10 Questions to Ask When Evaluating a Debt Settlement Company
October 15, 2008
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:
- 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.
- 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.
- 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.
- Can you do business in my state of residence?
- 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.
- What is the total cost of the program including fees? This figure should be somewhere around 60% of your current debt amount.
- 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.
- 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.
- 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.
- 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
October 15, 2008
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
Weekly Debt Free Clients
October 15, 2008
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%
Weekly Settlement Statistics
October 15, 2008
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)
The Importance of Commitment
October 15, 2008
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
October 10, 2008
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%
Weekly Settlement Statistics
October 10, 2008
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)
Sixteen Percent Settlement!
October 9, 2008
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)
Another Debt Free Client
October 9, 2008
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
October 9, 2008
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: