FOR ALL THOSE CONSIDERING DEBT SETTLEMENT COMPANIES

***Please read this entire post if you are considering using a debt settlement company to alleviate your PDL/CSO loans.***

I have 17 PDL's, currently, worth $5,795 if I pay them off w/ no interest or fees, or $7,608 if I paid each one off w/ the applicable fee tomorrow. If I only paid my renewal fees, plus one loan from Green Picket that has to be paid back IN FULL each time, it would be $2,776. My paycheck is not that much money- I have some legitimate reasons how I got myself into this mess, and I've prevented foreclosure on my house and paid my medical bills so we could keep seeing our doctor, but now I'm in some serious trouble. I kept thinking that when I got my economic stimulus, I could break the cycle. Then it was my fall bonus- I could break the cycle. Then I took a hardship withdrawal from my 401K - still couldn't break the cycle. Had to pay the loans, the mortgage and the bills, so what did I do? Took another loan, and another.

Cycle in full swing and I haven't slept for weeks. What do I do? Contact Langhorne, even thought the Texas AG's office knows next to nothing about "debt settlement companies", calling them a "new" debt service and advising "extreme caution" when dealing with them.

So, since I thought I could handle a few of the smaller loans myself, I went to Langhorne asking for relief on ~$4800 of my PDL's (before interest fees). Langhorne wanted 1868.40 for THEIR fees alone, (average of $147.36 per month for 12 months), paid out over 12 months, to maybe get me a settlement with these creditors, with no guarantee.
Here's what my fee/savings schedule came out to be:
>1 $389.69 $17.47 (plus $100 enrollment fee)
>2 $389.69 $17.47
>3 $389.69 $17.47
>4 $194.84 $212.32
>5 $194.84 $212.32
>6 $29.95 $377.21
>7 $29.95 $377.21
>8 $29.95 $377.21
>9 $29.95 $377.21
>10 $29.95 $377.21
>11 $29.95 $377.21
>12 $29.95 $377.21

My total payout over 12 months w/ fees/savings would have been $4886 to get rid of MOST of my loans, maybe, with a lot of hassle and harassment along the way. That doesn't even address the loans I held back thinking I could go ahead and pay myself. I considered this plan for about 3 hours until I finally broke down and called my mom and told her the mess I'd gotten myself into. She strongly urged me to go see an attorney for a free consultation about filing for bankruptcy and it was the best thing I've done yet. I had some credit cards that suffered this year, and some old, unresolved debts from before I bought my house that had cropped up again, plus this PDL fiasco, so I took her advice.

When I met w/ the attorney, I learned this: My bankruptcy fees will cost me $3324, and this will address ALL my debt, and allow me to keep my home and my car. $1324 is due prior to filing, which I can handle w/ some assistance from my family - (they had options if I was not able to produce this much money up front, prior to filing). The remaining $2000 is paid out over 60 months, lumped into my Ch. 13 settlement payment.

Here's what you GAIN by filing Chapter 13: EACH of your creditors (credit card companies, PDL co's, doesn't matter) has to file proof of claim in federal court once they are notified by the court that that your attorney has filed for bankruptcy for you. An injunction from the federal court prevents ANY CREDITOR (PDL/CSO co's included) from contacting you or your family or your work AT ALL, with threat of federal and/or state prosecution if they violate that injunction. So I can bet you that all of my 17 PDL/CSO folks will either not file proof of claim or miss the deadline for filing. Once all the proofs have been filed, my monthly settlement payment is determined, and I pay back my debts, pretty much interest free, over 60 months with one payment per month. Now, here's the catch- here is where I either sink or swim- I either learn to be careful as hell with my money or I screw up completely and lose everything. I think I'll choose that first option. You have to take a credit counseling course BEFORE you file for bankruptcy in court and a debtor's workshop AFTER you file.

Once I decided this was the better solution and I emaild D'Ann back at Langhorne to tell her thanks but no thanks, THIS was her response to me:

Dear Julie,

Remember we only deal with payday loans. Generally, you are not able to include payday loan in a bankruptcy. How much would you be paying out to do the bankruptcy? How much would the payoff be for each payday loan? Let me know.

---- Original Message ----

D'Ann at Langhorne debt solutions told me an ABSOLUTE LIE in that email. You can include ALL debts from personal loans of any kind in a formal bankruptcy. So now, I don't trust Langhorne or any of thes other companies. The moral of the story is why deal with one of these debt settlement shysters (because I guarantee that's what they are - why do you think they only deal w/ PDL'S?) when you can resolve ALL your debt and pay it back in a responsible way with Chapter 13? Chances are your credit is already wrecked and the last thing you need is MORE high-interest credit in a bad economy, so seriously consider the more responsible alternative. Otherwise, I'd take advantage of the resources on this site, close your bank account and go after them on your own. Good luck and God bless.

Thanks,
Julie