I was communicating with Mike Croxson, president of CareOne, who shared his written testimony with me regarding his view of the new proposed California SB 708 Debt Settlement Services Act.
His testimony stated
- the fee level set by SB 708 as a 15% of savings success fee was too low;
- consumers that contact CareOne broke down as 48% candidates for a DMP, enrollment was 25-30%, 12% suitable for debt settlement and 5% were suitable for bankruptcy;
- CareOne supports the ban on advance fees, mandatory disclosures, and to prohibit misrepresentations;
- the rule is incomplete and does not apply to nonprofits, face-to-face transactions, intrastate only sales, internet only sales; and,
- supports a fee level of at least 30% of savings.
You can see his full testimony below.
Sincerely,
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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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It is my impression that it would only apply to servicing California clients so a company could be located in California but not service California clients.
When is this expected to become law (if it is expected to pass)? Also, to whom will the SB 708 licensure and associated provisions apply? Will it apply to any company seeking to service CA consumers? What about companies based in CA…can they avoid the provisions by simply no longer servicing californians?
When is this expected to become law (if it is expected to pass)? Also, to whom will the SB 708 licensure and associated provisions apply? Will it apply to any company seeking to service CA consumers? What about companies based in CA…can they avoid the provisions by simply no longer servicing californians?
It is my impression that it would only apply to servicing California clients so a company could be located in California but not service California clients.
Making the world safe for the 50+15=55 scam. It’s like watching a tornado, awesome and beautiful yet devastating to all in tis path. They will sign thousands of desparate and scared families, take 55 cents from them, settle at 50 cents, charge 65 cents, and then convince the victims that it’s really their fault they did not have the discipline to complete the plan. Priceless.
Making the world safe for the 50+15=55 scam. It’s like watching a tornado, awesome and beautiful yet devastating to all in tis path. They will sign thousands of desparate and scared families, take 55 cents from them, settle at 50 cents, charge 65 cents, and then convince the victims that it’s really their fault they did not have the discipline to complete the plan. Priceless.
Errick, my assumption is that you work in credit counseling
at an executive level. Unless you reply that you are an attorney practicing
debt collection or bankruptcy, it would be hard to shake me off of this.
You have posted continuously on Care One threads on this site and rail against
debt settlement. You never mention that CareOne also provides debt management
plan services. Why is that?
CareOne offers DMP’s as a for profit company. One of the few who do. They do
not accept fair share or grant contributions from creditors to my knowledge,
unlike the non profit DMP providers who, for the most part, are beholden to
creditors and their whimsies because without the revenue from creditors they
would fail as going concerns. Why is it that CareOne can do what non profits can’t?
Are they more efficient than non profits? Probably, but let’s be real here. It
costs less than 10 bucks a month to service a DMP client. For some I bet the
costs are less than that. If the average monthly fee is $30 that’s at least a
200% return! With that kind of margin, why do non profits even need fair share
or grant money from creditors? What well run company cannot do well with a 200%
monthly operations budget?
I did not account for marketing. To do so would be to admit that nonprofit DMP
providers have to market. All the stuff I see presents nonprofits as some
benign help the community -help the people – type of set up. They are not. They
are companies just like any other. They just don’t pay tax and have to comply
with certain things as a result. They are to provide education. Big whoop!
There are many free sites with constantly updated money, budgeting and finance
education and advice that blow doors on the education offered by most non
profits. That being the case, non profits appear to not have to pay tax for
next to no good reason. If free sites can provide the same and better education
to consumers at no cost and pay tax on whatever revenue they generate, why cut
the nonprofits a tax break? Because they do the educating live in office or in
the local community, in schools and such? Maybe, but how many of the non
profits do that really? Could nonprofits who do not engage in DMP services do
the same and non profits DMP-ers pay tax? Yes indeed. Would creditors cut fair
share and grants even more because the “donations” would no longer be
a tax write off for them? You betcha! Nonprofits may take exception to my
stating this so simply, but it’s just not complicated.
So, non profits market. Is that why they need grant and fair share money? The
marketing and acquisition costs? Probably partly. I think its more a fact of
customer attrition though. What is the success rate of a DMP client? How many
people drop from a DMP in 3 to 12 months. Determining that number is important
for the American public to know. If the attrition is high, it means non profits
enroll people who should have been referred straight to bankruptcy. That’s the
only next step according to your answer. Why take on people who cannot finish?
For revenue and to serve the nonprofits true master, the banks. If nonprofit
DMP providers truly serve the consumer, and given your position that its either
DMP or BK than the only people who should ever be referred to nonprofit DMP
providers would be because of the BAPCPA. Following your logic it’s just that
plain and simple.
People should TRY EVERYTHING and when failed then to bankruptcy
is what you said above. Why Errick? Because its the moral thing to do? Because
it generates revenue for non profits? Because it serves banks?
So, what’s your opinion on CareOne’s DMP service they offer
while not accepting funds from creditors? Any feedback? I know mine. Its Kudos
to CareOne for being positioned to represent consumers more than banks.
Nonprofit DMP-ers cannot say they represent consumers more than banks with a
straight face.
I guess there are some states that require a nonprofit deliver a debt
management plan. So non profits should only exist to serve those states. I
think those laws should be changed to allow for profit companies who can do it better
and for less cost than the non profits and who pay tax to the treasury that
supports this country in its current troubled economy. Why the hell should
nonprofit DMP-ers be getting the tax break on DMP revenue when there is not
enough in the coffers to prevent severe poverty in this nation?
Errick – You favor DMP’s and I assume you work in the
nonprofit sector at a high and well informed level. How consumer focused are
the DMP-ers when 2 years ago one of the largest credit card issuers and another
one in the top 12 were offering account holders to settle their accounts at 15%
of the balance pre charge off? Were the DMP-ers “educating” consumers about
that? Bet not. For me, that would mean they are not interested in helping
consumers, just themselves and the banks they serve. Banks that, need I remind
you, have and will continue to pay out BILLIONS of dollars for their wrong
doing. That’s what you support Errick. A system that brought this nation to its
worst economic condition since the great depression.
“Now get in the pit
and try to love someone.”
P.S. I don’t work for CareOne or company related to them. I
am not related to anyone who does work for them nor any contractor for them
etc. I am just kinda sick of the Erricks and the holier than thou attitude they
have about debt management plans that are mostly offered by nonprofits. CareOne
is an exception and a good one for the DMP.