10 Questions to Ask When Evaluating a Debt Settlement Company

Evaluating a debt settlement company can be tough.  It seems that wherever you turn some debt relief company is trying to get your attention via a variety of channels from radio, TV, the Internet, e-mail, to even the bus bench.  Who can you trust? Who is reputable? And, more importantly, who is going to actually perform for you?  

As discussed in previous postings (see “Commitment“), entering a debt settlement program is a LONG-TERM commitment.  It takes a great deal of time and effort for the debt settlement company to negotiate settlements and it takes time and effort for you, the client, to save money for the settlements.

When evaluating doing business with a debt settlement company there are many important questions to ask.  However, the following items represent what I consider to be the “top 10″ questions to ask as you investigate various debt settlement companies:

1. How long have you been in the debt settlement business? In my opinion the answer needs to be at least 10 years.  Any less and the company does not have enough of a track record to provide feedback on average settlement rates etc. 
2. Are you going to be handling my settlements or do you outsource this to a third-party?  Generally speaking you do NOT want to be dealing with more than one company.  You are going to feel more at ease dealing with a single entity rather than several.
3. Are you a member of the Better Business Bureau (BBB)?  If not you can immediately discard the company regardless of what they say.  If they are a member visit www.bbb.org to search for the business listing.  Make sure that all outstanding complaints, if any, have been resolved.
4. Can you do business in my state of residence?
5. Can you reach settlements with my creditors?  Provide the company a list of your creditors with the respective balances.  Make sure they have a history of settling with your particular creditors.  Tell them your story.   Provide a little background as to how the debt accrued.
6. What is the total cost of the program including fees?  This figure should be somewhere around 60% of your current debt amount.
7. How much are your fees and how are they assessed?  The answer you should be looking for is somewhere between 15 - 20% and the fees should be fixed.  If there are “administrative”, “retainer”, “variable”, or other fees involved, or if the company cannot quote you a figure for fees then this might be a red flag.
8. What are your hours of business and who can I contact if I have a question regarding my account?  The rep you speak with on the phone with may not ultimately be the person you have to deal with if you have an issue.  Strong customer service is the cornerstone of a successful debt settlement company.
9. What is your web address (URL)?  The company website can provide a wealth of information as to the legitimacy of the business.  Make sure they list a physical address under the “contact us/about us” page.  Look around for fresh content.  Make sure the site is copyrighted for the current year.  Make sure there are no discrepancies between the messages on the website and what the representative on the phone tells you.
10. Ask a couple tough questions and guage the response.  For example, “can my creditors sue me”, “will they continue to call me”, and “will my credit score go down”?  The answer to all these questions is “yes” so make sure the representative does a good job explaining why.

How Would You Like $55k of Debt Settled for $8,400

Our client was overwhelmed with joy to hear that two of his major credit card accounts totaling $55,267.00 had been settled for a total of $8,400.00 only 15% of the amount owed.

Best of all, these were his last 2 accounts to be settled.

Congratulations on a fresh start for the New Year!

Ref. 1540

Technorati Tags: debt settlement results, debt settlement percentages, debt settlement offers, debt negotiation process

Weekly Debt Free Clients

Total Debt Free Clients October 6 - October 10, 2008

• Total Clients Debt Free -2
• Total Debt Settled - $83,669
• Settlement Amount - $19,999
• Savings - $63,669
• Average Percentage of Settlements - 32%
• Average Program Length - 24 months
• Best Settlement - 15%
• Worst Settlement - 72%

Technorati Tags: debt forgiveness, debt settlement

Weekly Settlement Statistics

Total for the week of October 6 - October 10, 2008:

• Total Debt Settled - $180,544
• Total Settlement Amount - $56,604
• Settlement Percentage - 31.4%
• Total Cases Settled - 23

Best Settlements:

• Current Claim - $41,077
• Settlement Amount - $12,000
• Percentage - 29.2% (negotiated with a original creditor)

• Current Claim - $26,477
• Settlement Amount - $4,000
• Percentage - 15.1% (negotiated with a original creditor)

• Current Claim - $28,790
• Settlement Amount - $4,400
• Percentage - 15.3% (negotiated with a original creditor)

Worst Settlement:

• Current Claim - $6,917
• Settlement Amount - $4,150
• Percentage - 60% (negotiated with an original creditor)

Technorati Tags: debt forgiveness, debt settlement

The Importance of Commitment

After 33 months of being in Provanta’s Debt Settlement Program, one of clients is finally able to be free of his credit card debt.

Our client’s original estimated program term was 29 months.  However, he continued to struggle with his income and expenses after enrollment.  Six of his regularly scheduled monthly deposits were returned as non-sufficient funds (NSF) by his bank.  He has also made special requests to skip or reduce his deposits on 3 other occasions.

We take these types of problems very seriously.  If a client continues to demonstrate an inability to make his monthly deposits as scheduled, we may consider closing the client’s debt settlement program.  This is not to be inconsiderate or unsympathetic to our client’s on going financial problems but to encourage them to look for different options that may suit them better.  Our debt settlement program simply cannot be effective if the client cannot afford it.

We never had to consider closing this particular client’s program despite some of his financial problems.  He was always in communication with us immediately whenever there was a issue.  He made efforts to make up the NSFs or skipped deposits.  He was honest about his situation and he understood why this was a serious matter.  He made all efforts necessary to continue with the program and we stayed committed to help him and to make necessary adjustments to our settlement strategy to accommodate his situation.

In the end, his program term extended only 4 months longer than originally anticipated and we were able to settle his accounts for 41% of the total balance owed.

Ref. 1539

Weekly Debt Free Clients

Total Debt Free Clients September 29 - October 3, 2008

• Total Clients Debt Free - 1
• Total Debt Settled - $23,755
• Settlement Amount - $9,047
• Savings - $14,707
• Average Percentage of Settlements - 38%
• Average Program Length - 72 months
• Best Settlement - 28%
• Worst Settlement - 60%

Technorati Tags: debt forgiveness, debt settlement

Weekly Settlement Statistics

Total for the week of September 29 - October 3, 2008:

• Total Debt Settled - $92,500
• Total Settlement Amount - $42,919
• Settlement Percentage - 46%
• Total Cases Settled - 22

Best Settlement:

• Current Claim - $1,886
• Settlement Amount - $535
• Percentage - 28.4% (negotiated with a original creditor)

Worst Settlement:

• Current Claim - $1,055
• Settlement Amount - $738
• Percentage - 70% (negotiated with an original creditor)

Technorati Tags: debt forgiveness, debt settlement

Sixteen Percent Settlement!

The best news of the week came yesterday when our settlement department supervisor came by my desk and informed me that she had just achieved a 16% settlement on two accounts with the same creditor.  Things got even better when I learned that the accounts belonged to a client I had personally referred the program.  I was ecstatic!

When James (alias) and I first spoke he was coming out of a difficult divorce and just finishing up a doctorate program at a local university.  James was financially insolvent and owed approximately $52,000 in credit card debt.  Because of a high concentration of debt with one creditor we placed him on a shorter program.  We also talked in some detail about some of the difficulties we typically encounter with this particular creditor.

The original debt amounts on the two largest accounts, $27,000 and $24,000, respectively were ultimately settled for $4,400 and $4,000 respectively.

I am pleased to report that James will be graduating from the program with a total program cost at approximately 38% of his original debt amount.  In other words, James saved approximately $32,000!

While James’ situation is not indicative of most of our clients I am encouraged by the two recent settlements. Hopefully this is an indication of things to come even when considering the struggles within the financial industry.

(Ref 1538)

Technorati Tags: debt settlement results, debt settlement client story

Another Debt Free Client

A middle aged couple from the Northeast recently completed their debt settlement program with Provanta.  They enrolled 10 accounts in the program.  Nine of those account were settled for a total of 40% of the current balance (51% of the original balance).  Great settlements overall.

One account was not settled because the account could not be located.  When we contacted the credit card company, we were told that they had no record of the account.  We asked our client to obtain their free credit report so that we could review it.  It turns out the account could not be found on the credit report either.  This is rare but we come across these situations from time to time.  There are several possible explanations.  Perhaps the credit card company simply made internal errors and erased all record of the account.  Maybe the credit card company has simply let the account slip through the cracks and they don’t want to bother with it anymore.  It may even be possible that the account may resurface in the future.  In any case, the clients decided to simply close the account since no one was collecting on it any more.

Our client can move forward with their credit card debt-free life with confidence that if the account ever resurfaces in the future, they can come back to Provanta and we will help them resolve it.

Ref. 1537

Capital One Collection Complaint Resolved

For approximately a year now, the U. S. Department of Justice has been investigating and working with Capital One to resolve complaints that the credit card company has been collecting on debt that was no longer owed to them.  According to articles on both the Wall Street Journal website and Forbes.com, Capital One has sought and collected on debts that had previously been discharged in bankruptcy proceedings.

Reports say that Capital One has collected approximately $340,000 and the company will be working with the Department to return the money.  An independent auditor will be hired to review over 650,000 Capital One customer accounts to look for any other monies collected in error.

It is great that the Department has gotten involved and that Capital One has been cooperative, open and willing to resolve this problem as quickly as possible.  However, I imagine that for a lot of individuals who unknowingly paid debts they shouldn’t have had to pay, this caused a huge financial burden.  It is always important that everyone understands their consumer rights and the laws that regulate collection practices.   For more information on this topic, I suggest visiting the following sites:

Federal Trade Commission

Wall Street Journal

Forbes

S&P/Case-Shiller Home Price Indices Fall

On September 30th data released by S&P for the S&P/Case-Shiller Home Price Indices showed continued decline in home prices among almost all major US cities measured by the indices.  

Las Vegas has continued to be one of the hardest hit cities with an annual decline of 29.9%.  All city/metro indices show an annual decline ranging from 29.9% in Las Vegas to 1.8% in Charlotte.

David M. Blitzer, the Chairman of the Index Committe at Standard & Poor’s indicated that there was no evidence of a bottom to the current decline.

For the complete report visit Standard & Poor’s website or click here.

My personal take on the current situation is that it will be a solid two years before we see any sign of recovery in the housing market.  Financial and housing sector woes have create ripples throughout our entire economy that are now just starting to reach other sectors.  Retail and manufacturing businesses are already beginning to feel the effect of reduced consumer spending.  Prices will go up and jobs will continue to be lost.  

Let’s take some cues from our grandparents.  Maybe it’s time for a heart-to-heart talk on how they weathered the storm during the great depression.  While I do NOT believe we are entering another depression I believe we all have equal responsibility to put our individual financial houses in order.  Now is the time to save, ensure job stability, work harder, and focus on paying off debt.  It would be ludicrous and irresponsible to believe that the legislature alone can remedy the current financial crisis.

Technorati Tags: financial crisis, housing market

Patience

All of our clients are aware that some creditors may still pursue legal action to collect on debt owed even though our clients have enrolled in Provanta’s Debt Settlement Program.  However, that does not make a creditor’s lawsuit any easier to deal with  In fact, some of our past clients have decided to withdraw and look for other options when litigation began.

I can’t say I blame our clients for making that choice.  Knowing something might happen and then actually experiencing it are two completely different things.  The latter can be extremely unpleasant.

Despite the creditors choice to litigate, we always encourage our clients to stay with the program and reach their ultimate goal of becoming debt free.  We provide support and guidance to help them through the unfortunate situation.  We explain that although one creditor may have filed a lawsuit, it does not mean others will.  More importantly, we continue to negotiate for settlements on accounts even if the accounts are in litigation or have judgments.  Settlements may still be reached in these situations.

For example, a client who recently graduated from Provanta’s Debt Settlement Program started the program with 7 accounts.  In 2006, one of her creditors decided to file a lawsuit and obtained a judgment against our client for a balance of $8100.  We had already settled 3 accounts for her and she had 4 accounts left including the judgment account.

Though she was distraught over her situation, she decided to stick to her original plan- to complete Provanta’s Debt Settlement Program and resolve her unsecured accounts.  We continued negotiations with the remaining creditors.  About a year later, in the spring of 2007, the creditor who filed a lawsuit finally realized our client would not be able to pay the judgment.  They offered to settle the account for $5698.  This was a good offer considering our client’s situation so we helped her take advantage of it.

Even though this particular account settled for 70% of the balance, the overall settlement percentage for our client at the end of her program was 42%.

(Ref. 1536)

Technorati Tags: debt collection lawsuit

Give Yourself an Early Christmas

Yes, it’s October 1st and yes, I did say “Christmas”.  I am ordinarily one of the first to complain about how Christmas decorations seem to promulgate retail establishments sooner-and-sooner with every passing year but this year is different.  Why?  The meltdown in the financial markets and the economy has given everyone in this country the opportunity to take a second look at their personal financial circumstances.  The observed changes to a certain extent effect everyone. 

What does Christmas, the financial sector, and the economy have to do with each other?  Well, as you may or may not know most retailers go “in the black” during the holiday shopping season.  In other words the sales/revenue generated during the holiday season typically predicates whether or not they turn a profit for their fiscal year.  What this means is that they are absolutely dependent on American consumers having disposable income to spend on gifts and the like during the holiday rush.  If Americans don’t spend as they ordinarily would then retailers may suffer, may actually end the year “in the red”, and may not be able to sustain growth during the next fiscal year.  Some may even go out of business.

To this end I am encouraging everyone to start preparing now.  Buy your Christmas gifts a little earlier this year.  Look for sales.  More importantly create a budget for October, November, and December.  Don’t wait until the last minute to load up your credit cards with gifts on December 24th.

The most significant and important gift one can give themselves or their family is a balanced budget.  I realize this is not a very exciting topic but if you work toward this end now then you may actually have a worry free holiday season.  If you currently carry a large amount of revolving unsecured debt on credit cards and personal loans now is absolutely the time to strategize as to how you are going to pay off the debt.  Don’t wait until the new year!  If you cannot balance your budget and cannot pay off your unsecured debt within three to four years on your own then it is time to reach out and look for some professional help.  Investigate your options.  Find a reputable company with a proven track record of success to help you plan on how to eliminate your debt.

Give yourself and your family the ultimate gift this year - financial freedom.

Technorati Tags: debt settlement, consumer credit counseling, budgeting, Christmas, holidays, shopping

Continuing Support for Clients

Last month a client contacted us and asked if we could add his wife and her accounts to his current debt settlement program.

The client had enrolled in our debt settlement program earlier this year.  He and his wife had always kept their credit cards separate so his wife was not required to join the program although we highly recommended that she did.   Our client has been battling cancer for the past five years, had brain surgery to remove a tumor and only received disability income since he can no longer work.  They had an extreme medical and financial  hardship which made our debt settlement services suitable for both of them.  However, our client was hopeful that if we could help him with his accounts, they would be able to manage his wife’s debt on their own.  They wanted to try to maintain her credit rating as well as have access to a credit card in case of emergencies.

Seven months later, I am working with the wife to add her accounts to his program.  Although they have tried to keep up with her bills during this time, their situation has worsened.  She fell behind on payments a few months ago and have not been able to catch up since.  She has gone through some personal medical problems, have had surgeries and missed a lot of work.  The emotional stress of dealing with financial and medical problems escalated into a deep depression for our client’s wife.   On top of this, our client’s cancer, which had been in remission for a little while, has come back.  He will start chemotherapy next month.

I was extremely sad to hear that our client’s situation has gotten to this point.  While I am glad they decided to enroll her accounts, I wish their decision was motivated by different circumstances.   Our services will not be able to help them with the medical struggles they’ll soon be facing but we can help alleviate some of their current financial burdens.

(Ref. 1535)

Technorati Tags: debt settlement, financial hardship, medical hardship