Having worked with consumers who are struggling with debt in one form or another for many years, I have always endeavored to compile informative resources geared towards a better educated consumer. Most resources and professional assistance available to consumers are often ones that have a bias due to self promotion. Someone or some source that has something to sell you is generally going to tip the scale in their favor and is prone to “talking their book”.

In the debt relief industry, finding a reliable and affordable source of comprehensive information about all of your options that is unbiased and not motivated by selling you something is becoming increasingly difficult to find.

This post is about “talking someone else’s book”! In its seventh printing no less!

The #1 resource I could possibly recommend to a consumer struggling financially and who is concerned with being fully informed about all of their options to deal with crushing debt is “A Guide to Surviving Debt”.  This book has critical information EVERY consumer will want to evaluate if they are struggling to find the best solution for themselves and their family in tough financial times.

This book will thoroughly deliver reliable information that you can use to determine your best path for getting out of debt, with no concern for whether the information is slanted toward a solution other than the one that is best suited for YOU.

Let me put it this way:

Get this book, read it cover to cover, and you will know more than most of the self-proclaimed experts offering debt relief advice or products.

Surviving Debt tells consumers, their counselors, and lawyers what they need to know about:

• dealing with debt collectors
• which debts to pay first
• saving your home from foreclosure
• your credit report
• credit card debt
• student loans
• when to refinance your car loan
• income tax collections
• how to find effective credit counseling agencies
• special rights for military service members
• your bankruptcy rights
• much more

“A Guide to Surviving Debt” is published and available from the National Consumer Law Center (NCLC). NCLC has a dedicated and successful history of championing consumer rights that spans decades!

If you are struggling financially or work with people who are, you owe it to yourself or those you work with to review this number one go-to resource!

Michael Bovee
CRN – President

Well… maybe shocking to some.

I do not often post on consults I do. This one from about six weeks ago provides both warning and sound advice.

A gentleman in Indiana called in to the toll free line here at Consumer Recovery Network after hitting our website while researching debt settlement. I answered the call and proceeded down a list of general things I ask during a typical debt consultation.

He had already spoken to a representative of a NY law firm after hearing a radio commercial advertising services to reduce debt. He felt he had a pretty good foundation of what settlement was. As I started to lay out some facts about debt settlement, he started to lay out a little confusion. His confusion is a direct result of things that were not covered in his consult with the representative of the law firm.

The end result of the consult I did was that he now knew about the knock on effects of settlement and that it should only be considered as an alternative to bankruptcy. He recognized he was not close to bankruptcy, but did have a need to get out of debt. During the consult he recognized he could quickly sell 2 cars he was not using for under blue book and pay off his credit cards.

I heard from him the next day.

Being the considerate type, he had called the law firm rep after speaking with me, to inform him he would not need to enroll in his program. The rep (obviously the consummate closer) tried to overcome his objections and continue to sell him on settlement.

He told the rep that he did not want late payments reported on his credit report for the next 7 years. The rep told him “Oh, that’s only for corporations”!

He told the rep that he was not willing to risk being sued. The reps response was “Well… I suppose it could happen, but you would be the first”!

First what? First person the rep lied to that day? This guy exemplifies what is wrong in the industry! He should be answering his telephone with “Thank you for calling the Bib-N-Fib. Can I take your order?”

I could tell my car selling buddy thought I would be shocked to hear that someone was so willing to deceive in order to make a buck. Instead, I shocked him when I informed him it came as no surprise at all. I did tell him that I was highly skeptical that the representative that he was speaking with was an actual employee of the law firm. The rep was likely just a sales guy at a call center where callers from radio and TV ads are funneled, and whose only purpose is to sell callers on settlement so they can get paid a commission. Even if they have to lie, omit or deceive to do it!

I don’t think car guy would have gotten the same nonsense if he called the law firm directly.

The point of this article:

Consumers should only speak to the actual service provider they would work with. Any middle man has one motivation and that is the commission. Some are far more artful in their selling techniques than who car guy talked to (let’s hope most), but why would you need to speak with anyone other than who you are going to work with? You wouldn’t.

If you are looking into bankruptcy and have a consultation (do more than 1), you are speaking to the attorney or an employee of the firm on their direct telephone line or standing in the office.

If you are looking into a debt management plan offered through consumer credit counseling, you are speaking to the counselor or an employee of the agency on their direct telephone line or standing in the office.

Why in the world should you look into a settlement company any other way? You shouldn’t.

There are thousands of places on the internet offering a consultation to see how they can help you get out of debt. There is a daily bombarding of radio and television commercials offering debt help. The vast majority have no direct connection to the company that will actually be providing you a product or service.

If you hear from whom ever you are speaking to that they are going to “refer” you to the best, most reputable this that or the other thing, your talking to a sales guy. He or she gets paid by selling to you and will not be working with you after you start. They often have no accountability to the actual service provider.

ALWAYS start at the source!

I cannot identify one exception to this. Can you?

FICO Data Reveals That Settling Your Debts Damages

Your Credit Scores Less Than Filing for Bankruptcy

FICO, the company that calculates consumers’ FICO scores — the scores that are the most widely used by American creditors to determine whether or not they will extend credit to a particular consumer and the terms of that credit — recently released data showing how different negative actions consumers might take in regard to their credit will affect their scores. Among other things, the data shows that settling your debts is far less damaging to your FICO scores than filing for bankruptcy. In other words, the data helps make the case for why settlement rather than bankruptcy is an excellent alternative for many cash-strapped consumers, assuming that they either settle their own debts or work with a reputable settlement firm that charges fairly for its services.

The data released by FICO and available on its web site at: http://www.myfico.com/crediteducation/questions/Credit_Problem_Comparison.aspx, shows that as a consequence of filing for bankruptcy, consumers may see as much as a 240 point drop in their FICO scores. In contrast, if they settle their debts, their FICO scores may drop by 125 points at most. Interestingly because of the way that FICO scores are calculated, when consumers have higher scores prior to either filing for bankruptcy or settling their debts, their credit scores are harmed more by settlement or bankruptcy than are the scores of consumers who had lower FICO scores to begin with. According to FICO, the reason for this difference is that the scores of lower scoring consumers already reflect their credit missteps.

Despite the FICO data, I must caution you not to base your decision about which debt relief option to pursue based on that information. All debt relief options — credit counseling, settlement and bankruptcy — will have a negative effect on your credit histories and/or FICO scores for some time. (See my recent blog, Debt Relief Options vs. Your Credit Score).

When you are deciding how to deal with your debt, your primary concerns should be gaining a clear understanding of how each option works and its pros and cons, and determining whether the numbers associated with a particular option make sense for you. For example, your first test if you are considering settlement should be whether or not you can accumulate the money you need to fund your creditors’ settlement offers before your risk of being sued by them for what you owe begins to escalate. If you cannot come up with the money you need to settle your debts relatively quickly, then bankruptcy is probably your better option.

For free help determining which debt relief option would work best for you, fill out CRN’s consultation request form.

Media’s Lack of Understanding About Debt Settlement’s Potential for Consumers

is Frustrating and Bad for Consumers

Sure, there are exceptions, but I’ve found that most media run the other way when it comes to covering debt settlement. They seem completely unwilling to get educated about do-it-yourself settlement options and about ethical debt settlement firms like CRN, that provide debt-stressed consumers with a valuable service and charge them fairly for that service, unlike most debt settlement firms. Instead, they either ignore debt settlement or they paint debt settlement firms with a broad brushstroke, characterizing every firm in the industry as a rip off.

Not only is this characterization unfair to those members of the settlement industry that truly want to help consumers get out of debt, but it’s also unfair to consumers who are burdened down with debt and looking for a way out. If they work with the right firm, debt settlement can be a great solution for many of those consumers. Yet, most media reports scare consumers about settlement and warn them to steer clear.

With countless consumers struggling to deal with mountains of debt and with the consumer bankruptcy rate on the rise, the media is doing consumers a disservice by not providing them with fair and balanced information about debt settlement. By fair and balanced I mean:

• explaining the goal of debt settlement

• detailing when settlement is an appropriate option and how it compares to other debt management options

• educating consumers about how to settle their own debts and the resources available to help them

• telling consumers how to chose a reputable debt settlement firm

• warning consumers about the warning signs that a firm is not on the up and up

So, I am issuing the media a challenge: Get informed about debt settlement! Understand how it can (and should) work and who it’s right for, warn consumers about the bad firms, and inform them about the good ones. Under the right circumstances, debt settlement can be a great option for consumers and every bit as legitimate an option as debt consolidation, working with a credit counseling agency or filing for bankruptcy. So, it’s time for the media to inform consumers who are drowning in debt that there is another option available to them — debt settlement.