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We Went With Covenant Debt Solutions Because Bill Handel Advised Us To. – Norah

“Dear Steve,

On the advice of Bill Handel we contacted Covenant Debt Solutions and they sound like the answer to our nightmare of debt.

Our debt is mostly business debt but nonetheless it’s about $300,000. If we turn our debt over to them and pay them monthly what we’ve been paying plus 15% (their fee) within 3 to 4 years will attempt to lower our debt. Although they cannot guarantee they can lower it. During this time we cannot apply for any loans or leases of any kind. After our debt is paid (in 4 years) they will restore our good credit.

We are making our payments, but our mortgage is about to go up and it will become difficult to continue. We’ve been in our home for 29 years and hope to not move and would hate to file bankruptcy. We are at a loss how to handle this since we thought Covenant may have been our answer, but now it seems they probably are not.

To go with Covenant Debt Solutions or not? I’ve read good reviews and some nightmares. Why would Bill Handel recommend them on his radio show if they are such a scam? Please help!

Norah”

 

Dear Norah,

I’d never heard of Bill Handel before so I had to do some research on your question.

First, let me talk about advertising. Most outlets, including this one, runs advertising on their site, paper or radio station. In the case of this site, I have no relationship with the people that advertise on my site and have no hand in picking the advertisements. In fact an ad you might see may never appear for anyone else. The ads are displayed by Google without any input from me.

Some public figures have come under scrutiny for prompting products or services on their show without disclosing a relationship with that company. The latest example that comes to mind is the Glenn Beck / Goldline issue.

Fox News jumped on this issue and offered a public statement to distance itself from Beck’s endorsement by saying it “prohibits on-air talent from endorsing products.”

So in researching your question I was surprised to find this document on the KFI AM 60 site, a list of companies that Bill Handel Endorses that includes Covenant Debt Solutions.

Then there was this, a Covenant Debt Solutions seminar with Dave Hardin and Bill Handel. – Source

Covenant Debt Solutions Commercial and Bill

Here is a story from Inc. magazine:

ReputationDefender, a start-up that helps customers manage their reputations online, decided to test a local radio endorsement. The Redwood City, California — based company partnered with Bill Handel, host of the nationally syndicated Handel on the Law, but bought time only on KFI-AM in Los Angeles.

To track the results, ReputationDefender created a unique-offer code, Web address, and phone number, and measured Internet traffic and search terms in the Los Angeles region. “Right now, endorsement radio is killing our other radio ads,” says chief marketing officer Terrence Sweeney. In fact, its cost per customer acquisition via endorsements is 30 percent to 50 percent less than the cost of acquiring customers through traditional radio advertising.

But it is not a sure thing. ReputationDefender tried a similar partnership with the deejay of a local music program last fall, with much poorer results. “Different radio personalities have differing abilities to sell,” says Swami Kumaresan, Carbonite’s vice president of marketing. “You put in as little money as possible with each program. If it works, you turn up the crank.”

Be aware that a radio endorsement requires relinquishing a certain amount of control over your message. Some hosts want carefully scripted copy; others prefer to ad-lib. “You’d rather have them sound authentic than constrain them,” says David Friend, a co-founder of Carbonite. – Source

I’m not saying Bill Handel has done anything illegal. I’m just trying to help educate you that an endorsement by Bill or any personality is not a singular reason why you should blindly march into anything that is not right for you. Bill Handel certainly appears to have an endorsement relationship with Covenant Debt Solutions and that simply might be why he mentions them.

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So let’s look at your situation now and the Covenant Debt Solutions site to see what we can learn.

Covenant Debt Solutions

Your debt is mostly business debt but I’m assuming it is in your personal name. Is the $300,000 on credit cards or is it some other form of debt?

There are some interesting facts buried in the Covenant site that might help you to make up your mind. These statements come from their TASC disclosure statement that is linked on their home page. – Source

  • Covenant Debt Solutions, Inc. cannot force the negotiations and cannot force creditors to accept a settlement. Covenant Debt Solutions, Inc. does not make regular monthly payments to your creditors. Your creditors may continue collection efforts on delinquent accounts while you are enrolled in a Debt Settlement Program. Such collection efforts can include phone calls and letters to you, charging off the account, sending accounts to collection agencies or attorneys, lawsuits and even garnishments of your wages if a judgment has been obtained. Covenant Debt Solutions, Inc. makes no claim that it will be able to stop these collection activities.
  • You have stated that, because of circumstances beyond your control (hardship), you are unable to meet the minimum payments required by your creditors. If you do not make required minimum payments to your creditors you may be breaking the terms of your agreements with them and your actions will probably be reported to consumer reporting agencies as late, delinquent, charged-off or past due balances. Your creditor may also raise the interest rate on your account and impose other penalties. Your account balance may continue to grow as your creditor adds accrued interest, late fees, over- limit fees and penalties. Your balance may continue to grow until a settlement is reached with your creditor; and, if negotiations are unsuccessful, you could be called upon to pay the entire balance. After settlement your creditor may comment that the account was “settled for less than the full amount” on your credit report. A Debt Settlement Program may have an adverse effect on your credit report and credit score.

So while you may be paying a fee of 15% of your debt, or $45,000, Covenant Debt Solutions makes no representation or guarantee they won’t be able to keep you from being sued or settle your debt.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
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While you may hate to file bankruptcy, it might be the best option for you in order to protect your home, prevent collection calls and give you a repayment plan you can afford. Before you do anything, even if you eventually do not decide to file for bankruptcy, I think it is important for you to find a local bankruptcy attorney and talk to them. Only then will you be better able to make an informed decision about what patch is right for you.

I was also concerned that on the Covenant Debt Solutions site, in my opinion, they misrepresent the realities of bankruptcy.

They say “7-10 years on your credit. Public record. You may not qualify depending upon your income and county of residence. You may only qualify for Chapter 13 which requires you to pay the debts over a long period of time.”
But what they fail to mention is that when you default on your debts to enter the debt settlement program it will also be reported on your credit report as bad debts for seven years. And they fail to state that nearly 75% of people actually file Chapter 7 bankruptcy. Their words seem designed to “scare” you away from bankruptcy.

Interestingly, you know all those disclaimers they make in their TASC membership document I quoted above, they don’t make any of those statements on their site when selling debt settlement by comparing options. Instead they say “With Debt Settlement, you get to move on with your life and rebuild. You don’t have the stress associated with rude collectors threatening you. You’ll immediately have peace of mind to start living vs. worrying and losing sleep! ”

Now you also said they told you they would restore your good credit after four years. But on their site they say “Q. Do you repair my credit? A. NO. Companies cannot remove legitimate negative items from your credit report. Negative items will remain on your credit report according to the conditions imposed by the credit reporting agencies.”

I hope all of that information puts the situation into context for you. Let me know what you decide to do.

Damon Day - Pro Debt Coach

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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.
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