A tipster (send in your tips here) sent me a document from inside Persels & Associates that lays out current client debt settlement success rates. The percentage of settlements is interesting but what really caught my eye was the statement that after implementing the DebtConnect Online solution that it was easier to secure some better settlement offers for clients.
DebtConnect is an online portal where creditors are able to log-in and accept pre-negotiated settlement offers. This process significantly speeds up the settlement process and all online activity through DebtConnect is recorded and noted in the client’s file.
On the surface it appears the DirectConnect Online system, that I’m not familiar with, may have an edge over other similar systems that attempt to achieve the same sort of outcome but charge the creditor up to 8% as a transaction fee. I can see no statement by Persels & Associates in the leaked document, that this is the case.
While the leaked document is not a statement about all clients enrolled and only addresses settlements actually received by Persels & Associates in August, it is a representation of the actual settlement clients received. This is not to be confused with statements made to consumers in an inducement for them to purchase settlement services. In those statements and figures quoted the FTC has extensive guidance on what must be included to give consumer full information. In that case, the overall performance figures would need to include accounts not yet settled or dropped.
In this case the leaked Persels & Associates document is not a sales document so the figures need to be read in that context.
The document says:
“Our Creditor Negotiators had a great month during August, settling 7,642 creditor accounts for our clients. Their success is due in part to our expanding relationships with original creditors, debt buyers, and collection attorneys. Each month our negotiators formally exchange settlement data with over 30 of the largest firms looking for the best deals through our Data Exchange process.”
That’s huge, “settling 7,642 creditor accounts” in one month.
And apparently the settlement percentages in August must be somewhat within expectations since the document says, “In determining which settlements to pursue, we only consider deals that are in the best interest of our clients. We use our historical settlement intelligence to determine if and when we should settle an account with a particular creditor. Our settlement rates clearly display the success of this approach.”
Here is the information Persels & Associates probably did not want to leak out, besides the rest of the document as well.
Below are some of our top activations from August. Most of these settlements are NOT with the original creditor (except BOA where we reach favorable settlements through Data Exchange). Often the very best deals are reached with a collection agency and it is important that a client understand that original creditors and collection firms can and will be very aggressive in their collection activities. They will often say or do anything to secure a payment. Clearly, they are not looking out for our client’s best interests. That is why your assurances and reinforcement of how the process works during your initial consultation is so vital. Settlement can be a scary process and that is why they hired a law firm to help. – Source
The information in the document shows the accretion, or balance creep, that typically occurs with accounts between enrollment and settlement when settlements are not able to be achieved straightaway, probably due to the need to accumulate money for settlement. Looking at a sample of the creditors included it looks like the balances crept up at the following rates:
- Midland Credit Management – 12%
- Zwicker & Associates – 8.5%
- Frederick Hanna & Associates – 9.1%
- Brachfeld & Associates – 21.6%
- Bank of America – 5.2%
I’d love to hear from another settlement company that is willing to compare their settlement percentages in August on the record. Let’s compare apples to apples. I’m interested to see what similar results are from other settlement groups.
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