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     | Saturday, October 28, 2000 - 05:47 am  It's really quite amusing to listen to these people. Let's see what they have to say point by point. 1. Their standard client owes $10k at 18.5% APR. 2. They claim that by making the minimum payment it could take a person 32 years and $24,500 to pay off that debt. Applying simple math I arrive at a payment of $63.80 ($24,500/32 years/12 months per year). However a little work with a financial calculator tells me that $154.60 is the amount to pay that will have the entire debt amortized over 32 years. What gives? 3. Neway's benefits include: "Reduction in minimum payments, as much as 50%" and "Reduced or eliminated interest rates" all while "that same client's debt will be paid off much sooner: usually 3 to 5 years, even with the reduced monthly payments!" Giving Neway the benefit of the doubt we're going to allow the higher of our two above payments (154.60) with no reductions and 60 months to pay. In addition we're going to say that Neway can get you 0 percent interest. Despite this generosity a simple calculator will tell you that $154.60x60 = 9261.60 so the math just isn't there to have your debt paid off in 60 months. 6. Yes, but "NEWAY offers credit counseling programs, debt management programs, or a combination of the two. This is what separates NEWAY from the competition and what will get you out of debt in the shortest period of time!" Wow, really? I thought bankruptcy would have me out of debt in the fastest time. 7. "NEWAY can probably help save you those court costs and the loss of precious assets. Please talk to one of our counselors if you are considering bankruptcy to find out about the alternatives. We can direct you to bankruptcy assistance if that is the best solution for your specific situation." Oh yeah I forgot about those wicked court costs. Let me see, if Neway can get me 5% interest and equal payments for 36 months I'll be paying $299.71 for 36 months for a total of $10,789.52 -- Court costs sure must have gone up! Shylock clicks to the next page. Oh look, I was overly generous. Neway thinks they can get you 8 percent interest. Let's check the statistics. Thinking of filing bankruptcy just because you owe $20,000 and are finding it hard to pay? Relax! Neway tells us that the average family owes $4,000. What this has to do with anything I don't know. And don't worry folks Neway is free as long as you contribute $6 per tradeline up to $70 a month. More good news: "...many of your creditors will re-age your account, which means they will show your accounts as current after several payments. In general, if you are paying off debt, that can revitalize your credit report." Of course there might be that one creditor out there that reports you as COLLECTIONS but hey that's not Neway's fault. Another point: "...you should be aware that your credit report may state that you are working through a debt management and credit counseling program. We can’t guarantee how future creditors will interpret this information, but we believe that..." (blah, blah). Do you want to know how a creditor will interpret that? Call up a mortgage specialist and tell them you want to refinance but that you're on a debt repayment plan with a credit counselor and you still have a couple more years to go. You'll see what I mean. Then call them back and say that you filed bankruptcy 3 years ago but ever since then you've paid everything on time and you're completely debt free. See what they say about that.
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| | Saturday, October 28, 2000 - 01:44 pm Yup. Thanks for posting that. Those debt reductions sites and organizations are just EVERYWHERE! I get so much spam with that crap, I hear the ads on the radio, and what REALLY bothers me, they're linked as consumer sites at places such as "Consumer ACTION & ADVICE Ring." I'm embarrassed to say that I still got that link on the main BayHouse page. Last night I thought I'd check and see what kind of sites there are. Found several of "those" sites, but could NOT find BayHouse. There are some good "personal" consumer pages about companies that screwed them, but aside from those, it's just crap. The "Free Credit Repair Manual" with all the ads including the "debt reduction" people. Obviously that link is going to be removed, but the fact is that corporate runs the web. Those sites are tops in the Search Engines, they're linked everywhere.
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| | Monday, October 30, 2000 - 07:06 am Also, over the last 6 months or so, I seen a HUGE spike in the debt couseling ads on TV (live in Northeren California). Places such as Ameridebt. They are EXTREMELY misleading. The "we only want to help you" theme is so flowery and overblown as to be nauseating. They just say they can negotiate with your creditors to relieve your monthly payment strain, saving you thousands in interest. WELL, WHO WOULDN'T WANT LOWER PAYMENTS AT LOWER INTERST RATES EVERY MONTH??!! What they conveniently forget to tell you is that you will be absolutely wrecking your credit by using one of these Consumer Credit Counseling Services. While I guess there are many cases where this is prefereable to the alternative for certain people in certain situations, there can be NO DOUBT that such misleading advertising will ALSO catch consumers who are not savvy to the credit game, and will end up making a VERY BAD decision that will haunt them for years. Oh, I'm sure if you argued this to the CCCS companies behind these ads, they'd say, "Oh, that could never happen as one of our (here's the laugh) 'trained, experienced, professional, competent, altrusitic' counselors would spot someone who didn't truly need our services, and direct them to another venue or strategy". [holding my sides---splitting with laughter]. Oh, yeah-boy, I beleive that.
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