Century Mitigations Announces Debt Settlement Getting Into Credit Counseling

This is the second time today I’ve seen the message that debt settlement companies are embracing credit counseling and going to start offering that service.

The first mention was about a presentation by The Association of Settlement Companies (TASC) regarding training that was going to be offered to its members.

State and Federal Compliance: How to Market and Sell Safely and Profitably. Hybrid Debt Settlement Models- Combining Settlement and DMP Offers.
-Complimentary Compliance Handouts and Charts Distributed to All Attendees
– The “Green and Red” States and all the Other Colors. FTC Requirements, Debt Adjuster Laws and Licensing, Telephone Marketing Compliance and Licensing, Garnishment References, Q&A.
Robby H. Birnbaum, TASC President, Partner, Greenspoon Marder, PA.

And just now a tipster (send in your tips here) sends in this email pitch that says Century Mitigation is offering affiliates a attorney model debt settlement program in conjunction with a debt management program.

Even more interesting is the little statement at the bottom that says they are getting into loan modifications and foreclosure defense programs. What’s next, entrance into the whole mass joinder mess?

If credit counseling does not act quickly to implement debt settlement solutions the debt settlement providers offering debt management plans are going to significantly impact their business. Is anyone over in credit counseling listening?

Sincerly,


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.

Damon Day - Pro Debt Coach

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

Steve Rhode

66 thoughts on “Century Mitigations Announces Debt Settlement Getting Into Credit Counseling”

  1. Knows How, why are you making a blanket comment that people should file BK, without making any distinction between Ch. 7 and Ch. 13? Are you not aware of the enormous difference between these two solutions? Can you not understand how someone facing a 5-year BK might prefer a private solution instead?

    Reply
  2. It’s not a rare case at all. Approximately 30% of bankruptcy filings are via Chapter 13, and virtually every one of those individuals should at least consider the debt settlement option. If you can liquidate assets and negotiate settlements in 12 months or less, why put yourself through a 5-year BK?

    Reply
  3. You are mistaken. If debt settlement is done correctly, meaning quickly, then lawsuits can be avoided. On the DIY model discussed in the article Steve pointed to above, our clients settled nearly 1,200 accounts in 2010. Only *15* of those were lawsuits. Just over 1% of accounts. Move fast enough, and lawsuits can be avoided. On the 1099-C, most of our clients have been able to claim the insolvency exemption to legitimately avoid paying taxes. If not, so what? The sum of creditor payment + tax bill is still less than full balance, and way less than what they would pay back on the “forever plan” offered by the bank.

    Reply
  4. Does the CCA you work/worked for publish their results like Cambridge Credit Counseling does? If not, why not? You say prudent; by what and whose standard? How can the company you represent in your comment be judged for its effectiveness if it does not publish transparent data?

    Your partiality results in your speaking in absolutes. Debt settlement done well and with the right profile is not a poor service. I will not endeavor to change your mind, but will rebut where appropriate.

    You said: “So now you are taking the holistic approach?”

    My companies model has remained relatively unchanged since doors opened in 06. We have always provided a “holistic” approach (if I am interpreting your comment correctly).

    DMP’s are great in theory too. In practical terms a poor decision roughly 70% of the time, and that is based on 2004 data. Results cannot have gotten much better for the industry as a whole with the current economy (excepting Cambridge who publishes data that with a high degree of likelihood is relatively unique to them).

    The practicality of any given debt relief option is different for each individual. While settlement was “practically” marketed to anyone with debt and a wallet/purse, where it should not have been, does not mean a DMP is the practical option in absolute terms.

    How many people did/do you enroll into a DMP that would fit internal proposal guidelines and who could swing the monthly payment, but whose situation would have been better addressed with a chapter 7 bankruptcy that would provide them a quicker and less expensive fresh start? Did/Does the CCA you refer to have a process in place to even determine equal qualification for BK and DMP with a decision tree for the consumer to then make an informed decision about which one would best meet their needs and goals?

    I define rapid as 18 months or less for most. There are others who define it even more narrowly. Your wizard of Oz comment is, to be blunt about it, uninformed and smacks as childish.

    A solvency test is not exclusive to income or amounts of forgiven debt. It is a strict asset and liability test with much broader parameters. Why do you not know how this works?

    Reply
  5. I think you are confusing settlement done the wrong way versus the right way. A blanket statement that it can’t work or is not for everybody would be a misstatement until the client individual situation is assessed.

    I’ve always said the best candidates for settlement were those that had cash on hand or soon to have cash on hand. I never took on anyone else.

    Reply
  6. I know all the debts are included in the equation for insolvency. I know settlement works always has when either the collector or the bank rep does it with the consumer directly.

    I read the other article and its back to the rare case of assets and then a DMP. Settlement in 3 months? Fine. but again a rare case..

    Reply
  7. Well actually…..

    The issuance of the 1099-C is not the hurdle. A 1099-C will be sent for any forgiven debt over $600, or at least it should be. This past reader Q&A touched on that fact.

    It is in fact easy for a consumer to be insolvent following the settling of debt(s). Do they have a mortgage or other obligations? It’s not the forgiveness of just the credit card debt that must be factored into the equation, it is the totality of all their assets and liabilities.

    People that have been sold a wait it out approach from advanced fee debt settlement companies have been sued at a much higher level. That is true. But that’s not a comment on settling debt as much as it was that model was always flawed and only designed for the companies to win.

    Using the strategy I linked to in my other article or in conjunction with making minimum payments or sending the remaining debts to a DMP, it can work without the lawsuit threats.

    In my day when we did settlements at the credit counseling agency we never had a single client sued. But that’s because we did it right.

    Saying all settlement does not work would be not true.

    Reply
  8. Steve, I think this site is great and a wealth of information, but the bottom line is lets not talk about sometimes they don’t get sued and there have been cases where they are not insolvent.

    The truth of the matter is most of the time the consumer is getting sued and they are getting a 1099-C just please admit that it happens 75-80% of the time and I’ll let it go! LOL

    Reply
  9. I have worked for a CCA that offered a prudent debt management program. What does that have to do with Debt Settlement? You say I’m partial? sure. but that doesn’t change the fact that debt settlement is a poor service! Do I find it appalling that Debt Settle. Companies over the past 4 years sent thousands of clients into bankruptcy? Damn Right.

    So now you are taking the holistic approach? But its vague and you are saying things like its “an enrollment limiter” ya think? That is the problem I have with this whole thing in theory sounds great! in practical terms poor decision.

    So you speak to 20 consumers and the one who fits this wizard of oz theory enrolls since you were honest about the issues of the service? and rapidly? What time frame in months is rapid?

    And the 1099-C is a legitimate concern? I would say so, and please answer me this question.

    How are you insolvent after you have reduced your debt to half of what you owe?

    Don’t you now by the mathematics have more money than you did before?

    Reply
  10. I do not tell people to stop paying their bills. They have to make that determination on their own. Most already are behind on one or more when I speak with them.

    Legitimate debt settlement companies must provide a good faith estimate to each person prior to enrolling them. The estimate must contain several points. One of the points is what you estimate they will need in funds to settle a debt based on the companies current experience with each specific account.

    What new laws are you referring to? What would these new laws have to do with justification of payment cessation?

    You said: “Knowing that the account is going to charge off lead to wage garnishment, destroy the credit rating and the 1099-C tax bills. Fees or no fees…It still a poor service… why not just file Bankruptcy?”

    Not all accounts charge off before settlement. Only a small percentage of charged off accounts lead to lawsuits. Not all lawsuits result in wage garnishment. All legitimate debt relief options affect most peoples access to fairly priced credit products for about the same amount of time. Not all forgiven debt is treated as taxable income. Done correctly it is not a poor service.

    Why not just file bankruptcy? Good question. Anyone forced to consider their options with dealing with debts that are no longer manageable should speak with a local BK attorney as part of their research into what is right for them. I am of the opinion chapter 7 is often the option of first resort, not last resort as it is typically referred to.

    May I suggest a new site moniker?

    Reply
  11. The rapid settlement approach is the opposite of a sales pitch. It is presenting the reality of the situation and the need to be quick about things, and when delivered in a consultation in a blunt and honest fashion, it is an enrollment limiter. So, the opposite of what you imply.

    Debt settlement does not need to legitimize itself. It is already a legitimate process. There are sales people that will try to legitimize it to the wrong people, but that is a different topic.

    Debt settlement done aggressively and rapidly mitigates the risk of being sued which can lead to wage garnishment.

    Being taxed on forgiven debt in excess of 600.00 is a legitimate concern and needs to be factored into the overall picture when deciding the path is the right one to take in the first place. My experience suggest that most consumers since the beginning of the recession are deemed technically insolvent and do not end up owing tax on the forgiven portion of debt resulting from the settlements.

    Knows how, your comments lead to my assumption that you work at a CCA offering DMP’s. Is this correct?

    Reply
  12. You know I’ve been critical of debt settlement, and depending on how much you’ve read on the site you may have seen that I also was able to assist some of our credit counseling clients back in the day with settlements, very successfully.

    I’ll try to correct a statement you made. Depending on how the debt settlement is approach, not all efforts lead to wage garnishment and as you can see by the link I gave you in my previous comment, not all settlements lead to charge off. The 1099 issue needs some clarification as well. If the debtor is solvent by the time they settle all their debts they will owe tax on the balance that took them into solvency, not the entire amount.

    If the debtor is insolvent, liabilities exceed assets, after settling their debt then there is no tax liability even though a 1099 may be issued. The IRS has a form for this.

    You may say this does not happen and it’s not a reality but I have personally seen it happen and other handle these types of cases every day.

    Reply
  13. What i meant by options that don’t exist is the government program or what ever “ponzi scheme you mentioned.

    Please explain to me with the new laws how can you justify telling a current consumer to stop paying their bills and we will settle the account for half?

    Knowing that the account is going to charge off lead to wage garnishment, destroy the credit rating and the 1099-C tax bills. Fees or no fees…It still a poor service… why not just file Bankruptcy?

    Reply
  14. Yes it is .but really the flaw is the entire program and this analogy that client are going to sell their car to pay a rapid settlement offer to justify the serious past due account that is going toward law suit is really just a good sales pitch from a desperate industry.

    Debt Settlement is trying to legitimize the service when it leads to wage garnishment and 1099-C tax bills.

    Reply
  15. I honestly do not understand your comment.

    What does selling off personal items have to do with flaws in debt settlement?

    Settlements happen when accounts go past due. That is well established. Is that the flaw?

    Reply
  16. If my choice of words distracts, I apologize. Perhaps rather than off base I should have said “overly broad”.

    If contemplating the way debt settlement was marketed and performed in the past and where up front fees were the norm, I do agree that consumers would often find themselves trapped due to the fee grab used by the majority of the industry. Further, if enrolling someone who is not suited mathematically to even start down the settlement path, they can similarly be trapped as you suggest.

    What did you mean by “They are just looking for a option that doesn’t exist”?

    I do talk to people regularly who are looking for answers to their issues. I am sure that my experience is similar to reports I hear from the CCA space that roughly only a third or less can qualify for a DMP. That’s a function of the individuals financial condition, not a commercial.

    I will never make light of what I have often referred to as the over hyped over sold and “ponzi” nature of many aspects to the debt settlement industry. I am an outspoken critic in calling out the industries worst practices.

    The realities of providing a legitimate debt settlement service today are not the same as they were just a short half year to 7 years ago. The criticisms of today are mostly consistent with past practices, or when raised against those promoting the “loophole” processes still being exploited. Those same criticisms do not accurately reflect the changes that have been adapted by many industry participants since federal rules became effective last October.

    Reply
  17. You might want to direct your comments over on this article where Charles specifically talks about how this is his primary way he settles debts.

    Feel free to ask him directly how he does it.

    Reply
  18. Steve, this analogy of assets on hand is thin at best. I would like to see real time stats on how many clients are going to “sell the car or sell the baseball card collection” to justify the flaws in debt settlement. its still based on past due payments. Period.

    These companies are enrolling current consumers everyday.

    Reply
  19. With all due respect Michael, off base is a poor choice of words. I was referring to a mindset the consumer has, not that they don’t have the intentions of paying when they call. They are just looking for a option that doesn’t exist. In theory the debt settlement program is great until they enroll and are trapped after 3-6 payments when nothing gets paid.

    Agreed they need to call when the debt is $10k not $50k or current before past due.

    Straw man argument? I take it you don’t speak with clients on a daily basis who are looking for their payments to be cut in half when you know it can only be reduced a few hundred dollars on a DMP. Especially the current consumer.

    I concur again; with the new bankruptcy laws on home equity you can go ahead and pay the $2500 and file Chapter 7, but don’t make light of the fact that the saturation of phony debt settlement ad’s over the past 5 years haven’t changed the mindset.

    Reply
  20. I agree that some of the more brazen commercials may have been the cause of some very limited moral hazard.

    The implication that most people seeking help can pay there bills, but just don’t want to is off base. People making a call out for help don’t call unless they need it. My experience is that they actually needed the help far sooner than when they reach out, but they often delay and exhaust resources in order to float longer in the hopes their situation turns around. This of course limits the options available.

    The assertion that a DMP approach is now not considered good enough by some because a commercial said they only need to pay half is something of a straw-man argument given the fact that chapter 7 is less expensive, more immediate and discharges the full balance of the unsecured debts.

    Reply
  21. There is never a one-size-fits-all solution. It needs to be a one-size-fits-one approach. Settling debt comes in different approaches. For example, this article shows how one company does it all prior to charge off and avoids suits.

    It is a reality that many people think about debt reduction in terms of only monthly payments or disposable income but there are other factors also. What assets are on hand? Is a loan from LendingClub.com or Prosper.com a reality before it all goes to hell and can those funds be used to settle rather than struggle.

    The new mantra, one-size-fits-one.

    Reply
  22. In theory this hybrid plan may work however, the truth of the matter is you are still telling a consumer to stop paying their one or several of their creditors for 4-8 months!

    So they are not going to get sued?

    As far as fundamentally flawed, if the consumer cannot afford a DMP than that is what bankruptcy is there for. I agree the creditors should lower the DMP payments to 2% and 5-6% interest so the payments are more affordable but that is the 800 pound gorilla in the room.

    Also no one has talked about the brainwashing that the debt settlement industry has done with their fake commericals on TV, radio and mail.

    Steve, you have touched on these more then anyone.

    But the effect on the mindset of the consumer is staggering. 1 out of 2 calls asks me to give them the “government program to settle my debts for half” or ” I don”t need to pay my account in full, the banks got a bailout so I can get my mine”

    No matter how preposterous this may sound to us its a fact to the consumer. These clients in most cases can afford the payments they are current now and I have reduced their payments lets say $300 a month! And the first words out of their mouth is “that’s it” ???????

    Most of these clients can afford the DMP they just choose not to.. because its not good enough.

    It’s the mindset that ” I can get a better deal from the TV ad, they said my payments will be cut in half!!!

    Reply
  23. Excellent question. So let me ask you. Is it fundamentally flawed for a credit counseling group, that could keep someone from being sued by putting them on a payment plan to not work together.

    More importantly, is it fundamentally flawed for some cooperation to help a consumer avoid bankruptcy when they had a specific reason they wanted to avoid it if this was a viable solution?

    I understand what you are saying but when should the emergency room turn injured people away?

    Reply
  24. So there is no conflict of interest for a non profit to take referrals from a for profit settlement company that is charging a large fee for a service that is fundamentally flawed and has the potential to make current clients severely past due trying to gauge a settlement?

    Reply
  25. Mike,

    I have to ask, based on the history of TASC’s lobbying efforts, how much would you be willing to contribute?

    Reply
  26. On the last call I was on, if my memory serves me correctly they mentioned they were looking for 6k a week in contributions to fight the Florida legislation

    Reply
  27. From what I understand the regulators don’t even take them seriously anymore, so I doubt their “lobbying efforts” will ever produce much.

    Reply
  28. In my opinion, they seem to be doing a good job of lobbying at the state level for some favorable legislation. Unless, however, they are taking credit for it, but I’m sure they are doing quite a bit

    Reply
  29. How does anybody take TASC seriously anymore? Who’s still paying them?

    I would rather invest in Enron than anything those mopes have to say.

    Reply
    • In my opinion, they seem to be doing a good job of lobbying at the state level for some favorable legislation. Unless, however, they are taking credit for it, but I’m sure they are doing quite a bit

      Reply
  30. how are for profit non licensed and bonded companies going to get credit counseling benefits from the creditors? And they are going to charge $50-75 enrollment? and a maximum monthly service fee of $50? to think that business model will work is laughable.

    Reply
  31. how are for profit non licensed and bonded companies going to get credit counseling benefits from the creditors? And they are going to charge $50-75 enrollment? and a maximum monthly service fee of $50? to think that business model will work is laughable.

    Reply
      • So there is no conflict of interest for a non profit to take referrals from a for profit settlement company that is charging a large fee for a service that is fundamentally flawed and has the potential to make current clients severely past due trying to gauge a settlement?

        Reply
        • Excellent question. So let me ask you. Is it fundamentally flawed for a credit counseling group, that could keep someone from being sued by putting them on a payment plan to not work together.More importantly, is it fundamentally flawed for some cooperation to help a consumer avoid bankruptcy when they had a specific reason they wanted to avoid it if this was a viable solution?I understand what you are saying but when should the emergency room turn injured people away?

          Reply
          • In theory this hybrid plan may work however, the truth of the matter is you are still telling a consumer to stop paying their one or several of their creditors for 4-8 months!

            So they are not going to get sued?

            As far as fundamentally flawed, if the consumer cannot afford a DMP than that is what bankruptcy is there for. I agree the creditors should lower the DMP payments to 2% and 5-6% interest so the payments are more affordable but that is the 800 pound gorilla in the room.

            Also no one has talked about the brainwashing that the debt settlement industry has done with their fake commericals on TV, radio and mail.

            Steve, you have touched on these more then anyone.

            But the effect on the mindset of the consumer is staggering. 1 out of 2 calls asks me to give them the “government program to settle my debts for half” or ” I don”t need to pay my account in full, the banks got a bailout so I can get my mine”

            No matter how preposterous this may sound to us its a fact to the consumer. These clients in most cases can afford the payments they are current now and I have reduced their payments lets say $300 a month! And the first words out of their mouth is “that’s it” ???????

            Most of these clients can afford the DMP they just choose not to.. because its not good enough.

            It’s the mindset that ” I can get a better deal from the TV ad, they said my payments will be cut in half!!!

          • There is never a one-size-fits-all solution. It needs to be a one-size-fits-one approach. Settling debt comes in different approaches. For example, this article shows how one company does it all prior to charge off and avoids suits.

            It is a reality that many people think about debt reduction in terms of only monthly payments or disposable income but there are other factors also. What assets are on hand? Is a loan from LendingClub.com or Prosper.com a reality before it all goes to hell and can those funds be used to settle rather than struggle.

            The new mantra, one-size-fits-one.

          • Steve, this analogy of assets on hand is thin at best. I would like to see real time stats on how many clients are going to “sell the car or sell the baseball card collection” to justify the flaws in debt settlement. its still based on past due payments. Period.

            These companies are enrolling current consumers everyday.

          • I honestly do not understand your comment.

            What does selling off personal items have to do with flaws in debt settlement?

            Settlements happen when accounts go past due. That is well established. Is that the flaw?

          • Yes it is .but really the flaw is the entire program and this analogy that client are going to sell their car to pay a rapid settlement offer to justify the serious past due account that is going toward law suit is really just a good sales pitch from a desperate industry.

            Debt Settlement is trying to legitimize the service when it leads to wage garnishment and 1099-C tax bills.

          • You know I’ve been critical of debt settlement, and depending on how much you’ve read on the site you may have seen that I also was able to assist some of our credit counseling clients back in the day with settlements, very successfully.

            I’ll try to correct a statement you made. Depending on how the debt settlement is approach, not all efforts lead to wage garnishment and as you can see by the link I gave you in my previous comment, not all settlements lead to charge off. The 1099 issue needs some clarification as well. If the debtor is solvent by the time they settle all their debts they will owe tax on the balance that took them into solvency, not the entire amount.

            If the debtor is insolvent, liabilities exceed assets, after settling their debt then there is no tax liability even though a 1099 may be issued. The IRS has a form for this.

            You may say this does not happen and it’s not a reality but I have personally seen it happen and other handle these types of cases every day.

          • Steve, I think this site is great and a wealth of information, but the bottom line is lets not talk about sometimes they don’t get sued and there have been cases where they are not insolvent.

            The truth of the matter is most of the time the consumer is getting sued and they are getting a 1099-C just please admit that it happens 75-80% of the time and I’ll let it go! LOL

          • Well actually…..

            The issuance of the 1099-C is not the hurdle. A 1099-C will be sent for any forgiven debt over $600, or at least it should be. This past reader Q&A touched on that fact.

            It is in fact easy for a consumer to be insolvent following the settling of debt(s). Do they have a mortgage or other obligations? It’s not the forgiveness of just the credit card debt that must be factored into the equation, it is the totality of all their assets and liabilities.

            People that have been sold a wait it out approach from advanced fee debt settlement companies have been sued at a much higher level. That is true. But that’s not a comment on settling debt as much as it was that model was always flawed and only designed for the companies to win.

            Using the strategy I linked to in my other article or in conjunction with making minimum payments or sending the remaining debts to a DMP, it can work without the lawsuit threats.

            In my day when we did settlements at the credit counseling agency we never had a single client sued. But that’s because we did it right.

            Saying all settlement does not work would be not true.

          • I know all the debts are included in the equation for insolvency. I know settlement works always has when either the collector or the bank rep does it with the consumer directly.

            I read the other article and its back to the rare case of assets and then a DMP. Settlement in 3 months? Fine. but again a rare case..

          • I think you are confusing settlement done the wrong way versus the right way. A blanket statement that it can’t work or is not for everybody would be a misstatement until the client individual situation is assessed.

            I’ve always said the best candidates for settlement were those that had cash on hand or soon to have cash on hand. I never took on anyone else.

          • It’s not a rare case at all. Approximately 30% of bankruptcy filings are via Chapter 13, and virtually every one of those individuals should at least consider the debt settlement option. If you can liquidate assets and negotiate settlements in 12 months or less, why put yourself through a 5-year BK?

          • You are mistaken. If debt settlement is done correctly, meaning quickly, then lawsuits can be avoided. On the DIY model discussed in the article Steve pointed to above, our clients settled nearly 1,200 accounts in 2010. Only *15* of those were lawsuits. Just over 1% of accounts. Move fast enough, and lawsuits can be avoided. On the 1099-C, most of our clients have been able to claim the insolvency exemption to legitimately avoid paying taxes. If not, so what? The sum of creditor payment + tax bill is still less than full balance, and way less than what they would pay back on the “forever plan” offered by the bank.

          • The rapid settlement approach is the opposite of a sales pitch. It is presenting the reality of the situation and the need to be quick about things, and when delivered in a consultation in a blunt and honest fashion, it is an enrollment limiter. So, the opposite of what you imply.

            Debt settlement does not need to legitimize itself. It is already a legitimate process. There are sales people that will try to legitimize it to the wrong people, but that is a different topic.

            Debt settlement done aggressively and rapidly mitigates the risk of being sued which can lead to wage garnishment.

            Being taxed on forgiven debt in excess of 600.00 is a legitimate concern and needs to be factored into the overall picture when deciding the path is the right one to take in the first place. My experience suggest that most consumers since the beginning of the recession are deemed technically insolvent and do not end up owing tax on the forgiven portion of debt resulting from the settlements.

            Knows how, your comments lead to my assumption that you work at a CCA offering DMP’s. Is this correct?

          • I have worked for a CCA that offered a prudent debt management program. What does that have to do with Debt Settlement? You say I’m partial? sure. but that doesn’t change the fact that debt settlement is a poor service! Do I find it appalling that Debt Settle. Companies over the past 4 years sent thousands of clients into bankruptcy? Damn Right.

            So now you are taking the holistic approach? But its vague and you are saying things like its “an enrollment limiter” ya think? That is the problem I have with this whole thing in theory sounds great! in practical terms poor decision.

            So you speak to 20 consumers and the one who fits this wizard of oz theory enrolls since you were honest about the issues of the service? and rapidly? What time frame in months is rapid?

            And the 1099-C is a legitimate concern? I would say so, and please answer me this question.

            How are you insolvent after you have reduced your debt to half of what you owe?

            Don’t you now by the mathematics have more money than you did before?

          • Does the CCA you work/worked for publish their results like Cambridge Credit Counseling does? If not, why not? You say prudent; by what and whose standard? How can the company you represent in your comment be judged for its effectiveness if it does not publish transparent data?

            Your partiality results in your speaking in absolutes. Debt settlement done well and with the right profile is not a poor service. I will not endeavor to change your mind, but will rebut where appropriate.

            You said: “So now you are taking the holistic approach?”

            My companies model has remained relatively unchanged since doors opened in 06. We have always provided a “holistic” approach (if I am interpreting your comment correctly).

            DMP’s are great in theory too. In practical terms a poor decision roughly 70% of the time, and that is based on 2004 data. Results cannot have gotten much better for the industry as a whole with the current economy (excepting Cambridge who publishes data that with a high degree of likelihood is relatively unique to them).

            The practicality of any given debt relief option is different for each individual. While settlement was “practically” marketed to anyone with debt and a wallet/purse, where it should not have been, does not mean a DMP is the practical option in absolute terms.

            How many people did/do you enroll into a DMP that would fit internal proposal guidelines and who could swing the monthly payment, but whose situation would have been better addressed with a chapter 7 bankruptcy that would provide them a quicker and less expensive fresh start? Did/Does the CCA you refer to have a process in place to even determine equal qualification for BK and DMP with a decision tree for the consumer to then make an informed decision about which one would best meet their needs and goals?

            I define rapid as 18 months or less for most. There are others who define it even more narrowly. Your wizard of Oz comment is, to be blunt about it, uninformed and smacks as childish.

            A solvency test is not exclusive to income or amounts of forgiven debt. It is a strict asset and liability test with much broader parameters. Why do you not know how this works?

          • I agree that some of the more brazen commercials may have been the cause of some very limited moral hazard.

            The implication that most people seeking help can pay there bills, but just don’t want to is off base. People making a call out for help don’t call unless they need it. My experience is that they actually needed the help far sooner than when they reach out, but they often delay and exhaust resources in order to float longer in the hopes their situation turns around. This of course limits the options available.

            The assertion that a DMP approach is now not considered good enough by some because a commercial said they only need to pay half is something of a straw-man argument given the fact that chapter 7 is less expensive, more immediate and discharges the full balance of the unsecured debts.

          • With all due respect Michael, off base is a poor choice of words. I was referring to a mindset the consumer has, not that they don’t have the intentions of paying when they call. They are just looking for a option that doesn’t exist. In theory the debt settlement program is great until they enroll and are trapped after 3-6 payments when nothing gets paid.

            Agreed they need to call when the debt is $10k not $50k or current before past due.

            Straw man argument? I take it you don’t speak with clients on a daily basis who are looking for their payments to be cut in half when you know it can only be reduced a few hundred dollars on a DMP. Especially the current consumer.

            I concur again; with the new bankruptcy laws on home equity you can go ahead and pay the $2500 and file Chapter 7, but don’t make light of the fact that the saturation of phony debt settlement ad’s over the past 5 years haven’t changed the mindset.

          • If my choice of words distracts, I apologize. Perhaps rather than off base I should have said “overly broad”.

            If contemplating the way debt settlement was marketed and performed in the past and where up front fees were the norm, I do agree that consumers would often find themselves trapped due to the fee grab used by the majority of the industry. Further, if enrolling someone who is not suited mathematically to even start down the settlement path, they can similarly be trapped as you suggest.

            What did you mean by “They are just looking for a option that doesn’t exist”?

            I do talk to people regularly who are looking for answers to their issues. I am sure that my experience is similar to reports I hear from the CCA space that roughly only a third or less can qualify for a DMP. That’s a function of the individuals financial condition, not a commercial.

            I will never make light of what I have often referred to as the over hyped over sold and “ponzi” nature of many aspects to the debt settlement industry. I am an outspoken critic in calling out the industries worst practices.

            The realities of providing a legitimate debt settlement service today are not the same as they were just a short half year to 7 years ago. The criticisms of today are mostly consistent with past practices, or when raised against those promoting the “loophole” processes still being exploited. Those same criticisms do not accurately reflect the changes that have been adapted by many industry participants since federal rules became effective last October.

          • What i meant by options that don’t exist is the government program or what ever “ponzi scheme you mentioned.

            Please explain to me with the new laws how can you justify telling a current consumer to stop paying their bills and we will settle the account for half?

            Knowing that the account is going to charge off lead to wage garnishment, destroy the credit rating and the 1099-C tax bills. Fees or no fees…It still a poor service… why not just file Bankruptcy?

          • I do not tell people to stop paying their bills. They have to make that determination on their own. Most already are behind on one or more when I speak with them.

            Legitimate debt settlement companies must provide a good faith estimate to each person prior to enrolling them. The estimate must contain several points. One of the points is what you estimate they will need in funds to settle a debt based on the companies current experience with each specific account.

            What new laws are you referring to? What would these new laws have to do with justification of payment cessation?

            You said: “Knowing that the account is going to charge off lead to wage garnishment, destroy the credit rating and the 1099-C tax bills. Fees or no fees…It still a poor service… why not just file Bankruptcy?”

            Not all accounts charge off before settlement. Only a small percentage of charged off accounts lead to lawsuits. Not all lawsuits result in wage garnishment. All legitimate debt relief options affect most peoples access to fairly priced credit products for about the same amount of time. Not all forgiven debt is treated as taxable income. Done correctly it is not a poor service.

            Why not just file bankruptcy? Good question. Anyone forced to consider their options with dealing with debts that are no longer manageable should speak with a local BK attorney as part of their research into what is right for them. I am of the opinion chapter 7 is often the option of first resort, not last resort as it is typically referred to.

            May I suggest a new site moniker?

          • Knows How, why are you making a blanket comment that people should file BK, without making any distinction between Ch. 7 and Ch. 13? Are you not aware of the enormous difference between these two solutions? Can you not understand how someone facing a 5-year BK might prefer a private solution instead?

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