Debt Minimum for Qualification

The average Provanta client enrolls approximately $30,000 of unsecured debt (mostly credit card) in our program.  Since most news reports state that the average American carries $8-$10K of debt, it’s understandable why someone with $30K of debt would need our help.  The discrepancy between what the average American owes and what our clients owe can also give our negotiators some advantage in the debt negotiation process.  The creditors and their collection agencies have more reason to accept our client’s financial hardship and work out a reasonable settlement arrangement.

But what about our other clients- the ones who owe a total of $5K, $10K or even $12K?  They’re not that far off from the average American so is it right for Provanta to help these clients resolve their accounts through our debt settlement process?  If so, is their situation more difficult for our negotiators since we may not be able to use some of the same arguments mentioned above?  Let me use the hardship of a newly enrolled client to address these questions:

Most of this person’s debt accumulated over the past three years.  He has been with his employer for over three years and has received consistent income.  However, just prior to securing this position, he was laid off for about five months.  He requires medication for high cholesterol, diabetes, and depression.  He is also paying for a breathing machine for sleep apnea.  At one time, he was paying over $300 a month in out of pocket medical expenses.  This has been reduced but it has not made things any easier.  The credit cards were used primarily for living expenses over the past couple of years.  More recently, it has become impossible for him to keep up with the minimum payments.  He cannot get ahead and elminate the debt on his own. 

Our client owes $11,000 in debt.  Although he may just be a tad above the average, his situation is anything but average.  He qualifies for our program because of his medical and financial hardship.  Our negotiators can use this information to effectively negotiate settlements regardless of whether his debt is above or below the average American’s.   

Although we may not be able to help everyone, Provanta will consider everyone’s situation to determine if debt settlement is the right option for them.  We do this regardless of the debt amount so long as the person is truly struggling. 

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Technorati Tags: debt hardship, medical hardship, financial hardship, average American 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.

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Technorati Tags: financial hardship, medical hardship, debt forgiveness

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.  

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Technorati Tags: bankruptcy, debt settlement, BBB, Better Business Bureau, debt settlement underwriting, bankruptcy attorney