We Could Not Consolidate Mary In TX, Here’s Why.

Submitted by FreedomDM on Fri, 11/06/2009 - 01:13

I had to tell Mary today that we could not enroll her, simply because there was no benefit in her case. Mary came to me with 2 Chase accounts and a Citi account. She had been in a program before and defaulted due to unemployment. She again attempted while she was getting on her feet and eventually stopped making payments because she wasn’t making enough money. After establishing stable employment Mary attempted a consolidation program again and came across our company searching online.

I had to first advise Mary that Chase would not allow her to consolidate the 2 accounts again. Chase has a stipulation that states if you default in a debt management program twice in one year you cannot attempt another management program with the same account for 5 years…OUCH right?! Please note; this stipulation is few and far as most creditors do not have such guidelines for debt consolidation.

Now we’re down to one account. So Mary has a Citi with a balance of about $2500 and an interest rate of 14.49%., monthly finances charges averaging $28.69 as she read to me off her statement. I advised Mary that Citi goes to 9.9% fixed in our program for our clients who enroll and maintain consecutive payments. I explained to Mary that she would also have a $10 service fee with us to manage the account. (that’s really the lowest we can go even with one account.) I further advised that we would waive our enrollment fee as well which is usually $65 flat. We waive this enrollment fee for clients who are also in a financial hardship after a budget counseling session has been provided.

So Mary’s currently at $2500 at 14.49% interest that equals $28.69 in finance charges.
With us, $2500 at 9.9% fixed = $20.63 in finance charges each month.
Mary saves $8.69 by enrolling our program monthly…except for our service fee of $10.00

I advised Mary that by enrolling she would have more of her monthly payment going to her balance over creditor fees but she would be spending an extra $1.94 a month because of our $10 monthly service fee. Sadly, I advised Mary I didn’t see much benefit to her enrolling the account in our program.

She kindly thanked me and I asked that if she knew anyone else who may benefit from our services to please refer them.

We don’t enroll people just to enroll. We enroll clients who can see benefit from our program and real savings before committing. I wrapped up this call earlier today and thought it would be a great post to show a little math, some specific individual creditor guidelines for consolidation, and a fine example of how we help educate people and truly weigh out all the factors before signing anyone up.

I think it is awesome that you would not taking on a client just for the sake of making money or having clientelle, thank you for sharing this story. I guess it shows that not every one can benefit from a program, again thanks for sharing.

Fri, 11/06/2009 - 02:18 Permalink
upsidedown (not verified)

when i went into debt management (of which i am almost paid off), why couldnt they incorporate my student loans (private lenders, non-governmental) into my plan?

Wed, 01/06/2010 - 20:55 Permalink

Student loans simply will not negotiate with third party agencies for a reduction in payment or fees. They've been that way for some time now and Ive been in this for about 8 years.

We dont really understand it either :(

We refer clients to NelNet.com who seem to be able to set up a 12mo deferment for student loans.

Wed, 01/06/2010 - 23:45 Permalink

I DO have to say, FREEDOM, I'm very impressed. First: you explained every option you could do for Mary. Second: you didn't enroll her JUST for the money (fee, etc.). Student loans can be a pain!!...that's for sure!! NelNet......what is it? I've never heard of them. I DO have a Student Loan I'm past due on, right now. It's not in 'default', however.........just seems like I've been paying on it 'FOREVER'. Any advice? Thanks.

Thu, 01/07/2010 - 10:38 Permalink