An Introduction To Debt Settlement

Gratitude

A client of Provanta enrolled with us in June of  2003 with eleven accounts at a total debt of $36,978.00.  On June 27, 2007. exactly four years later, we had settled 10 of his accounts for 55% of the balance.  This client recently decided to withdraw from the program since his last account had hit statute of limitations.  Below is a letter sent from him today:

Hello,

How are you? I hope you’re well.

For myself, I am fine as of today and my credit score is up to 705 by Transunion….BUT you know that this collection agency is still harrasing me by phone calls at home. So I did sent them a Certified Letter with returned signature that I am disputing my debt and told them to stop calling me at home.

In good faith thru Provanta Corporation I’ve tried my best to settle my debt to them but they ingnored it and at the end turned down your offer of compromise to settle the issue.

Thank you again in behalf of the staff of Provanta in helping me in my problems and  I’ll be OK in coming years of my life financially.

I APPRECIATED EVERYTHING YOU’VE DONE FOR ME.

(Ref. 1517)

Weekly Settlement Statistics

Total for the week of June 2-6, 2008:

• Total Debt Settled – $62,342
• Total Settlement Amount – $24,874
• Settlement Percentage – 39.9%
• Total Cases Settled – 13

Best Settlement:

• Current Claim – $1,783
• Settlement Amount – $400
• Percentage – 22.4% (negotiated with a collection agency)

Worst Settlement:

• Current Claim – $13,316
• Settlement Amount – $9,321
• Percentage – 70% (negotiated with an original creditor)

An Early Victory for a New Client

Last week we settled an account for a client who just enrolled at the end of April.  Our client signed the Limited Power of Attorney we provided in his Enrollment Application, as all of our clients are required to do, which authorized Provanta to negotiate debt settlements on his behalf.  We had to send the creditor a copy of the Limited Power of Attorney three times in May before the creditor finally acknowledged that we had proper authorization to speak on behalf of our client regarding this account.

In a different letter we faxed to the creditor office in June, we offered to settle the $8747 account for $2625. A Provanta negotiator contacted an agent at the office to follow up on our offer. The agent said that his manager was reviewing it and would get back to us. Two days letter, they accepted the offer. The account was settled at 30% of the original claim.

This settlement was possible at this early stage of our client’s program because our client had provided a substantial lump sum for the program up front. He was recently laid off and although he will be receiving unemployment, he knew he would not be able to keep up with his minimum payments. With unemployment on the rise nationwide, our client knew he had to find a solution to his debt as soon as possible just in case he could not find a job within a reasonable time frame. He decided to liquidate a significant amount of his savings so that he could offer it as settlements to his creditors through our program. He decided to do this before he even contacted Provanta.

Whether to use savings, investments and/or retirement funds to expedite the debt settlement process is always completely up to our clients. There can be benefits to doing so such as shorter programs, litigation avoidance, lower monthly EFTs, etc, but there can also be some risks as well such as a smaller emergency reserve or a postponed long term goal such as a house or retirement. This is why our Program Managers are always available to speak to any client who is debating such an issue.

(Ref. 1515)

Trickery

As a client of Provanta, or if you are in the process of evaluating which debt forgiveness program is for you, you must watch out for tricky creditors!

You are the first line of defense against their attempts to collect , and you must guard your information carefully. The best way to protect yourself is by denying creditors all information execept how to contact Provanta.

Learn from the experience of a Provanta client , who was persuaded into disclosing how much she had in her settlement savings account by a wiley and persistent agent. When Provanta negotiators tried to make a deal on that account, creditors wanted the full amount the client had mentioned rather than the lower amount they probably would have accepted according to the past settlement history with that company. Although a settlement was ultimately reached, Provanta could have done better if the client had not communicated with the creditor. You are your own best guard against tricky creditors! Give them nothing and send them to the expert settlement team at Provanta.

(Ref. 1514)

My Favorite Conversation in May

I had a chance to speak with a lovely older lady last month about our debt settlement program.  

This woman has had a series of misfortunes with her health that affected her work and her income.  She had to move out of her house last year due to a foreclosure, and now she’s at the point of being unsure whether she’ll be able to keep up with her credit card payments.  Despite all of this, she had an upbeat attitude and she made me laugh all the way through our conversation.  She’s a “glass half full” type of gal.

Unfortunately, Provanta could not help her for reasons that I won’t go into.  Instead, we talked about ways to minimize her expenses and I gave her ideas on how to manage her budget.  The most important advice I gave her, the one I give to anyone who wishes to become debt free, is to stop using credit cards. 

She said to me, “I’ll just freeze them.”

I asked what she meant and she replied, “I used to put my credit cards in a big bowl of water, then place the bowl in the freezer.  Whenever I felt the urge to buy something, I would have to wait for the credit cards to defrost, which could take up to a day or even two.  By then, the urge was gone.” 

I still smile whenever I think of her and imagine a bowl of frozen credit cards in her freezer.

(Ref. 1513)

Smear Campaigns: Idiocracy

It never ceases to amaze me how many other debt settlement (DS), consumer credit counseling service (CCCS), and debt management companies like to sling mud at each other.  All of these debt relief options have successfully existed for many years.  I don't think DS and CCCS are going away anytime soon.  In fact, if the economy is any indicator, the debt relief industry is really taking off right now.  That being said why are so many companies high centered on spending money on trying to derail the competition?  There are two reasons for this.

The first reason a company resorts to a smear campaign to try and find clients is simply because they have not been in business for very long.  They really have no depth of knowledge, no experience, and actually have no idea what they are saying when they attempt to attack the competition.

The second reason is that a few bad apples may be giving the wrong impression.  Every industry suffers from a few companies that are poorly managed and possibly unethical.  It is a shame that some resort to bad mouthing an entire industry simply because of their experience with one company.  This just goes to show that due diligence must be done up front when deciding on a company to resolve one's debt.  Two excellent indicators of a company's track record and stability are: the years they have been in business and their Better Business Beaureu (BBB) report. Provanta has been a member in good standing with the local chapter of the BBB since 1994.

There are many debt relief options.  Regardless of what type of program or what company is chosen to help eliminate one's debt, make sure appropriate research is performed.  If you feel rushed through the application process and uncomfortable for any reason, take a moment to step back.  Thoroughly evaluate your options before making a decision.

Lastly, don't work with a company that is spending all their time and effort bad mouthing the competition.  In reality, they probably don't know what they're talking about and will probably be out of business within a couple years.  If they spend all their time telling you why you should not be dealing with their competition, you might wonder why they're not spending it telling you about why you ought to consider working with them. Given two options, A and B, discovering that A is a bad one doesn't nesessarily mean that B is a good one. Option B must still be evaluated independently.

We invite you to evaluate Provanta.

Provanta on the Radio (not for everyone)

Earlier this week an upset caller called in complaining about our radio ad.  He asked, “Why does your company help people get debt relief?  Don’t you think people should be paying off their debt like I am because it’s their responsibility.” 

Even though the caller hung up before our representative could respond, I would still like to address his question.

The caller is right.  People should be paying off their debt and it is absolutley, without a doubt, our client’s responsibility to do so.  The clients that we enroll do not have any misconception about how much they owe or what their responsibility is.  The problem they have is in paying the debt.

Provanta enrolls clients with a financial hardship.  Some of our clients have lost their jobs and it took months for them to find another one.  Some of our clients have experienced a medical hardship or had a loved one go through medical difficulties.  Others are struggling as single parent and some have made a series of bad decisions such as purchasing a home they could not afford or starting a business without truly understanding the financial liabilities.  Regardless of the different backgrounds of our clients, they have one very serious commonality.  They cannot financially afford to keep up with the monthly payments their creditors are demanding. 

In this situation, they have a few options.  They can try to declare bankruptcy if they qualify.  They can simply stop paying their creditors and hope that it all just goes away.  They can stop spending money on other items like utlities, rent, food, insurance in order to pay their creditors.  Or they can look for help from a reputable debt relief company, such as Provanta.

Provanta cannot and does not force creditors to accept settlements.  We do not have a magic wand that makes our client’s debt disappear.  The creditors make the final decision about whether to forgive a debt and accept the settlement based on the information we provide regarding our client’s hardship.  The creditors who agree to the settlements accept the fact that our clients truly don’t have a way to pay and that they’ve enrolled with Provanta in order to be responsible, resolve the account as best they can in light of their financial problems, and to prevent the debt problem from escalating even further.  

So, to summarize my response to this caller:  Yes people should pay their debt and take responsibility for it and that is exactly why our company exists.  We help people resolve their unsecured debt.

A True Financial Hardship

For me, one of the most memorable hardships came from a new client that we enrolled in May.  She had the following story:

She went through a divorce about 20 years ago.  She paid her ex husband over $25,000 in the divorce proceedings but was luckily granted full custody of her children.  She basically raised her kids on own since her ex moved out of the country shortly thereafter.  He only provided $240/month in child support for all 3 kids.  Our client worked hard and focused all her efforts on raising her kids.  After they had all grown up, she began to make plans for her own life.  She wanted to pay off the debt she accumulated over the years as a single parent and she looked forward to retirement.  However, she was diagnosed with Parkinsons disease a couple of years ago.  Parkinsons is a degenerative disorder that will eventually affect her motor and speech skills.  Her symptoms are already beginning to worsen and she is taking several medications.  It is hard to predict how quickly the disease will progress, but she has already been advised that she may not be able to work for much longer.  With the increased medical expenses in her life, she cannot repay her creditors as she originally intended and her retirement plans have changed drastically. 

She made the decision to enroll with Provanta because she knew that one day she would not be able to afford to pay her creditors anything, not even the minimum payments.  Rather than just wait for that day to come and then file bankruptcy, which she had good reason to believe she would qualify for, she wanted to give her creditors to chance to review her situation and work out a settlement.

(Ref. 1511)

Monthly Settlement Statistics

For May, 2008:

• Total Debt Settled – $708,512
• Total Settlement Amount – $295,406
• Settlement Percentage – 41.7%
• Total Cases Settled – 123

Best Settlement:

• Current Claim – $9,637
• Settlement Amount – $1,328
• Percentage – 13.8% (Negotiation entity: original creditor)

Worst Settlement:

• Current Claim – $3,832
• Settlement Amount – $3,257
• Percentage – 85% (Negotiation entity: original creditor)

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