Credit Associates, “Step in it” AGAIN! (Pt 1)

*As always, let me point out I write these blogs for informational purposes based on my own opinions, my 15+ years of experience in the industry helping people navigate the sometimes “complex” world of credit and finance and no two credit issues are the same so I always recommend calling me for more specific information and direction for the best course of action for you and your family, not some company.*

That being said, I do (if you have read previous posts) prefer to write these posts as if we are simply two friends enjoying a cup of coffee, and I keep the talk straight, there’s enough companies out there hoping to sell you all  the “secrets the credit companies don’t want you to know” (see previous post regarding this little gem of a lie) to “help” you with all your credit and debt problems… (insert eye roll) So let’s just avoid all that and keep it real & direct. And on that note, let me share something that recently happened and I have been just itching to get to!

Now, this post is actually a little different than previous Credit Associates posts, because this time I was dealing with someone (let’s call him ‘Mike’) that had not only spoken to a CA representative, but had a detailed lengthy conversation with them he even received a CONTRACT for me to review!!! Now, how did he go from receiving a contract from them to talking to me you ask… EASY! Just while simply READING the contract he spotted more than a few rather major lies that certainly did not add up to what the representative on the phone had told him- which after all was all in hopes of getting him to “sign up”.

-Now we all know ANY time you call a company looking for help in some capacity or to sign up for some service you are talking to a salesperson. It doesn’t matter what they call themselves (Associate, Rep, Agent etc) they are a *trained* Salesperson that has quotas and incentives to meet! This is simply the world we live in, and sales and clients make the world go around (as well as their profit margin).

As I said, “Mike” had a feeling things just weren’t quite right, did a little research and came across me and previous posts and knew giving me a quick call would likely confirm any suspicions he may have had. During our first quick convo I asked if he would send me the contract to look over, assuring him I would not post it or any personal details, and Wow! It was like a gold mine!

For this post (Part 1) I am going to simply give an overview of the Credit Associates ‘Agreement’, and point out the little “gotchas” that an average person who hasn’t been in the industry over 15 years would likely not understand (they do that for a reason) or would just skim over thinking it was “normal”. *Again, read my disclaimer at top of post that these are my opinions*  to avoid any legal hawks swooping down at me!

  Unfortunately, but fortunately for companies like this, consumers call them when they’re in distress, and when you are emotionally drained you are more susceptible & compromised to believe when anyone tells you they can help just sign up and let’s get started. After all, we just want to be DONE with it. And Salespeople absolutely know this!

>Now, agreement in hand, the first thing I see in their Client Enrollment kit states the following, “the key points discussed in our initial Consultation are summarized here as well as incorporated into the attached agreement.”

*The one thing that I’ve always said I personally hate about this company is the direct lies that they tell customers. The customers are told on the phone that “in order for us to get settlement offers for you when you’re”current” on your account is you have to stop making your payments. (We’ll go into this in more detail later but it’s super important) and in the contract itself it explicitly states that you the person signing the agreement has been told that they didn’t tell you to do that.  Now there’s really no other way to spin this one it’s  A DIRECT LIE.

Now don’t get me wrong, there’s many customers that contact Credit Associates, Freedom Debt Relief or National Debt Relief (probably the 3 biggest) and the customer is already behind on payments, and it’s because of this that it makes the whole settlement process easier to begin. 

>Now, a question I get a lot about this company and others like Credit Associates is: “ is this company a scam?” Well, I always ask them, to define for me what their definition of a scam is… because, at the end of the day,  Credit Associates, National Debt Relief, Freedom Debt Relief, to name a few, are legally registered companies, they have employees, they pay business taxes so they are legitimate operating companies. *People then see all the fine print in contracts and think, “that’s a scam” But I point out to them, “Well have you ever looked at a cell phone contract? Everyone knows fine print is necessary but never works to your benefit you just need to make sure that certain sections in the contracts don’t take away what the salesperson told you to get you to sign up.”

And that’s where I am always seeing problems with this company! I know that approximately a year or more ago in Credit Associates commercials (both TV and radio) used to say, “If you have more than $5,000 there’s a secret the credit card companies don’t want you to know” that was the initial line that started me down this rabbit hole in particular, since it’s a bold face LIE! (there is no actual “secret”, but more on that later)

Well, they have just within the last year or so changed that number to $10,000. Why do you ask?  Well if we crunch the numbers, I was initially under the impression they charge a 20% fee on top of whatever discount they get you. But this contract shows me they actually charge 25%. Example: if you owe $10,000 and if they got a 50% discount for you then you would pay $5,000 to the bank (that could be in one payment or a breakdown of payments) BUT….  you then have to add the 25% which was their “Success” fee to the numbers. So if we add 50%  Which is what you’re paying + 25% obviously that’s 75% which means you saved $2,500.

  Does that sound like a deal to you? Overall the number is decent but I don’t know anyone that thinks 25% is worth it! Call me crazy, but I’ve certainly never charged anyone that amount and I think that number is a little ridiculous, personally.

 But most likely the reason why they bumped it up to $10,000- I guess their Finance people realized there is either too much work and too little pay for people coming in at only $5,000 so they need to bump it up to $10k in order to profit the amount of money they want to profit off of customers. Profit Margin once again!

I find it interesting in their example of their “Success fee” in their contract  they still state $5k even though they post on commercials “if you have a minimum of $10,000” So I assume no one told their Legal Eagles to update contract,It’s minor yes, but to me still deceptive.

>In that same section I found their “guarantee”. It seems their “guarantee” is you will save at least 5% of your total debt balance.

 I’ll be honest with you, I was scratching my head on this one, because if you were delinquent you could literally call yourself and ask for a 10% discount and they would give you a 10% discount without even blinking, so I’m unsure why they would post such incredibly small guaranteed amounts but you’d have to ask those higher-ups on that one.

I would think if they’re so confident and if all those reviews that they post on their website are 100% legitimate then they’d have more confidence to post a higher number.

Heck i tell people i can help and get a 50% discount without even blinking but im greedy and always want even more of a discount.

(I noticed researching other big companies post something very similar which raises my eyebrow, maybe it should yours too?)

*Now, one thing I do like about this company, or should I say at least I can appreciate, is once you sign a contract there’s something called the “Right of Rescission” – where you have 3-5 business days (depending on the state you live in) to cancel the agreement and not be out any money. \

This company actually offers a 10-day timeline to cancel this agreement once they accept it in writing. Now reading into it a little bit more, once they accept your contract they state that they will mail you a confirmation letter (which we all know that the post office could take 5 + days) but should still give you more than enough time to rush and sign the cancellation page on the back and email it or fax it to them. *If you ever do decide to cancel if you mail it it’ll never get to them in time for the 10 days and then that might be a problem emailing it whether it’s your email or you send an email through a friend or family members computer something where you can document is always the smart thing to do.*

>Back to agreement!

Client & Company Obligations:

Now this section I think is pretty “standard” and pretty simple BUT there are a few things that make you scratch your head on some insight to how they plan on treating you

-For the client portion, you obviously have to maintain open and honest communications with them, return paperwork to them when you get it signed, return phone calls when they call you, all of that obviously makes total sense. 

But here’s another quick “gotcha” IF you write one of the creditors names on that list BUT you then decide, “Hey I’m just going to do this myself” you still have to pay the company their  25% “success fee”! Which is pretty shocking, but they do say “unless the company has no involvement in obtaining that settlement offer otherwise client understands that “companies guidance, experience, advice, support and service surrounding the receipt of the settlement offers is valuable and important.” (Pretty much all creditors you put on list are they helped if they mentioned it, so boom they helped! And you have no documented proof they didn’t so pay them)

Now for the company obligation: 

There are the basics that they’re going to hold and maintain confidential information on you, respond to you back within a reasonable time frame, doesn’t define what time frame “reasonable” in their opinion- but reasonable is relative. 

*A part that concerns me that says “client specific creditors may include amounts that require the client handle a negotiation directly with the creditors in which case the company will assist the client. -Now if the bank or creditor will only deal with the client I’m not really sure how the company is supposed to help if they’re not allowed to be on the phone call with them, which means your doing it yourself but it says “clients participation in this still means the company earned their fee”.  So I guess at that point they’re stating that if we gave you advice we’re still entitled to 25%. I could be reading that wrong but I don’t think so.

   Settlement

This is the section that basically says all offers will be presented to the client for review of acceptance. But again there’s also a section that says “if the company has not received a communication from you the customer within 48 hours that they provided the notice clients direction to accept the settlement will be acted upon by company.” 

Now I personally read that as, they send you out notification of a settlement offer, you get busy with life or God forbid something happen with a family member yourself and you cannot respond then *They’re accepting the offer on your behalf after 2 days (even though many companies allow you several weeks to consider the offer).

 I’m not saying this may not be standard protocol for the industry, but personally I don’t want some company saying “yes we can pay this account” with my money without me actually saying yes or no. Again, call me crazy right?!

>Now this was a very broad stroke of the “Agreement” and I plan on getting into more later but I just want to end with the Most Common Complaints I receive from clients of Credit Associates & companies like it..

“Client understands that their credit rating will be adversely affected should client default or be delinquent in their payments to their creditors.”  

 “Client understands that this program will not improve their credit score.”

*This is a common question that gets asked by people because they are under the impression that by paying this debt off, it’ll actually improve their credit BUT it’s a double-edged question. (More details later, suffice to say, yes obviously paying something you havent “can” improve but it doesn’t happen overnight and other factors are involved)

Client agrees that company has not provided them with any advice or recommendations either orally or in writing, regarding reduction or termination of payment to creditors and that company has been engaged for the sole purpose of debt settlements.”

Client hereby confirms that client has not been advised by company to stop making payments to clients creditors

This was the one that made our friend Mike in the story really, really mad because and I quote from his email to me “this is so COMPLETELY FALSE!”  the Rep told me that is exactly what we need to do in order for them to help. *I think you guys know the answer to that one- which unfortunately is just a part of the sales game. 

Now these companies may have at the corporate level have all the best intentions, but like any company, each department tells you what you can or cannot do with a wink of the eye, (which is not an acknowledgement that can be shown in court or proven).

So my standard disclaimer because I never want people to think I’m just picking on companies like this because don’t get me wrong they do help some people but I’m kind of a cheap individual and value my money so I want to keep as much of it as much as possible and I’m assuming if you’re researching & reading this you feel the same way.

 I always tell people feel free to call me or email me. My email address is:

Wayne @ Wayne the credit guy. Com 

and it’s spaced out to prevent spam, or click on the contact us portion of my website and give me a call, tell me your situation and I will tell you what’s in the best interest of you and your family not the best interest of some company. 

Wayne

Debt Settlement VS Bankruptcy

When I started including my thoughts on debt settlement and writing some blogs about them I was amazed at the response and the views so thank you to everyone reading them.

Many times I was able to point them in the direction they needed for their benefit not some companies benefit. So far I have estimated that 2% of the people calling me or contacting me after reading them were clients for me that I could in good conscience help and save A LOT of money (ranging from 17k-80k).

Some just needed the right direction but I had someone that wanted to know why not just file bankruptcy and wipe it all clean.

Which leads me to this blog Debt Settlement vs Bankruptcy

If you have seen, heard or look at advertisements/commercials paid for by of course lawyers who want you to pay them to file bankruptcy they paint the prettiest of pictures to make all your problems go away in a snap.

Since most people reading these blogs are not qualified candidates for me then I believe I can give a real non bias opinion and lay out the pros and cons for each and give you the tools to make an educated decision.

So let’s start with the Pro’s BUT first let’s break it down as there are 2 MAIN types of bankruptcy. Back in the old days (prior to October 2008) you could file bankruptcy in the blink of an eye, but now you need to QUALIFY for it. So it makes sense to understand the two.

  1. Bankruptcy Chapter 13

Chapter 13 allows those with enough income to repay all or part of their debts an alternative to liquidation. It’s bankruptcy for those whose biggest problem is dealing with creditors’ demands for immediate payment, not lack of income.

An example of this is if the bank is getting ready to take your car or home, filing bankruptcy chapter 13 can actually be done on your own and it staves off the wolves so to speak, at least for a month which buys you some time for other options.

An over simplified way to understand this is think of the courts cutting your bills in half and then a structured payment plan is paid out to the court from anywhere from 1-5 years.

  1. Bankruptcy Chapter 7                                                                                                                                                          Is the most popular one for a variety of reasons, it allows you to walk away free and clear of any debt submitted to the courts with the exception of money owed to the government and student loans.

However now after the new laws kicked in after October 2008 you have to be “assessed” to see if you qualify for chapter 7 bankruptcy as you can no longer “just go file”. There was a means test created that you can google to read more so check that out if you are so inclined.

 

Bankruptcy chapter 7 stays on a credit report for 10 years, many future lenders look at this public record filing with different eyes. I recently had a client who filed Chapter 7 9 years ago and had a credit score now in the 700’s and he was denied for a credit card and the bankruptcy was the reason why. Now is that like that with all credit cards…. No. But it gives you an idea how future lenders look at bankruptcy and its given a more serious look as opposed to bankruptcy attorneys make it seem to be the ultimate tool to be free and clear.

PLUS from a credit standpoint what you need to understand that a bankruptcy is literally the worse mark you can have on a credit report. Plus from a mortgage lender position to buy ( or refinance ) if you have any more credit “hiccups” such as a collection or late payment lenders do not typically want to deal with you as they see this as  a continuous problem.

 

Now Debt Settlement

Debt Settlement can be considered an unofficial version of Bankruptcy chapter 13 without the public record on your credit report.

It’s basically a renegotiation of the original contract but without the bankruptcy stigma attached to it.

The quality of the debt settlement depends on the company involved. Many of the ones out there wait for the credit card companies to contact them and they take the 1st offer that is given to them which is usually about 30% of what the balance was.

I just found out that company I have never heard of (which means nothing as there are thousands out there) was charging the people I am currently guiding 20% of the debt owed! Wow!!

And they operate like I have typically heard with others, they come up with a number that you pay into an account of sorts and when the pot gets large enough they say they go after accounts for you for settlement but as I mentioned they just look at the letters and see who offered what and then say “hey we got one taken care of for you and save you …..”!

In this companies specific case if they saved them 30% of the balance but they charge 20% for their fees, so they saved you 10%?????????

 

Typically the “bigger the company” which they like to brag about to you the worse you are treated or once the agreement is solved the phone calls do not get returned like before you signed up with them as they have moved onto the next person/revenue/paycheck.

I don’t want to go into more stories but I typically help get an average of 60-70% of a discount and the absolute worst I have ever helped people with was 50% discount.

But that will be the difference between uneducated people who are basically just looking to get as many people into their program and take the deal offered to them as opposed to someone who teats your money as if its theirs and fights for every dollar as there is a BIG difference between a company’s profits and a family.

 

Feel free to contact me at wayne @ waynethecreditguy .com

(remove all the spaces, I just did that to avoid getting spammed)

 

If you have any questions and PLEASE be as detailed as possible with your situation, such as what your current credit score is, are you on-time with payments or late and if late how late and amount owed

 

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.

 

NOTE: 

I just felt the need to point this out but if i believe that after a conversation with someone after being told their complete situation and i feel that filing bankruptcy is the best option for them then i will suggest that and then discuss  all the pros and cons that come along with that choice.

And i have done that, but of course while i have to make the standard disclaimer that everything i discuss with people cannot be construed as financial or legal advice i will put myself in their situation and then let them know what i would do if in that position and give them the information and then they can make their own choices based on that data.

 

****  UPDATE:

When I was getting ready to post this blog this morning a perfect example just got emailed to me. A lady was told by a bankruptcy attorney she can’t file Bankruptcy 7 because her husband (the household) makes too much money.

Per his advice which baffles me greatly as the attorney should have asked these questions at the start since it’s not rocket science and now he is not taking/returning her calls. But now gave her advice that puts her in an even worse position now so will be talking to her later today to give her all her current options for her to decide what they think is best for their family.

I have said this for YEARS…. Just because your first name is “DR.” or last name is “ESQ.” does not mean they know EVERYTHING! It truly drives me nuts.

I learned a long time ago to doubt everyone and get several opinions, make sure I understand them and then see what is best for me and I use that to help people like you reading this and I hope it does.   =)











What the Debt Settlement companies DON’T SAY

I have received a lot of responses concerning the debt settlement blogs I have written which surprised me a bit. It was nice to hear people thanking me for the detailed information and tell me how it helped them understand more.

With all of the conversations I have had I noticed a few things that seem to be a pattern and I wanted to go into a little more detail on it for everyone.

While the below will apply to any company regarding debt settlement after these conversations this specifically applies to National Debt Relief, Credit Associates and Freedom Debt Relief as these were the three main companies people inquired about.

What I have noticed is a lack of transparency and only telling you half-truths or not the full story.

Now is that because they are doing it on purpose because let’s face it, whatever their “title” is they tell you at the end of the day they are there to get you signed up so they are sales people. While there is NOTHING wrong with that the behind the scene issues is what can get you.

If you remember the recent Wells Fargo scandal with employees signing people up for credit cards and lines of credit without their consent there were financial incentives when employees meet certain goals.

So one of the things people have a great concern when calling these companies looking for relief is their credit score. A good majority of people I have talked to do not necessarily have credit problems or really need credit repair, it’s just that their credit card bills have snowballed into a mountain and it’s too overwhelming and they see so relief in sight anytime soon.

These representatives seem to be steering people calling into what is best for the company and not the person calling. Now is that all representatives…. Of course not but these are the stories I am hearing we be wary.

If you are looking at trying to get the credit card companies to drop their interest then you are looking at what is called a Debt Management Program. Anything else will destroy your credit score. Now while there may be programs out there that are different that settling debt for pennies on the dollar the only way that can happen is for you to damage your credit score.

How much damage is hard to calculate as a credit score and report is like a fingerprint, every fingerprint is different thus the damage will be different for each person.

Credit is so specific that as I tell people who contact me that unless I can see the exact credit report for them that they are seeking advice on I can only give them general advice and I HATE giving general advice for someone with a specific goal they are trying to accomplish.

Andi am hearing that people are feeling like they are being double-talked into something they are not 100% sure is best for them.

One thing I have to point out was a story that still sticks in my head and it was from someone who spoke to National Debt Relief, they told him that they could get his then credit card that he owed approx. $19,000 down 30% and save him almost $6,000 ($5,700 to be exact). Now what were they going to do? Basically not tell him that in a few months the credit card company he owed the money to they were going to wait a few months and then the company would contact them offering a settlement of 30%.

So what in the world did they do? In my opinion (and probably yours too) nothing. But welcome to the world we live in. He wanted to see if I could help and I helped him settle it for a total of $8,000.00 saving him $11,000.00

As I have mentioned in past blogs at the end of this will be my email address, broken up to prevent me getting killed with spam but feel free to contact me. While seeing the credit report will help me assess you situation the standard disclaimer is I’m not dispensing legal or financial advice but I will look at your report and tell you what I would do in your situation with my 13 years of hands on experience in this industry.

When calling looking for relief of the financial sorts do not just jump on board with a company and be what the sales term is called as a “one call close”.

Get the information from these companies, think about it, make a pros and cons list. Good question for you reading this is the companies you called did they give you a pros and cons of what they are trying to sell you? if they didn’t then do not think for one second that there isn’t a plus and minus for you with what you are trying to do.

This like most things is a game of leverage, be smart always have a pad and paper with you to write what these companies are telling you (even if you bullet point it) as you will not remember what they tell you as it is your first time hearing this information and studies show most people only retain 15% of new information given to them. This way you now have reference to go back and if you contact someone like me your able to provide me the inforaiton they told you in order for me to provide you an educated opinion on the specific matter in question.

My email is below if you want to email me but please provide me a solid summary in bullet points to what is owed what you hope to accomplish and any additional information you may think I need.

 

Best of luck!

Wayne

 

 

* Want to learn more about how the credit system works?

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EMAIL:             Wayne @ wayne the credit guy.com    (REMOVE ALL THE SPACES)











National Debt Relief Blog Part II

 

Continued….

 

So I popped a spam email I use into their system to see what they would send me. In business it is called an Email “Drip System”. It is designed to keep showing up in your email box to remind you of your conversation with them

The first email and what always seems to be in their emails is check out our 15,000 reviews!

Now I’m not saying that the reviews are fake as there is really no way of knowing that but I could not tell you how many times I get calls from companies who say they can help me get 5 star reviews from verified profiles with their computer system bots. When I first got that call that floored me, but hey, it is the digital age.

And these reviews are probably real as most people only make 1 phone call, get the good sales pitch and they are emotionally drained from being overwhelmed with debt so if someone tells you that they can stop the phone calls and save you thousands and the customer doesn’t know or understand what is actually occurring or the future ramifications of what is being done as they are non the wiser. All they know at the moment is someone can help them save thousands which is a wonderful thing.

But if you’re reading my blogs then you’re the type who likes to do some research and not believe everything you read so I applaud that. I can’t count the amount of times I have told a sales person I am not a one call/time close. I need to absorb the new information given to me and then think and make a decision not jump into one on an emotional decision.

So approximately a day or so later I get The 1st email basically says look at all the people that love us. One quote in the email said:

45 years to pay off my debt but with the Debt Reset Program I’m able to pay it off in about 2 years“.

 

Yeah…. I’m going to have to call BS on that one for a few reasons. First is credit cards (or at least all the ones I have seen) will say pay the minimum only and will all be paid off in 28 years and 36 years was the most I have ever seen.

 

The 2nd email came about 3 days later saying what would you do with and extra $6,296 as that’s what they say clients save overall. What I mostly do not like about companies (just a personal feeling on how to conduct business) and of course after the fluff of the email they tell you to call their “Debt Counselors” but in the calls I have made all I observe  see and hear is a sales pitch and I have no skin in the game and don’t care if you work with them I am just pointing out what someone with years of experience hears.

 

The 3rd email approximately 3-4 days after # 2 reminds you to check out how many people like them.

Nothing wrong with that just trying to keep them in your mind and to keep you thinking about making a decision. And email any company would use.

 

NOW..

 

The 4th email is where they in my opinion fall into the same category as CREDIT ASSOCIATES, so let’s look at this one in detail:

Your credit score isn’t quite as important as you’ve been told it is. (THIS IS HOW THEY START IT)

 

If one of your main concerns about enrolling in a debt relief program – which can save you thousands of dollars and years of stress – is potential impact to your credit score, I have some news for you.

 

– Debt relief programs will only impact your credit score temporarily.

– Remaining in debt is much worse for your long-term credit.

– You could waste thousands of dollars on interest charges every year.

– Credit score only matters when you’re trying to take on more debt (a new loan, house, etc.) – but you’re trying to get out!

 

I do not want to attack each line in this as I could have a field day on how they are trying to manipulate you in this one.

And I do not want this to be a sales pitch for me. So Let’s just say credit is the cornerstone of the American economy, so yeah…it’s kind of important since that’s what EVERYONE ASKS you.

It’s now being used for car insurance, military promotion and job promotion, so again I think it is rather important and for them to make that last statement is literally just a flat out lie.

** So one thing I always tell people is if a company has to lie to get you to hire/work with them then how good or comfortable to do you feel about that?

 

So of course they lost me once I received this email and then started to work on this blog.

The 5th email they finally point out that they charge between 18-25% of the debt you owe. Call me crazy but I think that would be something to be discussed at the start and then point out how working with them will affect your credit.

Again…. Kind of important information that should be at least in the first two emails, correct?

So a little detail, if the account has been let go (6 months of no payment) then the account has been charged off. If it hasn’t and you’re looking to just get a company to help lower the interest rates as when you called they said no to you.

 

The final email gives some summary bullet points and I get a bit of a kick how they say in # 7:

  • Transparency is important to us

 

After reading the above I wrote and mentioned sort of points out that to me at least “Transparency” seems to have a different definition to me than it does them.

 

When I look at their “Accreditations” they are all paid memberships so they are not a nonprofit company. And just like with me and my business I will not be a paid member of an organization so I can post their logo and name to make it look like I am here to help a consumer.

 

So as I tell everyone remember “Buyer Beware”, can they help you based on where you are now…. I’m sure they can and if they save you $100 aren’t they complying with the contract? Just like with many scam credit repair companies out there, if they improve your credit from when you started it is a success but would you consider 5 points a success? The legal contract you signed would.

 

BUT

Are they helping you as much as they can? Probably not, after all it’s not your money they are negotiating is it?

 

REMEMBER—  KNOWLEDGE IS POWER!

 

 

Feel free to contact me at wayne@waynethecreditguy.com if you have any questions and PLEASE be as detailed as possible with your situation and ask about my book “The Real World of Credit” to learn A LOT more of how the system works if you are thinking of fixing your own credit.

 

Understanding how the system works is half the job!

 

 











National Debt Relief Investigation and a story (PART I)

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      wayne@waynethecreditguy.com