Provanta

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Client Withdrawals

On May 19th, I wrote about our client’s experience with a creditor who was threatening to sue our client even though Provanta had legitimately settled the account, received a settlement agreement letter, and made the settlement payment to the collection agency.  After 6 months of hard work and persistence, we got the law office to accept the original settlement agreement and cease any further legal action against our clients.

I have another conclusion to this story.  The clients decided to withdraw from Provanta shortly after the situation was resolved.  They do not blame Provanta for the situation because they know we did everything by the book.  They understand that the situation would not have occured in first place had it not been for poor miscommunication between the collection agency, creditor and law firm.  However, they are simply upset that the situation occurred at all.  They are disgusted with the complications that can arise when someone (in this case the collection agency) fails to do their part in the debt settlement process. 

We had settled a total of 5 out of their 10 accounts even though the clients had only been enrolled for 14 months.  The current claim of these accounts were $42,798.81 and they were settled for $18,760.35- the clients received a gross savings of 56%.  Even though the clients still have approximately $21,700 in debt left to be resolved and we’ve provided excellent settlements so far, they decided to try to make payment arrangements with the remainning creditors for balance in full.  They know that this will likely cost them more financially and that it can take a much longer to resolve the accounts but they are willing to take that risk instead of the risk of the above mentioned incident occurring again.       

It’s always difficult for Provanta to see a client withdraw before we complete their program. We understand that circumstances change and sometimes a client may need to withdraw because of a job loss or increased medical problems.  For this particular client it’s more difficult because their withdrawal resulted from a collection agency’s mistake and refusal to admit their error, which led to the drawn out and unnecessary process to correct the error.  We do however respect our client’s honesty and decision and wish them nothing but the best.    

(Ref. 1523)

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)

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. 

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)

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)

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)

A Collector’s Candid Intention to Violate the FDCPA

One of our Program Managers was talking to an agent from a collection agency today.  The agent was extremely upset that the clients were unable to make payments to their company even though we had explained many times that our clients had financial hardship.  The clients were a couple raising a mentally handicapped son.  The social security benefit they receive for their son is minimal.  In addition, the father has experienced a 3 month job loss and the mother has not been able to work for over 7 years to due a serious injury and has to rely on crutches and a wheelchair.

The agent’s reply to the Program Manager’s repeated refusal to give in to his high payment demands was to list off the names of 10 of our client’s neighbors.  We do not know for sure if these were truly the names of our clients’ neighbors, but the agent insisted they were.  He went on to add that he had their phone numbers and would start calling them right away about our clients’ situation if he didn’t receive a payment.

Our Program Manager said, “If you did that, you would be violating the FDCPA.”

The agent paused, then said that it wouldn’t be a violation if he didn’t disclose the reasons for his call. 

Our Program Manager replied, “You would still be violating the FDCPA.”

The agent ended the call with Provanta abruptly.

The Program Manager immediately contacted our clients to let them know of the agent’s unprofessional behavior and warned the clients that while it was probably just an empty threat, to keep Provanta informed of any misconduct by this agent or anyone else. 

Most collection agencies and collectors prey on consumers and take advantage of the fact that many do not know their consumer rights.  That is why many collectors get away with outrageous harassment threats and why many people give in to their tacitcs.  All of our representatives are fully informed of our client’s rights and they are not afraid to assert them for our clients. 

(Ref. 1512)

Debt Settlement Programs Can’t Help Everyone

Most companies in the service industry are focused on enrolling as many clients as they can.  Provanta is no different, but we do have to decline requests for enrollment from time to time if debt settlement simply is not a viable option for them. 

A woman who was referred to Provanta through the local Better Business Bureau (who has been kind enough to refer a number of clients) walked into our office last week and asked to speak to someone about our program.  Luckily, I was available to speak with her.  We spent about 45 minutes talking about our services.  I provided her an estimate for her program based on her current statements.  She said enthusiastically that she wanted to enroll into the program because it would help her financial situation and she felt comfortable with our approach and background.  We set up an appointment two days later for her to come back and complete an enrollment application.  I asked her to bring along some other documents including a pay stub and a list of all her monthly expenses.

During the appointment, I realized she only made about $2,600 a month after taxes but her monthly expenses with her mortgage, car payments, medical bills, food costs, etc totaled over $4,500.  She was upside down nearly $2,000 per month.  There was no financial way she could afford her current expenses let alone the additional $1000 she would need to provide for the debt settlement program -- she owed $58,000 on credit cards.  Even if she was able to eliminate her mortgage and her car payments tomorrow, she still could not afford the program.  It was difficult for her to accept.  She asked me to ignore her income and she asked if I coud even lie about her income to our underwriters.  She insisted that she would find a way afford the program and she would make it happen. 

I had to be firm with her and explained that it was simply irresponsible and unethical for Provanta to enroll her.  She had over extended herself long ago because of poor budgeting and because her creditors allowed it to happen.  Her creditors should not have extended over $50,000 of credit on credit cards to someone who only makes $2,600 a month and she should not have been able to purchase a home where the mortgage payment accounts for more than half of her monthly disposable income.  It's unfortunate for her, but she's at a point where it's unlikely any debt program could help her.  She asked about bankruptcy and I told her that it may be worthwhile for her to consult with an attorney specialist.  

(Ref. 1509)

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