they'll take a small percentage of what you don't have to pay as settlement. They want the up front money because they know that again, this only works if all your creditors play along. Some of these companies are outright scams. They know that most creditors don't play along, so the just take your money and do nothing. If they do attempt to negotiate on your behalf, only some of your creditors will play along. Most don't. You wind up getting sued by some, have other charge off the account, and even the creditors that do agree mark your credit reports as "Paid for less than agreed". And, all the while that you're not paying your debts you get to go through the "collection process"...see item 3. End result...your credit is trashed.

3. Collection agencies. Most creditors begin by "contracting" their bad debts over to professional collectors. At first, this is done while the creditor still owns the debt so the collector can be mean and nasty and call you at all hours of the day and night and try to intimidate you into paying. If the OC is collecting, they're not bound by the FDCPA and don't need to play nice. A contracted collector gets paid whether you pay or not. After the creditor has tried for about 6 months, they'll "assign" the debt to a professional collector. These guys only get paid if you pay and are bound by the FDCPA, so there are ways to make them play nice. They may agree to take less than the full amount for the debt, but unless you get it all in writing and know all the pitfalls associated with settling debts, they'll "forget" to report it to the orginal creditor or the original creditor will sell the balance to another collector and the whole deal starts over again. If you do pay the assigned collector, your credit report is marked "Paid collection". If you don't pay the "assigned" collector, the creditor may sue. Either way, your credit report is trashed.

4. Junk Debt Buyer. If the orginal creditor can't get you to pay, and the "assigned" collector can't get you to pay or if you settle for less than the full amount, the balance of your debt gets sold to a Junk Debt Buyer. These guys pay pennies on the dollar for the right to continue to hassle you. You don't owe them squat, but that doesn't stop them from giving you a bad time...and, trashing your credit report.

Bottom line. There's NO EASY WAY out of debt (unless you win the lottery). By turning the responsibity for your credit rating over to someone else 99 times out of 100 you wind up with worse credit than you have now. The only simple solution (but not exactly the best) is to declare bankruptcy. Yes, your credit will be trashed for 7 years, but you'll the stress of dealing with your creditors will be done, and you can get on with your life. If BK is not an option then take the time to learn how the game is played, and take control all of this yourself. If you learn to use the FDCPA to your advantage, you may even make a few bucks off the low-life collectors that make their money off of other people's misfortune.

Link to comment
Share on other sites

Guest sifxpert

Believe me, I've been doing this long enough to know that most debt management/ debt settlement companies are scams. Not all of them are scams but yet, just very inexperienced but yes, many are scams.

I run 2 debt settlement companies and have for several years now. I started working for Non-Profit consolidation which is where I learned that Consolidation/Non-Profit companies are a total sham! These companies get a set up fee equal to your regular monthly payment, a monthly service fee, and they are also paid by the creditors a fee which is called "fair Share". The fair share is a percentage of each monthly payment. So, when clients here say "I send my CCCS co. $500.00 per month but only $350.00 of this goes to the creditors its because of all the fees that are taken out before the bills are paid. No one ever says this to prospective clients because it is a "hidden fee".

The IRS is closing 20 CCCS companies very shortly and are investigating another 40 which will be closed down within the next year as well.

I have copies of all the investigations and their results. The chief complaint was that the IRS stated CCCS is nothing but a collection agency operating with a 501 c3 non-profit license. There are almost no CCCS companies donating to charities. All they are required to do as "charity" is to educate their clients and also the public. I see nothing on line but tons of marketing with no education at all. The CCCS co. I worked for had 600 employees. The owner had a private jet. I can go on and on about CCCS and prove over and over how they are scams.

I am the co-chair of the standards committee for the trade organization representing the Debt Settlement industry. Since our industry is not regulated in most states, our trade organization is drafting standards for our members. We are drafting these standards for obvious reasons....To keep the thieves out of the industry and shut down the ones who are out of compliance.

I agree and have stated many times that there are far too many companies with the primary concern of making money. My company absorbs all legal expenses for our clients. My legal fees each month are never less than 25k. If a prospective client contacts my company after getting shafted by another DS company I will deduct from our fees what they have paid into this other company who has done wrong and initiate an investigation through our trade organization.

The business model for CCCS is nothing short of a scam. There are no benefits. For someone who is no longer capable of making substantial enough payments to get themselves out of debt or just can no longer afford to continue at all needing a much lower payment, debt settlement is a very viable solution. For the most part, our clients are people who have a ton of debt that have no business having any credit for an extended period of time while they are getting back on their feet.

Unfortunately, yes, Debt Settlement does ruin credit but working with an ethical company you may enter a program and eliminate 1000's in a very short time and get back on track in a far less amount of time than filing b/k. A good company will know what accounts to settle at what time and to put a client on a realistic payment plan to avoid lawsuits and to see success for their clients.

Again, we absorb all legal fees so we will not sign a client on to our program who we know will get sued and we will not accept accounts we can not settle. Believe me, I run my company very well and I know what accounts will settle and what will not and I can tell within 10 minutes of reviewing an account if we will have problems. I am very strict with accounts and payment plans. I have excellent relationships with many creditors...some of the members on this forum will agree who I have given contact info for creditors to settle their accounts. Many of my contacts were set up after sueing collectors and putting their backs against the wall. I play hardball. I'm not the type who will lay down and allow my clients to suffer abuse.

Our model is excellent for some. If we can not help a client we let them know and direct them in a different direction. Unfortunately, there are many who run sham operations but bottom line is that our model is proven effective. Its all a matter of finding an ethical company who does their homework and has their clients best interests in the front of their minds rather than the almighty dollar.

I am extremely busy but still I am here providing free advise and defending my intentions here on this forum at 1.25 am.

Link to comment
Share on other sites

Okay then, based on sifxpert's reply and giving him the beneift of the doubt for honesty...here's the way I would paraphrase what he said.

1. There are a few (very few) debt settlement companies that are honest.

2. These companies will tell you up front, before they take any of your money, whether or not they can help you. They base this assessment on who you owe and how likely you are to get sued. If they misjudge and you are sued, a reputable company will defend you in court for no extra cost.

3. There are some debtors (with certain kinds of debts and/or certain credit card accounts) that these companies can't help.

4. At best, these companies will settle some debts for less than the full amount...in most cases, this will still have a negative impact on your credit ratings.

5. And...based on past discussions...there may be tax consequences to debt settlement that even honest companies cannot help you with.

And...one more comment...based on all of the other discussions on this board...none of these companies have any "magic" that allows them to do things you can't do for yourself. If you have money to throw at the problem, then maybe using someone else to deal with your creditors give them a try. On the other hand, if you can't pay your debts because you're broke...read the board here and learn to do it yourself.

Link to comment
Share on other sites

Guest sifxpert

xbeer2) I knew we would get along!

I wish the industry was not the way it is. Unfortunately, creditors make our jobs extremely difficult so unless you are willing to go the extra mile you become one of the bad guys very quickly. This biz will eat someone up and spit them out if they even try to slack.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.