....not really Consumer Credit Counseling Service, but a somewhat bizarre variation.... Quick recap...I'm a lender, but I collect delinquent accounts too....so here goes... I have a customer with a loan, gets behind, promises to pay (once, twice, three times--whatever)...then tells me he's gone with a consumer debt management outfit. OK--no big whoop, I deal with them all the time; however, whereas 5 years ago there were five, now it seems like there's 500 of 'em... I call them, leave no less than three messages...no return calls, no faxed proposals...nothing. Call the customer....he explains to me that the way this place works is they tell him they'll have all his debts paid in 4 years....goes on to explain he sends them $400+ per month, and they'll negotiate settlement amounts for all of his outstanding (unsecured I'm assuming) debt...he says THEY say they have contacts at all the "companies", they've been doing this for years, etc. and so on. Customer also tells me that THEY said don't pay anyone, and if they (like me) contact him, send a cease and desist letter...at which point I tell the customer that no matter how many C&S letters he sends me, it doesn't matter--I've got the loan contract in front of me, and if he doesn't pay, it'll go to our attorney for judgment and garnishment, regardless of what this consumer debt place says. He says they know all about the FCRA rules, and so on... I say he's being taken for a ride.... Thoughts? David
This sounds like one of the many "Debt Negotiation" companies that have popped up over the last few years. They basically require their customers to send a set payment per month, keep it in escrow and when they have enough to negotiate a lump sum settlement for a debt they then contact the creditor. They assure their customers that although their credit report will indicate lates initially this is one of the things they will negotiate is removed when they arrange a settlement on the account.
I almost went for one of these "deals" years ago, and actually did a smart consumer thing by checking with the local BBB before I did. Found really bad references...Horror stories that late payments kept piling up, no reduction in interest rates...just like the previous post said. Customers were basically led to believe this was like a traditional CCS. I think the name of the company was Phoenix Financial or something like that (you know, "PHOENIX" rising out of the ashes, lol,......kind of grabs you.... their marketeers must have been really impressed with themselves) I got the impression that it was a really bad deal for anyone who thought they were dealing with a traditional CCS with a beginning and an end. But that's just my opinion. <I suffer from "beginning senior moments" where I am somewhat of a ditz, or at least that is the excuse I use, rather than blaming it on hair color. > I wound up filing 13BK instead. Filed June96, discharged December 2000. Paid $16K towards secured debt (car) and $18K to creditors of unsecured debt...
Some of these deals like this that have cropped up lately are really just scams. They probably need to be investigated. We have some pretty good investigative minds on here. What's the name of the company?
I'll have to look when I go back to work Monday...Better Budget something something...I'm not exactly sure... David
I found a brief article on this topic. Everything I have heard or seen on the web or at work gives this type of business a bad report. http://www.msnbc.com/news/757370.asp?cp1=1
David, You sound like me 25 years ago. Of course, this was before all of these "debt negioation firms". I'd get a call from someone who was 60 or 90 days late and the person would start off by saying ,"I can settle this for 30% today." Left unsaid was the implication "take it or leave it". My response was always, "could you tell me exactly which clause in the loan document gives you the authorization to make ME a settlement offer?" I thenmade sure the pause was very long. I never said a word until the debtor stammered something. Then, I'd tell 'em they had until whatever the chargeoff date was to bring this current or, we'll sue. And then, I 'd do it. The trick is not to let this drag on forever. I always found collection agencies worse than useless in collecting bad debt. The second theloan is charged to P/L, is the second you sue. You'll be surprised at how fast and how much you recover.
I don't see any basis for a lawsuit. Perhaps he'll give us some of the documented verbiage from one of his classic cases.
Assuming you are referring to keepmine's comments - he works for a lender. I think you are misreading his comments. He is saying that instead of waiting for a defaulted debtor to diddle around, he took them to court immediately over the debt they had defaulted on. His comments are not directly related to the discussion of this particular CCCS, and I don't believe he is referring to suing over the person's comments, but to recover the money the debtor owes to the lender he works for. I'll shut up now, keepmine doesn't need me to interpret for him, I'm sure.
Greg, Breeze is correct. At one time I was a collection manager for a bank. My post was addressed to David {who started this thread}. Just telling him how I used to handle late pays who wanted to negoiate a settlement.
You're right keepmine. As for authority to negotiate a debt--it's really quite useless, IMHO, and has no legal legs to stand on (I'm sure I'll be corrected if I'm wrong, and would encourage anyone to do so). The only laws a lender are under any obligation to abide by when it comes to collecting from the lendee are the FCRA and bankruptcy laws...that's what they are there for. When I agree to a reduced payment amount--say through a "legitimate" debt counseling place--I do so as a courtesy...to help the lendee, and recover the loan over a longer period of time and/or with a reduced rate of interest. I'm bound by no one, and no law, to honor it. This business of debt negotiation is hogwash; it's akin to me borrowing money from the bank on Monday, and then on Tuesday, telling the bank "oh, Billy Bob is my debt manager...you need to contact him--he told me not to pay you. He'll probably negotiate a settlement with you". Uh, no--Billy Bob didn't borrow the money--I did. Seems to me they (these debt negotiation people/companies) prey on people by offering them unfullfillable promises, false hope, misinformation, and unrealistic expectations of outcomes. Judging from this encounter (at work) so far, people truly ignorant of the FCRA, and the law (and sometimes plain common sense) are at the worst risk. Just my opinion...had this been an actual opinion, you would have been notified to seek shelter... David P.S. The basis of the lawsuit is to obtain judgment, and ensuing garnishment, property seizure, lein attachment, and the like.
David you are sooooo right about these companies. I'm a yahoo user, and of course they know I frequent these boards and such. As a result I get non-stop advertising for these kinds of agencies. It is amazing what they say, and how their ads make people think this is a realistic way to get rid of debt. I imagine that people with pretty good credit, who are not in real trouble, are naive enough to succumb to these ads and ruin their credit in the process.
