Is It Ethical to Stop Paying Your Debts and Settle Them?

I know what so many of our prospective clients think. Sure, they would like nothing more than to be out of debt -- Debt Free! --  or at least a very long way towards that ultimate goal. But something holds them back. The truth is, what holds many people back is a sense of moral obligation. They feel a solemn obligation to pay back what they've borrowed.

But while there's certainly no fault in having such feelings, are we really talking about solemn obligations? You know, like when you borrowed money from a parent or other relative and promised to repay it in a way tantamount to staking your life an reputation on it?

...And, it's very convenient for the credit card companies, mortgage companies and even Uncle Sam to have you feeling that way. Don't they kinda spin it with a tinge of moral guilt when the subject comes up? Perhaps not without reason. Over the decades, we in America have become a nation of debtors, by and large. In the simplest sense, taking on debt is essentially selling your future labor. There's nothing inherently wrong in that, just when it gets out of hand and one day you wake up to realize that you've sold your next 20-30 years of productive life right now. Worse, you may have already spent it and have nothing much to show for it except to sack yourself with a much higher moving bill once that time comes.

Yes, indeed it's true. We've come to the place that if everyone stopped paying, all at the same time, it would be like a run on the banks and everything would collapse. And yet, if you feel your own money in the bank is in jeopardy, are you going to let it sit there so that other depositors not as contentious as you get their money back?

Ah, so you don't have an obligation to let your money sit in a failing bank? You're simply exercising your contractual rights as a depositor: to make a withdrawal? Well how about a credit contract? Does it really say in any of your credit card agreements (I know: you've never read them and either have I; and this should be a clue) that you 'solemnly promise to repay, no matter what,' or anything of the kind?

Of course not. A credit contract, just as mortgage contract, assigns certain obligations to each party and correspondingly, rights to each party in the event of default. Although...I'll bet you'll find that if you do actually read your credit card contract that you have most of the obligations while they have most of the rights.

Well, that's fair, as they are the ones taking the first risk.

Ah, so they're taking a risk? Like in business? Like, businesses take calculated risks and they price their products and services accordingly, so that they can weather the risks and losses and still make a profit? Maybe that's why you get the introductory interest rate and after a while, notice you're paying15, 20, 30 percent and more...(we have seen as high as 35% rates at Provanta). ...I'm not even going to go into the charges & fees.

The mortgage contract is the best way to illustrate what's going on. It's a pretty simple contract, at base. You agree to take on the obligation to pay interest, some principal (normally; amortized over some period), property taxes and insurance while they take on the obligation to treat you as the actual owner right now (not like a rental or lease); and if you default, they have the right to undertake a legal procedure that culminates in them getting the property back. And in most States, they have no recourse against you no matter what happens.

But credit cards are unsecured. They can't come and take your entertainment system, bedroom set, or anything else, so it's just you against them.

That's why you paid the higher interest rates and that's why they'll deal. And they do deal.

Before I close, I'll reiterate the original point but restate it in other terms: it's just business. The credit card companies, as did every lender you ever had, was looking to make a profit on providing services to you. They stringently calculated, they wrote up long and complex contacts to protect their interests, and they have their legal rights, which they know backwards & forwards.

But I know. You feel as though it's you suffering and not them if you decide to undergo the relative gauntlet that is a debt-settlement program. Frankly, it's a tough row to hoe for some, piece of cake for others, and how that's going to go is really unpredictable. In settling tens of thousands of accounts for hundreds of millions of dollars for small businesses and ordinary folks over nearly two decades, I have yet to come up with any formula that gives me any confidence in uttering any prediction in any individual case. Sometimes, they're aggressive, often not. The job can almost always get done; it's the level of difficulty that's unpredictable.

I won't lie to you, but most Debt Settlement companies do, at least in their advertising. It could be easy. It could be very hard, but what do you see typically in the advertising? The honest truth is that it's up in the air. Which means: the banks are conducting their affairs as the businesspeople they are, adhering to a contract they wrote, you agreed to...and there's nothing moral or ethical involved.

It's just business.

You really can get out of debt and we at Provanta can help. We can do it all for you. We've been doing it for thousands of clients for just shy of two decades. I hope it's a walk in the park for you but until I get a crystal ball, I simply can't assure you of that. What I can assure is that every client who has followed our instructions as best they can, consistently, has ended up 2-4 years later debt free, and including our fees...far less than they signed up with, and that's discounting even the continuing interest, late fees, and other charges.

Figure out what you owe today, total. Take 60% of that, give or take 10%, divide that into monthly payments over 24-48 months, and if you can make that payment, my bet is you'll be debt free. How easy, stressful, or un-stressful it is in your individual case is simply up for grabs and there's no getting around that. I would love to whisper sweet nothings in your ear if just to comfort you that it'll be alright, but I can't. I don't know your tolerance and I don't know the bank's resolve in your particular caee. What I can do it put my professionals to work on your behalf and we will absolutely do our best. That, I can solemnly promise.

A Better Business Rating to be Proud of

Provanta has been a BBB Accredited business since 1994. That's 17 years! What's more, we're "A" rated.

Are you aware that most Debt Settlement companies carry a "D" or an "F" rating, and that few are even accredited?

Recently, in an effort to give other Debt Settlement companies a chance at accreditation and a decent rating, the BBB at the national level pulled all ratings for all (including us, even though we've been "A" rated since 1994) and required that we comply with a multi-page set of operating standards, and that we supply documentation to substantiate our compliance with these standards. Fortunately, upon examination of the requirements, it was found that we had long been operating in compliance -- simply out of a sense of propriety, doing what's best for our clients and thinking in the long-term. As a result, we were quickly able to get our well-deserved "A" rating back.

Frankly, I don't now how all the other Debt Settlement companies out there rate in terms of the BBB, but you're certainly welcome to compare if you're interested in exploring your options.

Are You Considering Debt Settlement? Then Read This

I must admit: times were better back in 1992 when I first formed what was to become Provanta in my bedroom with about $250 to my name.

As you must have guessed — as I’m here writing this now–  it became successful; and almost immediately. But once I attained a bit of success, enough to pay my own rent at least, the only people I could really afford to bring on to help was family members (flexible about paydays). The very first, only months after the start, was my own mom who wished to get out of the daycare business. You’ll learn more about her later.

In subsequent posts I will delve more into Provanta’s unique history as a Debt Settlement company. For now, let me just advance from 1992 about a dozen years. By 2004 we had about 30 employees, many independent sales offices, three separate company owned offices and business was booming.

And I couldn’t sleep at night.

You see, in the pursuit of more and more business we took on a model of independent sales people, paid on what they produced. This was a mistake. For lack of a self-serving way to express it, I ended up employing a lot of liars. But it was my fault. You see, not being integrated with the business as a whole; that is, working in every aspect of the business before selling to new clients, they probably couldn’t help but be overly exuberant.

Debt Settlement is not a walk in the park. It’s kind of like going on a diet after you’ve spent years gaining that 10 pounds per year. At first, no big deal. By the time you realize you’ve racked on 30, 40, 50 pounds or more…well, it’s a lot like waking up to realize you have $30,000 of credit card debt — uncoincidentally, the amount of debt our average client has.

But while it’s not a walk in the park, it is possible to settle your debt if you do it right. Can you do it yourself? Certainly, just as you can re-roof your house, remodel your bathroom or kitchen, fix your own car and any host of other things. Never be fooled: this is simply about consistently hard work over a decent period of time; like 2-3 years. Kinda like loosing that 50 pounds.

It helps when someone is there to answer the phone during business hours when the best deals get done. We do that.

This is the introduction to a series of posts — a couple per week — about the state of the industry I helped create. I grew, then went smaller and “boutique,” and there are a lot of reasons for that.

I find the industry trend disturbing. It’s a lot of large companies now, with sales people promising you the moon.

The moon is not for sale.

What To Look For In A Debt Settlement Company

Credit Card debt is an extremely common issue that most people in today’s society can relate to. With the longest recession since the Great Depression in the 1930’s, many consumers have had to rely on different forms of credit to pay for their everyday basic living expenses. This has now left them with massive and unmanageable debt balances that keep increasing, despite the fact that the lines of credit are no longer being used.

With the Credit Card Debt Relief Act 2010, The Federal Trade Commission (FTC) passed new laws to regulate Debt Settlement Companies in an effort to weed out the unscrupulous and dishonest companies. With these new laws coming into effect October 27, 2010, what use to be viewed, as a risky option to resolve outstanding debt, is now looking more appealing as consumers are protected when it comes to Debt Settlement practices.

It is important to remember that despite the new laws going into effect next month, not all Debt Settlement companies are legitimate. When looking for a company, it is important to be able to differentiate between a reputable company and one that isn’t just out for your money. Be sure to ask questions about the company, its history, who its affiliated with and if they’re accredited with the Better Business Bureau (BBB). Be very cautious of any company that hasn’t been around for several years. A client’s program typically takes 3 years to complete and any company that hasn’t been around for at least 5-10 years, lack the experience needed to complete a successful program. Make sure the company is a member of TASC (The Association of Settlement Companies). The goal of TASC is to protect the interest of consumers by upholding and encouraging fair practices in the debt settlement industry. Also, stay clear of any Debt Settlement company that tells you they can stop creditor calls, freeze your interest rates or prevent litigation. No debt settlement company can completely stop the collection process, freeze your interest or guarantee that you will not be sued.

There are many other questions that you will most likely ask but the final decision is yours to make. Do the research on a company, ask plenty of questions and go with a company you are completely comfortable with. After all, this is your life.

NEW FTC RULES FOR DEBT SETTLEMENT COMPANIES

NEW FTC RULES FOR DEBT SETTLEMENT COMPANIES

On October 27, 2010 all debt settlements companies will be required to conform to the new rules of the FTC .

Following this policy, Provanta has a new program ready to start on October 1^st.  We see no benefit to either the consumer or Provanta to wait another month to bring our program into compliance with the new regulations.

As of October 1, 2010:

• There is no up front money paid to Provanta
• We have reduced our free from 20 to 15% of the total debt
• Fees are paid upon completion of each settlement
• Authorization of payment for all settlements by the client

Provanta is a leader in the debt settlement industry.  We have been in business since 1992.  With 17 years of experience behind us we have the expertise to help you become debt free.

For a free, no obligation consultation and quote, please call our toll free number.  Our case managers are waiting to help you become debt free.

Monthly Debt Free Clients

Total Debt Free Clients August, 2010

• Total Clients Debt Free 4
• Total Debt Settled – $75,311
• Settlement Amount – $36,115
• Savings – $39,196
• Average Percentage of Settlements – 47%
• Average Program Length – 34 months
• Best Settlement – 30%
• Worst Settlement – 80%

Monthly Settlement Statistics

For August, 2010:

• Total Debt Settled – $470,048/li>
• Total Settlement Amount – $185,669
• Settlement Percentage – 39.5%
• Total Cases Settled – 95

Monthly Settlement Statistics

For August, 2010:

• Total Debt Settled – $470,048/li>
• Total Settlement Amount – $185,669
• Settlement Percentage – 39.5%
• Total Cases Settled – 95

Monthly Debt Free Clients

Total Debt Free Clients August, 2010

• Total Clients Debt Free 4
• Total Debt Settled – $75,311
• Settlement Amount – $36,115
• Savings – $39,196
• Average Percentage of Settlements – 47%
• Average Program Length – 34 months
• Best Settlement – 30%
• Worst Settlement – 80%

Monthly Debt Free Clients

Total Debt Free Clients July, 2010

• Total Clients Debt Free 5
• Total Debt Settled – $154,704
• Settlement Amount – $74,716
• Savings – $79,988
• Average Percentage of Settlements – 48%
• Average Program Length – 35 months
• Best Settlement – 20%
• Worst Settlement – 70%

Monthly Settlement Statistics

For July, 2010:

• Total Debt Settled – $535,424/li>
• Total Settlement Amount – $197,571
• Settlement Percentage – 36.9%
• Total Cases Settled – 88

Monthly Settlement Statistics

For July, 2010:

• Total Debt Settled – $535,424/li>
• Total Settlement Amount – $197,571
• Settlement Percentage – 36.9%
• Total Cases Settled – 88

Monthly Debt Free Clients

Total Debt Free Clients July, 2010

• Total Clients Debt Free 5
• Total Debt Settled – $154,704
• Settlement Amount – $74,716
• Savings – $79,988
• Average Percentage of Settlements – 48%
• Average Program Length – 35 months
• Best Settlement – 20%
• Worst Settlement – 70%

Monthly Settlement Statistics

For June, 2010:

• Total Debt Settled – $327,639
• Total Settlement Amount – $143,833
• Settlement Percentage – 43.9%
• Total Cases Settled – 74

Monthly Debt Free Clients

Total Debt Free Clients June, 2010

• Total Clients Debt Free 5
• Total Debt Settled – $213,337
• Settlement Amount – $101,656
• Savings – $111,681
• Average Percentage of Settlements – 39.6%
• Average Program Length – 41 months
• Best Settlement – 20%
• Worst Settlement – 80%

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