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Settle your Debt for Pennies on the Dollar!
By Glen Becker
You have probably seen or heard advertisements that say: "We have access to secret programs the credit card companies don't want you do know about. We can settle your credit card debt for just pennies for every dollar you owe. You must owe at least $10,000 to qualify, so call now!"
You may have thought, "Golly, I only owe $7,000. Maybe if I take a vacation or buy a big-screen TV, I could charge-up enough to qualify for this wonderful opportunity!" Then a little voice inside of you says, "Don't believe it. You cannot get out of debt by borrowing more!"
Before going further, let's clarify the scenario we are addressing. A person has incurred debt with the promise to repay according to a written or verbal agreement. Regardless of who the money is owed to, a Christian has obligated himself to fulfill his part of the bargain – to repay. So let's consider options in the following paragraphs.
These "secret programs" are targeted at people who appear to be on the verge of bankruptcy. Credit card companies know that in bankruptcy, they would probably get nothing, so they may be willing to settle a debt for 30¢ to 70¢ on the dollar. If you really are close to bankruptcy, you are better advised to personally pursue a voluntary settlement with your creditors, because it is faster and less expensive than bankruptcy; and you don't need to engage a debt relief agency to do this for you.
Of course, you could always call your creditors and say, "Listen, I'm broke and if I declare bankruptcy, you get zilch, so you better take 30¢ on the dollar." You could even try to justify this approach by reminding God the creditor you just threatened is "voluntarily" settling the debt, so righteousness requires no additional (full) repayment. But God is not fooled by this kind of arrogant manipulation; a haughty attitude towards God and man cannot be God's plan for financial blessing.
Of course, if you hire a debt negotiator, he/she will most likely speak to your creditors in a professional way, but the message will often be the same. In fact, he will probably try to portray your situation as bad as he can make it, especially if his fee is a percentage of the dollars he saves you. He may say: "My client's financial future is so bleak that he could not possibly pay 65¢ on each dollar. The best you can hope for is 30¢." That doubles the debtor's savings from 35% to 70% of the amount owed, which might double the debt relief negotiator's fee.
I cannot imagine hiring someone to speak such financial curses on me. A person may not be in a current position to pay the full amount, but a Christian wants anyone who represents him to sincerely seek God's best for him, and to honestly deal with all parties involved. A just settlement is far better than a cheap settlement based on manipulation.
Professional debt negotiators often insist that when you finally settle the debt, you do so in a lump sum payment. But if you owe $10,000 that you cannot pay, how will find $5,000 to settle the debt? Or $1,500 more to pay the negotiator's fee? He would tell you to save it up, or to get it from relatives. He may insist that you let him hold it until the full amount is ready to pay. But, he does not pay interest, and is not FDIC insured.
Yes, creditors have different policies concerning debt workout plans, but it would seem better to work out a payment plan that shows slow, steady progress than to wait for $6,500 to fall out of the sky. If you owe multiple creditors, a negotiator might tell you to let him lump your debts together or to repeat this process as necessary for up to three years. Then, and only then, would you be able to start rebuilding your trashed credit rating.
But, if you work out a reasonable (fair & honest) payment plan with your creditors, then they should report your payments to the credit bureaus and your credit rating should begin to gradually improve. It certainly is worth your time to personally contact your creditors and honestly explain your situation, tell them you have a Spending Plan that allows you to pay your debt at a certain rate, and ask for their favor in reducing the interest, late fees and if necessary, the principal.
Any deal that seems too good to be true probably is. Taking advantage of a "secret program" to settle a debt for only 30¢ on the dollar sounds great until you count the true cost. God's not-so-secret program of rewarding the honest, diligent person with blessings and favor sounds far better.
Proverbs 22:1 A good name is to be more desired than great wealth, Favor is better than silver and gold (NAS).