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AFTER BK DOCTOR PROMOTES FINANCIAL HEALTH
DEBTORS ANONYMOUS
ONE FAMILY'S NEAR-BANKRUPTCY EXPERIENCE Valencia, CA, September 12, 2001-This is a story about Larry and Joan Green of North Hollywood, California, except these are not their real names. If real names were used this story could not be told. The reason for the secrecy is simply that in 1999 "Larry" and "Joan" had a brush with bankruptcy. If a near-bankruptcy experience induces secrecy, it tells you bankruptcy is something you never want to directly experience. For Larry and his wife the encounter could have meant the difference between working and never working again. Larry's job doesn't require any special security clearance and isn't even financial. He is simply self-employed and relies on his "acceptability" to clients for work. In business circles, bankruptcy or even the hint of it can make you "unacceptable". Larry's industry, like others, has its ups and downs. He has, however, been successfully self-employed for twenty-one years. Most of that time Larry's household income has been above $100,000 a year, but the Greens have lived conservative, middle-class lives; their free time revolving around the sports activities of four children. They own a home, but prefer buying used vehicles for cash rather than new ones. The Greens never had a problem with credit cards, but like most Americans they did not accumulate much savings, either. In 1997, Larry saw opportunity in an area that was different, but related to what he had been doing. He cut back on his usual business for an opportunity with potentially big rewards. Despite some early success, the expected rewards failed to materialize. Two years later, Larry and Joan found themselves $210,000 in debt on approximately twenty separate credit cards. Worse yet, they had run out of ways to meet the payments! "To tell you how I got so deeply in debt," recalls Larry, "isn't easy. There were expenditures on the new business such as computers and software. One of our regular clients had some setbacks and stopped paying us. Our lifestyle was economical, but it was still based on income greater than we were pulling in at the time. It can sneak up on you!" At an age when most people consider retirement, Larry and his wife were faced with financial ruin. Using cards with low introductory APRs they had made balance transfers to pay off higher-rate debt. The low rates eventually expired, however, and the couple was unable to qualify for any new cards or transfers. They were facing interest rates as high as 25%! An unexpected tax bill then came due and it became clear they wouldn't be able to keep up all of their payments. Was it checkmate? "It's ironic we were on the brink of bankruptcy without missing any payments," recalls Larry. "Doing the math clearly showed the debts had escalated beyond our ability to pay. The expected penalties and interest rate hikes would only make thing worse. Still, I resisted the idea of bankruptcy as it would almost certainly have eliminated any opportunity for work in this field." Scrambling, the couple saw an ad for an alternative to bankruptcy called debt mediation. "This was not something we had heard about," states Joan, "and we wanted to see what it was. Even though we were fairly desperate at that point, we were concerned whether is was legal or ethical." A representative of The Debt Solution came to the Green's home to explain the program. The process began with a full evaluation of Larry and Joan's finances. Based on the review the Greens agreed to a monthly deposit they would send to The Debt Solution for the lump sum settlement of debts at substantially reduced interest rates. The couple signed a power of attorney giving the company the right to negotiate specific high-rate credit card debts on their behalf. They also signed an agreement covering the fees of The Debt Solution. Larry and Joan could have sought reductions in principle as well as interest, but chose to negotiate interest only. "We basically focused on the high rate cards that were breaking our backs," states Larry. "We wanted to repay what was owed, but the interest and fees that had accumulated were just beyond us." "That was a turning point for us," Joan remembers, "because we had been paralyzed with guilt. We knew we had messed up and were ready to change. Our counselor, Duane, encouraged us and really put us into action." When creditors called the couple now had a script to guide in referring them over to The Debt Solution. "A few were rough," Joan recalls, "but most did exactly as we suggested." Freed of their preoccupation with creditors, Larry and Joan concentrated on making money and following their new financial plan. They regained some former customers, and even collected overdue fees from a client whose finances had rebounded. The couple refinanced their home loan and saved money in other areas. "We cut back in a lot of small ways," remembers Joan, "telephone, groceries, eating out less often, but it all adds up!" Besides the reduction in expenses, Larry and Joan soon noticed their income was climbing. Within twelve months, the couple had completed their program with The Debt Solution. The accumulated interest on their high-rate credit cards had been negotiated down substantially. Even so, their credit was unimpaired and they were able to restore relations with several of the credit card companies with whom settlements had been made. Even better, bankruptcy was no longer a threat. Today, Larry and Joan remain successfully self-employed, but play by a different set of financial rules. They mainly use debit cards, rarely a credit card. Card balances are closely monitored and usually paid off within the month. The couple retains many of their thrifty habits and are building a savings reserve. "At first you don't want to accept responsibility for what has happened," Larry observes, "but you must admit to yourself that you are in charge. That done, we felt more positively about the experience because we saw where our mistakes had been and we were able to correct them." "We had a misconception," he continues, "that you can rely on credit cards in an emergency. Cards are not the same as savings because cash gives you time to adjust. With cards, the balances comes back each month bigger than the last, so your reaction time is actually reduced." "Another factor," adds Joan, "is realizing that we live in a bountiful country with abundant temptations. Marketing firms are paid big dollars to make it seem you need all their products. Still, it is up to the individual to be aware of this and to exert the necessary resistance." The couple's main victory, however, was avoiding bankruptcy, or "BK". "For a self-employed couple like us," Larry relates, "BK is not an option as it's so punitive you never recover. It makes more sense for a mediator like The Debt Solution to work out acceptable settlements directly with creditors. We retain the ability to generate income, and avoid the stain of bankruptcy, while the creditors get repaid." The story of "Larry" and "Joan" is one that ends happily, if anonymously. About The Debt Solution: The Debt Solution, Inc., headquartered in Valencia, California, provides debt mediation services to qualifying consumers throughout the United States and Canada as a viable alternative to bankruptcy. The program offered by The Debt Solution differs from traditional debt counseling or debt consolidation. As these do not address the amount of outstanding indebtedness, they are not designed to help individuals who cannot sustain their minimum monthly payments. The program, while voluntary, is closely supervised. It greatly reduces the stress of creditor calls and produces a consumer who is totally debt-free within 24-36 months. The Debt Solution offers additional services that educate the debt-free graduates to manage their incomes wisely, attain financial responsibility and live prosperous lives of wealth accumulation. For more information on the Debt Solution call (866) 863 - 5544 or visit www.TheDebtSolution.com. |
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| Phone # (866) 863 - 5544 Email Us - info@thedebtsolution.com Fax - (661) 702 - 0317 |
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