Thinking of signing up with a debt reduction program. I live in Arizona, work for the Federal government, am 66 years old, and have too much debt to be able to retire before I’m 75.
I got a letter in the mail and called the number to talk to a representative. The debt reduction group is named Meridian Law Group. They offer to settle some $25,000 total debt – not MY total debt, just the debt I wanted to have settled – for about 40% of the actual amount, plus their fees.
The schedule of payments is 39 months, and the total cost will save me about $8,000, as I figure it, and help me to think about retirement and letting a younger person have a damn job job – though it doesn’t pay as much as the current claims being stated for federal workers, sooner rather then later.
But the bottom line is, is it legit or a ripoff? What do you know of the group? They claim that the reductions will be negotiated by lawyers with the credit card companies, and that although I will be essential “in default” with the credit card companies during the process, everything washes out in the end. Can you help me on this? Good move or bad idea?
The Meridian Law Group you are mentioning, I believe, is the one located in Tampa, Florida.
The attorneys the firm lists are:
James Spielberger – Attorney/Partner
Eric Mader – Attorney/Partner
Jason McGrath – Attorney/Partner
Michelle Grasso – Attorney/ FL, IL
Brad Latta – Attorney/AL
William Cowley – Attorney/KY
John Andrews – Attorney/TX
Fred Nix – Attorney/MD
Jessica Rauff – Attorney/CA
Julie-Ann Duhe-Keating – Attorney/LA
Natasha Davis – Attorney/WA
Dipawal Shah – Attorney/NJ, PA
Stephen Coffin – Attorney/MO
Edmund Gorman – Attorney/NV
Karen Mayer – Attorney/Associate
I’m always concerned by blanket solicitation mailers that are sent out. It seems to be generated out of a sales process rather than you taking the steps to seek assistance. In situations like this I feel it is prudent for consumers to get a second opinion before leaping for any solution. A good attorney will not mind of you get a second opinion.
And if you are considering a second opinion you may want to find a local bankruptcy attorney in your state and contact them for a consultation. Not only will that let you speak to a second attorney but it will allow you to evaluate a different solution in order to become more educated about which solution will be best for you in your situation.
I’m a little concerned that you were given a fixed amount of savings. Nobody has a crystal ball to predict what creditors may do in the future. It is well within your best interest to ask for specific numbers in writing regarding the performance of the debt settlement company. What is their success rate? What percentage of debt have they settled when accounting for all enrolled debt, fees, and failures?
Here is what the FTC says about what consumers should know when a company states a specific percentage.
State the savings based on the customer’s debt when he or she signs up for the program. You may not inflate savings figures or percentages by including interest and fees the credit card company adds after a customer signs up for your program.
Example 8: Andy signs up with a debt relief service offered by Company H, owing $10,000 on his credit card. One year later, following negotiations with the credit card company, Company H negotiates a settlement allowing Andy to pay $6,000 to resolve the debt. However, since Andy enrolled, the credit card company has charged him interest and late fees totaling $2,000, so that Andy now owes $12,000. By getting a settlement for $6,000, Company H has saved Andy $4,000 ($10,000 minus $6,000) or 40% of the debt at the time of enrollment. It would be deceptive for Company H to claim to have saved Andy $6,000 ($12,000 minus $6,000) or 50% of his debt.
Include the impact of your fees on the claimed savings. You may not inflate your savings claims by excluding the fees your customers paid you.
Example 9: Betty owes $10,000 on her credit card, and signs up with Company J’s debt relief service. Company J gets a settlement allowing Betty to pay $5,000 to resolve the debt. However, at the time of settlement, Company J charges Betty a $1,000 fee for its work. It would be deceptive for Company J to claim to have saved Betty $5,000 – or 50% of her debt – because Betty also had to pay $1,000 in fees. Instead, Company J may truthfully state Betty’s savings as $4,000 ($5,000 minus $1,000) or 40% of Betty’s debt.
In calculating the results you’ve achieved over time, you must include customers who dropped out or otherwise failed to complete the program. Don’t base your savings claims only on customers who successfully completed your program.
Example 10: Company K had 10 customers signed up for its service. Each one had $10,000 in unpaid credit card debt for a total of $100,000. Five of the customers completed the program, and each saved $5,000 – for a total savings of $25,000. The remaining five customers dropped out of the program, each one still owing the $10,000 they owed when they signed up with the program. Taken together, Company K has saved its customers $25,000 – or 25% – of the total $100,000 debt they had when they signed up with the program. It would be deceptive for Company K to exclude the drop-outs and claim that it saved its customers 50% of their debt.
Include all debts enrolled by your customers, not only those that have been settled successfully. In calculating your savings claim, you may not exclude accounts you failed to settle, even if the failure was due to customers dropping out of your service.
Example 11: Company L has 10 customers, and each of them enrolls two $1,000 debts in the program – totaling 20 debts or $20,000. Company L is able to settle 10 of the 20 debts, each for $500. However, it was unable to settle the remaining 10 debts before those customers either completed or dropped out of the program. Thus, Company L has saved its 10 customers $5,000 or 25% of their debts in the program. It would be deceptive for Company L to exclude the 10 accounts that weren’t settled and claim a savings rate of 50%.
You also need to clearly understand that going the settlement route is not without risks. It will hurt your credit, you may have a large tax bill afterwards, you can be sued and you can have your wages garnished.
Debt settlement is not a magic wand, but it can be the right tool in the right situation. The question here is if yours is the right situation.