Debt Negotiation 101
- Thursday, November 20, 2003
If you don’t have that kind of cash lying around the house (show me someone in dire financial straits that does), they set up a monthly payment plan. Of course they add in their fee which can be anywhere from 20 percent of what they hope to save you or 11 percent of your total outstanding debt. No matter how you look at it, we’re talking about a lot of money.
Next, if you are not behind on your payments, the negotiator will likely hint [wink, wink] that your creditors will have little motivation to arbitrate for a less-than-full pay off unless you are two or three months behind on payments and they believe recovery is not likely. They will suggest that instead of making your payments for the next few months you deposit that money with them to be held for your settlements.
When the full amount is on deposit, the negotiator commences to contact your creditors with offers to settle. In theory, each of your creditors jumps for joy upon hearing of your offer, the negotiator writes out all of the checks, delivers them and you end up debt-free. Sure, right. If only it were that simple.
Briggs, Baker and the BBB
If the name Briggs & Baker rings a bell, you’re probably familiar with this company’s radio commercials touting the benefits of debt negotiation. Some time back Briggs & Baker took the southern California air waves by storm and some other areas of the country as well. In preparation for this article and based on a tip from an angry B&B client, I checked out the company with the BBB (Better Business Bureau (www.bbbsouthland.org), where I found the following:
This company has an unsatisfactory business performance record including a pattern of complaints alleging the company failed to negotiate debts, failed to pay creditors, [clients’] credit standings deteriorated after enrollment and the company failed to provide adequate service. A few complainants allege that while in the program customers were sued by creditors or debts were arbitrated under the cardholder agreements. Some customers complained that creditors continued to contact them or they were turned over to collection even though they were led to believe by the company this would not occur. A few complainants allege they were instructed not to pay their debt as it would improve the company’s ability to negotiate settlement. ... Be aware that the time it takes to settle debt will depend on your ability to save money and the willingness of the creditor to accept partial payment.
Radio talk show host, Benjamin Dover, recently spoke on air with several people who had been clients of Briggs & Baker. One man told his truly sad story of taking more than $30,000 from his 401(k) retirement account to deposit with Briggs & Baker for his settlement program. When the company failed to deliver on their promised settlements he ended up filing for bankruptcy. If that wasn’t bad enough he got hit with a big IRS penalty for dipping into his 401k account.
Another guest told of writing checks totalling over $17,000 to Briggs & Baker from which the company took $12,000 as their fee. When the company would not stand behind their promises and the situation dragged out for so many months, he ended up settling his debts on his own. Briggs & Baker refused to refund any of their fee, and he walked away having learned a very expensive lesson.
I read dozens of similar accounts from people with various experiences with this firm and others. Over and again these clients said they were misled and misinformed. They were instructed that their lenders wouldn’t be motivated to settle unless they were at least two to three months behind.
When their settlements didn’t come through they were in a real mess.
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