Posts Tagged ‘debt settlement’

One reader’s experience settling $125,000 for $25,000.

Sunday, November 15th, 2009

Dear Kenny,

Thank you for your book! It was a huge turning point for me. It gave me clear direction when I really needed it, when I was lost in a thick dark jungle of credit card debt.

I had heard, mostly on the radio, that credit cards could be settled for far less than I owed, but just how? When I called some of those companies that advertised on the radio, they wanted huge fees and were talking about “consolidating” and having me make payments for at least 5 years — some even wanted me to deposit money with them! It was as if they wanted to be in control and I did not trust them. I also scoured the internet where I got plenty ‘bits and peices’ which seemed to tell only part of the story, but I couldn’t find any organized information.

What I needed was a comprehensive plan which would guide me, a plan coming from a source that didn’t want huge fees and commissions.
Then, thank God, I found your book. Just as the title says, I could do it myself! You were articulate and caring enough to put your experiences in writing, telling your story with all the twists and turns and the pitfallls and victories.

Thanks to your book, I didn’t have to go through the “Scary Forrest” all by myself because you had already been through it. You shared with me what you had been through, and it was not that bad. You guided me with critical intelligence and told me what to expect and to look out for, briefing me on so many of the “bluffs”, “rehearsed lines” and other tactics that the debt collectors use to intimidate. As a result, I was confident and unntimidated when going through the entire process, all the way to settlement.

I am happy to tell you that I just settled $125,000 of credit card debt for about 20% of my balance — yes, that’s 20 cents on the dollar!

Thanks for sharing Kenny.

Harold W. , Los Angeles. CA

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I just settled another credit card, for 22%

Wednesday, November 4th, 2009

I SETTLED ANOTHER CREDIT CARD ACCOUNT

Read-on to hear how I did it and learn some new
techniques that may help you in your own settlement negotiations

If you’ve ever put your email address into a website, you have probably noticed that you get follow-up emails every day continuing to pitch you products and services.

Conversely, you don’t hear from me very often. My last set of emails was in July and August to tell you about “The Do-It-Yourself Bailout” Seminar in Los Angeles.

The reason I write to you so infrequently is that I like to have something new to say. Today, I am writing to tell you that I SETTLED ANOTHER CREDIT CARD ACCOUNT.

In “The Do-It-Yourself Bailout” I tell the story of how I settled five of my seven credit card accounts. At the time of writing, I still had two open accounts, “Yellow Bank” with a $17,500 balance and “White Bank” with a $12,500 balance. With added interest during the months I was not making payments, the balances increased to $22,500 and $15,000 respectively.

Last Friday, I settled the Yellow Bank account for only 22%. That’s right, 22%!

If you’re still working on settling your own credit card accounts, read on because there is new information here based on experiences I’ve had since writing the book. Much of this new information will be expanded in a second printing of the book, but as a reader of “The Do-It-Yourself Bailout” I’m sharing it with you first.

For many months, Yellow bank was offering to settle for 40%, or about $8000 when the balance of the account was around $20,000. I didn’t have $8000 and was offering $5000, which they consistently refused with the patent answer, “we have never gone that low and never will.” At the time, a $5000 settlement would have been 25% of the current balance.

After about six months the account went into charge-off and I began speaking with a collection agent working on behalf of the bank. The balance had increased to its current level and 40% was now $9000. I still offered the $5000 and they still refused.

Over the next few weeks, the collection agent called three or four times a week. Sometimes I would speak to him. Others I would not. In all, the conversations were the same. They offered 40%. I offered $5000.

Just last Thursday, as I was out looking for a Halloween costume, I had something very new happen. Usually, whenever a collection agent would call me and leave a message, the message would never contain details. They would leave their name, company and phone number and ask me to return the call. That was it. This time, he actually left a message saying he had “good news.” It occurred to me that it might just be a ploy to get me to return his call. In the end, I figured if it was a ploy, we’d just have the same conversation and leave it at that. I might as well see if he really did have good news.

I phoned back and, sure enough, he said he got approval from the bank to accept my $5000 offer. A 22% settlement.

Of course, you know what I asked for next. A settlement agreement in writing. It was already Thursday afternoon, October 29, and he said the one condition of this settlement was that I had to make the payment during October so it could go on the bank’s books for the month.

I said that if they could get me the letter that day, I could overnight a certified check. Or, if they got me the letter the next day (Friday, October 30), I could do a wire transfer.

The letter came in at 8:15 a.m. on Friday morning, but there was a catch. They said they needed the payment by 11 a.m. Central Standard Time, which is 9 a.m. Pacific Standard Time where I am. I said it would be impossible. I couldn’t do a wire transfer until my bank opened at 9 a.m., which would be past their deadline. They suggested doing a check-by-phone. I had never done a check-by-phone before and, frankly, I didn’t feel comfortable giving a collection agent my primary bank account number with nothing more than a phone authorization to make a withdrawal. I wanted to move the $5000 into a temporary account, and I had to go into my bank to do it.

They then launched into the “sell” again. This offer is only good today. On Monday it will be 40% again. Etc. etc.

There was a lot of pressure here and I knew they were trying to get me emotionally off balance so I would make the check-by-phone payment right then and they would get their money while I was still on the phone and not give me the chance to back out.

I wasn’t having it. I said, “what if I wanted to send this settlement agreement to my attorney to look over before making payment? He doesn’t get into his office until after 9 a.m. Would you tell me that I had to send in a payment on a business deal without the benefit of having my attorney look over the documents? I’m sorry,” I said. “I’m ready, willing and able to make this payment, but I do not like receiving a letter at 8:15 a.m. and hearing that I must make a payment inside of 45 minutes before the start of business, when my bank isn’t open, my attorney isn’t available, and that if I don’t comply the deal is dead. It’s a red flag for me and I’m not going to fall to the pressure.”

So they did! The collection agent put a manager on the phone who said, “let me call the bank and see if I can extend the deadline.” And guess what? I got two extra hours, which allowed me to go to my bank, move the money between accounts, satisfy my concerns about a check-by-phone payment, and close the deal on my terms without fear or anxiety.

Now I can say that I have reduced my credit card debt from $212,000 to $15,000 and saved almost $133,000!

I hope “The Do-It-Yourself Bailout” has been working for you, both in your actual settlement negotiations, and in releasing yourself from the pain, fear and stress of debt.

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Do you need a bankruptcy attorney?

Monday, April 13th, 2009

Today I had a reader ask me if she needed to hire a bankruptcy attorney to pursue negotiated settlements on her credit card debt. I thought it might be helpful for me to post the answer for everyone.

A bankruptcy attorney is not required to call your creditors and discuss a negotiated settlement, however, every person’s financial picture is different and debt settlement is just one option among many. I found that the attorney, if only for a one hour consultation, was very helpful in taking me through all of my options so that I could make the best choice for me. Also, in the settlement process itself, though I did most of the negotiating, I found it helpful to be able to say on the phone that I had a bankruptcy attorney, it seemed to make them take me more seriously, and I did like having someone to look over my settlement agreements since I had never done that before. While The Do-It-Yourself Bailout does give a very detailed picture of what the settlement process looked like from my perspective, I still say there is no substitute for professional advice. Many bankruptcy attorney will consult with you for an hour or two at a very reasonable fee.

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Credit Card Settlements – Top 5 Pointers

Thursday, January 29th, 2009

Negotiating settlements on credit card debt is one of the fastest ways to reduced large portions of your credit card debt permanently. Although there are many companies advertising on radio and television to work for you in settling your credit card debt, it is possible to do it yourself without paying additional fees or a percentage of the amount you save to a third party. Here are five major points to keep in mind when settling your credit card debt.

1. It will be necessary to stop making payments on your credit cards. Generally, it seems that most banks, credit card issuers and other lending institutions are not interested in negotiating settlements with customers who are current on their payments. In my experience, most people who could save many thousands of dollars through debt settlement will not do so because they do not want to miss payments for two reasons.

First, they are worried about their credit score. The fear of hurting our credit score is quite common. Though I do not suggest that you should toss all concern for your credit score to the wind, I do suggest that you include consideration of your credit score as one point in a larger context of your overall finances. Your credit score is a tool that lenders use to determine the risk in lending to you. In many cases, having a lower credit score does not mean that you cannot get credit, only that the credit will come at higher interest. If the amount you can save through debt settlement greatly exceeds the amount you will pay through higher interest on a future loan, than the benefit of settlement outweighs the drop in credit score.

Second, they fell somehow “wrong” in missing a credit card payment. This is because we, as individuals, are taught to attach a great deal of emotion to our finances general and negative emotion to debt and the inability to pay off debt. By separating all emotionality from debt, you will be more successful in your settlement negotiations, which brings us to point number 2.
2. Treat debt settlement like a business negotiation, because it is. There is nothing wrong with you for being in debt. You are not a failure or a bad person. Our world runs on debt, every dollar in your pocket represents debt (the U.S. government owes the Federal Reserve $1 for borrowing that note). You are encouraged to borrow for school, cars, clothes, gasoline, homes and business. And in today’s economy, many of us are turning to credit to meet the shortfall between our income and our monthly expenses. This is the world we live in and the businesses that have chosen to lend money understand that life happens and some of their loans will not be repaid in full. The work those numbers into their business model they same way retailers know that November and December will be big and January will have a lot of returns. So when a collection’s agent tries to intimidate you buy calling into question your integrity because you are asking to settle the debt for less than is owed, remind yourself that this is a business deal and in business everyone is trying to negotiate the very best position for themselves or their company. You are the C.E.O of your own corporation, the corporation of You, and You have the right to reach the best financial terms for the health of your company as any other C.E.O. of any other business. One of the primary functions of every corporate C.E.O is keeping an eye on the company’s debt balances and negotiating out of debts, writing off debts, or selling debts in order to raise capital. You read about it every day in the Wall St. Journal. And they never take it personally or tell themselves they are bad people for doing it. If you’re going to play the same game, put yourself on the same playing field.

3. Be patient. In my experience, it takes three to four months from the time you stop making your payments before the banks or credit card companies will begin making settlement offers and their first offers will be very high. My own first offers ranged from 85% of the total debt to 92% of the total debt. One company offered to settle for my entire balance less the interest that had accrued from the time I stopped paying (no savings there). Usually, around the six month mark the bank will be getting ready to send the debt to a collection agency who will pay them far less for it, sometimes as little as 5%. Before that happens, they’ll be motivated to settle with you for more than they’ll get from collections. Generally, I hear about settlements in the 30-35% range as common after six to eight months of negotiating. I’ve heard as low as 15% but rarely. One of the biggest drawbacks to using a service agency to negotiate your debt (even one of the honest few) is that they don’t have the same stamina as you. They are either working for a fee and what to put in as few hours as possible to up their hourly rate on that fee, or they are working on a commission and want to book it as quickly as possible. So when the first offers start coming in at 50-60%, they may tell you to take it because they book their fee and move onto the next client. You, on the other hand, will have the patience to wait two, three, four more months for a settlement in the 35%, maybe even 20% range because it means a greater savings to you.

4. Get your settlement agreements in writing. I cannot stress this enough. I had one bank offer me a settlement, which I accepted, then tell me to send them the money and afterward they would send me a statement saying the account was settled in full. I asked, “Would you pay for a house and then look at the loan agreement?” Of course not. I had another bank settle with me then send the balance (the amount written off) to a collection agency to try to collect on it. If I hadn’t had had a settlement agreement in writing I might have been stuck with that debt but with the agreement it went away.

5. Live your life. Too often we allow serious debt and the stress associated with it to define our lives, our relationships, our moods and our actions. Along with giving up the emotion attached to debt, give up the sense that you have to stop enjoying life just because you are having financial troubles. Smile, walk in the park, go to a movie, eat ice cream, love you spouse, laugh with your children. You have the debt, live with it, don’t let it live you.

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Why did I write “The Do-It-Yourself Bailout?”

Monday, December 29th, 2008

I am an independent film maker.  In April of 2007 I went into production on a small but warm film with only a $500,000 budget. I had a single investor and it was the culmination of a decade’s work to get the film made.  As we started shooting we went over budget, and at the same time my investor became ill and was hospitalized.  It was impossible to speak with him at the time about covering the over budget expenses and I was faced with the choice of shutting down production or financing the expenses myself.  I wound up putting $212,000 on seven different cards with six different banks.  Then my investor (and good friend) passed away.  I was left to service the debt myself at a time when I had no income because I was still responsible for finishing post-production on the film, so I couldn’t go look for other work.

My goal was to finish the film and sell it to recoup the money and pay off the debt. I continued making $3600 monthly payments with that intent.  However, when we had a finished film, the housing market had already collapsed, the credit collapse was just hitting, and more than a year later the film still has not sold.  I was running out of cash and desperately trying to stay current on my mortgage (adjustable rate and through the roof for much of this period).  

Though my investment was in a film, I believe there are many small business people who have found themselves in similar situations, taking out loans for their businesses and then finding that the economy isn’t supporting their business.  Perhaps many of these people, like me, also find themselves turning to credit just to cover basic living expenses.

I finally made the difficult choice to stop making payments on my credit cards for the first time in my life.  I’m 41 years old and was actually proud of my credit score that hovered near 800.  I then spent the better part of a year taking sometimes five calls a day from banks and collection agents on the many accounts.   It was a long, often frightening, sometimes painful experience that, in the end, not only successfully reduced my credit card debt from $212,000 to $30,000, but also taught me many lessons about how to separate myself from the emotional judgment that often accompanies debt.

In the end, I emerged a stronger person. I saved $115,000 in the negotiations.  I did this without using a “service,” many of which are getting very bad press these days as being scams or doing more harm then good for their customers.  I did it myself and tell the whole story in my book, “The Do-It-Yourself Bailout,” in detail. What the phone calls sounded like, how I got settlement agreements, I even put copies of the settlement agreements and amounts into the book.  I want others to have as much information as they can to work through their own debt.  

I believe, in this economy, that every individual has the right to consider him or herself the President and C.E.O. of their own corporation, the corporation of “You,” and the right to treat debt with the same attitude that businesses do. It is a commodity and the C.E.O.’s responsibility is to deal with it as best he or she can for the health and benefit of the shareholders, which in the corporation of “You” is the family.

I truly feel that my experiences will give people countless insights into how they can prepare themselves to navigate the process of negotiating through their credit card debt.

For more info on “The Do-It-Yourself Bailout,” please visit http://www.settleyourcreditcards.com

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