Debt settlement

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Collection Rep Tried to Steer Me Away from CCCS Agency! Why?

For signed up for a debt management plan through a consumer counseling agency in January 2013. For 2 years I made consistent monthly payments. In Fall 2014, my transmission went out and I still owed on the car. I did not have money for the transmission repair, so I had to find a cheap rental car from a mom-and-pop operation as alternative transportation, have my car towed and pay a money storage at a parking garage since I could not leave a inoperable vehicle parked in the city streets, and still have to pay for car note. I had to place student loans in forbearance. To make it short (too late), I was screwed.

Although I was nominally on the debt management plan for most of this year, I kept falling further behind. This Fall, I contacted the credit counseling agency regarding the possibility of establishing a new payment plan. They told me that the criteria are established by the credit card companies and made no effort to negotiate a new payment plan. This prompted me to start looking at other credit counseling agencies.

I am completing the process of signing up with another credit counseling agency. The projected payments are lower, if only because my debt is lower than when I first signed up with my original agency.

As part of the process, I needed to get updated records on the balances on the cards. I had recent statements for all creditors except American Express, which stopped sending statements after I signed up with the original payment plan. When I called to find out the exact balance, I was referred to Zwicker and Associates.

Zwicker does not own the account, but performs some of American Express’ debt collection and legal functions. I got the balance, but not without some hardball tactics to get me to pay them that night.

The representative I spoke with was very anti-consumer credit counseling agency. He said they would not work with a credit counseling agency and would only work directly with me. He questioned me as to whey I would want to pay somebody else to pay them, when I could do it directly. I told him that it would be easier on me administratively with the # of accounts and the accounts I had. Then he said their attorneys were working on my case earlier that morning and would file a suit in my state to garnish my wages if I did not pay directly through them. I had already told him I did not have money to pay the terms he was asking for, so I told him I need to “check around” to see if I could get some help from family. He gave me a deadline of 8 AM the next morning to respond back.

The conversation with the Zwicker rep was very upsetting, but I did not let him affect my plans. At this point, my only options are trying to re-establish a new debt management plan, trying to do debt settlement, or bankruptcy. I already had it in my mind that bankruptcy was a last option, but I would do it if anybody tried to come after me through the courts. After getting off the phone, I reported the balance on the AMEX account to my new credit counseling agency. They finalized and sent out proposals to the card companies the next day, which are pending. The car is still disabled, but I have miraculously paid off the car note. If the new DMP proposal is accepted, it will open up $400/month in my income and really take a lot of strain off my financial life (although I still have to be fiscally prudent).

Does anybody else have experience with such agencies like Zwicker (an agency that performs some collection functions, but does not actually own the account) trying to steer people away from credit counseling? Given that the account was still with the original creditor, I was very suspicious that Zwicker was trying to pressure me to pay through them so they would not be squeezed out of some of the money. There were so many red flags in my conversation with the rep like the next day 8 AM deadline, which I suspected was done so I would panic and pay them something, before consulting with any financial or legal advisors about my rights. Of course, the next day I learn that most courts would not issue a judgment against you if you are making monthly payments or other reasonable efforts to pay off the debts.

Spoke to one of my cc today

Union Plus called and the rep I spoke with told me some interesting things.

He was trying to get me to sign up for a “hardship” program. It required me to make a larger payment and then the interest rate would be reduced for 6 months and I would have to disclose my income and all my debts and things like that. I would have to be “approved” for it. I decided against it as I did not feel comfortable with all that was required.

I started to talking to him about settlement options. He let me know that if I try to settle between 0 and 90 days past due they would probably offer to settle at 65% of the debt. When it becomes more than 120 days past due I could probably settle for about 45%. He also let me know that it wasn’t going to help me if I sent in the small pro rata payments if I planned on settling the debt anyway. I was only sending them about $25 a month. He suggested that I save it for my settlement payment.

He did say that they would even do a payment plan for the debt settlement amount. I clarified that it would all be in writing and he said yes, the agreement would all be in writing.

So, I will have some extra $$ in February and plan to call and offer a settlement at that time. My question is, what percentage should I start my negotiations at and what is the max that you think I should go? I was thinking to offer 25% of the debt and not go more than 30 or 35%. I believe that my extra $$ will be around 40% of the debt but I want to stretch the amount as far as possible and start saving for another settlement offer.

Your thoughts as always are appreciated.

45% is a great settlement especially with a credit union. I don’t think that you’ll get much better than that. You could try, and if you do start off with 30% and go up from there. Be careful as you could shoot yourself in the foot.

If I were you and they offered me 45% I would jump at it immediately.

Credit unions, as a whole, can be more difficult than banks to settle with. The reason s that the credit union is a collection of investors, like yourself. The profit goes to all that bank with the credit unions, so if you do a settlement for less, then you are taking away from your fellow members.

It was very smart on yourself to make sure that it will be in writing. Make sur that before you pay a dime you have it in writing. This would also be a good time to negotiate that they remove all bad marks from your credit report, and that they report the settlement as “paid in full” instead of “paid as agreed” or what other statements they use to indicate settlement. You may or may not get these concessions, but it never hurts to ask…if you get it, bonus.

Of course, this advice only pertains to the credit union. If it were a regular credit card I would say go for as much as you can.

Best to you. Happy holidays.

One of the best methods to eliminate debt

First I want to say that the Dave Ramsey method is one of the best methods to eliminate debt that I have come across. His thoughts, experience and knowledge is the best I have seen…far superior to Suze Orman.

Watch this controversial video to learn more:

I feel that anyone using his system would be greatly benefited…

But…

It is not for everyone.

I would not suggest this to people that do not have any discretionary income to work with. If you can budget, without depriving your lifestyle, and live below your means then this by far a superior method.

But for those of you that, have already cut back on expenses as much as you can and are still in trouble then DO NOT DO THIS SERVICE as you will fail.

Your best alternative is debt settlement, then bankruptcy.

Maybe people don’t like debt settlement, and Dave Ramsey himself is against it, but when you have no other options it will give your relief from the debts and still let you fulfill your moral obligations of paying at least something to the debt.

Of course debt settlement is not for everyone either. Don’t do it if you can pay your bills and are not in trouble financially. It then would be unethical in my opinion.

If you can’t do debt settlement, then you should look at bankruptcy as the final option.

I have read the earlier posts, especially of the moral and ethical issues of debt. I think Chad (whom is very knowledgable) stated that a Christian, if they have read the bible, should pay their bills. I don’t disagree with that at all.

But…

A more careful study of the good book will reveal that GETTING INTO debt is not very Christian in the first place. The bible ( in the Old Testament) clearly states that anyone that loans someone money for the express purpose of usuary will not go to heaven. I guess this would refer to the banks of our time, yes?

So if banks, per the bible, are charging usuary (interest) for profit, and they are not going to go heaven, then it stands to reason that these are not Godly people. So why would we work with them and get into debt? Isn’t that tantamount to be in agreement with these people?

SO the handling is prevention. But if you are in debt, then use what ever method you need to to get out of debt. Use your best judgment, and follow your own ethics.

I hope that helps. I hope I have over stepped my bounds here, nor did I wish to offend anyone. If I did I am truly sorry, but please do look at what I said to see if it applies before any rash judgments are made.