“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.
So let’s look at your situation now and the Covenant Debt Solutions site to see what we can learn.
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.
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.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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I too hired Covenant Debt Solutions to negotiate debt settlement. After paying them for a year, I received a call from one of their (I use this term lightly) representatives. She said she was not having success negotiating with my debt holder. I told her to try again. I got another call, no success. So, I cancelled my account and asked for a refund. I got back HALF my money, they kept the rest. What a rip off. 50% to fail at negotiating my debt down. I did this because Bill Handel endorses them. In My Opinion, THEY RIPPED ME OFF.
On the bright side, with what I did receive, I was able to hire a bankruptcy lawyer and eliminate all the debt.
Congratulations to Covenant Debt Solutions and Capital One…..Neither one of them will ever get any more of my money!!!!
Steve, i want to thank you for this info on Covenant. I was just getting ready to sign paperwork and not i have serious thoughts. I don’t want to file bankruptcy because i feel it is my responsibilty to repay the credit i used to survive so i found them. I knew something was wrong when i started getting too many phone calls and emails reminding me to sign the forms right away so i started looking for reviews. So happy i did, seemed to good to be true. I will now try another option. I have been through enough, the last thing i need is more stress. Thank u from the bottom of my heart.
You are welcome.
I think this article will help you a long way on your journey out of debt. Please read, How to Get Out of Debt. The Honest and Unvarnished Truth.
First, let me thank you Steve for what you do! I have NO idea how you make a living offering all this free advise (and books), but it’s great you’re there for those of us that don’t have a financial clue!
I really appreciate your reply regarding Covenant Debt Solutions, however we already decided not to use them or any other debt “solution” company. Once I started doing a Google review on all companies along with the BBB it became apparent that those kind of companies were not the way to go. It looked like further money troubles and headaches would be ahead.
We’re hoping to sell some property and keep our heads above water so we don’t have to sell our home. I guess I’d rather sell (even though it will break my heart) than file bankruptcy. It feels like there is such a stigma attached to filing and after watching your video it sounds like something to be avoided if possible.
Like you we also tried talking to our credit card companies, that was a joke! It makes you wonder why they’d rather have people file bankruptcy and get NO money than work with them and get some or all of it at a slower time frame. The same with our mortgage company – our mortgage will be going up because of a package we got into and they won’t work with us either. Why they’d want a house in today’s market if we should need to file bankruptcy is beyond me. Why not just work with people – wouldn’t it be a win-win situation. After all, we bailed the banks out of their mess, wouldn’t you think they’d help us.
Again, thank you for all you do.
Sincerely,
Norah
Norah,
You are welcome.
Don’t assume about bankruptcy. I’m not saying you need to file but you ABSOLUTELY owe it to yourself to learn what bankruptcy would mean for you without emotional assumptions. Bankruptcy is the only legal solution that gives you rights and protections.
Even if you think there is no way in the world you would ever file, investigate it. I’ve just seen too many people make the wrong decisions based on how they think they might feel rather than what is actually best for them in their situation.
Big hug.
Steve
Hello again!
I just saw an email “purchase confirmation” for Herb Kay SOS that my husband apparently thinks will tell him something of value. Do you know anything about this?
Thank you for your advise on bankruptcy. I truly know nothing about it, besides what I’ve heard through the grapevine through the years, i.e., no credit for 7 years, etc. Doing that I don’t know how we’d run our business (printing distributor for 30+ years) because many vendors require credit card payments only. We lease our cars and it seems scary not to be able to purchase necessities.
To become informed about bankruptcy would you suggest we just google and read what there is to read or speak with an attorney first to hear what they have to say?
Regards,
Norah
I don’t know anything about a Herb Kay.
Since every situation is different I ALWAYS think it is better to speak to an attorney licensed in your state about your specific situation. This is the time you need specific advice and not general advice from something you read.
Steve
Norah, I realize this is an old thread but I was interested in your experience with the Herb Kay program and am hoping you might still check this thread on occasion. I’ve been researching the SOS program myself lately and would like to hear your input, since you’ve had it for about 2 months now. Like you, I am also facing a mortgage payment increase looming in the future and can’t imagine how we’re going to negotiate ourselves through that one!
Any debt settlement site that has a link to “DebtTalk”(or Debt Talk) will have back-end work performed by Nationwide Support Services. Worth knowing at least who will be doing the actual negotiation for you, since I’m sure Covenant doesn’t disclose that information, just like all of Nationwide’s other front-end companies. Check out the FTC action against National Support Services and Joanne Garneau/Joanne Torkelson for more details (National and Nationwide are related, as you can see in the FTC action).
Thanks for doing that. I saw the “Debt Talk” link right in the center of the site but failed to mention it.
Here is the link to the FTC information you mentioned.
Steve
NEVER PAY UPFRONT! There are companies who ONLY charge WHEN THEY SETTLE YOUR DEBTS! NO FRONT END FEES!!!!!!!!!!!!!
No need to sugarcoat it. Tell us how you really feel. (LOL)
Steve