Research study! Research! Research!
You will hear me say this dozen of times. As a consumer, it is our duty to be informed and informed. http://centuryconsultingservices.com The lack of education, laziness, or in my case, REJECTION, gets us in trouble.
I swore to never once again be an uninformed consumer. With that in mind, I put all of my efforts into finding the best debt settlement choices. I spent 4 weeks and about 40 hours on the phone speaking to various business.
There is a barrage of info out there. Just by typing debt settlement into Google, you will get 8,650,000 results. Click HERE.
Crazy. It is daunting to cull through these resources and decipher what the hell they are using. I put in the time to comprehend my options. My very first calls were to the obvious big business like Credit Solutions, Ameridebt and CuraDebt. However I likewise checked out a few of the lesser-known business like Pacific Financial obligation. Here was the basic deal:
* I was to deposit $2000/month into an escrow account.
* The first 6 months of these payments into that escrow account would go towards paying the debt settlement business for their services.
* I would continue to make $2000 payments for approximately 36 months.
* As settlement offers can be found in, they would consult me.
* The banks would be paid from this settlement account.
* In 36 months, I would run out financial obligation.
Initially, I was really excited and relieved about a solution to my issue.
Below are the approximated cost savings and costs from 2 of the business I spoke with. As you can see there is an amazing amount of variance. A great deal of that deals with the fees and the length of time you require to settle.
CuraDebt Strategy
If they got a 50% cost savings on my $130,000 of debt, it would take 41 months of $2000/month payments to get out of debt. Total cost including settlements and charges:$ 81,900.
If they got a 60% savings on my $130,000 of debt, it would take 36 months of $2000/month payments to get out of financial obligation. Overall expense consisting of settlements and charges: $71,500.
If they a 75% cost savings on my $130,000 of debt, it would take 28 months of $2000/month payments to leave financial obligation. Overall cost consisting of settlements and fees: $55,900.
PacificDebt
With $130,000 of financial obligation, it would take 46 months of $2000/month payments to leave debt. Total cost consisting of settlements and fees: $90,995.
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Pretty fascinating things, best!?! After a couple of days, I saw something that didn't make good sense:
* Before I would reduce any of my financial obligation, the financial obligation settlement business would increase my debt typically of $12,000 since they get paid initially!
* All of the business state the bank provides their best offers throughout the first 6 months - however according to their recommended schedule, I would have no money left in my escrow account at 6 months due to the fact that all of that $12,000 would go towards paying the debt settlement business their fees. Which by the way, is for a service they have not even performed. Let me repeat this since it is vital.
The best offers come at the 6-month mark. Despite the fact that I would have accumulated $12,000 in my escrow account, I wouldn't have any cash left in there to pay the settlement offer because that cash currently went to pay the financial obligation settlement company!!!!
Talk about the contradictions !? Oftentimes, customers get discouraged at that point. They drop out of the program and declare insolvency. These debt settlement business prosper on our falling out of the program. They are predatory business much in the same way the charge card are predatory loan providers. Remember what I said about educating myself? I would not be a victim a 2nd time around.
So let's evaluation ... this is why most debt settlement companies are rascals:
* I pay the financial obligation settlement business $12,000.
* In 6 months, the bank makes a deal.
* Considering that I have no money in my escrow account, I ask the bank to spread the payments out over the next 6 months so I can have time to accumulate some funds.
* The bank decreases due to the fact that the majority of their settlement offers have a 90-day payment time-frame.
* Threatened by liens and judgments, I drop out of the program and state personal bankruptcy.
* The bank writes off my debt.
* The debt settlement makes pure earnings.
I proposed this contradiction to the reps, but their action was foggy at best. Since I was using the details they provided me to describe this contradiction, they didn't have an answer that made good sense. Rather, they deflected my question by stating they can get a better offer than I can get myself. WHICH IS COMPLETELY FALSE BY THE WAY!
It became clear that the representative was just a sales representative and had no REAL concept about this procedure. When enrolled, I would never speak with him once again. As I stated previously, let's take ownership and take control. I fell into the financial obligation trap, however I was not going to fall under the financial obligation settlement business' trap.
Please don't be so desperate and incur more debt when you are trying to leave financial obligation. If you make the effort to run the numbers, you will see most programs don't make good sense. An efficient debt settlement business will charge a small start-up fee, base their commission on performance AND take their commission AFTER you have actually paid the bank. Sound too great to be real? Stay tuned!
In the next post, I will discuss how some financial obligation settlement companies hold true customer advocates.