Outstanding Settlement

A Provanta client had a delinquent balance of $17,133.00.  Through tough and hard-nosed negotiating, our staff was able to settle the debt in full satisfaction for $5,996.54 only 35% of the balance.  That’s a total savings of $11,136.46.

Though any particular settlement is never a guarantee for any particular future result, some clients can certainly expect similar results from time to time on some cases.

(Ref. 1520)

“Standard” Won’t Do

Today, one of Provanta’s debt negotiators was attempting a settlement for one of our clients with a Successor In Interest or Debt Buyer.

As our negotiator opened dialog with the agent, he was given the “standard.”  This agency’s “standard” settlement offer is 60% of the current balance, which would be $4,879.00 on this client’s debt.  The negotiator countered the agents offer with an offer of $1,640.00, which was only 20% of the current claim.  She emphasized that the client’s account is more than four years delinquent and that recovery, no matter how small, should be an important part of their decision.

She was hoping to get them off of their “standard” and go lower, and she was pleased when they came back with 25% of the current claim as an acceptable settlement amount. The client is now getting a settlement of $2,032.00 on her $8,131.00 account, which amounts to almost $6,000 worth of savings.

(Ref. 1521)

Weekly Settlement Statistics

Total for the week of June 9-13, 2008:

• Total Debt Settled – $131,618
• Total Settlement Amount – $62,522
• Settlement Percentage – 47.5%
• Total Cases Settled – 25

Best Settlement:

• Current Claim – $8,868
• Settlement Amount – $1,956
• Percentage – 22.1% (negotiated with a original creditor)

Worst Settlement:

• Current Claim – $4,121
• Settlement Amount – $3,500
• Percentage – 84.9% (negotiated with an original creditor)

38 Months to Freedom From Debt

A young couple, Provanta clients, just received some very good news from us.  Not only did we just settle an account for them, it was the last account on their program.  In approximately 38 months, we were able to settle all 9 of the accounts they enrolled and they are debt free.

Our clients had a financial hardship when they first enrolled.  For over a year and a half, the husband worked for the military and he was relocated to Hawaii, so he and his wife were separated for quite awhile.  When he finally switched jobs to be back at home, he worked for a year and then suddenly, he was laid off.  He was still collecting unemployment by the time he and his wife had their first child.  His wife was also not working and collecting disability.  They were new parents, unemployed, and struggling with medical bills when they contacted Provanta.

Their financial hardship actually worsened during our program.  While the wife was pregnant with their second child, she was in a serious car accident.  The car was totaled but luckily, both the unborn child and mother were going to be okay.  Provanta worked closely with the clients to help them maintain their program despite the unexpected and scary experience.  We made adjustments to their program and to our negotiation strategies to accommodate their new situation.

Though their program took 38 months instead of 36, as originally estimated, our clients are thrilled to finally be able to put all of this behind them and concentrate on raising their children.  In addition, since they referred someone they knew to our debt settlement program, we offered the clients the option of receiving $595 cash or $1000 credit toward their final Provanta fees, simply as a thank you for helping someone they know become debt free through our program.  They opted for the credit so not only did we settle their last account for them, we paid the fees associated with it.  They are very happy.

(Ref.1519)

Outrageous FDCPA Violation

As I was reading an article about a $200 million lawsuit that the FTC and FDIC are jointly trying to file against a major, publicly traded credit card marketer and its debt collection agency for deceptive marketing and numerous FDCPA violations, a Program Manager popped her head in my office to let me know that a collection agency is calling our client’s neighbors and leaving notes on the neighbor’s door about our client.

I am amazed.  The above referenced companies are facing a $200 million lawsuit for FDCPA violations.   The FTC reported in it’s Annual Report 2008: Fair Debt Collection Practices Act that in November 2007, the FTC won a lawsuit against another collection agency for misleading, threatening and harassing consumers.  This collection agency was ordered to pay over $1.3 million in fines to settle the case.  A popular political topic in this year’s presidential campaign has been the credit card industry and America’s growing debt problem.  With all of  this going on, I am amazed that there are still some credit card companies and collection agencies with the audacity to so blatantly violate our client’s basic consumer rights and not think twice about it.  Did they not get the memo on what’s going on, or do they simply think they are above the law?

Well, be assured that we are working very closely with the client to help her through this troubling incident.  She is just as angry as we are about the situation and she plans to file an official claim with the FTC against the collection agency.  I hope that others who have had such an awful experience will do the same so that FDCPA violators can be penalized for their behavior.

(Ref. 1518)

Provanta On The Radio – New Spot!

Beginning the broadcast week of 6/16 a new radio spot will be heard on several stations throughout the country.  If you happen to live in the Buffalo, Niagara Falls, Washington D.C., or St. Louis area you may hear this new spot on the radio.  Over the next few weeks this spot will also air in other parts of the country. 

To listen to the new spot click here: Broadcast Radio Spot 3

Debt & Medical Issues

For many years it has been readily apparent to those working in the debt relief industry that many of our clients have a medical hardship.  This was recently confirmed by an article published by CNN:

http://www.cnn.com/2008/LIVING/personal/06/09/stressing.over.debt.ap/index.html

While we know that a medical hardship can contribute to rising amounts of debt what we often don’t realize is that the stress of dealing with debt can actually lead to an increase in medical issues. 

The CNN article summarizes findings from a recent poll conducted by the Associated Press-AOL Health.  This survey of just over 1,000 adults with debt found that:

• 27 percent had ulcers or digestive tract problems, compared with 8 percent of those with low levels of debt stress.
• 44 percent had migraines or other headaches, compared with 15 percent
• 29 percent suffered severe anxiety, compared with 4 percent
• 23 percent had severe depression, compared with 4 percent
• 6 percent reported heart attacks, double the rate for those with low debt stress
• More than half, 51 percent, had muscle tension, including pain the lower back.  That compared with 31 percent of those with low levels of debt stress.

Major medical issues often prove to be the catalyst in deteriorating personal financial circumstances.  However, based on the findings in this article it also appears that resulting high debt levels can exacerbate pre-existing medical issues or create new problems for those struggling with debt.

When I Grow Up I Want to be in Debt

Does that line sound familiar?  Of course not.  Kids grow up saying things like they want to be a doctor, an astronaut, or a zoo keeper.   No one grows up saying they want to be in debt one day, so why is it that Americans have a combined credit card debt of over $900 billion? 

There are many theories and possible explanations that all have some truth behind them.  One possibility is that most people have simply forgotten the basics of sound financial planning.  Traditional financial planners will tell you that you need to have a reserve emergency fund with enough cash to last you at least six months should something unexpected occur, such as job loss.  If your emergency lasts longer than six months then maybe, just maybe, you will use the little piece of plastic to buy food or pay for utilities-just the absolute bare necessities.  Once you are back on track you do all that you can to rebuild that emergency fund, pay off that credit card, and then put the credit card away so that it will be used only in the next dire emergency.  Yes, this may mean some months of clipping coupons and postponing that vacation, but that is what being financially responsible is all about.   

That was then; this is now.  Credit cards are no longer used just for emergencies.  They are used every day to pay for everything from utility bills and groceries to shoes and vacations.  So how did this happen?  Well, first there’s the convenience factor.  Carrying a credit card is definitely easier than carrying a wad of cash in your wallet.  It makes your purse a little lighter and if your purse gets stolen, you can cancel your credit cards. Cash, on the other hand, cannot be canceled and issued to you again.  Convenience is great.

Second, once you get accustomed to using credit cards to purchase daily needs, the line of demarcation between necessity and want blurs.  For example, food is a necessity.  A $100 per person dinner at the new trendy restaurant is a want.  A credit card can marry the two, such that you can satisfy your basic need and your desire at the same time.  Since credit card use has become a habit, the $100 dinners continue and then voila, and 3 years later you’re still paying for that dinner.  This is great…well, not really.

Does this mean that I believe everyone in debt is in their situation because of poor money management, distaste for cash, and lack of self discipline?  No, of course not.  As I mentioned above, there is not one single answer to explain all of this; rather, there are many factors fueling America’s growing debt problem, including the job market, legislation and credit card companies themselves.   However, I think that if Americans are to start trying to resolve this problem, and more importantly, teach our kids how to avoid putting themselves in this same situation, we all need to go back to the basics of sound financial planning and responsible credit card use as soon as possible. 

Can We Reach an Understanding?

A large collection agency and debt buyer called regarding a Provanta client’s delinquent account.  The original balance on the account was $298 and the current balance is $745.00.  Our negotiator offered to settle the account in full for $179, the agent countered at $250.  The negotiator declined his offer informing him that the client is a homemaker and her husband is on Social Security which is their only source of income.  We made it very clear that we can only offer what is available.

The agent called back five minutes later offering to settle for $450 over 2 months.  Again we declined his offer based upon the clients financial situation and funds available.  once again less than five minutes later the agent called for a 3rd time.  His offer this time around was $224, we advised yet another time all that was available for settlement was $179.

This collector’s offers fluctuated, the funds available for settlement remained the same. After the 3rd call, I hope the agent understood this.

(Ref. 1516)

Convicing Creditors

Sometimes convincing creditors to settle is unbelievably difficult, and the only way to overcome their reluctance is a persistent attitude.

Recently, a major creditor neglected to respond to all settlement offers with anything other than a canned letter requesting redundant copies of a limited power of attorney and/or client information we cannot disclose.

In response, we add dozens of accounts to our bulk offer list each month to reinforce the idea that by refusing to cooperate, they are turning their backs on potential revenue. This month, for example, if this creditor accepts 50% settlement offers on the 104 clients who have open accounts, they stand to make $80,000! With some foresight, they will see the light.

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