Saturday, January 08, 2005

The Debt Consolidation Company Road Bump

So around November, my wife started looking into debt consolidation companies. She’d been handling our finances, and she could tell that we were overextending ourselves. When she came to me about it, I started adding up the numbers and realized she was right—we just didn’t have the cashflow to pay for all the bills we had each month.

If you’ve never used one of these places, the scenario is basically like this:

They work out a plan they think they can negotiate with your credit card companies based on what they’ve been able to get for other people before. They “consolidate” this into one easy, monthly payment.

The first month, they keep the entire payment for themselves. This pays for their bills and the month you’re late on your credit card payments gives them leverage with your credit card companies to get a lower monthly payment, lower interest rates, and waived late fees. Sounds great, if you don’t mind the hit on your credit rating—I’ve heard a lot of credit providers view debt consolidation the same way they view bankruptcy.

It’s really nothing you can’t do for yourself. I’ll post more about what I probably should have done instead sometime, but at the time we were so behind we felt like we had no choice.

There’s a million companies out there, and it’s not the kind of thing they have at the mall. We found one of them on the internet and set it up.

The name of the company is Pinnacle Financial Management Corp.

So first month comes and goes and we start getting letters from some of our cards (we had four) stating that they’ve accepted the terms of the offer. One card, though, never sent a letter. They sent letters saying things about how we needed to hurry and pay.

It didn’t seem to be a problem with the card provider—one of the other cards was from the same provider, and they’d accepted that offer. When we called, the provider told us they hadn’t heard from Pinnacle yet.

The month drags on, and still no payment on any of the cards. We start to worry, and we start making phone calls. My wife leaves messages on the voice mail of the guy who helped her set up the account, who was, apparently, pretty cool.

Days go by, and none of the calls are returned. At this point, we’re both worried. Flashing neon signs are blinking in my mind, and they all read “SCAM.” Next time we call, after we get the answering machine we click over to the operator. There’s a message saying they’re on holiday until the first of the year. We leave a message anyway. Sounds like a relief, but there’s still that nagging voice in my mind saying a week-long holiday is a great way for scammers to make a getaway.

Finally, on the 29th, we get a letter from one of the card providers stating that since our provider had failed to meet the outlined terms and we were being dropped from the program. This, combined with the other card that still hadn’t sent word they’d ever received the offer, put me over the top.

These guys might be on vacation, but somebody had to be home. I sent the kind of email I was sure would get a quick response from anybody who happened to be there, even if it was the janitor. It basically said I was concerned about the legitimacy of their company and that if I didn’t get my phone calls returned by the first (the day they were going to be back anyway) I would go on every internet financial forum I could find and post my experience with them, and that from there I would do whatever else was necessary to rectify the situation.

Did it get me a quick response?

Yup. At 6:45am Monday morning, two days after this blog went live, I got an answering machine message from some guy named Joseph saying that he’d got my email with my concerns and that he was going to drop me from the program. If I posted anything on the internet about my experiences with him, he’d get his lawyer to sue me for slander.

Yeah, you read that right. This guy’s way of reassuring a concerned customer was to cut him off at the knees.

My phone call back to him was an insane argument—the kind of argument you’d expect to have with your little brother—about whether my email was too mean for him to be able to continue to do business with me.

And this wasn’t just some poorly trained customer service rep. This guy assured me during the call that he was the owner of the company. The owner of Pinnacle Financial Management Corp. was going to cut me lose for fearing his company wasn't legit.

Once I finally calmed him down (yeah, you read that right) he explained to me the delays that happen in each month because of the ACH’s.

Now he was speaking my language. I understand completely about ACH’s—electronic debits—and how after they happen, there’s a seven day delay that the person who withdrew the funds isn’t allowed to consider them “collected.” Since there are two ACH’s—one from us to Pinnacle, and one from Pinnacle to the debt consolidation service—that’s a two week delay from when his company gets the money to when it posts at the providers.

The letter from the credit card company was a mistake on the credit card company’s part.

Now, I can safely say our banks have received their payments. The whole thing’s been worked out fine, and the road bump’s over.

At least, I hope it is. Because in the back of my mind, there’s still this little blinking sign plugged into the memory that my debt consolidation company’s owner sounds like a 20 year old kid in his garage.

But what the heck. I’m a 20 something paranoid kid, too. At least for another seven months. And if this guy’s getting his own company going—well, I hope that’s where I am in a couple of years. Power to him for being that far ahead of the game. I’m envious.

Of course, if he screws me, my offer still stands.

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