I posted a topic in the Chap13 forum and it was suggested I post a new thread here about my experience with Debt Settlement and Debt Negotiation programs.
First if you don't already know, these are two different programs. With settlement you work with a company that directs you to ACH money into another bank account. Eventually as this money builds in this account they will call up one of your creditors and negotiate a term to settle the account right then and there. Nothing up to this point is paid to your creditor by the company, or yourself. The rep told me once I was "in the system* I could tell the I was working with the program to get them to stop calling, however once I signed on and got the welcome packet (a payment later) - it says do NOT do this because if they find out they can speed up legal actions.
The problem with this type of program that worried me at the start was the fact that the creditors don't know your doing it! To them you are just missing your payments. I mentioned it many times to my contact that I was afraid of charge off, being sued and eventually garnishment in email, she wouldn't respond to these concerns in email and it makes sense now why not. She suggested I call her which she would tell me most of the time it takes longer then two years for these types of things to happen. What a joke! 3 months later I have 4 charge offs.
After a couple payments to the program I finally got tired of the situation and 'not doing anything'. I called to cancel and 10 days later I got a check for half the amount of money I sent in ($800 a month) the rest being their 'fees'. I learned later from GP that this system might be against Michigan Law and I intend to look into this and perhaps get more of my money back from them. The law has to do with not being able to collect fee's without performing any services.
There are a couple of companies that provide this service, we started with Freedom and they changed us over to CNI.
So then we looked into Negotiation. With this program they negotiate rates and make payments monthly to your creditors. With Greenpath we were able to meet in person and go over everything. It seems like a good plan, with a maximum of $50/mo for their fees a month (not 400+). I just think personally for us, it's too late. Had we started 3 or 4 months go, it would had probably worked out.
I think debt negotiation is much like ch 13 in the sense you make one payment and it gets dispersed. However, it is not legally binding - the Creditors do not have to accept your, or any proposal and you could end up paying them back in full through the program. The reps are very nice and not judgmental at all. I felt very comfortable talking about our situation with this person.
Like I said had it been three or four months earlier, we would be going strong with this program with out any charge offs. Of course they will work with collection agencies but it makes it just that much harder and chances are your payments will be higher.
When you meet with the rep they will go over your income, living expenses and creditors. They will pull your report for $15/ea and match that to the information you have. They will explain how everything works, how much they can typically negotiate for with certain creditors and then they will leave it all up to you. One problem we had with this though was not only the timing with the charge offs, also a new job. We couldn't start the program for a couple months.
So if you *can* afford to pay it back, *can't handle* all the payments yourself and are about 60-90 days into default, negotiation may be the answer for you. Even if you have a few at the 120 day typical charge off mark, they can still help you. I would recommend people check this type of program out before BK if you still have time.
I would never recommend a settlement program.
First if you don't already know, these are two different programs. With settlement you work with a company that directs you to ACH money into another bank account. Eventually as this money builds in this account they will call up one of your creditors and negotiate a term to settle the account right then and there. Nothing up to this point is paid to your creditor by the company, or yourself. The rep told me once I was "in the system* I could tell the I was working with the program to get them to stop calling, however once I signed on and got the welcome packet (a payment later) - it says do NOT do this because if they find out they can speed up legal actions.
The problem with this type of program that worried me at the start was the fact that the creditors don't know your doing it! To them you are just missing your payments. I mentioned it many times to my contact that I was afraid of charge off, being sued and eventually garnishment in email, she wouldn't respond to these concerns in email and it makes sense now why not. She suggested I call her which she would tell me most of the time it takes longer then two years for these types of things to happen. What a joke! 3 months later I have 4 charge offs.
After a couple payments to the program I finally got tired of the situation and 'not doing anything'. I called to cancel and 10 days later I got a check for half the amount of money I sent in ($800 a month) the rest being their 'fees'. I learned later from GP that this system might be against Michigan Law and I intend to look into this and perhaps get more of my money back from them. The law has to do with not being able to collect fee's without performing any services.
There are a couple of companies that provide this service, we started with Freedom and they changed us over to CNI.
So then we looked into Negotiation. With this program they negotiate rates and make payments monthly to your creditors. With Greenpath we were able to meet in person and go over everything. It seems like a good plan, with a maximum of $50/mo for their fees a month (not 400+). I just think personally for us, it's too late. Had we started 3 or 4 months go, it would had probably worked out.
I think debt negotiation is much like ch 13 in the sense you make one payment and it gets dispersed. However, it is not legally binding - the Creditors do not have to accept your, or any proposal and you could end up paying them back in full through the program. The reps are very nice and not judgmental at all. I felt very comfortable talking about our situation with this person.
Like I said had it been three or four months earlier, we would be going strong with this program with out any charge offs. Of course they will work with collection agencies but it makes it just that much harder and chances are your payments will be higher.
When you meet with the rep they will go over your income, living expenses and creditors. They will pull your report for $15/ea and match that to the information you have. They will explain how everything works, how much they can typically negotiate for with certain creditors and then they will leave it all up to you. One problem we had with this though was not only the timing with the charge offs, also a new job. We couldn't start the program for a couple months.
So if you *can* afford to pay it back, *can't handle* all the payments yourself and are about 60-90 days into default, negotiation may be the answer for you. Even if you have a few at the 120 day typical charge off mark, they can still help you. I would recommend people check this type of program out before BK if you still have time.
I would never recommend a settlement program.
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