As I always mention at the beginning I am only documenting my opinion on these debt settlement companies as I am entitled to my opinion.
As a finance specialist for over 13 years with debt and credit I reflect back to the beginning when I knew nothing about this industry at all and as I mention and use an analogy for your legal rights it applies the same with this:
“If you don’t know your rights, then you have no rights”.
“If you don’t know your options, then you have no options”.
Companies in the debt settlement industry like Credit Associates that started me writing these kinds of informative blogs thrive on a consumer’s lack of knowledge. In fact that lack of knowledge is what keeps them in business.
I personally believe Credit Associates is one of the worst out there. As someone with a knowledge base of over 13 years I can spot the lies that are done in their commercials or advertising spots so I felt the need to point them out so someone doesn’t get taken advantage of.
A gentleman called me and said they read my blog about them and agreed with my assessment and then also spoke to National Debt Relief and then told me a rather shocking story that I will pass along to you today.
He said he had a business credit card at about $20,000 he is being forced to make the decision to let go.
The “Representative” he spoke to (you know… the salesperson) asked if he had any other debt and he said he stated he had a personal target credit card for about $5,000 and another credit card for about $4000.00 but they have been paid on time. It was only the business card that had started to slip.
They told him they would have to do “all 3 cards” in order to help him. They chatted about it and he said how much could you save me on the cards?
I of course was curious myself and when they told him they could get it all down to $21,000.00 there was a bit of silence on the phone as I had trouble believing such a pathetic amount and repeated what he told me to make sure I heard him right. That s right, he owed $29,000 and said they could only get him a savings of $8,000.00.
What scares me is this is possibly the norm. After all is it not the job of sales people to maybe exacerbate how much they could save? If that’s them bragging then oh my, what is their average?
HINT—see PART II of this blog (coming next week)
I asked him if he had a lump sum to get this all handled to go away and he said he did but not a ton of money of course. I informed him it was idiotic to add the 2 perfectly good paid cards he had to let them go and destroy his personal credit and after some conversation he wanted to work directly with me.
NOTE— This is a 2 part story as I also contact them as a potential client to see what they could do for me.
As I always say, a credit report is like a thumb print…. And every thumbprint is different so generic advice that is attached to your financial well-being is not the smartest move. Only by having a full and complete picture of what is going on is the way to truly get the best advice for you and your family.
Back to the Story!
I told him to keep his personal credit cards paid and to keep them paid and good. In less than a month I had the company agree to a settlement of $8,000.00
Now the thing you need to be informed about is while reading this is if the bank takes a hit on what you owe them they can 1099 you and the IRS considers that “undeclared income” and you have to give that to your CPA.
That of course sucks but it’s still a hell of a lot cheaper that paying the debt owed. Plus you can always set up a payment plan for it if necessary.
AN ADDITIONAL FYI is the bank has to 1099 you if they do in 3 years. If not then they lose the opportunity to take a tax break on it. we had a client get 1099’d 4 years later and a simple general dispute to the IRS got it dismissed and saved the client an additional $1,500.00 of their hard earned money.
So why was there such a money difference you may ask? It’s rather simple actually, if you don’t think you can get anything and you get told you can save $8000.00 you are very happy!
But when you don’t know you could actually save $12,000.00 then the $8,000.00 sounds pretty good.
As I always say, the bigger the company the bigger the overhead so you’re not a client you’re an amount.
They will take the 1st offer the bank gives them and then sell you on how good of a deal it is and how it benefits you so they can move onto the next client.
So that’s the end of part I of this blog, the next one may be short but it will be from my own direct experience of calling and emailing National Debt Relief as opposed to detailing you the story from a 3rd party person.
NOW I want to say that while this person’s experience with National Debt Relief may not be typical if they read this and say that’s not how we do things is possible. I would find it rather improbable that this client just happen to tell me the one bad representative that they have out of the possible hundred (more or less). Especially when it’s combined with my own experience listed in PART II.
I will note that the rep never told him how bad this will hurt his credit score and how future lenders will look at him which I feel is a disservice to the consumer. Now it is possible they were never trained on that but as a credit and financial professional for over 13 years, isn’t that one of the reasons why you would be calling them???
Wayne Sanford is a credit and finance expert with over 13 years’ experience in the industry. He has reviewed over 16,000 credit reports and appeared on local and national TV on CBS and is a contributor to many online publications as well as being an Continuing educational provider for the Texas Real Estate Commission.
Have a question? Send an email to Wayne firstname.lastname@example.org