But while there's certainly no fault in having such feelings, are we really talking about solemn obligations? You know, like when you borrowed money from a parent or other relative and promised to repay it in a way tantamount to staking your life an reputation on it?

...And, it's very convenient for the credit card companies, mortgage companies and even Uncle Sam to have you feeling that way. Don't they kinda spin it with a tinge of moral guilt when the subject comes up? Perhaps not without reason. Over the decades, we in America have become a nation of debtors, by and large. In the simplest sense, taking on debt is essentially selling your future labor. There's nothing inherently wrong in that, just when it gets out of hand and one day you wake up to realize that you've sold your next 20-30 years of productive life right now. Worse, you may have already spent it and have nothing much to show for it except to sack yourself with a much higher moving bill once that time comes.

Yes, indeed it's true. We've come to the place that if everyone stopped paying, all at the same time, it would be like a run on the banks and everything would collapse. And yet, if you feel your own money in the bank is in jeopardy, are you going to let it sit there so that other depositors not as contentious as you get their money back?

Ah, so you don't have an obligation to let your money sit in a failing bank? You're simply exercising your contractual rights as a depositor: to make a withdrawal? Well how about a credit contract? Does it really say in any of your credit card agreements (I know: you've never read them and either have I; and this should be a clue) that you 'solemnly promise to repay, no matter what,' or anything of the kind?

Of course not. A credit contract, just as mortgage contract, assigns certain obligations to each party and correspondingly, rights to each party in the event of default. Although...I'll bet you'll find that if you do actually read your credit card contract that you have most of the obligations while they have most of the rights.

Well, that's fair, as they are the ones taking the first risk.

Ah, so they're taking a risk? Like in business? Like, businesses take calculated risks and they price their products and services accordingly, so that they can weather the risks and losses and still make a profit? Maybe that's why you get the introductory interest rate and after a while, notice you're paying15, 20, 30 percent and more...(we have seen as high as 35% rates at Provanta). ...I'm not even going to go into the charges & fees.

The mortgage contract is the best way to illustrate what's going on. It's a pretty simple contract, at base. You agree to take on the obligation to pay interest, some principal (normally; amortized over some period), property taxes and insurance while they take on the obligation to treat you as the actual owner right now (not like a rental or lease); and if you default, they have the right to undertake a legal procedure that culminates in them getting the property back. And in most States, they have no recourse against you no matter what happens.

But credit cards are unsecured. They can't come and take your entertainment system, bedroom set, or anything else, so it's just you against them.

That's why you paid the higher interest rates and that's why they'll deal. And they do deal.

Before I close, I'll reiterate the original point but restate it in other terms: it's just business. The credit card companies, as did every lender you ever had, was looking to make a profit on providing services to you. They stringently calculated, they wrote up long and complex contacts to protect their interests, and they have their legal rights, which they know backwards & forwards.

But I know. You feel as though it's you suffering and not them if you decide to undergo the relative gauntlet that is a debt-settlement program. Frankly, it's a tough row to hoe for some, piece of cake for others, and how that's going to go is really unpredictable. In settling tens of thousands of accounts for hundreds of millions of dollars for small businesses and ordinary folks over nearly two decades, I have yet to come up with any formula that gives me any confidence in uttering any prediction in any individual case. Sometimes, they're aggressive, often not. The job can almost always get done; it's the level of difficulty that's unpredictable.

I won't lie to you, but most Debt Settlement companies do, at least in their advertising. It could be easy. It could be very hard, but what do you see typically in the advertising? The honest truth is that it's up in the air. Which means: the banks are conducting their affairs as the businesspeople they are, adhering to a contract they wrote, you agreed to...and there's nothing moral or ethical involved.

It's just business.

You really can get out of debt and we at Provanta can help. We can do it all for you. We've been doing it for thousands of clients for just shy of two decades. I hope it's a walk in the park for you but until I get a crystal ball, I simply can't assure you of that. What I can assure is that every client who has followed our instructions as best they can, consistently, has ended up 2-4 years later debt free, and including our fees...far less than they signed up with, and that's discounting even the continuing interest, late fees, and other charges.

Figure out what you owe today, total. Take 60% of that, give or take 10%, divide that into monthly payments over 24-48 months, and if you can make that payment, my bet is you'll be debt free. How easy, stressful, or un-stressful it is in your individual case is simply up for grabs and there's no getting around that. I would love to whisper sweet nothings in your ear if just to comfort you that it'll be alright, but I can't. I don't know your tolerance and I don't know the bank's resolve in your particular caee. What I can do it put my professionals to work on your behalf and we will absolutely do our best. That, I can solemnly promise.

As you must have guessed — as I’m here writing this now–  it became successful; and almost immediately. But once I attained a bit of success, enough to pay my own rent at least, the only people I could really afford to bring on to help was family members (flexible about paydays). The very first, only months after the start, was my own mom who wished to get out of the daycare business. You’ll learn more about her later.

In subsequent posts I will delve more into Provanta’s unique history as a Debt Settlement company. For now, let me just advance from 1992 about a dozen years. By 2004 we had about 30 employees, many independent sales offices, three separate company owned offices and business was booming.

And I couldn’t sleep at night.

You see, in the pursuit of more and more business we took on a model of independent sales people, paid on what they produced. This was a mistake. For lack of a self-serving way to express it, I ended up employing a lot of liars. But it was my fault. You see, not being integrated with the business as a whole; that is, working in every aspect of the business before selling to new clients, they probably couldn’t help but be overly exuberant.

Debt Settlement is not a walk in the park. It’s kind of like going on a diet after you’ve spent years gaining that 10 pounds per year. At first, no big deal. By the time you realize you’ve racked on 30, 40, 50 pounds or more…well, it’s a lot like waking up to realize you have $30,000 of credit card debt — uncoincidentally, the amount of debt our average client has.

But while it’s not a walk in the park, it is possible to settle your debt if you do it right. Can you do it yourself? Certainly, just as you can re-roof your house, remodel your bathroom or kitchen, fix your own car and any host of other things. Never be fooled: this is simply about consistently hard work over a decent period of time; like 2-3 years. Kinda like loosing that 50 pounds.

It helps when someone is there to answer the phone during business hours when the best deals get done. We do that.

This is the introduction to a series of posts — a couple per week — about the state of the industry I helped create. I grew, then went smaller and “boutique,” and there are a lot of reasons for that.

I find the industry trend disturbing. It’s a lot of large companies now, with sales people promising you the moon.

The moon is not for sale.

With the Credit Card Debt Relief Act 2010, The Federal Trade Commission (FTC) passed new laws to regulate Debt Settlement Companies in an effort to weed out the unscrupulous and dishonest companies. With these new laws coming into effect October 27, 2010, what use to be viewed, as a risky option to resolve outstanding debt, is now looking more appealing as consumers are protected when it comes to Debt Settlement practices.

It is important to remember that despite the new laws going into effect next month, not all Debt Settlement companies are legitimate. When looking for a company, it is important to be able to differentiate between a reputable company and one that isn’t just out for your money. Be sure to ask questions about the company, its history, who its affiliated with and if they’re accredited with the Better Business Bureau (BBB). Be very cautious of any company that hasn’t been around for several years. A client’s program typically takes 3 years to complete and any company that hasn’t been around for at least 5-10 years, lack the experience needed to complete a successful program. Make sure the company is a member of TASC (The Association of Settlement Companies). The goal of TASC is to protect the interest of consumers by upholding and encouraging fair practices in the debt settlement industry. Also, stay clear of any Debt Settlement company that tells you they can stop creditor calls, freeze your interest rates or prevent litigation. No debt settlement company can completely stop the collection process, freeze your interest or guarantee that you will not be sued.

There are many other questions that you will most likely ask but the final decision is yours to make. Do the research on a company, ask plenty of questions and go with a company you are completely comfortable with. After all, this is your life.

On October 27, 2010 all debt settlements companies will be required to conform to the new rules of the FTC .

Following this policy, Provanta has a new program ready to start on October 1^st.  We see no benefit to either the consumer or Provanta to wait another month to bring our program into compliance with the new regulations.

As of October 1, 2010:

• There is no up front money paid to Provanta
• We have reduced our free from 20 to 15% of the total debt
• Fees are paid upon completion of each settlement
• Authorization of payment for all settlements by the client

Provanta is a leader in the debt settlement industry.  We have been in business since 1992.  With 17 years of experience behind us we have the expertise to help you become debt free.

For a free, no obligation consultation and quote, please call our toll free number.  Our case managers are waiting to help you become debt free.

For more information on the FDCPA and other money matters visit www.ftc.gov/moneymatters.

If you’re at a point where you realize you need help with your financial situation, then you should already understand that using any forms of credit is doing nothing for you besides digging a deeper hole of debt. Not only do you need to realize that you will be further in debt than you already are but the consequences that lie behind your actions. 

How would a creditor take this? Your creditors have access to pull and review your credit report, and how would it look if they saw that you have been opening new lines of credit or see that you have the ability to make monthly payments to other creditors. Because of the appearance of bad-faith on your part in the eyes of your creditors to which you are delinquent, it is likely to keep you from receiving debt settlement benefits as favorable as those received by debtors who have stopped using their credit cards. It may also increase the risk that these creditors will refuse to negotiate a debt settlement in favor of filing a law suit to collect the amount they claim is owed to them.

Don’t stress over having to use any form of credit.  Credit cards weren’t introduced until the mid 1900′s and since then the ability for consumers to save rather than charge has become almost non-existent.  Any form of credit is nothing but a temporary “fix” on situations.  While you may be able to escape some of your problems at the present time through the use of credit cards, it will eventually catch up with you in the end.

Since accounts are sold and outsourced to different agents to collect so often it is easy for an agent to forgot or overlook an account when they update their system. Sometimes it’s a matter of the creditor / agent just closing the account in their office.

This situation is pretty simple to correct. Our client service department will contact the current collector and inform them the account has already been settled. Agents will request settlement documentation at that time which we will provide (acceptance letter & copies of all checks cashed if available) we do this as a courtesy to our client. Technically once we inform a collector that an account has already been settled it is their responsibility to go back to the original creditor and confirm this info. Once we provide the settlement information the accounts are closed and no further collect attempts are made.

In rare situations it will take a second conversation with the collector to get the account closed and marked as settled. Our clients can also pull a credit report and dispute the account in question to ensure no further collection action is taken. The client can also file a complaint with the FTC if the agents start to harass them after collection proof is provided.

There is only 1 time that I can recall that collections efforts escalated into litigation. In that situation the client went to court, provided all settlement documentation to the judge, and the case was dismissed.

In a nutshell this is a easy problem to fix.

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.

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

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