Provanta

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Excerpt From A Client Letter

Excerpt from a client’s written request to close her debt settlement program with Provanta received on 5/22/08:

I am writing to inform you that I would like to close my Provanta account with a full refund of any funds still in the account.  Since (the final creditor) wont’t talk to you I will call them and take care of the final account.  I thank you for all the help for getting my credit back in order.  I have found that I can live without credit cards.  Thank you for that.

Provanta settled 4 accounts for this client.  The current claim on these 4 accounts at the time of settlement was $38,271.34.  The accounts settled for a total of $17,294 and the client has received a gross savings of $20,977.34.

(Ref. 1508)

Being Perfect is Hard But You Still Have to Try

Sometimes our clients are exasperated by the amount of questions our Program Management Department asks them when they call in to request an EFT (Electronic Funds Transfer) reduction or skip.  The line of questioning often includes:

1. What is the exact reason for your request?
2. Is there any other way for you to pay for that unexpected emergency, expense, etc?
3. Can you reduce or cut back on any other expense this month instead of using your Settlement Fund?
4. Have you reviewed your entire budget to determine this? If no, let’s go through it together.
5. Can you pay for that unexpected expense over the next few months instead of all at once?
6. Can you obtain the money elsewhere?
7. Can you increase next month’s EFT to make up for this?
8. Can you increase any future EFTs to get you back on track with your EFT schedule?

It is not our goal to give our clients the third degree every time they call in (believe me, it’s not that fun for our Program Mangers either), but it’s extremely important that our clients maintain the EFT deposit schedule if we are to provide the best results possible for them.  Provanta cannot effectively negotiate for debt forgiveness settlements to creditors if there are no funds to work with.  In addition, if a client reduces or skips their EFTs and does not make up for them in the future, our client’s program will undoubtedly take longer than the original estimated time frame.  Longer programs expose our clients to higher chances of above average settlements and higher chances that the creditor may give up on negotiation process altogether and look into litigation.

This does not mean we deny our client’s request.  We understand more than anyone else that life happens and there will be unexpected emergencies during enrollment.  That’s why we honor most of the requests without having to resort to a suspension or withdrawal of services, action reserved for egregious and repeated abuse of the client agreement.  We just want to make sure the client understands that the EFTs need to be placed at the top of the priority list, along with other absolute necessities such as mortgage or rent, food, utilities, car payments, medical payments and insurance. 

The Good and the Bad

One of the largest programs we’ve enrolled into the Provanta Debt Settlement Program belongs to a retired couple who joined Provanta a little over a year and a half ago.  They enrolled with over $240,000 of unsecured credit card debt on over 10 accounts.   

The positive update on their program is that we have settled 5 accounts for them so far.  The total original claim on these accounts was $125,000 and the total current claim at the time of settlement was $148,000.  We settled the accounts for total of $48,000.  The clients have received a gross savings of $100,000.

The less positive update on their program is that they just received a summons from one of their creditors.  The balance on the account is $10,000 (one of our client’s smallest accounts) and the creditor has refused to settle.  In order to try to prevent further legal action we contacted the client to see if they could provide additional funds to pay the balance in full (something we do only in extreme situations).  Unfortunately, they could not.    

Our clients have always been aware that litigation was a possibility and they accept their situation and our services for what it is.  They understand that we cannot stop litigation but we can give their creditors information about their financial hardship to try to deter them from choosing litigation.  Since they don’t have the money to pay this particular creditor they’ve asked us to focus our efforts on the other creditors who have not pursued legal action.  They understand litigation may continue and even possibly turn a judgment, but at this point, there is nothing the clients can do about it and they plan on dealing with it if it actually happens.

We agree with the client’s decision and assured them that even while we work on the other accounts, we will stay in touch with this particular creditor.  They may come around eventually and want to settle in the future because from our experience even legal accounts can be settled.

(Ref. 1507)

Fighting Fire With Fire

Sometimes, it’s like a battlefield…

In October 2007, Provanta negotiated a settlement on a $12,900 account with a collection agency who was representing the original creditor.  As with all settlements, Provanta required the collection agency to supply a written settlement agreement before any payment to them.  We received the written agreement, sent the settlement payment of $5,600 to the collection agency, and saved our clients a gross amount of $7,300. 

Three weeks later, Provanta received a call from a supervisor at the collection agency.  She informed us that the original creditor recalled the account and as a result they could not proceed with the settlement agreement.  This was completely unacceptable to Provanta, for we had a valid, signed settlement agreement that was in already in place, performed upon, and the payment accepted. 

To make matters worse, the original creditor sent the account to a collection attorney who threatened to sue our clients unless they paid the balance in full.  This was the last straw for Provanta, and we contacted an attorney that we have worked with for many years.  He specializes in consumer law and FDCPA, Fair Debt Collection Practices Act, violations.  He was more than happy to assist our clients. 

It took about 6 months and lot of letters to reach an agreement but we finally did.  In the end, the collection attorney agreed to accept the $5600 original settlement agreement, or deal with a lawsuit against themselves, as well as the original creditor, should they persist.

(Ref. 1506)

Fee Harvesting

During the course of a conversation with a young woman about her debt, she gave me some very interesting information about one account she had with a balance of about $475.  It turns out she opened this account about 4 months ago with a very large and popular credit card company.  She did so in her last attempt to manage her debt on her own and avoid having to enroll in a debt program or filing bankruptcy.  She was hoping that this card, which only had a $500 limit and low interest for the first 6 months, would give her some cushion to pay for increasing food and gas prices while she the juggled the payments on her other 6 accounts.  She admitted to me that this was not a well thought out plan to begin with and I had to agree with her. 

Anyway, she had the card for about a  month and she hadn’t even had a chance to charge anything yet when she received her first statement.  There were 4 charges on the account-an initiation fee of over $100, an annual fee to be in a rewards program for $25, another monthly maitenance fee of $10, and a set up fee of $25.  She had already accumulated over $150 of debt with this company and she not even signed the back of the card yet.  Needless to say her struggles with her budget and debt did not improve.           

This is an example of fee harvesting and it’s something that I’m coming across more and more as I talk to clients about their experiences.  Fee harvesting generally refers to a credit card company’s practice of applying fees to a customer’s account so that the interest drawing balance continues to grow even if the person is no longer actively using the account.  Simply put, it allows a creditor to charge you a fee and then charge you interest on the fee.  Highly profitable for the creditors, and highly dangerous for individuals who do not read the fine print when they sign up for these offers that sound too great to be true.       

The Most Commonly Asked Question of the Day

“Can I keep a credit card out of the program to be used for minor expenses each month or if there was an emergency?”  The unfortunate, and fortunate answer, is no, you cannot continue to use credit cards while in a debt settlement program if you want to receive favorable results.

The reason why I say the answer is unfortunate is because I understand the comfort of having an emergency credit card handy.  Like most Americans I began using credit cards the day I turned 18 and was set loose on a college campus full of low-interest, introductory credit card offers.  Relying on credit cards for your daily needs and desires is a hard habit to break and like most other vices such as smoking, it is hard to quit cold turkey.  We probably live in one of the most superficial and materialistic times in history and this has been heavily influenced by the credit card companies’ clever marketing message that tells us it’s okay to acheive the American Dream on credit or you can have your cake and eat it too as long as you are willing to pay for that cake 10 years from now because that’s how long it may take you to pay off that credit card bill.  When I realized this, I realized the comfort of using credit cards is not all that comforting after all.

Even though the credit card habit is hard to financially and mentally break, it can be one of the most rewarding and liberating things you can do for yourself.  You are no longer subject the credit card companies’ change in policy, increases in interest rates or minimum payments.  You can plan your life around goals like retirement, a dream house, paying for your child’s college education instead of planning your life around making next month’s minimum credit card payments.   

From a debt negotiation standpoint, we simply cannot help you get out of debt if you continue to use debt.  Our goal is negotiate with your creditors, establish your financial hardship, and work out a settlement arrangement for you.  From our experience, your creditors are likely to review your credit activity during this process.  If they see you are still actively using credit cards they may question your commitment to the program and ask themselves, why should we allow your client to pay us less than she owes, when she is still accummulating debt and paying those creditors in full?   

As for emergencies that may come up during your program, there are often ways to work around those emergencies without relying on credit cards.  Our clients often contact us when they have an unexpected expense and we review their options, review their expenses, and find ways to rearrange their budget.  We will help you through your emergencies as best we can.  So if you have a fear of not being able to use credit cards, think of the thousands of people Provanta has helped in the past 15 years and believe me, if they can get through 2-3 years without credit cards, you can too!  

An Exceptional Offer for Deserving Clients

It’s always great news when we reach a settlement agreement for a client.  It’s even better news when the settlement produces a gross savings of over $16,000 for the client.

These clients are a married couple raising a family and have been in the program about 32 months.  They initially had 10 accounts and owed over $85,000 in credit card debt.  Provanta had already settled 6 of the 10 accounts.   This latest settlement was reached with major credit card company.  The current balance on the account was approximately $23,000 and the creditor was willing to accept a settlement of 30%, just a little over $7,000 and forgive the other $16,000.  Please keep in mind that this is an exceptional settlement, one that does not happen often.  Our average settlements are closer to 40% which is why this is such great news for our clients. 

Though the end result for this client is fantastic, it was a long journey to get to this point.  The creditor had consistenly rejected all of our settlement offers in the past.  At one time, the creditor even sent our client’s account to Arbitration because they did not want to consider settlement as an option.   We persisted with the creditor anyway, maintaining the posture that our clients simply did not have the means to pay the high balance.  We took advantage of every opportunity to remind the creditor that our clients had a financial hardship.  They were renters, they owned no assets and they had been unemployed and without income for 9 months before they finally decided to contact Provanta.  Our clients are not in our program because they thought this would be an easy way to get out of paying their debt.  They’re in our program because financially, it was one of the most effective ways for them to resolve their accounts and still pay the creditors something, albeit a lower settlment.   

Our persistence with this creditor paid off in the end.  Now we just have 3 more accounts to settle before these clients are completely debt free.

(Ref: 1504)

An Unhappy Client’s Story

I was finally able to resolve an an issue with a former client, today.  Although he withdrew from the program extremely unhappy, I am proud to say that I was able address his concerns, offer a solution, and officially end our relationship amicably.

The client had been in the program for about 24 months when he decided to withdraw.  His program was estimated to take 36 months but none of his accounts had yet been settled.  He was understandably upset at the current status and demanded a full refund of all fees he paid to Provanta.

When I first received his withdrawal letter, I was very concerned.  It is highly unusual that we would have not settled any accounts for him in the past two years.  Though Provanta cannot guarantee how long any particular account may take to settle, two years is a long time without any results for a client who has been committed to the program (i.e., he has a perfect settlement savings schedule, followed our advice on how to deal with creditor calls, informed Provanta of all significant changes in his situation, etc).  I was determined to find out happened and whether we could have prevented this situation from occurring.

In my research, I was able to affirm three things:  1) Provanta was dilligent in all efforts to contact his creditors and negotiate possible settlements.  2)  His creditors had offered several settlements to Provanta as a result of our dilligence and hardwork.  3)  The settlement offers made by his creditors were high in our opinon, which is based on our experience with these same credtiors in the past.  The unfortunate conclusion was that his creditors were not ready yet to offer settlements that were uniformly workable for our client.  Instead of just accepting their high settlement offers for the sake of closing an account, Provanta remained determined to settle our client’s portfolio of debt in an equitable and wholly workable way in consideration of all creditors. We believed we would eventually obtain such settlements. However, in spite of signing up for a 36-month estimated program, the client decided to leave early.

In my response to this client, I openly stated that I understood the reasons for his dissatisfaction.  I was just as disappointed as he was at the current status of his accounts and quite frankly, I also would have liked to provide him more results him by this time.  I admitted that his situation was rare because most clients who are on track with their program have at least one, if not more accounts, settled by this time.

Personal feelings aside, however, I had to remind him that Provanta cannot control how long the negotiation process will take on any particular account or for any particular client.  The experiences of our past clients can give us insight as to what other clients may expect but we cannot guarantee that all programs will follow the exact same formula and time frame.  Simply put, we cannot force creditors to settle an account before they are willing to.

This was a difficult situation for me because on the one hand, Provanta had performed all the services according to the client’s Enrollment Agreement.  It is true that we have not settled an account yet, but we cannot produce results for someone who has withdrawn, especially one who has withdrawn before the estimated completion date.  Provanta had fully earned all the fees he had paid.  On the other hand, the client is understandably dissatisfied with his program.  Although he acknowledges that everything I described in the previous paragraph he was still frustrated.  This was not an ideal situation for the client or Provanta.

In the end, I offered a him a small refund of the fees he had paid even though he did not have a valid claim for any refund.  It is not something we do often, and rarely something we do when Provanta has zero obligation to do so, but we did so anyway, simply as a gesture of goodwill.  He agreed with my analysis of the situation and he respectfully accepted the refund.

A Common Creditor and Collector Ruse

Occasionally a client will wish to close one of his credit card accounts that had previously been included in his debt settlement program. When asked for the reason, the client typically informs us that the creditor claims they do not work with companies like Provanta (we can always prove otherwise), but that the creditor is wiling to work something out with the client directly. As a result, the client then wants to try to settle this particular account on his own. 

The collection agent is being less than honest with our mutual client.  In this situation, we must explain that creditors will often do or say almost anything to avoid having to work with companies like Provanta, because they know our goal is to achieve for our clients the lowest possible settlement, and we’re extremely effective at it. And it’s not about simply saving the most money, but rather to get the settlement figures low enough across the board, in order to settle all the accounts in a structured way that’s equitable for all. But collectors, whether part of the original creditor, or an agent, often prefer to work with the client directly, bypassing Provanta, because negotiating with a client who’s a novice to debt negotiation is easier than negotiating with our trained professional representatives who’ve “heard it all a million times.”  The creditor has a better chance of getting more money directly from our client than through our program, resulting in an inequitable result when considering the portfolio as a whole. They’re just trying to jump to the head of the line.  

It’s important that our clients understand that though they have the final say in everything, Provanta is unable to work effectively if the client is undermining our efforts by communicating directly. Moreover, doing so only encourages the creditors to keep calling and pushing, trying to undermine the our client’s confidence in Provanta. It becomes a self-fulfilling prophecy: the creditor or collector refuses to deal with Provanta, because they don’t need to, because they can deal direct. I can’t blame them, but this is a direct effect of the creditor/collector’s ruse, and the client falling for it. By giving their creditors the silent treatment, our clients are sending a message loud and clear: that they are committed to the debt settlement program, and that the fastest way for the creditor to get resolution and some recovery is to work with Provanta. 

The Amateur vs. The Professional

Last week I was talking to a guy who had a lot of questions about the negotiation process and the creditors motivation to settle accounts.  Near the end of our conversation he asked, “Why can’t I do this myself?”

I told him simply, “You can.”  He was quiet for a while.  I am actually asked this question quite often and people are always surprised by my answer.  I suspect it’s because they expect me to start spewing all the virtues of Provanta and extolling our 15 years of experience, which don’t get me wrong, I do eventually.  But ultimately they expect me to tell them all the reasons why they are not qualified and that the process is extremely complicated and beyond any average person’s ability to comprehend.

The truth is debt settlement is not rocket science.  It is a complicated process that involves a lot of time, patience, industry knowledge, and thick skin but it’s not entirely impossible for an average individual to do on their own.  You just need to ask yourself whether you have what it takes and are you willing to take the risks of failing?

Let me give you some other examples to consider.  Some people remodel their bathroom by hiring a professional contractor.  Others watch marathon episodes of home improvement shows, buy a hammer, and start ripping out the tiles.  Some people go to tax professionals to file their taxes while others manage it on their own.  Last month, I was reading an article in a men’s magazine about how to give yourself a suture and stitch up a deep cut or wound.  I read the entire article and I’m about 90% positive that I could stitch up a wound by myself.  But if I stepped on a piece of broken glass right now the last thing I am going to do is grab my sewing kit and start sterilizing a needle.  I will be on my way to the hospital.  My health is worth the effort and costs of seeking professional help.  Is financial improvement worth it for you?

To decide if you want try to settle your own accounts instead of finding a professional debt settlement company with a long and proven track record, ask yourself:

1. Are you an effective communicator and negotiator?
2. Are you prepared to deal with creditor harassment on your own?
3. Do you understand the regulations that govern collection practices? If not, are you willing to learn them, and learn them quickly?
4. Can you set up a disciplined savings plan for at least 18-36 months in order to accumulate the money needed to settle your accounts?
5. In the meantime, are you willing to spend the next 18-36 months negotiating and renegotiating with your creditors?
6. Are you confident that when a settlement agreement is reached that it will be a good and appropriate settlement for your situation?

For Provanta, the answers to all the above questions are yes.  If you can also confidently answer yes to all of the above, then go and take care of your debt!  We’d love to hear about your success story!

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