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 wasnâ€™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 yearsâ€¦OUCH right?! Please note; this stipulation is few and far as most creditors do not have such guidelines for debt consolidation.
Now weâ€™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. (thatâ€™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 Maryâ€™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 monthlyâ€¦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 didnâ€™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 donâ€™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.