|Steve is a Christian Minister and DebtSmart® Email Newsletter
Our story began 23 years ago when my wife and I
got our first credit card ever. We were young, married just a short while, and
had already established good credit (without a credit card). Back then the
credit card was for "emergencies" only. What a crock!
We fooled ourselves. We shortly discovered how
easy it was to whip out the credit card to buy something we wanted. Oh, at
first, we always paid the balance back right away (putting aside the money from
our meager paychecks so we would have it to pay when the bill arrived). Then it
happened, the "emergency!" I was in a serious auto accident. I was not hurt too
badly, fortunately, but my car was a total loss, and we still owed money on it.
We did not have much money in savings. Of course, we did get a check from the
insurance company for the loss--but it was nowhere near what we owed on the car,
and we had to get another vehicle. So we did the dumb thing--we used our credit
card (cash advance) to pay off the portion of the car debt that the insurance
did not cover and then used another cash advance to put a down payment on
While that kept the car payments down, it
also started the cycle of debt. We were young and dumb. We should have
sought the advice of a financial counselor way back then before we did what we
did. But we thought we were too smart to ask advice. Over the years, we once
were able to pay down that debt (we received a small inheritance that helped
us), but we did not change our ways.
Now fast forward to 2006.... 23 years, several
"emergencies" and one long stint of unemployment later, we are still in credit
card debt, but the credit card companies are not as "nice" as they used to be.
In fact, they have become adversarial with consumers.
I was "let go" from my job at the end of May
2005, and have not been able to find a replacement job yet, though I have looked
hard. Our debts keep rising--even though we don't use the cards. BTW, we have
nine cards and about $60,000 in debt (with about $115,000 in total credit line).
I need to say, however, that we are not behind in any of our minimum payments,
and our credit is still currently very good. But I can see that changing, and
not for the better.
We thought, we'd better look into some type of
debt consolidation or maybe debt settlement. Bankruptcy is not an option for us.
We will pay back what we have borrowed and at a reasonable interest. So I
contacted Christian Debt Solutions. I thought I had seen them listed as an NFCC
member, and they had BBB credentials. And since I am a Christian minister, how
could I go wrong. Oh BOY was I wrong! I realized later that they are not listed
by the NFCC and their BBB listing is very recent and with very little history
My first contact with them was good. I had lots
of questions and they seemed to be patient to answer all of my questions. And of
course, this was over the phone - not face to face. After I had asked all of my
questions, the "counselor" asked for my debt amounts, so I told him and he said
he would work up a couple of plans, one for a consolidation and another for a
debt settlement, and he would call me back with some numbers. He seemed to be
very concerned for our situation and genuine in his desire to help us.
Then things changed. I did receive a call back
from the counselor, and he had indeed worked up two possible scenarios. But his
attitude seemed to change. He became more aggressive, less understanding, more
pushy about us getting started. I had thought of several more questions that I
wanted to ask. One, in particular, was about the income tax implications of a debt
settlement. He got snippy with me at that point. Still pushing me to make a
decision about the plans and when I wanted to start. etc. I told him I still did
not have enough information. I needed an answer to my tax question. He
transferred me to their finance director. The finance director explained that
they had never had a client have an adverse income tax problem with a debt
settlement and that I probably would not either. RED FLAG!!!
When I was transferred back to the "counselor," he
was still being pushy and still wanted me to name the starting date. I said,
send me something in writing that I can review with my wife and then we’ll
decide. At first he did not want to send me anything in writing unless I was
ready to name a start date, so I did. But, I explained that I needed to discuss
this with my wife and that she would want to see the plan in writing, he
reluctantly agreed. He emailed me the contract, with all of the information of
my debts, and starting date, etc. all filled in. I read the entire contract from
top to bottom, and discovered several things, which he had never mentioned to me
in all of the conversations we had. First, their "upfront" fee was equal to my
first month's payment (which would be $800) and had to be paid with the
contract. Then they tacked on a $50 monthly fee after that. Secondly, I would have
to stop paying my debts immediately, so I would be become in arrears before they
would start negotiating a settlement (I was totally current with all my debts at
that point). Then they would not be sending any payments until the amounts I had
paid equaled about $3,000 in the non-interest bearing account they kept the
money in. That meant that I would be in arrears for more than 4 months before
any payment would go out. I have never been in arrears, EVER!!
After my wife and I discussed it, we decided to
wait a little while and research some other solutions. So I called CDS back and
told them we would be looking elsewhere. I thanked the counselor for his service
and helpful information. The "counselor" went off on me over the phone, short of
swearing at me, he was very upset. He told me I was making a big mistake, and
that I could not get a better deal anywhere else, etc., etc. Then without
another word, he just hung up on me!
The lesson is, not all debt counseling services
are equal. It's a business, like any other. The bottom line for some of them is
to make money!!
So here we are. I have looked into a couple of
other counseling services. I know that there are no easy solutions or that this
will not be an easy road. But we will get through it and learn to be more
Thanks for listening.