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I’ve Been Solicited by Wites and Kapetan to Restructure My Debt. – Margaret

“Dear Steve,

Ups and downs of commission-based salary coupled with tendency to put off tax debt to year end has resulted in 15 yr. accumulation of over 150K unsecured debt, most 3-9 months past due. Total equity less than 100K. Reduced income is allowing payment of mortgages and basic expenses, but little else. Have no more resources, have tried to work with creditors (hardship,etc, but only paying a portion of this debt.) Have talked to credit counselors, debt mgt people, etc. Read your articles, have appt. on Monday with bankruptcy attorney.

Have been solicited by a law firm (wites and kapetan) with an impressive website/resume who claim that they will restructure debt under their financial injury area. Claim a paralegal will negotiate with creditors immediately and that settlements will be based off original numbers, not inflated by fees/interest. Claim legal representation is included if necessary (local lawyer affiliated.) Their fees range from 15-20% of total debt, 1st 2 payments go toward their fee, the rest as debt is settled. Payments go into trust acct. in my name. Payment #s workable. What do you think?

Margaret”

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The Answer

Dear Margaret,

First off, thank you for reaching out to me and letting me offer my point of view.

Before we evaluate anything else I need for you to be honest with yourself about the life you expect moving forward. If you have reached your limit and can’t deal with this any more then a legal second change like bankruptcy makes more immediate sense. It also might make perfectly logical sense as well as the most affordable and most powerful way out of unmanageable debt.

Let’s just look at the numbers for a moment. The debt settlement or debt relief company is going to charge you about $30,000 in basic fees for settling your debt. If the law firm operates as others do then most of these fees will be paid early on and before you receive much, if any, benefit from the debt settlement services. This approach will leave you way out of pocket money you need, deeper in collections, and more likely to be sued by a creditor.

It may take you years to settle your debt and the majority of debt settlement clients never settle all their debt. Just take a look at “The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.”

The promise of local legal representation from firms in general has been hollow from many firms. What most people get is a call to a lawyer in their state, but not representation in court. For the most part you are told to represent yourself when you are sued.

And I can find no reason why you should pay any debt settlement company in advance. New rules went into force on October 27, 2010 which say that companies should collect a fee for settlement once they have actually settled the debt, not before.

Now, if we compare that approach with a legal fresh start like bankruptcy, which if you qualify for a Chapter 7 bankruptcy, will cost about $1,600 and eliminate your debt in a few months, stop all collections nearly instantly, and prevent you from being sued; which approach seems to make better sense?

I’m glad you already have an appointment with a bankruptcy attorney to go talk over your situation. That is excellent. And the reason it is great is because in order for you to make the best decision for your situation you need specific information about how the solution impacts you. The bankruptcy attorney will be able to answer all of your specific questions.

Another way to look at the situation would be after the meeting with the bankruptcy attorney, envision yourself advising a trusted friend in a similar situation. What would you advise them to do? Often times if we can take ourselves out of the equation we can make a better decision based on the facts, and not our emotions.

If, after meeting with the bankruptcy attorney, you are still uncertain about which path you should follow please come back and post an update in the comments. And I can’t emphasize enough how much a second opinion might be a benefit to you here. I would recommend you contact Damon Day, a fellow debt coach, and review your situation also with him to gain an additional perspective and clarity.

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!

Ive Been Solicited by Wites and Kapetan to Restructure My Debt.   Margaret
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I've Been Solicited by Wites and Kapetan to Restructure My Debt. - Margaret by

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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.
  • Steve Rhode

    Here is the FTC link. http://www.ftc.gov/opa/2010/10

    You may want to talk with one of the AACC companies that charges no advance fee and has pledged to put consumers first.

  • CMC

    Steve:

    You wrote the othe day “And I can find no reason why you should pay any debt settlement company in advance. New rules went into force on October 27, 2010 which say that companies should collect a fee for settlement once they have actually settled the debt, not before.”

    Where is this law or new rules. at the FTC Site.?? I was with Wites and Kapetan for a while but I quit their program. I was planning to go back into it.!! I am like $52,000 in debt. Had no Job for 2.5 years but recently got a “contract” work offer. (don’t know how long this will last but looks a prominent opportunity). Was recently sued by Chase on 22,500 debt. I will like to pay it all back. Looked at Bankruptcy but I do not qualify since I received a Settlement of 40K to repair a damaged home by a local builder. I don’t want to use this money to pay off my debts but to pay the damages to the home. What can I do.?? or How can you advise me on this.?

    Thanks,

    CMC

  • CMC

    Steve:

    You wrote the othe day “And I can find no reason why you should pay any debt settlement company in advance. New rules went into force on October 27, 2010 which say that companies should collect a fee for settlement once they have actually settled the debt, not before.”

    Where is this law or new rules. at the FTC Site.?? I was with Wites and Kapetan for a while but I quit their program. I was planning to go back into it.!! I am like $52,000 in debt. Had no Job for 2.5 years but recently got a “contract” work offer. (don’t know how long this will last but looks a prominent opportunity). Was recently sued by Chase on 22,500 debt. I will like to pay it all back. Looked at Bankruptcy but I do not qualify since I received a Settlement of 40K to repair a damaged home by a local builder. I don’t want to use this money to pay off my debts but to pay the damages to the home. What can I do.?? or How can you advise me on this.?

    Thanks,

    CMC

  • ComplianceSlave

    50% of your next 21 payments go to them too- ONLY USE A SETTLEMENT FIRM THAT TAKES FEES AFTER THE DEBTS ARE SETTLED!

  • http://www.ftc.gov ComplianceSlave

    50% of your next 21 payments go to them too- ONLY USE A SETTLEMENT FIRM THAT TAKES FEES AFTER THE DEBTS ARE SETTLED!

  • danel

    It takes one to know one. Therefore, you are.

  • danel

    Thank you Mr. Rhodes for your quick response. Now I have to respond to the arrogant reply from Meret

  • Steve Rhode

    Kind of interesting to notice that both your comment and the one from Yomoma came from the same IP address. Are you the same person or different people at the same company posting negative comments?

  • Yomoma

    im a deadbeat… i dont pay my bills and i cant read a contract.

  • Meret

    How can people be so dumb!!!

  • Steve Rhode

    Marga,

    You got off to a good start on the refund process but if you follow the process, to the letter, that I wrote, you have a better chance of success. See How to Get Out of a Debt Relief Program and Get a Big Refund.

  • Marga

    In February of this year we signed up to use the services of Debt Relief Center in California. They open an scrow account at Noteworld Servicing Center on our behalf. After several months and $3,882.15 in the hole and nothing was settled except the money we put in at Nioteworld is gone taken by Debt Relief we decided to discontinue the program. Now I asked them to return our money back. Debt Relief said that they cannot and will not return the money because we sign up for the program. I told them that I was not happy for their lack of services on our behalf. They DID not do anything. Mostly I was the one sending letters to creditors. Fending their phone calls. Everytime creditos wants to settle I sent the settlement letters to the Credit Relief and nothing was done.

    Three months ago I sent letters to attorney generals of Massachusetts where I live and attorney general of California. I sent letter to FTC in Washington, DC. I just want my money back from this fraudulent outfit. They’re nothing by a shark. Is there any hope for me? I want my money back.

  • Marga

    In February of this year we signed up to use the services of Debt Relief Center in California. They open an scrow account at Noteworld Servicing Center on our behalf. After several months and $3,882.15 in the hole and nothing was settled except the money we put in at Nioteworld is gone taken by Debt Relief we decided to discontinue the program. Now I asked them to return our money back. Debt Relief said that they cannot and will not return the money because we sign up for the program. I told them that I was not happy for their lack of services on our behalf. They DID not do anything. Mostly I was the one sending letters to creditors. Fending their phone calls. Everytime creditos wants to settle I sent the settlement letters to the Credit Relief and nothing was done.

    Three months ago I sent letters to attorney generals of Massachusetts where I live and attorney general of California. I sent letter to FTC in Washington, DC. I just want my money back from this fraudulent outfit. They’re nothing by a shark. Is there any hope for me? I want my money back.

    • http://GetOutOfDebt.org Steve Rhode

      Marga,

      You got off to a good start on the refund process but if you follow the process, to the letter, that I wrote, you have a better chance of success. See How to Get Out of a Debt Relief Program and Get a Big Refund.

      • Anonymous

        Thank you Mr. Rhodes for your quick response. Now I have to respond to the arrogant reply from Meret

    • Meret

      How can people be so dumb!!!

      • http://GetOutOfDebt.org Steve Rhode

        Kind of interesting to notice that both your comment and the one from Yomoma came from the same IP address. Are you the same person or different people at the same company posting negative comments?

      • Anonymous

        It takes one to know one. Therefore, you are.

    • Yomoma

      im a deadbeat… i dont pay my bills and i cant read a contract.

  • Steve Rhode

    Good catch.

  • Lewis Roberts

    You stated mortgages, plural, not just a mortgage. You may benefit form a chapter 13 bankruptcy which may enable you to strip your second mortgage. Get rid of it like unsecured debt.

    This can only be done if the value of your home is less than the amount you owe on the first mortgage. This is one of the most powerful tools of bankruptcy.

    Please make sure you ask about it. It may fit your situation, and give you even more relief than you imagined.

    Debt settlement can do nothing about your secured loans like a chapter 13 possible can.

    See my website regarding stripping a second mortgage.

    http://www.lrlawoffice.com/flo

  • Lewis Roberts

    You stated mortgages, plural, not just a mortgage. You may benefit form a chapter 13 bankruptcy which may enable you to strip your second mortgage. Get rid of it like unsecured debt.

    This can only be done if the value of your home is less than the amount you owe on the first mortgage. This is one of the most powerful tools of bankruptcy.

    Please make sure you ask about it. It may fit your situation, and give you even more relief than you imagined.

    Debt settlement can do nothing about your secured loans like a chapter 13 possible can.

    See my website regarding stripping a second mortgage.

    http://www.lrlawoffice.com/florida-mortgages-bankruptcy-chapter-13-second-mortgage/

    • http://GetOutOfDebt.org Steve Rhode

      Good catch.

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