Debt Settlement Companies Charge too Much – Settling Debt Yourself is Better
Hi, I am currently in a debt settlement program with a law firm called Persels and Associates. I have noticed that 40% of my monthly payments to them goes in contingency fees. In my opinion this is far too much to pay. Out of approx 8 credit card debts totaling approx $28,000, I have settled and paid two of those totaling $3,000. The remaining credit card debts appear on my monthly statement from Persells and Associates as either active or in progress.
Now, is there anyway I can just negotiate directly with my creditors myself and avoid having to pay the contingency fees to Persells and Associates for the remaining credit card debts? Or, since I entered this debt settlement arrangement, am I bound to let Persells and Associates work on my behalf from now on.
Any info is very greatly appreciated.
Can I cancel my debt settlement agreement and settle my credit cards on my own?
—Gerry
I agree that 40% is too high a fee charged by a company for credit card settlements. As far as how to cancel, if you were to, you can look to your contract with Persels and Associates.
Given the detail you provided, it appears they are currently collecting on earned fees for 2 credit card debts they settled already. Future fees for successfully settling additional accounts being based on contingency (performance fee), should mean you would not owe a fee for credit cards not settled. If you have not fully paid for the fees earned for work already performed, you should expect to pay any remaining balance owed for debt settlement services performed.
As for the remaining, settling debt yourself is absolutely an option! I believe most people can settle all, or the majority of their credit card bills, on their own. Thousands of people visit this site every day with that very goal in mind.
Negotiating and Settling Debt Yourself
Plugging into information and support systems that allow you to negotiate and fund settlements without the expense associated with hiring someone to do it for you is just smart.
Getting empowered to do some or all of the settlements on your own means you save money in fees which allows you to fund credit card settlements that much quicker and be out of debt more rapidly. The quicker you can move through settling the credit cards, the less risk you have and the sooner you can return to responsible spending and more stable finances.
If you experience difficulty settling one or more account on your own, only then would you need to connect with affordable and effective professionals to settle the debts on your behalf. At CRN we believe 15% of savings for professional debt settlement services is a fair and affordable fee and that is what is available through the negotiation professionals in the network. This is generally half of what most companies charge and, in your case, nearly a third of what your being charged.
I am assuming that your credit card debts have gone unpaid for more than 6 months so you will mostly be working with debt collectors and debt buyers at this point. Contacting collection agencies and working out an arrangement to settle the accounts is not rocket science. There is, however, a science to it, and it mostly consists of strategy.
When Negotiating, Who the Debt Collectors are Matter
Who was the original creditor and where is the debt placed now? If an agency has the debt on assignment from your credit card bank, how long have they had it and was it placed with an agency prior? If the debt has been purchased, by whom? Not all buyers settle debts at the same rates and not all buyers or agencies offer the same payment terms, where the reduced amount can be paid over many months, as opposed to a lump sum or shorter term payment durations.
Have any of the accounts been placed with a collection law firm? If so, this fact would impact the priority given to each account.
The state you reside in could change your debt settlement plan strategy. For instance, if you live in a state that has more advantageous consumer protection laws like North Carolina, Texas, Pennsylvania, Florida and some others, you have an element of time being more on your side than someone in New Jersey and other states lacking robust consumer protection laws.
Then there is the number one ingredient that goes into baking a settling debt yourself or having someone help settle it for you; the amount of money you can pull together over a specific period of time in order to follow through with the credit card settlement plan design. We can cover as much of that as you like right here on the site.
Learn more about settling debt yourself using our in-depth DIY debt settlement guide.
Anyone with questions or concerns about negotiating and settling debt yourself can post in the comments below for feedback.
Sam says
Hi,
I have not paid on my credit card (the only debt-$13,000) for almost a year now. I had hoped it would go to collections so I could settle it, and would like to either settle sooner or gain an estimate of when that will happen.
Is there any way I can do this? When I call AMEX they just tell me how far past overdue it is, and encourage me to pay.
Michael Bovee says
Is your AMEX account with a third party collection agency or law firm?
Hello Michael B I have 2 charge off with CAPTIAL one 4 years ago I am ready to negotiate or settle one account ($1000) second one ($2800) it’s at in house debt collector who I am already paid them every month already what is a good settlement price for deleting or paid as agree need some advice tks u
You could not offer Capital One 10 times what you owe them to delete it, or to mark it like you never missed a payment.
Settling the debt will result in it showing as a paid collection account.
You can accomplish all major credit goals with paid collection on there.
Settling is typically much more well received when you are not sending money in already.
Thank you so much Mr. Bovee.
Your dedication and devotion is remarkably incredible and outstanding to those in need like us for great advise and guidance.
Yes, we, thank goodness had our brother (brother-in-law) present to assist with paying off the debt of all the approximately 7/8 cc that needed debt settlement.
The banks worked with us and was in favor of cutting our debts. However the hardest being the “bigger” named banks such as Chase and/or Capital One. We were way over our “heads” and will not go that extent ever again.
One thing, which we failed to follow up with and didn’t know at the time (wasn’t aware of this support you provide) and after perusing your site– is getting those debt settlement letters with the accompanying pay off amount, date, and all pertinent information.
But, thanks to this insightful service that is provided by your team and yourself, there is some “light at the end of the dark tunnel”..
Thanks as always,
an avid reader,
A.
Oh.. forgot to mention. We are broke and (no funds at all) and no money in any escrow accounts
Thanks as always,
A.
Hi Mr. Bovee.
Yes, he was paid and is billing for more money that was a % that was settled from the accounts I settled myself.
The attorney is Mr. Michael Schlachter, attorney.
I never signed with a debt settlement company only a lawyer retained (with my husband). My brother in law- family paid off the debt settlement for us both that we put ourselves in.
There are no more debts to settle in our debt settlement case with this attorney. All has been completed about 3 years ago.
Any question, please ask away.
Thanks as always.
You’re the best,
A.
If you paid the retainer to the extent that was agreed, I would not accept a bill charging more money 3 months later, let alone 3 years later.
I would refuse the offer to pay more, and include a polite touch of indignity.
I suppose the only question I have, but more for future readers of this page, is how did you do on your settlements with each bank?
Hi.. I settled with various credit card companies with Capital One and Chase being the largest and the most difficult to settle. My assigned and retained lawyer was not on top of the account with either of the last of 7-8 credit cards going through settlement processes.
The lawyer now, about 3 years later, is seeking more for the debt settlement % sum.
I feel don’t owe him anything. He didn’t do his full & complete job as always advising to get debt settlement sign off letters that were paid to the credit card companies satisfaction with the date, company name, pay off amount, etc. Also, I had to personally intervene and be the “lawyer” for myself for two credit card companies which wanted to settle.
The lawyer is not sending anything certified mail for the bill. The secretary emailed us with an attachment from QuickBooks of the bill invoice owed.
Your suggestion is helpful.
Thanks much,
AG
I want to be certain I understand what is happening. I read your comment to say you had an agreement and retainer with the attorney,and he was paid that amount, but now is billing you for more money. Is that what is happening, or is it where you have not paid the full amount, but that the debt settlement attorney is billing you for accounts you had to settle for yourself?
Who is the attorney, and also the debt settlement company you signed up with if different than the attorney?
Are there any debts left to settle as part of your program?
Is there money in your third party escrow account?
I received the following reader comment via email:
“My father recently got into a lot of CC debt. He owes ~$11K to CapOne, Chase, and __.
He got a solicitation from Nationwide Debt Direct and signed their paperwork a few days ago. I learned about it, looked over the documents and it seems like the scams you outline in your posts. 36 month term, high fees that are hidden and mysterious – first 3 months all the payments go to fees. I asked them – what if we get the full balance ~40% of debt and can pay it to you in month 2 – they said that they don’t settle anything for at least 6 months – that seemed very fishy. First question: any thoughts on Nationwide Debt Direct? Should we cancel this deal asap?
Second question – how easy is it to DIY and negotiate the debt with the banks? Who would I call – customer service? Do you have a plan where I can speak to someone to create a negotiations plan together – if so, how much does that cost?”
Can you confirm that those fees are indeed paid upfront, and before a debt has been successfully negotiated? And if so, did your father meet with someone from Nationwide Debt Direct in person to go over the paperwork?
The ability to charge up front fees for direct debt negotiations and settlement services is largely a thing of the past. But there are some narrow exceptions, which is why I ask.
Debt settlement is not really an option in month two of delinquency. That goes for Nationwide Debt Direct, me, or even you or your father trying to settle. With some limited exceptions, it is generally better to target your earliest offers in the 6th month of late payments, or between 150 and 180 days late. Those settlements will often be negotiated with the original creditors, where settlements after 6 months late will get completed with third party debt collectors.
You can handle the process every step of the way, and negotiate the deals on your own. Start by learning how to settle with credit card banks in the first stage of collection. At the end of the article you can click through to the next article in the series.
I highly recommend you and/or your father read through the last several debt relief program reports too. You will need to understand why some accounts should not be settled, how to document the deals, etc.
I am obviously a fan of DIY debt settlement. But I also know that not everyone is up to the task, or would simply prefer someone handle it. You sound capable. If your father is not up to it, and you would like to help out, you can get him to give you written authorization, or verbal as needed, and you can get these done as good as a pro can. If you hit a wall on an account or two, then turn to a company to negotiate those.
How easy is it? I have coached thousands of people to do this on their own. There are some accounts that can be tougher than others, but most files were able to go start to finish on their own, about 80% historically.
I shut down the DIY and full service debt negotiations available direct through CRN about 2 years ago. I still do the same work, but mostly only publicly on the site so that everyone can learn from it. I do not currently accept paid files. I do recommend some debt settlement resources you can tap into for both one on one coaching like CRN has always offered, and for direct negotiations. The pros you can connect with all have reasonable fees that are explained on that page.
If you do decide to take the DIY approach, I can help you for free right here on the site. I do encourage you work one on one with a coach though. It brings an element that cannot be duplicated on line.
This is great thanks! If I want to negotiate in his behalf, how do I make that legal so that the creditors speak with me? I would want to negotiate down his debt and then lend him the balance to pay off the debt. I think he is already 60+ days past due on the payments so we will hit the right time to negotiate soon.
Also any tips on how to get to the right person on the phone that can make a settlement decision and can provide a settlement letter?
Thanks again – you’re a lifesaver! 🙂
Click through to all of the links in my above post, and read through that content. It will not take you long, you will have answers to your immediate questions, and will likely find you are 90 percent ready to negotiate the settlements.
Post questions that come up along the way, either here, or in the pages you read throughout the site.
You can download a limited power of attorney from many places on the web. You can also have your dad provide verbal authorization one time over the phone, with you there to hand the phone back to (3-way calling works too). There are a few creditors that seem to want verbal authorization each time you try to talk with them, so something in writing is often preferred.
I have a 9 year old credit card debt out of Arizona, am I protected from the collection agency from suing me or giving me bad credit scores?
If you have not paid a penny toward the debt in that time, the collections should not be on your credit reports, and the limit for a debt collector to legitimately sue you in Arizona would have passed.
That does not mean companies will not make an error, so monitor your credit.
we were in care one credit there was 3 bills left we were in it for41/2 years me and my husband decided to spilt up so I cancelled care one but there is one big credit card still its 6500 do you think they will still settle outside of care one if I take care on my own or will they even bother me since it has been 5 years
diane – Were you working with Care One to settle these debts for less than the balances, or enrolled in a debt management plan? If this credit card has not been paid anything for that 5 years, what state do you live in?
kentucky
Thanks Diane. Can you tell me if you were in a debt management, or debt settlement plan with Care One?