David McCullough
Marketing Manager and Senior Case Manager at Provanta for over three years. Previously a financial advisor/planner with over six years of experience in the financial services industry. BA, University of California, Davis.

dmccullough@provanta.com

Living Beyond Your Means?

A great article was published via Yahoo! Finance on Monday titled “Five Signs That You Are Living Beyond Your Means”.  This article stresses several key factors that many struggling with debt are acutely aware of:

1. Your Credit Score is Below 600
2. You are Saving Less than 5%
3. Your Credit Card Balances are Rising
4. More than 28% of Income Goes To Your House
5. Your Bills are Spiraling Out of Control

What struck me more than any of the other statistics quoted in the article was that the personal savings rate has severely deteriorated over the past couple years.  The following chart was provided based on data from the U.S. Bureau of Economic Analysis.

For the full article provided by Investopedia on Yahoo! Finance click here.

Technorati Tags: personal savings rate, debt settlement, budgeting, economics

Commitment

One size does not fit all.  Everyone suffers from unique symptoms that require an individualized remedy.  Regardless of the plan of action to eliminate debt, it takes a high level of commitment.

If you have ever worked with a fitness/athletic trainer you know this to be true.  Any trainer worth their salt will tell you that in order to see results, long-term commitment is needed.  Results simply don’t happen overnight.  The same applies to any plan chosen to eliminate one’s debt.  Too often those struggling with debt assume that there is a magic bullet that will somehow fix all of their problems.

Whether one decides on a debt settlement program, consumer credit counseling, a home equity line of credit (HELOC), bankruptcy, or simply to pay off the debt on their own, one must be fully ready to COMMIT.  Success, in any area of life, requires a high level of perseverance and commitment.  This is especially true as it pertains to one’s finances.

If you are struggling with debt take a few moments to think about how long it took you to accrue the debt.  It is important to realize that any plan to eliminate the debt, no matter how carefully thought out, is most likely going to take several years to execute.  Once you have made that decision to live cash only and live a life free of debt take a deep breath.  This is going to be an endurance run and not a sprint.  Focus in on the finish line with the unwavering eye of an Olympian and don’t quit until the last penny of your debt has been taken care of.

Many have traveled this path before and rest assured that you are not alone in your quest.  For words of encouragement and ideas please read other blog postings on this site or give us a call to discuss your options.

Technorati Tags: debt forgiveness, debt settlement, debt relief options, cccs, consumer credit counseling, home equity line of credit, heloc, debt consolidation, bankruptcy

Foreclosure & Cardholder Default

An article released yesterday by Bloomberg quoted American Express CFO, Daniel Henry, as saying “Defaults by cardholders worsened most in areas where U.S. home prices dropped by more than 5 to 10 percent”.

While this may appear obvious to some I firmly believe that defaults on unsecured debt will continue to increase as mortgage deliquencies and foreclosures continue to climb.  With no sign of a turnaround more-and-more Americans will see their unsecured debt loads increase and will continue to struggle to make ends meet as they try and make the monthly minimum payments to their creditors.

To read the entire article visit Bloomberg.

Technorati Tags: debt settlement, credit card debt, home foreclosure, debt relief

Home Prices Continue To Fall

The other day I was looking at the S&P/Case-Shiller Home Price Indices.  The indices follow trends in home values in several of the country’s largest metropolitan areas.  With almost no exception every index has shown a sharp decline since the latter half of 2006.  Based on residential real estate indicators, provided by Standard & Poors June 2008 report, there is no sign of a turnaround.  In fact, all mortgage delinquency indicators have continued to rise quarter over quarter since the end of 2006.  For example, foreclosures started, as a percent of all loans, in Q1 of 2007 was 0.40%.  As of Q1 2008 this figure has risen to 0.99%.  Delinquency rates, regardless of loan type, have continued their climb in all categories.  Below is a graphical representation of the indices covering a period from 1987 through April 2008:

As disheartening as all this appears the dip has to bottom out somewhere.  The question of course remains when and how far.  I don’t want to spend too much time on this topic, but at the time the dot com bubble burst, I was working as a financial advisor for Morgan Stanley.  The graph above bears a strange resemblance to the trends of other market indexes I pored over with my clients during this period.  Keeping this in mind I am cautiously hopeful but also believe that the dip may end up squaring out for some time before climbing again.

Reference: S&P/Case-Shiller home Price Indices

Technorati Tags: residential real estate indicators, home prices, home values

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

Technorati Tags: debt settlement, debt relief radio advertising

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.

Technorati Tags: debt settlement, medical hardship, financial hardship

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.

Technorati Tags: debt settlement, consumer credit counseling service, debt relief marketing, debt management

Why We Love Referrals

Referrals often make for the best clients. Why? Because it is usually a friend or family member that referred them to the Provanta Debt Settlement and Forgiveness Program. A referral usually has the added benefit of seeing how a debt settlement program works before they commit to enrolling. While individual experiences may vary, a referral who has been able to closely observe their friend or family member going through debt settlement process is acutely aware of how successful Provanta is with their settlements, while at the same time recognizing that it’s not a walk in the park and requires a serious commitment. Seeing this track record of success over a long period of time with a client ultimately helps a referral make that decision to contact us and to eventually enroll themselves.

There’s also a secondary aspect, one of trust. One difficulty that Provanta encounters is the self-fulfilling prophecy of creditors and collectors who attempt to sabotage the program. Not all, but some creditors, once aware of the client’s enrollment, will contact the client and inform them that they have made an error, that they “don’t work with debt negotiation companies” — this, in spite of the fact that we can prove that they indeed do. The client then takes that information seriously, and failure becomes self fulfilling because they have lost (or never gained) the trust needed to ignore those creditor admonitions and proceed ahead. Clients that have come by way of referral already understand and trust it can work, so they are far more willing to disregard the creditor’s admonitions (or, better yet, refuse to discuss it with them) and let the program run its course.

Technorati Tags: debt settlement referral, referral incentive, debt forgiveness

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

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

Provanta On The Radio

What is Provanta saying on the radio? Take a listen to some of our radio spots currently being aired throughout the country:

Broadcast Radio Spot 1

Broadcast Radio Spot 2