Please Review This Debt Rx USA Marketing Material for Me. – Jeannie


“Dear Steve,

Debt RX USA sounded too good to be true, started researching reviews and found your site. any advice? am forwarding the letter I receuved from them after our phone call. am glad I did not sign up with them.


Dear Jeannie,

First off, thank you so much for sharing the information you received from Debt RX USA. I have written about Debt Rx USA before. See With Debt Rx USA I Have Had a Miserable Time and I Question Their Legitimacy. – Ralph.

The information you sent was very detailed so I thought I’d paste it here and then add my comments in bold [ ].

This is the email that Jeannie forwarded to me that she had received.

From: “Keith [—-]”
To: “‘Jeannie
Date: Thu, 23 Jul 2009 10:46:04 -0500
Subject: RE: info to review

Here is a break down based on 20k.

We discussed two types of programs:

Debt Consolidation

These companies will lump your accounts together and work on your interest rates. The majority of the time, they will get those to fall a couple percentage points and set you up on a program that typically takes 5 to 7 years to get everything handled. So, you’re still paying back 100% of what you owe….plus interest on each account. The reason these companies don’t try and help a little more than that is because most of them are owned by credit card companies. So, it’s not in their best interest to. We don’t do ANY of this. [He’s talking about a traditional debt management and credit counseling company. As critical as I have been about the relationship between creditors and credit counseling, it is not true that they are owned by creditors.]

Debt Settlement

This is the service we provide. We negotiate cash settlements with your accounts that work out to be an average of 40% of the balances you currently owe. This 40 cents on the dollar average is the national standard for settlement nationwide. [I don’t know that to be a fact.] With debt settlement, you will be out from underneath your debt in an average of 36 months or less. [Misleading. This is only true if all clients had all debts settled within this time range, which I know is not a fact. The success rate of debt settlement is actually relatively low with few clients of any debt settlement company have all debts resolved through debt settlement.]

Both types of management programs will affect your credit in some way. With Debt Consolidation, the company name you go through will show up on your credit report as a third party intervention. This is interpreted as you going through an assisted program to take care of your debt. Many loan officers compare a third party intervention to a Chapter 13 bankruptcy, because it’s a reorganization of your accounts. [A gross exaggeration of reality here designed to scare you away from the debt management solution.]

With Debt Settlement, your accounts will not be receiving minimum monthly payments during the program. They will only receive a one lump sum cash settlement that we negotiate. So, your payment history will be affected. [If your creditors are not receiving your minimum payment from you each month as agreed, they will most certainly report your account delinquent and that will be reflected on your credit report.] As you settle each account, it will be reported back as a paid as agreed remark and a zero balance. [What they fail to mention is that the debt that may have been settled will appear as a negative item on your credit report in addition to any comment about the settled amount being paid.] This will help improve your debt to income ratio, as well as your credit score. [How, since the credit report will now be littered with missed payments and written off debt entries.] Also, our company name will never appear on your credit report, so this will look like you paid your debt off on your own. This will put you in a position where you can receive prime interest rates again after finishing the program. [Holy crap! I can’t believe they actually put that in writing. This is not true. Maybe prime+bad credit rates.]

Based on $50,000 of debt, we will negotiate that down to about $20,000. [Is that a guarantee?] Our company charges a flat service fee of 15% of your total debt, so your total program cost would then be only $27,000. [Odd, 15% of $50,000 is $7,500, not $7,000. The service fee is $7,500 but they don’t calculate that for you. You also told me they were asking you for $547 up front so while this is a setup fee, and part of the 15% it is not disclosed in the number presented to you.] So, you’ll save about $22,500 off what you owe. To have you out of debt in 36 months or less, your monthly budget would be $763.89. [This is only an estimate and not based on actual negotiations with your creditors. And if some of your creditors refuse to deal with the settlement company or don’t settle, guess what, you are not out of debt.] We do have longer program lengths available that will give you a smaller monthly payment if that is needed. With any program length, you would have the option to pay everything off early with no penalties. [Oh goodie, you get to pay their unearned fees off early. Whoopee.]

See also  Debt RX USA Debt Settlement Company Consumer Complaint

Our fee is already included in that monthly payment and it is prorated out over the first 17 months of the 36 month program. For the first 3 months, we will draft that $763.89 from your personal checking account. [The first three months will be taken exclusively for fees for services not delivered to you yet, on top of the setup fee of $547 they already would have collected from you. This will be $2,291.67 + $547 or $2838.67 that you will be out of pocket right off the top. I doubt any of that is refundable to you.] For the following 14 months, you’ll be set up on what we call a split pay. During this time we will only be drafting a little bit less than half of that $763.89. [They will take an additional $5347.23 in fees for debt settlement service not delivered to you yet during months 4 to 18. At the end of time you would only have about $5,300 in your savings account, that hopefully you have not touched and that will not be enough to settle all of your debts.] The remaining portion will be deposited into your own personal savings account at your own bank. After those 14 split pay months, you will deposit the entire $763.89 into your personal savings account. The money you put into savings is what you will use to settle your debts one by one.

For example, say you have an account you owe $1,000 to. We estimate to settle that for about $400. Once you have $400 saved up in your savings account, we will finalize all negotiations with that creditor and have you send them a cashier’s check for the $400. [If they accept that amount as a settlement.] In exchange for that, you will receive a letter from them showing your account was paid satisfactorily and that it will be reported as a zero balance. [Again, not true. The settlement amount may be paid satisfactorily but the debt forgiven will appear as a negative item on your credit report. Hopefully the settlement letter is obtained before you send funds to the creditor so you know there has actually been an agreement.] We will then move on to your next account.

At the beginning of the program, it’s possible that you may receive phone calls from your creditors. [Possible! I guarantee you that the moment you fall delinquent on your payments to creditors that you WILL be getting calls and letters about it.] We will get this correspondence redirected back into our office; it will just take a little time. [By directing creditors to change your mailing address to them? This will also keep you out of the loop on actions on your account by creditors.] Once you start the program, we will engage your creditors and let them know that we are taking over. We will present this to them as a financial hardship so they understand that you are not trying to run away from your debt. [So how do you think creditors are going to react to you having $763.89 a month to pay, but not to them. Do you think that will be understandable and applaud your action, or will it just make them angry?] You are set up on a savings budget to get this taken care of. This will hold leverage with your creditors because it will show them that you are trying to make good on your accounts. [Sorry, that’s just bullshit. Now I’m getting really pissed off.] The best thing you can do in the mean time while we’re working on redirecting their correspondence is to screen your calls the best you can. You’ll want to try your hardest not to speak with your creditors. [If you do this you are asking, no begging, to be sued by your creditors.] There is no law that says you have to, so don’t put yourself through the hassle. Just let us take care of everything for you. If they cannot get in touch with you, it will help us redirect their calls much faster.

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You will also have one of our Customer Service representatives contact you every single month of the program to give you updates and answer any questions for you. Of course, you are welcome to contact me any time during your program with us.

My Comment: This marketing material makes no mention that if you are not sending payments to your creditors that you can be sued, your wages can be garnished, attachments could be made on your property, etc. It also completes ignores the tax liability that you will incur when you settle. The creditor will be required to file a 1099-C form with the IRS. It makes no mention of the fact that settled debt is treated as income by the IRS and you will have to pay tax on that forgiven amount, just as if you got it in a paycheck.

We are audited by the United States Organization for Bankruptcy Alternatives, monitored by the FCC [For what? What does the Federal Communications Commission have to do with debt settlement, except monitoring for false advertising?] and we are by industry standards, compliant with the Federal Trade Commission. [With all these half-truths, misleading statements and omitted information, I can’t see how they would be in compliance.]

I am enclosing the USOBA link. Feel free to call them at 281-820-0666 to verify our membership. I also have enclosed a news link on our company. We are a settlement company with vast experience run by settlement professionals. We, unlike many settlement companies, provide customer service and settlement arbitrating in-house. Many companies choose to sub out the most important phases of the settlement process, thus sacrificing care of clients and providing the best possible settlements.

We are the best solution for your debt and I am here to help! [I’m not sure I have any words to respond to that statement. I’m just shaking my head.] I look forward to your call today.


http://www.ibtimes.com/prnews/20081022/debt-settlement-consolidation-consumer-counseling.htm [It’s their own press release, big deal.]

Keith [—-]
Senior Financial Director
Main (877) 661-3834 |Fax (469) 519-4272
5501 LBJ Freeway Suite 100 | Dallas | TX 75240


Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

This is what a Chase settlement letter looks like. It means nothing. It does not mean that your debts will be settled, even by Chase. It is a document that shows that one person got a settlement with Chase. And Chase should be spanked since their letter does not disclose the mandatory IRS reporting for the forgiven debt nor does it talk about how they report the debt forgiven on your credit report. It only makes mention how they will report the settled debt. The letter I assume is supposed to provide you with confidence that all your debts will be settled and ease your mind so you’ll enroll with Debt Rx USA and pay them $7,500 in fees for a solution that is not guaranteed to succeed.

Bottom Line Here:

I have a really hard time saying anything about this marketing letter other than it comes across as an intentional and deceptive effort to induce you to enroll in a program based on incomplete information and missing facts with what appear to be less than truthful statements. I am totally disgusted with what this marketing email attempts to accomplish.

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2 thoughts on “Please Review This Debt Rx USA Marketing Material for Me. – Jeannie”

  1. Steve, great feedback to this consumer. I have over 9 years experience marketing financial services HONESTLY and I too am shocked at the level of false advertising that goes on. Let me see if I can add a couple important points to your comments.

    When evaluating any debt relief company online if they do not have a FULL disclaimer exlpaining their marketing claims. LEAVE.

    Reduction expectations:
    Do not trust any company that advertises debt reductions over 50%. Amazing some advertise 40-80% reductions! Which is advertising the exception not the rule.

    The Debt Settlement industry averages a 50% reduction. PLUS the cost of the service, normally 10-15% of your total debt. A better expectation is that at the end of a program your debts might be reduced by a total of 30-40% of the entire debt load including service fees. Meaning you may pay 60 cents for every dollar you owe.

    Hardship – This is a hardship based program you MUST demonstrate a legitmate hardship or absolutely no negotiation will take place. If a company does not review and scrutinize your hardship, run.

    Negotiation is NOT a 100% done deal.
    You must be willing to risk that your debts do NOT get settled, and or they are reduced only slightly.

    Length of Program.
    Creditors will NOT wait forever to negotiate with you. Going for a low monthly payment extends the length of your program and does not help you it can hurt you. Programs over 36 months are risky.

    About Credit Counseling/Debt Mangagement. Although they are not directly owned by credit card companies they are highly compensated by them. If you complete their program they no longer get paid.. so their incentives to get you debt free are questionable. Also, many counseling services have board members with direct ties to credit card companies. Less than 20% of consumers complete a credit counseling program successfully. If you miss a payment to your counseling program, you can be dropped and you are a back at step one, with the same debt and problem…two years of effort later. In my view there is no real comparison between settlement and credit counseling as they serve two different purposes.

    Settlement is a strong and serious reaction to debts you are *not able* to pay and you face a potential bankruptcy.

    Counseling is for consumers who simply got over their head with high interest rate credit cards and need “breathing room” but they are *able* to make their monthly minimum payments.

    As always, check with the BBB, your state Attorney General’s website and ask your service provider to give proof that they are licensed to offer their service in your state.
    .-= Jerry Nordstrom´s last blog ..8 ways to find your way to the WC =-.


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