The income based means test was introduced as part of the 2005 changes. It is a household income hurdle that must be cleared first. The allowable earnings are different from state to state.  You basically must earn less as a household than a set dollar figure. If you are over the median income amount, there may be allowable exemptions that apply to you that will help you clear the means test. A good bankruptcy attorney will be able to help you better evaluate any exemptions.

This income hurdle was supposed to push more people into a chapter 13 repayment plan, or possibly into a debt management plan (DMP) offered through nonprofit credit counseling agencies. That hasn’t worked out too well. There has been no substantial change to how many chapter 7 bankruptcies are filed versus chapter 13’s.

Another one of the changes in 2005 was the requirement for EOST approved pre and post filing counseling sessions. A certificate of completion is required, or your petition can be dismissed. I am sure the idea was that more people would be guided away from bankruptcy by credit counseling agencies (CCA’s)who partner with banks in order to get you to pay back your balances at a lower interest rate.

CCA’s can charge as much as 50.00 for the session. Most of the CCA’s quickly learned that live sessions were a waste of counselor resources and went to a more streamlined automated delivery system. Many sessions are now done online. One of the EOST approved vendors who can certify that you have met the pre filing counseling requirement now charges as little as $5.

So… credit counselors who are trained to operate a computer screen in order to fit people into predetermined criteria for a debt management plan has now been reduced to a 60 minute experience flipping through screen shots on a computer. While the former was never really equipped to provide any creative concepts or information to avoid bankruptcy, the latter is even less instructive.

A friend of mine recently filed chapter 7 bankruptcy. He used an online delivery system for the pre filing counseling requirement. One of the suggestions the system gave him to avoid bankruptcy was to quit smoking. He doesn’t smoke. Never has. He did not accidently answer a question about smoking. There were no questions about smoking.

The counseling session requirement was a bad idea to begin with due to how narrow the qualifications for credit counseling repayment programs are and the fact that banks don’t permit the CCA’s to offer anything other than a DMP. A poor concept has only become sillier with computer generated certificates that have no chance of delivering a meaningful evaluation of a person’s ability to avoid bankruptcy.

The vast majority of people who can qualify to discharge debts in a chapter 7 are going to find that bankruptcy is the least costly and quickest path to a financial fresh start. For those seeking an alternative to bankruptcy, a DMP offered through credit counseling companies may be an option if you can afford to make a monthly payment equal to about 2.2% of your combined balances on accounts you enroll into the plan. At the time of this writing less than 20% of the people who speak with a credit counseling outfit can qualify for a DMP.

You can also look to negotiate reduced balance settlements with creditors; enroll in hardship repayment plans direct with your creditors; or a combination of both.

Or… just quit smoking.

Very, but those doing the disclosing are not really helping with the little information they give.

When a person is struggling with debt and looking for outside help from a company or person, they should certainly have risks and rewards disclosed to them. Ideally, the disclosures would help a person to best evaluate which direction to take for help, and who to trust. A recent article by Elisabeth Rosenthal in the NYT: I Disclose… Nothing helps to underscore what I find to be the biggest shortcoming of disclosures in debt relief – No context.

From NYT article linked above:

“… disclosure laws — meant to elucidate — do not necessarily lead to greater transparency or prevent the things they were meant to deter.”

One or two sentence disclosures rarely do. Disclosures about the affects of a debt relief option to ones credit score are a good example.

Credit counselors and debt settlement companies offering legitimate services will disclose that there will be an impact to credit scores and those things will appear on the consumer’s credit report as a result of enrolling in their respective programs. If a consumer is hyper concerned about her credit score and credit report, but unable to pay the minimum monthly amount due on her Citi card, she may be more prone to try and avoid bankruptcy with a DMP than by opting for debt settlement. In this way, one would think disclosures about the impact to credit that this consumer read or heard – performed exactly as meant to. Nope.

The problem debt she has is a $17,000.00 balance with an interest rate of over 20%. A credit counselor offering a monthly payment of 357.00 sounds better than the 500.00 plus she cannot afford now, but the 357.00 monthly payments are going to be a stretch too. She enrolls in the DMP and scrambles up the 357.00 each month only to miss a payment in month 8.  She finds herself unable to get back on track the following month. The account was closed by the creditor when she enrolled in the debt management plan, she now has a 30 and 60 day late pay reporting, and she blew through 2500.00 in payments toward a solution she was not going to succeed with. That 2500.00 would have more than covered the cost of a chapter 7 bankruptcy that she was qualified to file. And, as it turns out, that 2500.00 was enough to settle the account with card services in month 7 after she fell off the DMP.

The messaging from credit counselors, the media and societal conditioning placed too high of importance on the wrong thing. Not just in this woman’s case, but likely in millions of cases. Her issue was debt she could no longer afford to pay. Not her credit score. Her score will bounce back from the settlement event in about the same amount of time it would have had she filed for chapter 7.

Disclosures made when she was originally trying to get a grip on her options lacked the detail needed for her to make a fully informed decision. The disclosures about credit impacts are often used as a bias forming selling point to the detriment of the individual relying on professional feedback. The lack of fully fleshed out disclosure details is not a mistake by omission. It is a purposeful strategy. One that is not just costly to the consumer in financial trouble, but to local communities and our national economy.

More from the NYT piece linked above:

“One fundamental problem is that disclosure requirements merely get information onto the table, but themselves demand no further action. According to political theory, disclosure is both a citizen’s right and a tool to ensure good government and consumer protection, because it provides information that leads to informed decisions. Instead, disclosure has often become an endpoint in the chain of responsibility, an act of compliance with the letter of the law rather than the spirit of transparency.”

A good example of this would be companies offering debt settlement disclosing the fact that nonpayment to creditors could result in being sued by a creditor in their attempt to collect. That lawsuit may result in judgment which could result in bank levy or garnishment. A consumer given this disclosure is now informed of a known risk. The company making this disclosure can feel that they covered their own butt because the risk was plainly stated to the customer in advance. However, if any real context were provided to the consumer about this known risk, it would involve much more detail – detail that cannot fit into a tidy paragraph or three, let alone one sentence. Being sued by a creditor IS a real risk. Do settlement companies and those who promote them state plainly that the risk of being sued increases the longer debts remain unpaid? Most don’t go into that type of detail as it would scare off a consumer from beginning the savings and settlement plan.

The kind of detail a consumer deserves to know on this critical disclosure is not provided because it would often lead to the consumer opting for bankruptcy where they are protected from collection law suits, or electing to gut out the repayment plan in a DMP over 4 to 5 years. Here again, the failure to provide consumers the type of debt advise and disclosure needed, that allows them to make informed and appropriate decisions, are a purposeful act of omission tied to a company or persons revenue goals.

More from the NYT article:

“Many disclosure programs today cloud rather than clarify a particular situation. As disclosure statements have become more numerous and more complicated, “consumers just ignore them or don’t understand what they say,” said Jeff Sovern, an expert in consumer law at St. John’s University.”

The type of disclosure context needed that provides an individual seeking debt relief a meaningful grasp of the issues they face; that educates and informs to the degree that would maximize awareness of the wrong and right steps to take; how to evaluate the immediate need for relief alongside concerns for ones future success and goals; that applies disclosures to the unique circumstances of the relief seeker – is simply not provided in the main by those offering alternatives to bankruptcy.

“While regulators and consumers see disclosure as a way to improve transparency, companies often regard it as a risk-management strategy. “Often the goal of disclosure is to reduce or eliminate the legal risk,” Dr. Weinfurt said. “It is so they can say, ‘Hey we told you so.’ ”

When it comes to the debt relief industry, companies and people provide disclosures in order to meet a minimum standard and to limit their own liability. Any substantive and informative discussion around disclosures to debt relief seeking customers that allows them to truly weigh and measure how the facts disclosed apply to them at the moment and on a forward looking basis, typically never happens. If meaningful discussion about key disclosures does occur, it would most likely be down the line when a disclosure item is triggered and after irreversible action steps in debt relief have been taken. This is where most of the headaches for debt relief customers and companies occur. Unhappy customers who were not fully aware of the implications of the decisions they were making at the time they enrolled in a debt relief plan. Customers of debt management & debt settlement plans may want to place blame on a service provider when things don’t go as planned. The service provider will want to point to a disclosure and say, “we told you this at the beginning”.

The consumer seeking debt relief is not shopping for a toaster oven. Companies and individuals representing they can help someone in need are selling something. That something is not as benign as describing the convection cooking features of a counter top oven. The responsibility debt relief service providers have to inform and educate the consumers they come in contact with cannot be underscored enough.

A friend of mine started a unique consulting service a couple years ago. He provides paid consultations with consumers in order to help them understand the debt relief options available to them. He does not provide settlement, debt management or bankruptcy services. What does he do? He provides detailed debt relief disclosures as they relate to the individuals set of circumstances that are not readily provided to consumers in any meaningful way by the companies who DO provide the services. He fills a niche that should not even exist, but it does, and will remain until disclosure gaps are filled with useful information, consumer education, and side by side comparisons.

There are tools and solutions available to legitimate service providers that can fill the disclosure gap. CRN offers educational tools and training to the debt relief services industry along side the products and services we provide direct to consumers in need of debt relief. We provide more detail about all of the debt relief implications than anyone else because we are not financially tied to the path you choose for relief. We are committed to providing the details that help you make good decisions right now and in the future. We provide this at a lower cost than currently can be found anywhere else.

Want to get fully informed? Would you like to work with a company that provides a satisfaction guarantee? Consider enrolling in CRN’s membership program.

One of, if not the largest shortcoming that exists in the current system designed to provide people struggling with debt an alternative to bankruptcy is – Information. That we have come through the “information age” and fallen short of including more of it in professional debt relief products and servicing is a failing that can and should be fixed.

A system that better educates and thoroughly informs consumers about their debt relief options; intervention steps available to them that can be accomplished on their own; through service providers charging only fair and affordable fees; all with a consumer first focus – Is Here.

In an effort to be a catalyst for continued industry change; deliver enhanced value to consumers; and to bring complete information and tools direct to consumers; CRN now offers industry professionals training and access to efficient and effective technology systems for our successful methods in educating and supporting consumers through the debt relief decision process and delivery of debt reduction solutions.

So – what’s on the table? Let’s dig in.

Program Design:

The initial focus of this education platform is to assist customers with reaching informed decisions about their options for managing debt they can no longer afford to pay weighed against current and projected income, individual hardship circumstances, and future financial goals.

The education, support and communication systems next place consumers in the best position to take actions steps to manage some or all of the debt relief activities on their own, while offering continued access to professionals and peers. Consumers can also connect with service providers directly when needed or requested.

Your customers will be subscribed to information and individualized support allowing them to:

• Reduce monthly payments via DIY DMP efforts or as provided by a CCA
• Negotiate debts for less than balance owed through DIY settlement or full negotiation services provided by attorneys who charge based on contingency and at a rate of 15% of savings
• Why bankruptcy may be the option of first resort, not last – as it is often referred to.
• Direct access to discounted bankruptcy assistance
• Cost/Time/Resource benefit analysis

Capitalize on existing market reach:

You can simply refer people into the system with confidence knowing that the education and information is supported by knowledgeable professionals with years of experience in delivering unique and tailored strategies to your customers who can depend on fair and honest experienced support beginning with assessment and continuing through implementation and ultimately – successful resolutions.

You will be able to monitor and track activity with access to reports set at intervals and frequency you choose.

Expand existing products and services:

Established industry participants have the opportunity to earn while you learn. We provide executive level, supervisor/manager, intake/consultant/counselor training that will allow you to manage your own platform delivery, product and servicing support. In this way, you can provide meaningful value and experienced support to your customers while your internal resources are acquiring skill sets and compenetncy levels consistent with your management, and control protocols.

Give yourself and your customers a competitive edge:

One significant market impacting attribute of this product and delivery system is the inclusion of proven upfront DIY settlement education that is supplemented with ongoing information and detail accessible to subscribers. This feature encourages consumers to:

• Confidently speak directly with their creditors in order to effectuate settlements without the need and expense of third party negotiation services.
• If direct debt settlement services are requested or needed they are available and offered by attorneys and established industry professionals at a rate of 15% of savings.

Access to proven DIY settlement strategies and support often lead to accelerated customer success because money is going to creditors instead of fees for services. With direct services available on an as needed basis, at half or less the cost of the industry norm, more customers will reach their debt relief goals.

Help people help themselves and connect them to affordable services:

Connect customers with your designated product and service partners. Whether you work with partners who deliver HUD or bankruptcy counseling, or provide same internally; where you connect those seeking bankruptcy or other competent legal resources; connect customers to debt and credit products and services of virtually any type – you have the ability to manage internal and external relations. If you need recommendations we can provide them.

The ability to maintain your internal and external work flow assists our partners with managing their reputation while maintaining current professional relationships or creating new ones, further economizing CPA and/or maintaining existing revenue channels.

Some of the partnerships you may already have, or may choose to connect with include:

• Bankruptcy attorneys
• Attorneys providing direct debt settlement services charging a performance fee of as little as 15% of savings
• Credit Counseling
• HUD approved housing counseling
• Judicial foreclosure defense (in court)
• Attorney managed loss mitigation
• FDCPA protections

Systems delivery and efficiencies using proven technology:

With over 500,000 custom lines of code, there are many features to outline. What follows are but a few.

• Custom Enrollment Package, program types, program length, and EP submission pages for the Sales team.

• The Create EP module uses actual settlement data history to calculate estimated settlement for creditors/collectors

• Electronically store documents

• Custom enrollment checklist with multiple categories and items

• Ability to group creditors for easy deployment of policy changes

• Access to hundreds of built-in letters and reports

• Ability to modify our built-in reports and request custom reports

• Easily print and export data to Excel

• Users can define their default searches and activity views

• Easy navigation through the use of tabs and context menus

• Ability to track changes made to customer data

Client Login:

• Educational links and courses

• Financial Analysis tools, including custom form for the client to submit or change their monthly budget

• Useful debt, credit, and financial related links, calculators and tools

• Custom Company Contact info page

• Real time access to their account status, including all enrolled accounts and current statuses

Tasks and Events:

• Add notes and create follow-up reminders

• Attach documents to the client’s file

• Set up appointments based on availability and easily check the availability of every specialist or counselor

• Easily set up your appointment slots several weeks in advance with recurring appointments if necessary

• Ability to schedule for follow-up for a specific date and time

• Link documents or other attachments to each issue note

• Customize your own To-Do lists and set up custom workflows for automatic redirection of work

Fees, ACH, Payments:

• Set up multiple due dates and disbursement dates

• Automatically calculate one-time fees and monthly fees

• View balance forecast of each account using custom dates

• Create and submit ACH debit files to your financial institution

Customizing to fit your needs and the needs of your customers is available

This partnership platform will be ideal for existing service providers to immediately help customers who do not qualify for programs you currently support while providing substantive upfront value. Given time and levels of market adaptation, this platform will usher forth broad and helpful impacts to:

• Debt relief industry servicers
• Marketing
• Financial services
• Media
• Regulatory oversight

The content and delivery platform is where the industry needs to be when informing and assisting consumers. This is where we as an industry should be given current and ongoing regulatory and oversight realities. The system provides lower cost efficiencies for current market needs while maintaining flexibility to adapt to future opportunities and realities.

Whether you simply wish to connect people to affordable and reliable resources when looking for answers and effective tools to deal with overwhelming debt, or would like to expand your available product and services, I invite you to ask questions and comment below. If you would like to schedule a time to learn more details you are welcome to contact me directly.

Working together we can build a more effective and productive debt relief industry future.

Michael Bovee

info@consumerrecoverynetwork.com

208-265-8884

I generally begin any consultation I do with people who reach out to my company in search of help with debt with this question: “What has you reaching out to a perfect stranger? What is going on with you financially”? Then, I shut up and listen. I am sometimes the first person the caller has ever spoken to about the situation they are in.

The responses I hear vary, as does the time someone will take to outline the details of their hardship. By listening closely, I am able to hear the stress and fear they have about their debt. I often hear the struggles they have gone through to try and keep current with credit card bills, or the difficulty they have had in communicating with creditors and collectors.

The other day, I heard one of the simplest and shortest answers to my initial question that I have had to date.

“My Debt Is Crippling Me.”

While this response does not provide details I generally look to key off of in order to identify the debt pieces or solutions to putting the person’s financial puzzle back together, it said a great deal in a very powerful way.

Struggles with debt DO feel crippling. In the very sense that someone with a physical disability is forced to deal with every day of their lives. The stress and fear with debt problems are debilitating and can often manifest into actual maladies. The worry and frustration about money, and the lack of money, carries over from one day to the next. What am I going to do at the end of the month when these other bills are due? When will I ever be out of credit card debt? How did I get trapped in a home now worth far less than I owe? What if I get laid off with no savings? How would I get by with maxed out credit cards and no income?

One of the overwhelming benefits to people we talk with is that we can reduce, or even remove the stress and fear they have about their debt problem in one phone call.

This gentleman did not feel crippled when we finished talking about his problem because I plainly laid out the facts of his finances (after several additional questions to be sure), and was able to point out to him the mathematical rational solution to his debt. His solution did not involve needing to engage my company for a product or service, as he was past the point of debt settlement or a creditor sponsored hardship plan being a viable option.

He learned that, unlike someone who has a physical disability for the rest of their life, his crippling debt could actually be cured and with little fuss or expense. He was not at all excited to know that his only real option was to file for chapter 7 bankruptcy, but he saw the wisdom in doing so and hung up the phone with no fear and less stress.

I asked him before we hung up from the call “How crippling is your debt now?”.
He replied “Not at all.”

There is always and answer to recover from debt. The answers do often involve tough choices and some action steps that are not exactly a thrill to take, but can be arrived at through the process of elimination. Generally, I can walk through the following things and eliminate 3 or 4 out of the 5:

• Creditor monthly payment concessions
• Debt Management Plans through a credit counseling group
• Bankruptcy
• Debt Settlement
• Doing nothing (sometimes the right thing for brief period – couple months)

Knowledge removes the fear of the unknown, and unemotional, boring, old arithmetic is the compass to find your way to healthier finances.

My advice to anyone feeling crippled with debt boils down to the “Four Gets”:

• Get real about your finances;
• Get informed about your options;
• Get a plan in place; and
• Get started

If you would like to start getting informed the same way the man who inspired this article did, think about enrolling as a CRN member. Click here to learn more: Debt Help

Media Contact:

Ken Luck

(336) 553‐1804

kluck@rlfcommunications.com

Debt Relief Companies Form New Consumer Advocacy Organization

Raleigh, N.C. (Feb. 9, 2011) – In an ongoing effort to raise standards in the debt relief industry and improve consumer protections, a diverse group of leading debt relief companies have formed a new organization devoted to consumer advocacy. The organization is spearheaded by Steve Rhode, aconsumer advocate and founder of the website GetOutofDebt.org. Membership is by invitation only to companies who promote transparency and have a demonstrated track record in properly helping consumers address financial hardships.

The American Association of Credit Counselors (AACC) will include nonprofit credit counseling agencies, debt management companies, debt settlement companies and other providers who are focused on serving consumers in financial distress. The AACC name reflects the revival of an organization that existed with a similar mission but has been defunct for more than 20 years.

This is the first debt relief association formed solely to find collaborative ways to work for the betterment of consumers rather than to lobby on behalf of the industry.

“We’re not an official association, we’re not a traditional industry group that anyone can join as long as they are willing to pay the membership dues,” said Rhode, one of the most vocal and active advocates for consumer interests. “We’re really a club, a club that only accepts the best companies who’ve demonstrated a commitment to the highest standards in serving consumers and who want to work collaboratively to protect consumers facing money troubles.”

All member companies in the AACC have agreed to a set of common standards, including:

• • Charging no upfront fees for debt settlement services;
• • Providing customers with good faith estimates before they enroll in any debt relief service;
• • Outlining the potential risks of a debt settlement or debt management program in easy‐to understand language;
• • Providing openness and transparency regarding performance results; and
• • Making top management readily available to their customers.

The group has adopted the motto “Putting Consumers First.”

“We are thrilled to be a part of this group, which is really focused on creating educated consumers and campaigning for their rights and protection,” said Chris Schornak, president of Debt Solutions Network, one of the founding members. “There are a wide range of debt relief options out there, but not every option will work for every individual. It’s exciting to see a group of companies standing up and saying that education is more important than deception and that the needs of the consumer are more important than a company’s bottom line.”

The genesis of the organization came out of an event Rhode hosted in late November called “A Group Conversation about Restoring Truth to Debt Relief.” The day‐long meeting brought together heads of debt relief companies, consumer advocates and regulatory agencies to discuss ways to improve consumer protections while still making debt relief services available to those in need and explore ways to increase the credibility of legitimate debt relief providers.

“That meeting created some great conversations among various debt relief providers about ways to better the industry as a whole and to make services from credible providers more readily available to consumers,” said Rhode. “Those discussions have continued over the last few months as these companies, while competitors, have found they have common interests and a shared vision for improving the industry. They felt there would be strength in numbers and have decided to work together for change.”

Charter members of the organization are:

• • Active Debt Solutions, a Florida‐based company that offers credit counseling, debt consolidations, bankruptcy referrals, and debt settlement programs;

• • Cambridge Credit Counseling , a Massachusetts‐based nonprofit that offers financial education and debt management services;

• • CareOne Services Inc., a Maryland‐based company that offers credit counseling, debt management and debt settlement programs and bankruptcy referral services;

• • Consumer Recovery Network, an Idaho‐based company which provides DIY instruction and offers debt settlement services

• • Debt Solutions Network LLC, a Michigan‐based company that offers debt settlement and debt consolidation services;

• • New Era Debt Solutions, a California‐based company that offers debt settlement services; and

“We take great pride in being part of a group that puts consumers first,” said Alex Viecco, vice president of New Era Debt Solutions. “This is something that has been lacking in this industry for a very long time.”

The original AACC was created in 1955 and disbanded in the 1980s.

About the American Association of Credit Counselors

The American Association of Credit Counselors was founded with the mission of “Putting Consumers First” in debt relief services. Membership in the organization is by invitation only and all of the members have agreed to meet specific standards and principles in offering their services. The AACC has eight members. For more information, visit http://newaacc.org/.

Debts that go unpaid follow a relatively predictable pattern.

When first missing a payment, the phone rings… a lot.  After 30 days late your account is reported to credit reporting agencies (CRA’s) as such.

Next, the phone rings… a lot.

The pattern of the phone calls when you are 60, 90, 120 days late will often include offers of lower payment arrangements and hardship plans. Your credit report will continue to receive unsightly blemishes in 30 day intervals.

As you get nearer 180 days of nonpayment, some of the collection calls will take on a new tone. If you have not already thrown your phone out, changed your number, or continue to answer in your best disguised voice informing the caller that “um… that person does not live here”, you may get offers to settle the debt for less than what you owe.

At 180 days of delinquency (sometimes 210), something strange happens. Suddenly the background melody you became so accustomed to while watching television, or spending time with family, suddenly ceases. No more getting up to check the caller ID to see if you want to answer. No more checking messages for 10 minutes listening to “this call is for ____”, quickly followed by “message deleted”.

When you realize that the incessant phone calls have ceased seemingly overnight, you may even be compelled to dance a jig while singing “ding-dong, the witch is dead, the witch is dead” like scare crow traipsing down the yellow brick road in the Wizard of Oz.

Not so fast…. All that has happened is that your debt has been charged off and is in limbo while your creditor figures out which part of the collection pipe line they are dropping your account into.

Within a matter of days, or weeks, the monkey reappears and plants itself firmly on your back. He announces his presence daily, starting at 8 am and continuing through 9 pm. Riiiinnnggg… Riiiiinnnggg.

Your account has now been placed with a collection agency.

The pattern I present here typifies what will occur in the first 6 months of nonpayment with most credit card issuers. As you can see, there will be some opportunities.

For many people faced with the inability to pay their credit card bills on time, all the time, it can make sense to capitalize on these opportunities. You should look to optimize your success by:

• Following an intelligent design that can be tailored to your specific set of financial circumstances.
• Design a plan using information about what each of your specific creditors will do and when.
• Be prepared to adjust. Your creditors may change their recovery policies requiring you to tweak your plan.

You can learn more about how “charge off” can be friend or foe by following the Debt Bytes continuing series on the topic: Click Here

If you would like to speak with someone who can assist you in determining what your next best step to getting out of debt may be: Click Here to schedule a Consultation. A CRN specialist can assist you in learning the details you will need to consider once they know more about you. Consults are provided at no cost.

The term “charge off” describes an accounting function followed by your lenders. When speaking of revolving consumer credit card accounts, a charge off occurs when the credit issuer either chooses, or must, recognize an unpaid loan balance as a loss.

For lenders, losses are bad news. The bad news gets reported and can affect anything from loan loss allowance/reserves, securitization, liquidity, even solvency.

Because of the bad news nature of a charge off, your credit card issuer will generally wait until the maximum time allowed to charge off your unpaid debt. The time frame for your creditor to recognize the loss on your unpaid credit card balance is outlined in Generally Accepted Accounting Principles (GAAP) and is typically 180 days of consecutive nonpayment, or what the Office of the Comptroller of the Currency (OCC) has designated as “seven zero billings”. There will be instances where charge off will seem to occur at 210 days of nonpayment.

Most lenders will wait as long as is allowable to take the charge off hit to their books, but they can take the hit earlier than 180-210 days. It’s just not a common practice.

What does this mean to you?

While charge off is an important accounting function for lenders, it is also a major event that applies to, and will affect, the efforts of a consumer who is experiencing financial difficulty.

While you are trying to navigate your inability to pay all of your debts and when evaluating the different debt relief options available to you, understanding the timing and affects of your accounts charging off will give you a needed advantage in your planning and timing.

The period leading up to, during, and after a charge off of your unsecured debts will impact:

• Debt collection efforts with your original creditor
• Debt collection with outside collection agency
• Debt Purchasing and subsequent collection efforts
• Debt Settlement/Debt Negotiation
• Credit Reporting
• Debt Management Plans
• Risks of being sued on unpaid debt
• Biting the Bullet and Filing Bankruptcy
• Delaying a Bankruptcy

Each one of the bullet items above are deserving of a separate article and will be posted on debt bytes as I complete them. If an above bullet is a click-able link, it will lead to coverage of that topic individually.

If you would like to speak with a pro for free to discuss your specific situation and what you may be able to do to deal with it, Click: Free Consultation Request. You will be contacted by a CRN specialist who can assist you in identifying your options and next best steps related to pre or post charge off debts.

You MUST do your research into ALL three of these options by discussing them individually with reputable service providers.

Debt Management Plans (DMP’s) & Credit Counseling Services:

The core benefit when enrolling in a DMP is lower interest rates on the existing debts you have with creditors who participate in managed plans. This translates into lower and more manageable monthly payments.

When it comes to DMP’s and Credit Counseling Companies who support them, my experience is that not all firms are created equal. While the interest rate concessions that DMP providers arrange with your creditors are generally predetermined and will not vary from one service provider to the next, the service and attention to YOU, their client and customer, can vary greatly! The difference in consumer education and hands on tools that are provided as well as the care and compassion rooted in their management and employees can make all the difference in a positive experience and outcome!

When consulting with a credit counseling firm, you also need assurance that you are not talking with someone whose goal is to sign you up into a program that you are not suited for. Many of these firms want to beef up their numbers in order to collect a monthly fee and increase their fair share and grant contributions from creditors, without enough regard for how suitable a candidate you are for their program.

For these reasons and more, I recommend anyone gathering information about DMP’s offered through a credit counseling organization contact:  Safe Guard Credit Counseling – Direct Dial: (800) 673-6993. I am sure there are other companies who offer similar services around the nation that could meet the high standards you will be greeted by at SafeGuard.

So why single them out for you to contact and schedule a free consultation?

• I have been to their offices.
• I know, like & trust their management team.
• I have reviewed their counselor training materials.
• Their fees are fair & their people care about assuring you can be a success when working with them.

SafeGuard is who I have trusted, and continue to trust, when referring people to find out if a debt management plan could work for them.

Disclosure: None. Consumer Recovery Network, Debt Bytes nor Michael Bovee receives any form of compensation for referring consumers to Safeguard.

You are Invited…

…to share your story, feedback, and/or review of your experience working with Consumer Recovery Network in the comment section of this post.

There are no rules for posting. You may want to follow an outline of what brought you to CRN, how we compared to other options or companies you looked into, what happened along the way, and what the ultimate result of working with us has been, to date. Or, just have fun and express yourself!

ALSO:

Not everyone we consult with qualifies for our more aggressive approach to dealing with debt. Many of you we consult with still appreciate the time we take to inform you of what debt settlement really involves after having contacted other service providers. Our consults are often a refreshing dose of blunt honesty for people just looking for information and answers they can trust. You are invited to share too!

Tell you what….if you having anything to share about CRN, the Debt Bytes Blog, or any facet of the work we do…. chime in! We look forward to hearing from you!

P.S. You can identify yourself using your initials or first name only, unless you are comfortable sharing your identity, like Jonathan Grossman, who blogs about his experience with CRN at Debtsettlementstory.com

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