Open question to your forum

You have posed a very good question, I honestly do not know how the rating system was created. Perhaps one of the Admins can address this.

You have an excellent point. I am an active participant in the forum but this forum also is a for profit venture. I do not agree with the rating system and frankly only support self-settlement.

I was just wondering that if we can't trust IAPDA, TASC and USOBA, then whom should we trust? Can you suggest any organization? I would like to know on what basis are you questioning the credibility of these organizations? You are calling them "defunct" for god sake!! I don't think its a good idea to put the credibility of these organizations into test just like that.

I am a regular visitor of this forum. As far as Ranking Chart is concerned, I don't think anybody will be dumb enough to give credit to the companies that 'prey consumers'. Surely, they must be ranking the companies based on few factors.

I agree with what dantheman has said. It is always a better option to go for Do-It-Yourself (DIY). Settling or consolidating your debts on your own will be a better option as it will help you in saving quite a large sum of money that you'll have to, otherwise, pay to the debt relief companies. If in case, you're unable to negotiate with your creditors/collection agencies, then you should think about taking help from debt relief companies.

We appreciate the observation made by the OP. In the long run we look to rate companies based on consumer feedback. For that reason, we have added a feedback section where consumers get a chance to share their experience with the companies they are dealing with. We will give negative points to companies if we get valid proof against them. We took accreditations as basic minimum criteria for listing companies in our ranking chart. We encourage companies to be open with their fees structure. Moreover, the new law is well laid out now :)

As for the suggestion its really a good one and we look forward to the implementation of the same in the near future. Let us know if you have any other proposals.

Jason

I suggest the DIY method too. We started out using a guy that came highly recommended and we just about got skinned. BofA did get skinned under his plan but thankfully, we didn't lose much. It was stressful though. This forum gives so much good info that I would recommend doing it yourself.

I think you will find that a majority of the regular forum posters fall under the DIY method. That is my general observation at least. Most of them have settled some kind of debt at some point in time. I see benefits to both sides though, assuming you can get a legitimate company to help you and not one that just takes your money and walks. If you are not good negotiating over the phone or succumb to high pressure tactics then you might consider paying someone to take the abuse. If you can handle the phone calls then you will definitely save money DIY.

You make a good point--those phone calls can be nerve wracking at first! They make you feel like scum and try to get you to agree to things you can't do. It can be a lot of pressure.

My company has never registered in the ranking chart. We would receive the second highest score given the point criteria. We have never been part of TASC, USOBA or IAPDA.

Involvement in most debt settlement industry associations (including those listed above) has proven to provide no tangible benefit to consumers who reach out to the companies belonging to them. In fact, many of the companies who have been shut down or sued by state and federal regulatory agencies were/are members of these groups.

One of the reasons we did not submit for ranking when we became aware of the feature on this site was because of the credibility awarded by the system to members of trade associations where historically some of the worst actors in the industry can be found.

I am a fan of this site and am encouraged by Jason's response above. I look forward to new developments.

My best to DCC staff, moderators, posters and readers in the new year!

IMO consumers can negotiate debt settlements on their own. There's little reason to hire someone to do something you can do yourself, especially with so many resources available.

You won't get much of an argument out of me on that Shaz.

Mileage may vary

Really settling yourself is a very easy process if you prepare for it. I have read many very good posts on this site with pointers on how to settle debt. Below are a few off the top of my head to follow.

[SIZE=3]The hardest part in my opinion is saving the money. You need to change your lifestyle in order to save the required money to settle with. I have seen and written some posts about budgeting on this site to help in this area. If you hire a company then that is partially what you are paying for. They basically put you on a forced savings plan but they charge you 100???s if not 1000???s to do so. I think DIY is better because you can save those fees and use them for settling. [/SIZE]

The rest of the process is a matter of setting your figure and sticking to it. My suggestion is to look at the delinquent debt and offer 25-30% of the debt with fees, penalties and interest in the figure or 50% if they remove all that garbage. It is a negotiation tactic. You are telling the collector the same bottom line number in either scenario. Make sure to review the debt and make those calculations prior to making the phone call to insure that they are close to the same bottom number. The only time to raise your numbers is if they have sued and you have received the summons. Verify this through your court because collectors have been know to send fake summons and/or threaten to sue but not follow through. If the debt is past your state SOL then do not waiver and remind them that you will take that defense if they decide to sue. If the debt is over 7 ?? years old and outside your state SOL then send the collector a DV letter along with a cease and desist letter.

[SIZE=3]Do not discuss anything else besides the debt. The collector does not need to know your income, if you own or rent, if you have savings, pensions or SSI, if you own a car or any other miscellaneous information. Your goal is to make the collector think that all you have is the amount you are offering and if they don???t take it then the next one in line will get it. In some cases this might be true and in other cases it may not. [/SIZE]

I agree with all that you wrote save one thing Dollars.

Setting your own target for settlement and sticking to it is not realistic with original creditors or their assignees. Doing so can lead to litigation that was avoidable.

Original creditors often have settlement floors that cannot be breached without making an upper management exception. To get the exception, one often must prove a hardship. If you can prove it, great. Go for it. If you cannot, and you stick to your pre-targeted figure, you may miss an opportunity to put the account behind you. In some cases you may hit the target later on in the collection cycle, but in some cases the figure will get higher. If you are later sued on the account where the OC still has the account, it will most certainly be settled at a higher rate.

What you suggest is certainly applicable when settling aged debt that is past the consumers SOL for their state. It also has greater applicability when dealing with a purchaser.

Managing ones settlement percentage expectations and being realistic from the beginning about what you will be able to come up with and when is the first step to establishing whether you should take the debt settlement route or not.

If a consumer is heavier laden with accounts and balances with a creditor(s) known to settle at higher percentages, and she lives in a state known for higher percentage court actions, owns a home, has verifiable employment, is making current payments on installment or secured loans (easily seen by real time access to her credit report), she may not be suitable to take the settlement route.

The concept of settlement is not complicated, but it should not be overly simplified. I am not suggesting you have done so. Just weighing in with some thoughts.


Mileage may vary

settlement companies can & will get you in a bigger mess while charging you to do it ! i know that for a fact.. do it yourself and save yourself all those fees

I also agree with the general when speaking of debt settlement companies generally given the past 7-ish years of common industry practices.

New laws passed this year will create a different environment for consumers hiring compliant companies going forward.

There will be a dominant tendency on the web, in forums, in the press and media, to refer to the industry as a whole using historical earned bias that is unfortunately backward looking rather than forward. This fact is not unexpected right now, but should moderate moving forward.

The ability for DIY success has been, and likely will remain, the best first step to take for those people suited to it. This fact wont change until creditors practices change, which I do not see until the nation is experiencing a marked and measurable economic recovery.

Mileage may vary

I was referring more to a Junk Debt Buyer. You should always give more weight to an OC or their assignee because they can easily prove the debt. Also, as stated earlier if you are about to be sued then you need to reconsider your bottom line especially if they have solid evidence of the debt. I think it is smarter to settle even if it is more than what you wanted just to avoid a judgment. JDBs general can not validate the debt but if the debt is legitimate it seems easier to settle for a little more than to possibly end up in court. I???ve been fortunate enough to settle anything I have had or to scare them out of suing due to lack of proof so I have not been sued.

"The ability for DIY success has been, and likely will remain, the best first step to take for those people suited to it. This fact wont change until creditors practices change, which I do not see until the nation is experiencing a marked and measurable economic recovery."

Would you elaborate on what you anticipate will change with an economic recovery? I believe I know where you are headed but would like to be certain. dtm

Hi Dan,

Economic recovery (which in the context of my comment means jobs, jobs, jobs), will bring with it a return to more historical charge off and delinquency ratios for credit card issuers. The historic rate on average is less than 4%, where some issuers saw higher than 10% recently. When issuers see charge off stability we could see a return to more normalized recovery practices, both pre and post charge off. I can tell you that settling debt in the 90's and earlier part of the new millennium is functionally different than it is today. Pro's in the field were better positioned to negotiate and consummate settlement deals back then, where starting about 04-05-ish, consumers possessing the fortitude are just as well (or better) positioned to handle settlements in first stage collections.

There are other dynamics that may have major impacts on the debt relief industry and consumers settling debt moving forward.

The changes made to the telemarketing sales rules by the FTC were published only a few months ago. When enforcement of the rules begins in the early months of 2011, the industry will shrink further and as much as a few dozen companies will emerge as leaders with best practices. It is possible that larger issuers will begin to trust and partner with legitimate companies operating in the debt settlement space as a result. Some do now. Years ago the second largest issuer in the nation ran a pilot program with a settlement company where they verbally referred consumers to one of the larger companies at that time. Card members who were delinquent, fell out of re-aging plans, newly created bank sponsored hardship plans and those who were unable to continue with DMP's were encouraged to call the settlement firm. The program did not last long. The company???s fees being collected up front did not exactly deliver the recovery results anticipated. Due to new federal laws prohibiting upfront fees (with few exceptions), the recovery potential issuers were/are looking for will be more rapidly realized.


There are several outliers that will impact the debt relief space in the near future:


The CFPB will kick into full gear this coming July. I expect debt relief companies of every stripe and flavor to be impacted by the new agency within 12-24 months of this.


DMP providers have been working overtime the last 2 years to structure and organize less than full balance payment plans with the issuers they already collect money for. There have been pilot programs started already and I expect more in the new year.


The slow gears of legislative change to debt collection and debt purchaser practices are well under way. I expect amendments to the FDCPA within about 18 to 24 months. Depending on how the amendments shakeout, we could see dramatic changes to how issuers view and support long standing collection channels. Some issuers have already created internal post charge off departments and are hanging onto some debt longer than they have in the past. I think issuers will recognize better recovery and lower costs for that recovery by working directly with debt relief providers and consumers than by paying 15 to 25 percent to assignees collecting on their behalf. Agencies facing the specter of tougher laws and an increase of the statutory penalty caps for violations will have a lot more to think about soon. Can you say YAY?


The economic downturn is not over, not even close in my opinion. The debt relief space has seen a great deal of change recently and that is not over either.


This is an odd place for me to post these observations, but your question got me going with some pent up thoughts. In an attempt to tie this comment back into the thread: I think the ranking chart should be smaller and better vetted. I think the current number one slot deserves to be there because I know them and how they operate. If the list were to stick to its current format it should be limited to gold and silver and the ???also rans??? should be removed. I think the point criteria should be rethought.


SE

I think we are five years away from any significant recovery. I believe there are three major factors that have adversely impacted our economy. The first two factors are gas prices and banking practices. The final factor is how irresponsible our Federal, State and local governments are acting.

The first and most important is the gas prices. Gas prices generally are as follows:

2005 ??? 1.50
2006 ??? 2.00
2007 ??? 3.00
2008 ??? 4.00
2009 ??? 2.50
2010 ??? 2.50

The problem I see is gas prices are trending up again. Gas in my area is now over 3.00 a gallon. Our economy does not function well when it is over 2.00 a gallon. Some reports are calling for 4.00 in the next year. I think if it hits 4.00 again then it will cripple our economy for a significant amount of time.

The knockout of the one two punch in my opinion was caused by the banks. The banking industry has been very irresponsible in their lending practices. The banking industry single handedly caused the mortgage crisis in my opinion. They loaned excessive amounts of money to people that should not have qualified. Their method in loaning money was doubly impacted by the fact that it inflated some markets to values of more than 5x what those markets should bare. Couple all of that with the credit card debacle that banks have created and the American public has been left with a huge mess.

[SIZE=3]The final factor is how are government is responding. Washington believes they can legislate and borrow their way out of a financial crisis. Most state and local governments follow suit. I believe that is non-sense. More jobs, fewer taxes and smaller government are the only way out of this mess. [/SIZE]