Confused or Dishonest?

A collection attorney from the state of Florida called Provanta in regards to a delinquent account for one of our clients in another state.  Our negotiator made a calculated offer of around thirty percent of the current claim to settle the debt in full.  The attorney countered at seventy percent, to settle.

Our negotiator asked why he was demanding such a “high amount” to settlement the account, considering the fact that there are other creditors, and it’s our job to find a Pareto optimal solution, of sorts.  The attorney responded, “…because we have filed suit on the account.”  Our negotiator then asked in which state the suit was filed (The negotiator knew the attorney was not licensed to practice law in the same state where the client resided). The attorney replied: “Florida.”

Our negotiator asked the attorney for additional information, such as the docket number and the date the client was served, etc.  At this point the attorney became confused with the questions presented, not being used to being challenged on a common debt collector ruse. Once our negotiator informed the agent that our client doesn’t reside in Florida, the frustrated attorney hung up.

Technorati Tags: debt settlement, financial hardship, debt collection, debt collection attorney

(Ref. 1503)

A Common Creditor and Collector Ruse

Occasionally a client will wish to close one of his credit card accounts that had previously been included in his debt settlement program. When asked for the reason, the client typically informs us that the creditor claims they do not work with companies like Provanta (we can always prove otherwise), but that the creditor is wiling to work something out with the client directly. As a result, the client then wants to try to settle this particular account on his own. 

The collection agent is being less than honest with our mutual client.  In this situation, we must explain that creditors will often do or say almost anything to avoid having to work with companies like Provanta, because they know our goal is to achieve for our clients the lowest possible settlement, and we’re extremely effective at it. And it’s not about simply saving the most money, but rather to get the settlement figures low enough across the board, in order to settle all the accounts in a structured way that’s equitable for all. But collectors, whether part of the original creditor, or an agent, often prefer to work with the client directly, bypassing Provanta, because negotiating with a client who’s a novice to debt negotiation is easier than negotiating with our trained professional representatives who’ve “heard it all a million times.”  The creditor has a better chance of getting more money directly from our client than through our program, resulting in an inequitable result when considering the portfolio as a whole. They’re just trying to jump to the head of the line.  

It’s important that our clients understand that though they have the final say in everything, Provanta is unable to work effectively if the client is undermining our efforts by communicating directly. Moreover, doing so only encourages the creditors to keep calling and pushing, trying to undermine the our client’s confidence in Provanta. It becomes a self-fulfilling prophecy: the creditor or collector refuses to deal with Provanta, because they don’t need to, because they can deal direct. I can’t blame them, but this is a direct effect of the creditor/collector’s ruse, and the client falling for it. By giving their creditors the silent treatment, our clients are sending a message loud and clear: that they are committed to the debt settlement program, and that the fastest way for the creditor to get resolution and some recovery is to work with Provanta. 

Technorati Tags: creditor harassment, debt collector harassment, FDCPA, Fair Debt Collection Practices Act

Hardship

One of Provanta’s settlement negotiators received a call on a client’s behalf from a collection agency. This was on an account with an original balance of $1,406 in May of 2007 ( a year ago, as of this posting), and this balance — or, really: claim — has since grown to $2,050, an increase of 46%. The agency is now the successor in interest, i.e., they purchased the debt — likely for only a few cents on the dollar based on the 1400-figure.

Our negotiator informed the collector that another collection agency had already and recently accepted a settlement offer on another of the client’s accounts, and that no funds are currently available. This debt buyer adversary was none too please at receiving this information, and thereupon demanded that our client begin making minimum monthly payments. This is something we hear from collectors and creditors on a daily basis, of course. Our task, then, is to get them to understand that all of Provanta’s clients are in our program due to financial hardship and cannot commit to minimum monthly payments — promises they can’t keep — on all their obligations; i.e., settlement is the option they’ve chosen, and typically so over a quick and easy full discharge of all unsecured debt through bankruptcy proceedings.

Our negotiator then explained the client’s hardship to the collector, which is one of a common and typical nature for many of our clients. Many of our clients begin their financial decline through divorce, one or the other typically becoming responsible through court order for debt incurred within the marriage. This particular client owns no real estate, has no liquid assets, and owes in excess of $50,000 in delinquent, unsecured debt.

After the collector ran through the usual gamut of scare tactics, including commencing litigation (cheap threat: equivalent to a debtor threatening bankruptcy right out of the gate), our negotiator calmly explained that it’s going to cost her company far more in time and money to take a single mother of two to court than they will ever get back on a $2K account.

We’ll look to settle this account in the future, once sufficient funds have accumulated to make a non-insulting settlement offer.

(Ref. 1502)

Technorati Tags: debt settlement, financial hardship, debt collector, debt buyer

Monthly Settlement Statistics

For April, 2008:

• Total Debt Settled - $768,631
• Total Settlement Amount - $355,821
• Settlement Percentage - 46.3%
• Total Cases Settled - 143

Best Settlement:

• Current Claim - $14,806
• Settlement Amount - $2,559
• Percentage - 17.3%

(Negotiation entity: original creditor)

Worst Settlement:

• Current Claim - $3,678
• Settlement Amount - $3,136
• Percentage - 85.3%

(Negotiation entity: original creditor)

And as always, these terrific results for clients with legitimate and serious financial hardships would not have been possible but for creditors, collectors, even law firms with the benevolence to recognize hardship and voluntarily forgive debt. They don’t have to do that, and it should never be forgotten. And also, it goes a long way to have a company like Provanta, with a reputation with these adversaries that goes far beyond a single client or case. We always strive to present a realistic, believable, and true hardship.

Technorati Tags: debt settlement statistics

The Perfect Client

What makes a perfect debt settlement program? Many times, the success of a debt settlement program is a direct result of having “the perfect client.”

One client in particular is in the process of having their last case settled for about 30% of the current balance, completing a program with total debt claims in the amount of $30,787. Total settlement on the six accounts in the program was $11,659. What makes this client perfect? They’ve completed their program with no insufficient funds drafts, no lawsuits, no trouble following the rule to let Provanta do the talking with the creditors, and they did it in 3 and 1/2 years.  Their overall settlement percentage just prior to this final success was about 40%. Now, and this last done deal will bring it down to an even lower overall percentage of 37.87%, with total savings of $19,127 (excluding fees).

But how can “no lawsuits” be credited to the client, and not to Provanta? Well, in truth, it’s both; but we have learned over the years that the clients who tend to have creditors and collectors occasionally opt for the legal collection route, instead of, or even as a “hard line” prelude to settlement, are those clients who often fail to set aside their programmed settlement money every month and/or insist on communicating with the collectors themselves instead of allowing Provanta to do its job most effectively.

Debt settlement works! But it requires a client to understand the program, and follow it.

(Ref: 1501)

Technorati Tags: debt settlement program

Recognizing Provanta’s Honesty and Leadership

Jeff Michael, author of Repair Your Credit and Knock Out Your Debt, as well as the proprietor of a debt recovery industry watch blog, has some very nice things to say about Provanta’s new approach to its corporate website. Jeff is from the credit counseling arena of the debt recovery profession, and he’s always been reasonable and fair in his assessments of debt settlement as an option for some people.

I really, really like it. At first, it’s a novel idea to have a corporate site that is essentially a blog. It’s a smart (and inexpensive) way for a company to set up their web presence that says a lot about the company.

But it’s also nice to see our efforts so well understood in our first outside recognition:

And after reading most of the site, it’s not just the fact that it’s a blog that is impressive, it’s the content of the posts. I don’t know else where you’re going to find this much honesty on a debt settlement negotiator’s site, or on any corporate web site.

It reminds of the the whole idea of public companies vs. private companies (Provanta is privately held). The basic idea is that public companies have a whole host of reporting requirements so that investors presumably have all they need to make an informed investment decision, should they be inclined to purchase stock in the company. Of course, as we’ve seen in one corporate scandal after another, it’s not only fraud (”cooking the books”) that’s a problem, it’s that corporate interests have the “advantage” of millions of dollars towards lobbying efforts. It’s hard not to view the plethora of barrier-to-entry securities regulation as “the best set of laws money can buy.” At Provanta, we want to do our part in leading the way to a point where one day, the chief competitive weapon small, private companies have against the massive ones is that they don’t hide behind elite spin public relations firms. That’s not to say we’re going to be posting our P&L or tax returns, but we do want to be as open and transparent about the true nature of the services we perform for clients as possible.

Weekly Settlement Statistics

For the week of April 28 - May 2

• Total Debt Settled - $190,576
• Total Settlement Amount - $95,421
• Settlement Percentage - 50.1%
• Total Cases Settled - 34

Not often mentioned, but a hearty round of applause for the major credit card banks who recognized financial hardship, and voluntarily agreed to these settlement agreements in lieu of more forceful options at their disposal.

Technorati Tags: debt settlement results

The Amateur vs. The Professional

Last week I was talking to a guy who had a lot of questions about the negotiation process and the creditors motivation to settle accounts.  Near the end of our conversation he asked, “Why can’t I do this myself?”

I told him simply, “You can.”  He was quiet for a while.  I am actually asked this question quite often and people are always surprised by my answer.  I suspect it’s because they expect me to start spewing all the virtues of Provanta and extolling our 15 years of experience, which don’t get me wrong, I do eventually.  But ultimately they expect me to tell them all the reasons why they are not qualified and that the process is extremely complicated and beyond any average person’s ability to comprehend.

The truth is debt settlement is not rocket science.  It is a complicated process that involves a lot of time, patience, industry knowledge, and thick skin but it’s not entirely impossible for an average individual to do on their own.  You just need to ask yourself whether you have what it takes and are you willing to take the risks of failing?

Let me give you some other examples to consider.  Some people remodel their bathroom by hiring a professional contractor.  Others watch marathon episodes of home improvement shows, buy a hammer, and start ripping out the tiles.  Some people go to tax professionals to file their taxes while others manage it on their own.  Last month, I was reading an article in a men’s magazine about how to give yourself a suture and stitch up a deep cut or wound.  I read the entire article and I’m about 90% positive that I could stitch up a wound by myself.  But if I stepped on a piece of broken glass right now the last thing I am going to do is grab my sewing kit and start sterilizing a needle.  I will be on my way to the hospital.  My health is worth the effort and costs of seeking professional help.  Is financial improvement worth it for you?

To decide if you want try to settle your own accounts instead of finding a professional debt settlement company with a long and proven track record, ask yourself:

1. Are you an effective communicator and negotiator?
2. Are you prepared to deal with creditor harassment on your own?
3. Do you understand the regulations that govern collection practices? If not, are you willing to learn them, and learn them quickly?
4. Can you set up a disciplined savings plan for at least 18-36 months in order to accumulate the money needed to settle your accounts?
5. In the meantime, are you willing to spend the next 18-36 months negotiating and renegotiating with your creditors?
6. Are you confident that when a settlement agreement is reached that it will be a good and appropriate settlement for your situation?

For Provanta, the answers to all the above questions are yes.  If you can also confidently answer yes to all of the above, then go and take care of your debt!  We’d love to hear about your success story!

Technorati Tags: diy, do-it-yourself, debt settlement

Help, I Have Debt! Which Path Should I Take?

I am often asked by potential clients if they think a debt settlement program is a good fit based on their current financial situation. While there is a plethora of possible answers to this question, I typically resort to the shorter, more concise answer: “it depends on cash flow.” I know that most will find this answer unsatisfactory, but our experience suggests that one’s cash flow ought to fundamentally predicate the type of program decided upon. Of course, I should mention that individual circumstances vary and there may be important ancillary factors to take into consideration.

If one actually has some discretionary income at the end of the month, after all expenses (including credit card minimums) are paid, then there’s quite a bit more flexibility in choosing a path. With any amount of discretionary income, one may simply accelerate their payment schedules to each of their creditors. I typically recommend paying off a couple small accounts first — to build momentum — followed by focusing efforts to pay off higher interest accounts first. A handy payment calculator can be found at www.bankrate.com/brm/calc/creditcardpay.asp.

If you find that even with an accelerated payment schedule, it’s going to take you far too much time than what you would like to eliminate your debt, then another path should be considered. A good rule of thumb: if you think it will take more than three years to pay off your credit card debt on your own then you should consider a debt relief plan/program provided by a reputable company with a track record of success. It is important to research all of your options; from consolidating your debt via a home equity line of credit, to a consumer credit counseling service, to a debt settlement program…even bankruptcy, as your last and final resort. The focus should be on how quickly you can eliminate the debt. Determine the feasibility of a program, according to your unique circumstances and values, and not upon the lofty and often self-serving predictions of a debt or budget counselor sales representative tells you. While maintaining a good credit history is important, for example, you are doing yourself a disservice by carrying large balances on unsecured accounts over an extended period of time (in  terms of credit score, as well as the high interest you pay). In fact, a high debt to credit ratio may have a significant negative impact on your credit score. See www.myfico.com/CreditEducation for more information.

Technorati Tags: bankruptcy, debt help, financial budget, getting out of debt, debt counseling, credit counseling, debt consolidation

I Want The Truth!

“Can you help me? I’ve been speaking with several debt settlement companies but I hear different things from each company. Some say they can help me but others say they can’t. Why? I’m tired of feeling like I’m being sold on a program that might not even be a good fit for my situation. I want the truth!”

The complaint above is common. Almost every day one of our case managers hears a story that echoes this sentiment. At Provanta, the daily order of business is to provide honest and straightforward advice to our clients and prospective clients. Over the past few years, however, it has become apparent that numerous recently founded debt-settlement companies have been aggressively marketing their services to the masses, and as a result, have potentially tarnished the image of the debt-settlement industry. Perhaps you have heard some of the radio ads that promise things like “stopping creditor or collector calls” (nobody can honestly promise that), “halting late fees and interest charges” (only if they agree to do so, prior to settlement), and “huge savings off what you owe” (that’s the idea, but it can’t be promised).

Provanta does not make false promises. We enroll clients with set mutual expectations, where long-term success is the goal. After all, we’ve been settling debts for clients for fifteen years and have consequently come to understand what sorts of client expectations are reasonable, and which are not. Our goal as a company is to prosper through helping those in debt, ultimately achieving a client base that is fully satisfied with our services. Neither Provanta nor its clients are in the least served by either having false or unreasonable expectations.

If what you’ve heard about debt settlement leads you to believe that it sounds too good to be true, stick around. Or, give us a call anytime for a realistic approach to what could be a valuable experience, so long as you know what really to expect.

Technorati Tags: debt settlement, debt help

FTC Issues 2008 Fair Debt Collection Practices Report to Congress

According to the FTC website:

Issuance of Commission report to Congress: The Commission has authorized the staff to release publicly the 30th Annual Report to Congress on the Fair Debt Collection Practices Act (FDCPA). This report, which is available now on the FTC’s Web site, summarizes the Commission’s administration and enforcement of the FDCPA during 2007. It presents an overview of the types of consumer complaints received by the Commission, descriptions of the Commission’s debt-collection law enforcement actions, and a summary of the Commission’s consumer and industry education initiatives. The FDCPA prohibits deceptive, unfair, and abusive practices by third-party debt collectors. Section 815 of the FDCPA requires the Commission to submit annual reports to Congress. The Commission vote to issue the report was 5-0. (FTC File No. P084802; the staff contact is Karen Hickey, Bureau of Consumer Protection…

The 16-page report (PDF) can be obtained here. Among many items of note in the report…

These actions are part of the Commission’s ongoing effort to curtail deceptive, unfair, and abusive debt collection practices in the marketplace. Such practices cause substantial consumer injury, including payment of amounts not owed, unintended waivers of rights, invasions of privacy, and emotional distress.

[...]

The Commission staff held a two-day public workshop in October 2007 to examine the industry and a number of current issues. The staff invited consumer advocates, industry representatives, state and federal regulators, and other experts to provide information and their views on the collection industry and related policy issues.

Of course, what the FTC may likely be unaware of is that the debt settlement industry is the perfect “private enforcement” of professional debt collection practices. We see violations of the FDCPA virtually every day at Provanta, and while most are not of the most egregious sort (child answers the phone; debt collector informs child he’s going to put mommy and daddy in jail if they don’t pay up), professional debt settlement companies go a long way towards mitigating the embarrassment and abuse that can result from a sincere financial hardship.

A suggestion concerning the FTC’s workshop: The Association of Settlement Companies (TASC), of which Provanta is a proud member, ought to field representatives from our industry the next time around.

I’ll have more to say about the FTC’s report in subsequent entries.

Technorati Tags: ftc, fdcpa, debt collection, debt settlement, tasc

Balance in Full

One of Provanta’s settlement negotiators once again found it necessary to educate a debt collector why a California collection law firm can’t initiate litigation against an out-of-state client, unless that law firm has one or more lawyers admitted to the Bar in the state in which the client resides. This grew out of a discussion in which the collector wouldn’t put any type of offer on the table because the account was “pre-litigation” and was only eligible for balance in full — according to the collector, of course. After a fair amount of time talking with the agent’s manager nothing was gained; but we’ll be following up.

(Ref: 1500)

Technorati Tags: debt collection, litigation, debt settlement

Why Are My Creditors Not Getting Paid?

If you are enrolled in a typical debt settlement program, your creditors won’t receive any payments until a settlement agreement is reached.

Achieving a settlement agreement can take many months, even years, depending on who your creditors are, the distribution of your debt, the type of accounts you have, and the availability of settlement funds set aside over time. Your monthly payment to the program is being saved in a settlement savings account designed specifically for the debt settlement program. It should not be used for any purpose other than settling your debts. In rare situations, a structured settlement payment plan may be agreed upon where a creditor might receive payment in full for a settlement over a two to four month period. Most of the time, however, payment is disbursed to the creditor on a lump-sum basis only.

If, for some reason, it’s important to you that your creditors receive payment every month, then a debt settlement program is not going to be the right fit. You may wish to consider a consolidation loan (typically via home equity) or a consumer credit counseling service (CCCS).

There is a bigger issue at stake than simply making or not making payments to your creditors each month. It is important to consider what your long-term financial objectives are. If you wish to get out of debt in three years or less and work towards rebuilding your credit, a debt settlement program is really your only option short of filing bankruptcy.

Your credit score cannot improve as long as you are carrying large balances on your accounts (a high debt to credit ratio - see www.myfico.com/crediteducation) even if your payment history is perfect. There are many factors that go into you credit score and it imperative that you know what they are. Even though you may feel limited by not using credit cards and not applying for new credit while in a debt settlement program, taking these steps are essential to eliminating your debt once and for all.

Technorati Tags: debt settlement

Listen to Client Testimonials

In 2007 an independent market research company interviewed several current and former Provanta clients. Listen to what our clients have to say about the Debt Settlement Program.

Brian S. - Testimonial

Paul M. - Testimonial

Tiffany A. - Testimonial

The above audio files contain testimonials of actual clients whose names have been modified to protect their identity and ensure confidentiality.

Individual results may vary and are dependent on successful completion of program and ability to save funds. Provanta Corporation does not assume or pay any debt, nor does it provide legal advice or offer credit repair. Read and understand contract terms before enrolling.

Technorati Tags: debt settlement testimonial

Can You Afford A Debt Settlement Program?

In talking to thousands of potential clients over the years it has become abundantly clear that the primary issue for most individuals struggling with debt is simply an inadequate grasp of cash flow. Many people believe that because they are current with their monthly minimum payments to their creditors they will then be able to afford a debt relief program whether it be debt settlement or consumer credit counseling. The reality of the situation may indeed be quite to the contrary. It comes as a shock to many when they discover that they are actually running negative every month. Let me give you a quick example.

Joe and Mary’s net income is $5,000 a month. They currently have about $40,000 in credit card debt. They pay about $1,200 a month in minimums to their creditors. They are not behind on payments and actually happy that they have been able to maintain a relatively good credit score. However, they have recently discovered that they are approaching the limits on the credit cards and that their debt to credit ratio is in decline. The credit score that they used to be so proud of has begun to erode and they know that something has to be done. They have not actually used the credit cards for purchases in about a year and are now looking into a debt settlement or credit counseling program.

A quick review of Joe and Mary’s expenses reveal that their regular monthly living expenses including the: mortgage, homeowners insurance, property taxes, utilities, car payments, insurance, gas, maintenance, food, clothing, daycare, school lunches and supplies totals $5,000 a month. When the credit card minimum payments are added to this total it brings their grand total to $6,200 a month. In subtracting their expenses from their income it is discovered that they are running negative each month to the tune of $1,200. They realize that the only way they are staying current with their creditors is via balance transfers and cash advances.

Joe and Mary decide that a debt settlement program will provide the best solution to resolve their $40,000 in credit card debt. They quickly learn that a monthly payment to a debt settlement program lasting 3 years is approximately $667. While this is substantially less than the $1,200 a month they are currently paying their creditors the debt settlement company will not enroll them because they are still negative by about $667 a month.

The only way for Joe and Mary to afford the debt settlement program is to eliminate some of their monthly living expenses or increase their income. Because Joe and Mary are already working overtime and cannot possibly generate any more income they decide to sell one of their vehicles and move into a smaller apartment. The decrease in living expenses increases their available income by about $800 a month allowing them to enroll in a 3 year debt settlement program.

Technorati Tags: budgeting

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