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I Got Cancer and My Credit Went South So I Went With First Choice Debt Resolution. – S

“Dear Steve,

I had pristine credit for 10 years and then got cancer in 2008 and also lost my job that same year so at that point I was unable to keep up with my credit cards. I had unfortunately been in a really bad relationship for 5 years and I allowed that person to run up credit card balances. I kept up with all of this for many years and in 2008 when I went through the cancer/job loss I knew I’d not be able to keep up much longer. I went through all of my savings to keep up and thankfully was able to get a job in Jan 2009. At that point, I decided that I was in over my head and wanted to do the debt settlement route. I just couldn’t keep up anymore.

So I UNFORTUNATELY chose First Choice Debt Resolution. UNFORTUNATELY doesn’t fully cover my dislike. At first they were very attentive and involved. They even settled 2 of my smaller accounts within 6 months. As time went on, they got less and less attentive. DUH, they already had my $3000 in fees. At that moment I wasn’t really worried about it because I didn’t have extra money to use in a lump sum, so I kind of had to just keep waiting until the Global Services account filled up.

Earlier this year, I was served a lawsuit by AMEX. I wanted to get that all settled up before the court date because I really didn’t want to go through all of that. First Choice “negotiated” for me and got an okay settlement for the balance- at 40%. As time went on, they basically stopped helping me completely. I emailed 3 of the people I had been working with- they had all been fired. WTF?! The new people claimed they would be helping me….which they mildly did for about 2 days and then again- no responses to emails whatsoever.

At this point I have about $2800 solid that I have saved and would rather NOT have to do lump sums right now, but I also got served by Citibank and have a case in January, so I’d also like to finish this off as well.

I decided I’m going to have to do this all by myself now. I believe that I could get a settlement of 25% or less of the balance on BOTH my Citibank and the Bank of America- who hasn’t sued me (yet??). I am unemployed; I have zero assets; and do not have the money I have completely in my savings.

I figure they can take what I am offering- or NOTHING! They can’t garnish wages I don’t have, they can’t put liens on houses and cars and accounts I don’t have either- right?

I have read your article about getting refunds from these useless Debt Settlement companies. I’m feeling overwhelmed, but I REALLY need that money back a.s.a.p! My question that wasn’t fully answered in that article was: If they did help me with about 1 yrs worth of “help”, am I able to still request a full refund, or what should I do in that case? Does all of this really happen pretty quickly (the getting refund part?). I can’t find tons of info on First Choice Debt Resolution…..

I’m also kind of nervous on how to approach the negotiating process with the 3 accounts that I still have. The one that I know is with a law firm for sure, am I supposed to directly contact them? I have no idea what is going on with the other accounts. I haven’t gotten served by anyone else, but I’d rather finish all of this off before I am!

Advice?

Thanks!

S”

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The Answer

Dear S,

You’ve already taken a credit hit with the debt settlement approach so why not just use the protections that the law offers you to stop all creditor suits, prevent creditor calls and eliminate your debt in months? That process is called bankruptcy. For about $1,500, or less if you qualify for pro bono help you could eliminate all of your debt in about three months.

Considering your health situation it seems the benefit of bankruptcy would be significantly positive. Bankruptcy would immediately eliminate the collection stress and stress of the debts. There are trainloads of data that show the correlation between stress, illness and recovery. And those studies show that your health and recovery are negatively impacted with increased stress.

My vote would be that you should proceed with your refund request and at the same time you should meet with a bankruptcy attorney.

Bankruptcy is also the logical and prudent path, not only because of your health, but also because you have no expectation of returning to the same level of employment. Entering into payment arrangements with your creditors with uncertain income would be unwise. Besides, we need to eliminate this debt and give you the best chance to be able to feed and shelter yourself.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

I Got Cancer and My Credit Went South So I Went With First Choice Debt Resolution.   S
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If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • S3

    So it does disqualify me for Federal school loans and Pell grants?

  • S3

    Also, I don’t know if I did add this before- but I am a current student, and am worried that if I file bk, I will no longer be eligible to receive any Pell money or Federal loans. Does anybody know anything about this?

  • Steve Rhode

    Good news is that bankruptcy does not disqualify you for private student loans and the government has a great site that will show you what insurers are available for you when you are ready for health insurance. Because of health care reform you will no longer be excluded for your pre-existing condition. The site is HealthCare.gov.

    I just saw you are in California. Here is the link for the pre-existing insurance plan in California.

  • S3

    Also, I don’t know if I did add this before- but I am a current student, and am worried that if I file bk, I will no longer be eligible to receive any Pell money or Federal loans. Does anybody know anything about this?

  • S3

    Hi Damon,

    Tell me what other pieces of information that could/would help you better understand my circumstances? I am in California, I am 30, I am unemployed, single and have no children. I am looking to move to Arizona and would like to find employment there and continue my studies, but now I am worried that might not happen if I file a BK? I do not have health insurance, so anything I do/have is out of pocket. I am thankfully okay right now, and I’m hoping if I get a job, I can tag onto their insurance plans.
    What other info would help for your advice/guidance?

  • S3

    Hi Michael,

    Yes, you’re correct. I have no home or car, so those do not show up in my credit history. However, I have had 3 different personal loans, and all 3 of those are pristine and paid off. I had pristine credit for 10 years as well, and it all went down hill starting in 2008.

    I *really* wanted to do it the right way, but I am just now seeing that I don’t know if that is possible now. I am healthy right now (I completed the treatment and everything in 2008, nobody will privately insure me because of that!). I pay out of pocket for my medication and all blood work.

    I really want to find a job, and I’m terrified that I won’t get one either way- from this debt settlement garbage or through a bankruptcy. I also am a student (if I did not mention that before) and I do rely on federal student loans. This also terrifies me as far as the bankruptcy goes. I’d have to spend my cash on a lawyer now, and that upsets me also. I don’t know how the Pro Bono lawyers work and how likely I’d qualify?

  • S3

    Steve,

    I have about $17000-$18000 left overall. I paid off 3 of them already and I feel so mad that I may have wasted that. I paid about $5k so far overall. I WANT to get a refund from First Choice, and I think I paid them about $2500-$3000. I’d LOVE to just start over, but it REALLLLLLY scares me. I just called the attorney and even as bold and serious as I was, they wouldn’t budge under 75%, so I am feeling like maybe following your path could be for the best. I’m extremely scared though. :(

  • Damon Day

    Hello S,

    I also agree with Michael and Steve. Michael actually hit my biggest concern right on the head at the end of his post. If you still have ongoing medical issues that might not be covered and there is nothing a judgment creditor can do to collect right now. The best move would be to forget about the debt, focus on healing and living life. You do not want to prematurely pull the trigger on a BK if you are going to possibly have large medical bills that your insurance might not cover.

    Also I would be more concerned about your long term prospects. If your earnings are down and not likely to pick up, and you have no savings and no retirement, then right now cash is king and you need to protect as much as you can. Given your situation I also agree with Mike and Steve that a BK will not likely be worse on your credit than moving forward with settlement.

    You mentioned that if you were going to file BK you wish you would have done it at the beginning. I agree, and you have found one of the biggest and rarely talked about problems in the debt settlement industry. When consumers get financial advice from a sales person, they are typically not equipped to advise you on the appropriate actions to take. They are not looking at overall life circumstances and taking a macro view of your situation. They typically only deal with the here and now, because that is what they are paid to do and what they are told to do. They say, I can cut your payment down and have you out of debt in X number of years, how does that sound? They don’t take the time to figure out if you should be doing something else.

    I don’t know your exact circumstances at the time, but given the little information you shared. If a client came to me that was recently diagnosed with cancer which would have an unknown effect on the client. The client had been out of work for some time and had only just gotten a new job. There is no way on this earth I would have a client enroll in a settlement program and just hope for the best.

    You hit the nail on the head when you said, they already got your 3,000 and they stopped working with you very much. That sales person was looking at the 3,000 and not looking at the fact that settlement was not the right move given your situation. I am sure the sales person also played on your feelings about BK. They use your own emotions against you, and try to make you believe they have the magic pill that will do everything you want.

    I know hindsight is 20/20 but other then going after them for a refund, the only thing you can do is move forward and make the right decision for you now and in the future.

    When you ask for a refund, I would use the fact that you were sold a program that you should not have been sold given your circumstances. I don’t care if they settled a few debts for you. If your situation was such that it was so uncertain that you were not likely to succeed and they didn’t tell you that, then I would consider that fraud in my book. There are certainly no guarantees in life and sometimes clients situations change. However, if they should have known from the beginning that you were very likely to fail, then that should have been disclosed in detail. If you still made the decision to move forward knowing it was a long shot, then that is fine, but if they sold you a fairy tale and didn’t give you the information you needed to make an informed decision then that is another thing all together. I would go after a full refund. They really did a number on you leading you down a path that not only already cost you thousands of dollars but created tremendous and undo stress along the way.

    Had they been honest and upfront with you, you would have filed BK and now you would be almost 2 years removed from the filing and well on your way to rebuilding your financial life. In my opinion, the least they owe you is all of your money back.

    Hope that helps.

  • http://DamonDay.com Damon Day

    Hello S,

    I also agree with Michael and Steve. Michael actually hit my biggest concern right on the head at the end of his post. If you still have ongoing medical issues that might not be covered and there is nothing a judgment creditor can do to collect right now. The best move would be to forget about the debt, focus on healing and living life. You do not want to prematurely pull the trigger on a BK if you are going to possibly have large medical bills that your insurance might not cover.

    Also I would be more concerned about your long term prospects. If your earnings are down and not likely to pick up, and you have no savings and no retirement, then right now cash is king and you need to protect as much as you can. Given your situation I also agree with Mike and Steve that a BK will not likely be worse on your credit than moving forward with settlement.

    You mentioned that if you were going to file BK you wish you would have done it at the beginning. I agree, and you have found one of the biggest and rarely talked about problems in the debt settlement industry. When consumers get financial advice from a sales person, they are typically not equipped to advise you on the appropriate actions to take. They are not looking at overall life circumstances and taking a macro view of your situation. They typically only deal with the here and now, because that is what they are paid to do and what they are told to do. They say, I can cut your payment down and have you out of debt in X number of years, how does that sound? They don’t take the time to figure out if you should be doing something else.

    I don’t know your exact circumstances at the time, but given the little information you shared. If a client came to me that was recently diagnosed with cancer which would have an unknown effect on the client. The client had been out of work for some time and had only just gotten a new job. There is no way on this earth I would have a client enroll in a settlement program and just hope for the best.

    You hit the nail on the head when you said, they already got your 3,000 and they stopped working with you very much. That sales person was looking at the 3,000 and not looking at the fact that settlement was not the right move given your situation. I am sure the sales person also played on your feelings about BK. They use your own emotions against you, and try to make you believe they have the magic pill that will do everything you want.

    I know hindsight is 20/20 but other then going after them for a refund, the only thing you can do is move forward and make the right decision for you now and in the future.

    When you ask for a refund, I would use the fact that you were sold a program that you should not have been sold given your circumstances. I don’t care if they settled a few debts for you. If your situation was such that it was so uncertain that you were not likely to succeed and they didn’t tell you that, then I would consider that fraud in my book. There are certainly no guarantees in life and sometimes clients situations change. However, if they should have known from the beginning that you were very likely to fail, then that should have been disclosed in detail. If you still made the decision to move forward knowing it was a long shot, then that is fine, but if they sold you a fairy tale and didn’t give you the information you needed to make an informed decision then that is another thing all together. I would go after a full refund. They really did a number on you leading you down a path that not only already cost you thousands of dollars but created tremendous and undo stress along the way.

    Had they been honest and upfront with you, you would have filed BK and now you would be almost 2 years removed from the filing and well on your way to rebuilding your financial life. In my opinion, the least they owe you is all of your money back.

    Hope that helps.

    • S3

      Hi Damon,

      Tell me what other pieces of information that could/would help you better understand my circumstances? I am in California, I am 30, I am unemployed, single and have no children. I am looking to move to Arizona and would like to find employment there and continue my studies, but now I am worried that might not happen if I file a BK? I do not have health insurance, so anything I do/have is out of pocket. I am thankfully okay right now, and I’m hoping if I get a job, I can tag onto their insurance plans.
      What other info would help for your advice/guidance?

  • Michael

    S,

    The amounts and terms that you should use as a settlement target with the remaining debts you have will vary. Active litigation is rarely settled for 25%.

    From reading your question and comment reply, I can see that you are emotionally committed to seeing your original intent of settling through to the end. I respect that commitment. I also see Steve’s point of focusing on the numbers and health concerns and letting that guide your decision.

    Your credit and the ability to obtain fair loan products in the future would be better served by filing bankruptcy at this point. The reason I say this is due to some detail you have provided (though admittedly limited).

    You do not have a car, therefore no car loan showing positive history.
    You do not have a mortgage, therefore no payment history established as a positive with regard to a home.

    You have very low credit diversity.

    You had multiple revolving consumer credit accounts that all went south in order to do settlement. If the bulk of your recent credit history (last 3-5 years) is made up of the accounts that are now charged off, it will likely take 24 or more months AFTER your final settlement is completed and reported as zero balance due, for your credit to BEGIN to recover.

    Compare this to filing chapter 7 where after discharge, consumers can qualify for a home purchase using FHA underwriting after 2 years, obtain government backed student loans after 3 years, finance a vehicle within 12 or so months….

    These realities put you in the same spot 24 to 36 months from now.

    One of the options; Settlement, will be more stress filled, cost more in dollars and time.
    The other option; Bankruptcy, will cost less, remove stress and free up time.

    My only concern from a dollars and sense perspective is whether your medical issues have stabilized or if you will be continuing treatments. If there are additional medical expenses that will not be covered, I would suggest holding onto what little funds you have, wait for your health to stabilize, and then determine your next best step.

    Best of success to you, your health and your finances!

  • Michael

    S,

    The amounts and terms that you should use as a settlement target with the remaining debts you have will vary. Active litigation is rarely settled for 25%.

    From reading your question and comment reply, I can see that you are emotionally committed to seeing your original intent of settling through to the end. I respect that commitment. I also see Steve’s point of focusing on the numbers and health concerns and letting that guide your decision.

    Your credit and the ability to obtain fair loan products in the future would be better served by filing bankruptcy at this point. The reason I say this is due to some detail you have provided (though admittedly limited).

    You do not have a car, therefore no car loan showing positive history.
    You do not have a mortgage, therefore no payment history established as a positive with regard to a home.

    You have very low credit diversity.

    You had multiple revolving consumer credit accounts that all went south in order to do settlement. If the bulk of your recent credit history (last 3-5 years) is made up of the accounts that are now charged off, it will likely take 24 or more months AFTER your final settlement is completed and reported as zero balance due, for your credit to BEGIN to recover.

    Compare this to filing chapter 7 where after discharge, consumers can qualify for a home purchase using FHA underwriting after 2 years, obtain government backed student loans after 3 years, finance a vehicle within 12 or so months….

    These realities put you in the same spot 24 to 36 months from now.

    One of the options; Settlement, will be more stress filled, cost more in dollars and time.
    The other option; Bankruptcy, will cost less, remove stress and free up time.

    My only concern from a dollars and sense perspective is whether your medical issues have stabilized or if you will be continuing treatments. If there are additional medical expenses that will not be covered, I would suggest holding onto what little funds you have, wait for your health to stabilize, and then determine your next best step.

    Best of success to you, your health and your finances!

    • S3

      Hi Michael,

      Yes, you’re correct. I have no home or car, so those do not show up in my credit history. However, I have had 3 different personal loans, and all 3 of those are pristine and paid off. I had pristine credit for 10 years as well, and it all went down hill starting in 2008.

      I *really* wanted to do it the right way, but I am just now seeing that I don’t know if that is possible now. I am healthy right now (I completed the treatment and everything in 2008, nobody will privately insure me because of that!). I pay out of pocket for my medication and all blood work.

      I really want to find a job, and I’m terrified that I won’t get one either way- from this debt settlement garbage or through a bankruptcy. I also am a student (if I did not mention that before) and I do rely on federal student loans. This also terrifies me as far as the bankruptcy goes. I’d have to spend my cash on a lawyer now, and that upsets me also. I don’t know how the Pro Bono lawyers work and how likely I’d qualify?

      • http://GetOutOfDebt.org Steve Rhode

        Good news is that bankruptcy does not disqualify you for private student loans and the government has a great site that will show you what insurers are available for you when you are ready for health insurance. Because of health care reform you will no longer be excluded for your pre-existing condition. The site is HealthCare.gov.

        I just saw you are in California. Here is the link for the pre-existing insurance plan in California.

      • S3

        So it does disqualify me for Federal school loans and Pell grants?

  • Steve Rhode

    S,

    You would be incorrect that debt settlement is better than bankruptcy
    when it comes to your credit. It’s easy to rebuild your credit and
    you’ll have to do that anyway with the pounding it’s taken in the debt
    settlement route.

    There is no sens to perpetuate the wrong path by continuing it.
    Seeking protection under bankruptcy at this point is the logical and
    prudent solution.

    As far as what the creditors would accept, all you can do is try. But
    if you don’t try to take some steps to end this situation now with
    bankruptcy, how are you ever going to preserve what little money you
    have left and resolve the debt?

    How much debt do you have left?

    I assumed that when you said you had $2,800 in cash and were looking
    for 25% offers that it was around $11,000 total. is that right?

  • S3

    Steve,

    Thank you for the quick response! The reason I have hesitated using bankruptcy is that I feel the debt settlement overall isn’t nearly as bad as bankruptcy in the near future for me. Like, in 3 years, I think that a BK would still look way worse than just settling. I feel like I have done all of this work and sacrifice and worry that I should have just done a BK to begin with and to do it now that I’m not horribly far from finishing all of the settling would have made everything else a total waste.

    I wondered if it is possible to do the suggestion I put in my original email as far as offering very low amounts considering my situation. If those are possibilities…?

  • S3

    Steve,

    Thank you for the quick response! The reason I have hesitated using bankruptcy is that I feel the debt settlement overall isn’t nearly as bad as bankruptcy in the near future for me. Like, in 3 years, I think that a BK would still look way worse than just settling. I feel like I have done all of this work and sacrifice and worry that I should have just done a BK to begin with and to do it now that I’m not horribly far from finishing all of the settling would have made everything else a total waste.

    I wondered if it is possible to do the suggestion I put in my original email as far as offering very low amounts considering my situation. If those are possibilities…?

    • http://GetOutOfDebt.org Steve Rhode

      S,

      You would be incorrect that debt settlement is better than bankruptcy
      when it comes to your credit. It’s easy to rebuild your credit and
      you’ll have to do that anyway with the pounding it’s taken in the debt
      settlement route.

      There is no sens to perpetuate the wrong path by continuing it.
      Seeking protection under bankruptcy at this point is the logical and
      prudent solution.

      As far as what the creditors would accept, all you can do is try. But
      if you don’t try to take some steps to end this situation now with
      bankruptcy, how are you ever going to preserve what little money you
      have left and resolve the debt?

      How much debt do you have left?

      I assumed that when you said you had $2,800 in cash and were looking
      for 25% offers that it was around $11,000 total. is that right?

      • S3

        Steve,

        I have about $17000-$18000 left overall. I paid off 3 of them already and I feel so mad that I may have wasted that. I paid about $5k so far overall. I WANT to get a refund from First Choice, and I think I paid them about $2500-$3000. I’d LOVE to just start over, but it REALLLLLLY scares me. I just called the attorney and even as bold and serious as I was, they wouldn’t budge under 75%, so I am feeling like maybe following your path could be for the best. I’m extremely scared though. :(

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