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USDR Comes Out to Publicly Support 15% Success Fee Cap for Debt Settlement in California

Here is a copy of testimony that was presented in California today to support a debt settlement fee cap at 15% of savings.

USDR Comes Out to Publicly Support 15% Success Fee Cap for Debt Settlement in California
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20 April 2011

The Honorable Ellen Corbett
Senate
JUDICIARY COMMITTEE 

State Capitol, Room 2187

Sacramento, CA 95814 

RE: SB 708 (Corbett) – Support

Dear Senator Ellen Corbett:

On behalf of U.S. Debt Resolve (USDR) we support Senate Bill 708 (Corbett), which would put additional rules in place to prevent debt settlement companies from taking advantage of financially distressed consumers. USDR has performed debt relief services for over 6 years and has been recognized as an industry leader from a national bank based on the companies performance. In a Case study1 by the British Standards Institute USDR was once again acknowledge as a leader in producing some of the industry’s top results. A distinction of USDR is achieving and maintaining the only nationally recognized certification – the ISO 9001 standard. This has allowed us to operate on a performance basis and also in alignment with the proposed fee structure. We operate in California and offer debt relief services in alignment of the proposed 15% of savings model.

USDR has always been a supporter of regulation for the debt relief industry as we have supported the UDMSA and Debt Relief Acts in over a dozen states. Our involvement as panelists with the FTC for both the Debt Settlement Workshop in 20082 and amending the Telemarketing Sales Rule in 20093 demonstrates our commitment to ensure the best possible safeguards for consumer protection.  The long practice of fee structures being collected in advance of services being performed has resulted in consumer fraud, high failure rates and putting consumers in a financial position worse off then when initially engaging with the provider that was offering assistance. Debt relief firms that have operated in a performance based fee model will have a seamless transition to adhere to new regulations as this practice of debt settlement indicates higher success rates and puts consumers at lower risk.

The Provisions of SB 708 compliment the TSR by providing the additional safeguards to protect consumers and would address licensing, certification, insurance and bonding.

Two other areas of crucial concern would also be addressed and that is improved suitability testing of enrollees and comprehensive data to evaluate the success of program results by a provider. Suitability testing of prospective clients will ensure that the client’s goals for debt relief are in alignment with the best options that are available to them and eliminate misdirection of being put in a settlement program when not qualified. Data evaluation has been a concern for regulators and consumer protection groups for years as the industry as a whole has neglected to provide any substantial information to support its claims that debt settlement is a viable option for consumers. Collection of data will allow successful providers of debt relief to continue to practice and the elimination of sub standard programs.

In closing this SB 708 will have additional benefits on the Debt Relief Industry

1. Simplified Consumer selection of qualified debt relief providers
Easy to identify the best of breed

2. Increased level of Education and Financial literacy
Continued pro active debt relief program designs

3. Strong enforcement of these rules will be important to ensure that predatory activities do not continue

4. Elimination of Flawed Debt Relief Programs

5. Non Qualified Consumers will not be solicited

Should you require any additional information, please do not hesitate to contact me at 214.732.0484 or [email protected]

Regards,
/s/ Scott C Johnson
Scott C Johnson
CEO
USDR
www.usdrinc.com

cc: Senator Ellen Corbett
Honorable Members, Senate Banking & Finance Committee
Eileen Newhall, Staff Director, Senate Banking & Finance Committee

  1. BSI CASE STUDY – http://www.usdrinc.com/downloads/bsi-case-study.pdf
  2. Consumer protection and the Debt Settlement Industry http://www.ftc.gov/bcp/workshops/debtsettlement/index.shtm
  3. # 302; Project No. R411001; 16 CFR Part 310: Telemarketing Sales Rule: Notice of Proposed Rulemaking to Amend the FTC’s Telemarketing Sales Rule to Address the Sale of Debt Relief Services; Request for Public Comment, and Announcement of Public Forum http://www.ftc.gov/os/comments/tsrdebtrelief/index.shtm

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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.
  • Errick

    To what context are you referring? I didn’t say you said anything. I am just reiterating the reasonable conclusion I draw from your very extensive presentation. Which I am accepting as completely truthful, against all expectation.

    I challenged anyone to give me ONE example of a completely successful debt settlement plan. Nobody did, but you gave us examples of excellent results that fall short of complete success, but they are still really great.

    They all have in common, fees well below 5 percent of the enrolled debt, sometimes as low as 1 percent of the enrolled debt.

    There was an example of a client who was trusted to pay the 15 percent success fee in installments AFTER settlements were funded. I doubt any of your colleagues will be that generous.

    I’m taking you at your word, just like you challenged me to.

  • Mike Reilly

    Scott, the math is the math, I think what most folks don’t get (specifically the regulators) is the work in producing the results, (I know you do) and even more importantly what the results mean to the consumer at any level under 100%. It means they’re out from under the burden and can carry on a less stressful life.

    At what point in the life cycle of the debt settlement industry did an “all in completion percentage” emerge and who set the bar? If company/process “A” proves over and over to settle consumer debt at 70% “all in” and company “B” does it at 50% but only 60% of the time what’s the better company/process?

    Raise company A to 80% “all in” 95% of the time and company B at 40% only 50% of the time and tell me who you want working for you.

    At the end of the day the one thing that doesn’t change is that we’re in the consumer service industry (B2C) and that requires hard work no matter the level of technology one deploys. Folks want to earn, just ask the consumers we serve.

    I can go to Red Lobster for a lobster dinner and the all you can eat salad bar and come away from the table with a full belly but, I would much rather head down the road to H2O for the same meal and receive 5 star service, sure I’ll pay more, I’ll also remember the experience and refer my friends.

    By the way, real story, the Red Lobster I’m referring to just went out of business, Smithtown, NY.

    Busy morning but I’ll give you a ring later on!

    Thanks

  • Michael

    Errick, your comments are becoming disingenuous. You appear to be moving the goal posts whenever you see fit. I never said debt settlement only works at the fee levels that can be calculated from the examples I provided on a different thread. You are taking my comments and references out of context to suit your bias.

    I answered your challenge to show that debt settlement works for even one person (a ridiculous challenge).

    In the 90′s debt settlement was performed at a typical fee of 25 to 35% of the savings and things were just ducky.

    I many not support high fees, and find higher fee programs marketed en mass to the wrong people to be problematic, but I never inferred settlement “only” works using the cost and fee structures found in my comment on the other thread.

    Perhaps your speaking in absolutes is part of the problem?

    Anyone interested in understanding the actual context of what Erick partially pasted from a different thread can read here:
    http://getoutofdebt.org/27480/

  • Errick

    Look, don’t shoot the messenger, I’m just telling you what your colleague said. Debt settlement only works at these fee levels:

    QUOTE

    Here is a paste of case outlines from a regulatory filing I made. This is filed with a federal agency so please refrain from questioning the veracity of the content I submitted as something other than factual:

    “Consumer enrolled after having researched several companies in the debt relief service industry. His research led to the CRN web site and his subsequent request for a no cost consultation. It was determined he would be successful with a settlement approach. The consumer enrolled 3 accounts with CRN on 9/13/2009 in anticipation that CRN would do all negotiations on his behalf and he would pay a total of 15% of the savings after the settlements were complete. The fee based on results was why he chose CRN over others he had consulted with.

    Consumer received our DIY course material and consulted one on one with his assigned specialist. He determined shortly after following the details in our material, fielding a few creditor calls and subsequent consults with his specialist that he would try to accomplish the settlements through the DIY process.

    Account Results:

    1. $11,000.00 settled for $3,660.00
    2. $14,000.00 settled for $4,700.00
    3. $32,000.00 settled for $12,000.00
    Estimated fee had CRN provided full service (based on 15% of saving): $5,496.00
    Actual Total fees paid to CRN due to DIY implementation: $995.00

    Here are excerpts of an email sent to me by this consumer on 1/12/10:
    “So I was scouring the internet and I came across a company called CRN. I had a talk with them and I knew within 15 minutes of talking to Michael that this was the way to go. There are three main reasons that helped me steer me towards CRN:
    1) Their fee is based on the debt amount that was reduced;
    2) I do not have to set up a bank account thru them.
    3) They offered a DIY option as well.”

    “Their fee being the most reasonable made sense to me too. Most everybody wanted 20% of the total debt load; CRN wanted 15% of the debt reduced.

    Also, CRN sent me a whole debt settlement packet which included good information on DS as well as very infomative CD’s; count 9 of them! That information in the packet along with Michael’s acute consultation helped me settle my debt of $60K in 6 months!

    Nobody I talked to was even close. Thanks to CRN, I have settled all 3 of my accounts for 30~35% on a total balance of almost $60K! And I started this process in August of 2009! I couldn’t not have done so well in such short time had it not been for CRN.

    Their model is transparent and to the point.”

    Status: File closed 1/2010

    CRN Member Example 2:

    This consumer enrolled after having researched several companies in the debt relief service industry. His research led to the CRN web site and his subsequent request for a no cost consultation. It was determined he would be successful with a settlement approach. The consumer enrolled 4 accounts with CRN on 7/2/2009 in anticipation that CRN would do all negotiations on his behalf and he would pay a total of 15% of the savings after the settlements were complete. The fee based on results was why he chose CRN over others he had consulted with.

    Consumer received our DIY course material and consulted one on one with his assigned specialist. He determined shortly after following the details in our material, fielding a few creditor calls and subsequent consults with his specialist that he would try to accomplish the settlements through the DIY process.

    Account Results:

    1. $19,783.17 settled for $6924.11

    2. $22,563.84 Active – Not settled yet

    3. $45,468.20 settled for $10,386.67

    4. $48,711.10 settled for $14,613.33

    Estimated fee had CRN provided full service to date (based on 15% of saving): $12,305.00

    Actual Total fees paid to CRN to date due to DIY implementation: $1,195.00

    Status: Active

    CRN Member Example 3:

    This consumer enrolled after having researched several companies in the debt relief service industry. Her research led to the CRN web site and her subsequent request for a no cost consultation. It was determined she would be successful with a settlement approach. The consumer enrolled 4 accounts with CRN on 10/18/2009 in anticipation that CRN would do all negotiations on her behalf and she would pay a total of 15% of the savings after the settlements were complete. The fee based on results was why she chose CRN over others she had consulted with.

    Consumer received our DIY course material and consulted one on one with her assigned specialist. She determined shortly after following the details in our material, fielding a few creditor calls and subsequent consults with her specialist that she would try to accomplish the settlements through the DIY process.

    This member, who enrolled to have CRN provide full service settlement, contacted me via phone on 1/18/10 indicating that she is confident she can proceed with her goals without us. She requested and has been sent a refund of $300.00 which is the per account menu pricing which has a lifetime refund policy.

    1. $ 5,155.36 settled for $1546.00

    2. $7,694.97 – Inactive
    (Indicated in her 1/18/10 telephone call that she is only waiting on documentation for the 25% settlement offer already verbally agreed upon with creditor)

    3. $13,833.03 – Inactive

    4. $19,738.79 – Inactive

    Actual Total fees paid to CRN due to DIY implementation: $695.00

    Here are excerpts of an email sent to me by this consumer on 1/18/10:

    “Mr. Michael,

    I want to thank you and all members of CRN for helping me gain the knowledge to get through my debt situation. Thanks to the cds and the advice of my debt specialist I have closed one out of four accounts and now have the confidence to face the other three accounts I still have to settle. I just want to add that the service is exceptional since all my calls and emails were answered the same day as well as all the questions I had. I would definitely recommend my friends and family to obtain the cds and materials.

    I also want to remind you, as per our discussion, that I want to cancel my membership so that the $50 monthly fee will not be charged anymore and that a refund of the three accounts that have not been settled yet needs to be applied to my checking account.”

    END QUOTE

  • Scott Johnson

    Mike

    Here is some examples for talking points

    Company performance Examples
    & the impact to a consumer

    Debt @ enrollment
    $25,000

    Number of enrolled
    Accounts 5

    Settlement Values based on original balance

    Equal value for each debt

    Accretion For each account10%

    Acct1 5.5k settled @ 60% = $3,300
    Acct2 5.5k settled @ 55% = $3,025
    Acct3 5.5k settled @ 50% = $2,750
    Acct4 5.5k settled @ 45% = $2,475
    Acct5 5.5k settled @ 40% = $2,200
    $13,750
    Fees @ 15% of
    enrolled debt $3,750

    Total Cost of Program $17,500

    Acct1, 2,3,4,5 @ 40% = $10,000
    Fees @ 15% of Savings = $2,250
    Total Cost of Program= $12,250

    Acct1, 2,3,4,5 @ 50% = $12,500
    Fees @ 15% of Savings= $1875
    Total Cost of Program = $14,375

  • Scott Johnson

    Mike

    Heres is some examples to discuss

    Company performance Examples
    & the impact to a consumer

    Debt @ enrollment
    $25,000

    Number of enrolled
    Accounts 5

    Equal value for each debt

    Accretion For each account10%

    Acct1 5.5k settled @ 60% = $3,300 Acct1, 2,3,4,5 @ 40% = $10,000
    Acct2 5.5k settled @ 55% = $3,025
    Acct3 5.5k settled @ 50% = $2,750Fees @ 15% of
    Acct4 5.5k settled @ 45% = $2,475Savings = $2,250
    Acct5 5.5k settled @ 40% = $2,200
    total$13,750 Total Cost of Program =$12,250
    Fees @ 15% of
    enrolled debt$3,750 Acct1,2,3,4,5 @ 50% = $12,500

    Total Cost of Program$17,500 Fees @ 15% of
    Savings = $1875

    Total Cost of Program = $14,375

  • Mike Reilly

    I think you proved one thing but… that was not it.

    The only thing 5% will ensure is a BK, both on a consumer and business level.

    Based on my example above that’s $110 in total fees, paid out over 18 months it equates to $6.11 per month. Get in the business, do the work required for that fee and payout.

    Errick, luck is for lottery players but you’re gonna need lots of it too!

    If you’re not willing to do that, than why should anyone else.

  • Errick

    I thought we proved over in the other thread that the fees should be capped at five percent of enrolled debt to ensure success for the consumer.

  • Mike Reilly

    Paragraph 5 change the word clients to cases, sorry folks, just banging it out.

  • Mike Reilly

    Again I’m having a hard time wrapping my arms around this position as I think it will only create a shift in power between creditors/collectors/debt buyers and debt relief service providers. Forget about what was; let’s look at today and beyond. The focus in my facility is settlement at the best terms for the consumer and to get that done as quickly as possible. We know that if we continue to provide high quality service, matched with success (good settlements under terms our clients can afford) the firm will grow on a number of levels in most environments.

    That being said most if not all of the settlements we negotiate are term settlements, we do this for a number of reason (too many to list), we never exhaust a client’s savings and always keep them in a savings addition mode.

    So, the 15% of savings is adopted and let’s pretend I’m a creditor/collector/debt buyer and you call me with a CA consumers account. Well, if you think for a second I don’t know the new law….you’re dreaming, you want 30% over 6 months, nice try, you offer 30% lump payment… well that use to be enticing but, the new rule over here is 60% “firm” with a term as long as 18 months, how would you like to proceed? No matter the answer if the offer is firm and you don’t play ball the file goes legal and things get ugly. Worse yet, a slightly better offer goes directly to your client.

    So the debt at the time of enrollment is $5000 it escalated 10% before settlement to $5500 settled at 60% over 18 months = $3300 @ $183.33 monthly, total savings is $2200 x 15% = $330

    Now that you’ve earned your fee how do you secure it? We do it based on the same term the consumer agreed to, so, that’s $18.33 per month. To reach 100k per month in revenue (if this was the average size case) you need to be actively servicing almost 5500 clients. Not a very big business in my book. Flip the fee to 15% of the debt amount at time of enrollment and you’re talking $750 over 18 months = $41.67 ! ! ! Is that really outrageous or over the top?

    Don’t get me wrong here, I’m not saying that it will start at this level (50-60%) but, I would be willing to bet it will get there over time if this becomes a trend. It seems as if the politicians and large institutions (hence their donations/funding) want this industry to remain cottage or boutique in nature. Regulating the fee for service to me is not about the consumer but more so the original creditors, and collections agencies and debt buyers are banking on it.

    I witnessed/participated in a fragmented industry that catered to local and national lending institutions and trust me when I tell you, they rule the roost!

    Steve, I think a poll is in order,

    Who do you believe benefits most from what could become a national fee cap?
    Consumers/Politicians/Creditors/Collectors/Debt Buyers/CCC’s/Debt Settlement Providers
    Rate each on a scale of 1-10 and provide a brief comment on your highest rating.

    So, who will be the first to tell me “money talks and BS walks”?

    Michael Reilly, CDS/CCCS
    Emerge America

  • Mike Reilly

    Again I’m having a hard time wrapping my arms around this position as I think it will only create a shift in power between creditors/collectors/debt buyers and debt relief service providers. Forget about what was; let’s look at today and beyond. The focus in my facility is settlement at the best terms for the consumer and to get that done as quickly as possible. We know that if we continue to provide high quality service, matched with success (good settlements under terms our clients can afford) the firm will grow on a number of levels in most environments.

    That being said most if not all of the settlements we negotiate are term settlements, we do this for a number of reason (too many to list), we never exhaust a client’s savings and always keep them in a savings addition mode.

    So, the 15% of savings is adopted and let’s pretend I’m a creditor/collector/debt buyer and you call me with a CA consumers account. Well, if you think for a second I don’t know the new law….you’re dreaming, you want 30% over 6 months, nice try, you offer 30% lump payment… well that use to be enticing but, the new rule over here is 60% “firm” with a term as long as 18 months, how would you like to proceed? No matter the answer if the offer is firm and you don’t play ball the file goes legal and things get ugly. Worse yet, a slightly better offer goes directly to your client.

    So the debt at the time of enrollment is $5000 it escalated 10% before settlement to $5500 settled at 60% over 18 months = $3300 @ $183.33 monthly, total savings is $2200 x 15% = $330

    Now that you’ve earned your fee how do you secure it? We do it based on the same term the consumer agreed to, so, that’s $18.33 per month. To reach 100k per month in revenue (if this was the average size case) you need to be actively servicing almost 5500 clients. Not a very big business in my book. Flip the fee to 15% of the debt amount at time of enrollment and you’re talking $750 over 18 months = $41.67 ! ! ! Is that really outrageous or over the top?

    Don’t get me wrong here, I’m not saying that it will start at this level (50-60%) but, I would be willing to bet it will get there over time if this becomes a trend. It seems as if the politicians and large institutions (hence their donations/funding) want this industry to remain cottage or boutique in nature. Regulating the fee for service to me is not about the consumer but more so the original creditors, and collections agencies and debt buyers are banking on it.

    I witnessed/participated in a fragmented industry that catered to local and national lending institutions and trust me when I tell you, they rule the roost!

    Steve, I think a poll is in order,

    Who do you believe benefits most from what could become a national fee cap?
    Consumers/Politicians/Creditors/Collectors/Debt Buyers/CCC’s/Debt Settlement Providers
    Rate each on a scale of 1-10 and provide a brief comment on your highest rating.

    So, who will be the first to tell me “money talks and BS walks”?

    Michael Reilly, CDS/CCCS
    Emerge America

    • Mike Reilly

      Paragraph 5 change the word clients to cases, sorry folks, just banging it out.

    • Errick

      I thought we proved over in the other thread that the fees should be capped at five percent of enrolled debt to ensure success for the consumer.

      • Mike Reilly

        I think you proved one thing but… that was not it.

        The only thing 5% will ensure is a BK, both on a consumer and business level.

        Based on my example above that’s $110 in total fees, paid out over 18 months it equates to $6.11 per month. Get in the business, do the work required for that fee and payout.

        Errick, luck is for lottery players but you’re gonna need lots of it too!

        If you’re not willing to do that, than why should anyone else.

      • Errick

        Look, don’t shoot the messenger, I’m just telling you what your colleague said. Debt settlement only works at these fee levels:

        QUOTE

        Here is a paste of case outlines from a regulatory filing I made. This is filed with a federal agency so please refrain from questioning the veracity of the content I submitted as something other than factual:

        “Consumer enrolled after having researched several companies in the debt relief service industry. His research led to the CRN web site and his subsequent request for a no cost consultation. It was determined he would be successful with a settlement approach. The consumer enrolled 3 accounts with CRN on 9/13/2009 in anticipation that CRN would do all negotiations on his behalf and he would pay a total of 15% of the savings after the settlements were complete. The fee based on results was why he chose CRN over others he had consulted with.

        Consumer received our DIY course material and consulted one on one with his assigned specialist. He determined shortly after following the details in our material, fielding a few creditor calls and subsequent consults with his specialist that he would try to accomplish the settlements through the DIY process.

        Account Results:

        1. $11,000.00 settled for $3,660.00
        2. $14,000.00 settled for $4,700.00
        3. $32,000.00 settled for $12,000.00
        Estimated fee had CRN provided full service (based on 15% of saving): $5,496.00
        Actual Total fees paid to CRN due to DIY implementation: $995.00

        Here are excerpts of an email sent to me by this consumer on 1/12/10:
        “So I was scouring the internet and I came across a company called CRN. I had a talk with them and I knew within 15 minutes of talking to Michael that this was the way to go. There are three main reasons that helped me steer me towards CRN:
        1) Their fee is based on the debt amount that was reduced;
        2) I do not have to set up a bank account thru them.
        3) They offered a DIY option as well.”

        “Their fee being the most reasonable made sense to me too. Most everybody wanted 20% of the total debt load; CRN wanted 15% of the debt reduced.

        Also, CRN sent me a whole debt settlement packet which included good information on DS as well as very infomative CD’s; count 9 of them! That information in the packet along with Michael’s acute consultation helped me settle my debt of $60K in 6 months!

        Nobody I talked to was even close. Thanks to CRN, I have settled all 3 of my accounts for 30~35% on a total balance of almost $60K! And I started this process in August of 2009! I couldn’t not have done so well in such short time had it not been for CRN.

        Their model is transparent and to the point.”

        Status: File closed 1/2010

        CRN Member Example 2:

        This consumer enrolled after having researched several companies in the debt relief service industry. His research led to the CRN web site and his subsequent request for a no cost consultation. It was determined he would be successful with a settlement approach. The consumer enrolled 4 accounts with CRN on 7/2/2009 in anticipation that CRN would do all negotiations on his behalf and he would pay a total of 15% of the savings after the settlements were complete. The fee based on results was why he chose CRN over others he had consulted with.

        Consumer received our DIY course material and consulted one on one with his assigned specialist. He determined shortly after following the details in our material, fielding a few creditor calls and subsequent consults with his specialist that he would try to accomplish the settlements through the DIY process.

        Account Results:

        1. $19,783.17 settled for $6924.11

        2. $22,563.84 Active – Not settled yet

        3. $45,468.20 settled for $10,386.67

        4. $48,711.10 settled for $14,613.33

        Estimated fee had CRN provided full service to date (based on 15% of saving): $12,305.00

        Actual Total fees paid to CRN to date due to DIY implementation: $1,195.00

        Status: Active

        CRN Member Example 3:

        This consumer enrolled after having researched several companies in the debt relief service industry. Her research led to the CRN web site and her subsequent request for a no cost consultation. It was determined she would be successful with a settlement approach. The consumer enrolled 4 accounts with CRN on 10/18/2009 in anticipation that CRN would do all negotiations on her behalf and she would pay a total of 15% of the savings after the settlements were complete. The fee based on results was why she chose CRN over others she had consulted with.

        Consumer received our DIY course material and consulted one on one with her assigned specialist. She determined shortly after following the details in our material, fielding a few creditor calls and subsequent consults with her specialist that she would try to accomplish the settlements through the DIY process.

        This member, who enrolled to have CRN provide full service settlement, contacted me via phone on 1/18/10 indicating that she is confident she can proceed with her goals without us. She requested and has been sent a refund of $300.00 which is the per account menu pricing which has a lifetime refund policy.

        1. $ 5,155.36 settled for $1546.00

        2. $7,694.97 – Inactive
        (Indicated in her 1/18/10 telephone call that she is only waiting on documentation for the 25% settlement offer already verbally agreed upon with creditor)

        3. $13,833.03 – Inactive

        4. $19,738.79 – Inactive

        Actual Total fees paid to CRN due to DIY implementation: $695.00

        Here are excerpts of an email sent to me by this consumer on 1/18/10:

        “Mr. Michael,

        I want to thank you and all members of CRN for helping me gain the knowledge to get through my debt situation. Thanks to the cds and the advice of my debt specialist I have closed one out of four accounts and now have the confidence to face the other three accounts I still have to settle. I just want to add that the service is exceptional since all my calls and emails were answered the same day as well as all the questions I had. I would definitely recommend my friends and family to obtain the cds and materials.

        I also want to remind you, as per our discussion, that I want to cancel my membership so that the $50 monthly fee will not be charged anymore and that a refund of the three accounts that have not been settled yet needs to be applied to my checking account.”

        END QUOTE

      • Michael

        Errick, your comments are becoming disingenuous. You appear to be moving the goal posts whenever you see fit. I never said debt settlement only works at the fee levels that can be calculated from the examples I provided on a different thread. You are taking my comments and references out of context to suit your bias.

        I answered your challenge to show that debt settlement works for even one person (a ridiculous challenge).

        In the 90′s debt settlement was performed at a typical fee of 25 to 35% of the savings and things were just ducky.

        I many not support high fees, and find higher fee programs marketed en mass to the wrong people to be problematic, but I never inferred settlement “only” works using the cost and fee structures found in my comment on the other thread.

        Perhaps your speaking in absolutes is part of the problem?

        Anyone interested in understanding the actual context of what Erick partially pasted from a different thread can read here:
        http://getoutofdebt.org/27480/center-for-responsible-lending-says-15-success-fee-for-debt-settlement-should-be-the-norm?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CommentsForHowToGetOutOfDebt+%28Comments+for+GetOutOfDebt.org+Site%29#comment-192189797

      • Errick

        To what context are you referring? I didn’t say you said anything. I am just reiterating the reasonable conclusion I draw from your very extensive presentation. Which I am accepting as completely truthful, against all expectation.

        I challenged anyone to give me ONE example of a completely successful debt settlement plan. Nobody did, but you gave us examples of excellent results that fall short of complete success, but they are still really great.

        They all have in common, fees well below 5 percent of the enrolled debt, sometimes as low as 1 percent of the enrolled debt.

        There was an example of a client who was trusted to pay the 15 percent success fee in installments AFTER settlements were funded. I doubt any of your colleagues will be that generous.

        I’m taking you at your word, just like you challenged me to.

    • Scott Johnson

      Mike

      Heres is some examples to discuss

      Company performance Examples
      & the impact to a consumer

      Debt @ enrollment
      $25,000

      Number of enrolled
      Accounts 5

      Equal value for each debt

      Accretion For each account 10%

      Acct1 5.5k settled @ 60% = $3,300 Acct1, 2,3,4,5 @ 40% = $10,000
      Acct2 5.5k settled @ 55% = $3,025
      Acct3 5.5k settled @ 50% = $2,750 Fees @ 15% of
      Acct4 5.5k settled @ 45% = $2,475 Savings = $2,250
      Acct5 5.5k settled @ 40% = $2,200
      total $13,750 Total Cost of Program =$12,250
      Fees @ 15% of
      enrolled debt $3,750 Acct1,2,3,4,5 @ 50% = $12,500

      Total Cost of Program $17,500 Fees @ 15% of
      Savings = $1875

      Total Cost of Program = $14,375

    • Scott Johnson

      Mike

      Here is some examples for talking points

      Company performance Examples
      & the impact to a consumer

      Debt @ enrollment
      $25,000

      Number of enrolled
      Accounts 5

      Settlement Values based on original balance

      Equal value for each debt

      Accretion For each account 10%

      Acct1 5.5k settled @ 60% = $3,300
      Acct2 5.5k settled @ 55% = $3,025
      Acct3 5.5k settled @ 50% = $2,750
      Acct4 5.5k settled @ 45% = $2,475
      Acct5 5.5k settled @ 40% = $2,200
      $13,750
      Fees @ 15% of
      enrolled debt $3,750

      Total Cost of Program $17,500

      Acct1, 2,3,4,5 @ 40% = $10,000
      Fees @ 15% of Savings = $2,250
      Total Cost of Program = $12,250

      Acct1, 2,3,4,5 @ 50% = $12,500
      Fees @ 15% of Savings = $1875
      Total Cost of Program = $14,375

      • Mike Reilly

        Scott, the math is the math, I think what most folks don’t get (specifically the regulators) is the work in producing the results, (I know you do) and even more importantly what the results mean to the consumer at any level under 100%. It means they’re out from under the burden and can carry on a less stressful life.

        At what point in the life cycle of the debt settlement industry did an “all in completion percentage” emerge and who set the bar? If company/process “A” proves over and over to settle consumer debt at 70% “all in” and company “B” does it at 50% but only 60% of the time what’s the better company/process?

        Raise company A to 80% “all in” 95% of the time and company B at 40% only 50% of the time and tell me who you want working for you.

        At the end of the day the one thing that doesn’t change is that we’re in the consumer service industry (B2C) and that requires hard work no matter the level of technology one deploys. Folks want to earn, just ask the consumers we serve.

        I can go to Red Lobster for a lobster dinner and the all you can eat salad bar and come away from the table with a full belly but, I would much rather head down the road to H2O for the same meal and receive 5 star service, sure I’ll pay more, I’ll also remember the experience and refer my friends.

        By the way, real story, the Red Lobster I’m referring to just went out of business, Smithtown, NY.

        Busy morning but I’ll give you a ring later on!

        Thanks

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