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Charles Phelan

Settle Your Debts in 2015!

December 31, 2014 by Charles Phelan 1 Comment

It’s the very last day of the year and 2015 is just around the corner. If you have put off cleaning up old collection accounts, or you’re facing a financial hardship and can’t continue making payments on your credit card debts, then you need to know that debt settlement will still be a viable solution in 2015.

In fact, next year may be a very good year for settling debts, especially because there has been strong pressure on the collection and debt purchasing industries to clean up their act. Some experts are predicting less creditor litigation in the coming years, as documentation standards for purchased debt continue to tighten.

There have also been numerous enforcement actions by the Federal Trade Commission and the Consumer Financial Protection Bureau against collection agencies that were routinely violating the law. And of course, just like every other year, many debt relief scams have also been shut down by Federal and state authorities. But no matter what happens in terms of regulation or enforcement, the basic financial math that drives banks to settle will still be in place.

Debt settlement will therefore remain a valid and viable alternative to bankruptcy (especially Chapter 13 bankruptcy) for the foreseeable future. However, the creditors will make adjustments to what they may accept for settlements, and changes are sure to happen.

That’s why it’s important not to rely solely on advice from reading the various debt relief forums on the Internet, as useful as those sites may be for overall information. A creditor settling for 35% today might only be willing to take 45% tomorrow, or perhaps become more lenient and start accepting 30%.

What I do here at ZipDebt is monitor the trends across a large number of settlements, so I can keep my “finger on the pulse” of what is happening and guide you to the best possible settlement for any given creditor. I take the guesswork out of the process, and hand you the playbook of the other team so your success is assured.

I should also mention that ZipDebt will still be going strong in 2015 when others in the debt relief field have come and gone. I’ve been at this since 1997, and 18 years later I’m still here when many others have exited the industry. As the financial crisis has wound down, there is far less delinquent debt and fewer people in trouble. But we’re still seeing hundreds of thousands of annual bankruptcy filings, and good paying jobs remain hard to find. So I know that people still need help out there and that’s what I’m here to do.

Long time readers of The ZipDebt Blog may have wondered about the lack of new posts for 2014. I do plan to resume regular posting in 2015, and some of what I will be writing about is the financial challenge I myself faced in 2013-2014. I made a very difficult decision to sell my “dream home” in order to solve my own debt problem before it spiraled out of control. As long as I’ve been in the financial sector, I’m still learning. I still make mistakes on occasion, and then try to learn from those mistakes. I hope to share this story soon, and perhaps inspire others to make the tough choices needed to regain a sound financial footing.

Best Wishes for a Very Happy New Year!

Filed Under: Debt & Credit Tagged With: debt settlement, do it yourself debt settlement

ZipDebt Client Comment Forum (2007-2019)

March 13, 2014 by Charles Phelan 138 Comments

This post is intended to provide a forum for ZipDebt clients to post comments about their experience with the program. Recently, I spoke to a person interested in my program, and they told me that they didn’t bother to read any of the testimonials on my site because “everybody fakes testimonials.” Well, that’s probably true of many (if not most) debt-related websites. Not so with ZipDebt. ALL of my testimonials are real. No need for faking it here. But it gave me the idea of providing a way for clients to write in and post comments on their own.

Feel free to write about your experience of handling your own negotiations with training and coaching by yours truly.

Two simple ground rules for posting your feedback:

1. Please do not mention bank names or the names of collection agencies. (Two reasons for this: One, I don’t want to get drowned in blog-spam by debt collectors who work for said companies, or notices from their legal departments, etc. Two, settlement percentages are a moving target, and a bank/agency that settles for 30% today may stick with 50% tomorrow, and vice versa.)

2. Please do not include website links or html tags in your posts.

3. No profanity please (however tempting it may be to dump on your favorite debt collector). 🙂

Otherwise, please feel free to relate as much or as little as you care to share with others. The main purpose here is to help the folks who are struggling with their decision about whether to use this strategy in their situation.

Filed Under: Debt & Credit

Insolvency Calculator for IRS Form 982 Now Available! Only $29!

December 17, 2013 by Charles Phelan 8 Comments

zipdebt.com proudly announces the launch of our new INSOLVENCY CALCULATOR, designed to help taxpayers and professional tax preparers determine taxable income associated with 1099-C “cancelation of debt income.”

At the super-low price of $29, this Excel based calculator will help you save HOURS of time in completing “the tax form from hell” (Form 982). You can buy it right now, download immediately, and get to work on your Form 982 within minutes.

Click Here to Buy the Insolvency Calculator for Instant Download

Every year when tax season rolls around, I receive numerous questions from anxious taxpayers who have received 1099-C forms for debts settled the prior year. People want to know if they will have to pay taxes on the forgiven debt, or how to determine whether the “insolvency exemption” will apply to their specific situation. I wrote a blog post several years ago on the subject of “Debt Settlement, Insolvency, and Income Taxes,” but there still seems to be no end to the questions people have on how to actually perform the calculations needed to determine insolvency.

That’s mainly because the IRS instructions for Form 982 read like they were written by a CPA with a MBA from Harvard and a mission to confuse as many people as possible! Even professionals are frequently stumped on questions about calculating insolvency, figuring out the exemption, and then filling in the rest of the form correctly.

Tax preparation software is of little help in dealing with Form 982. For example, what if you have received more than one 1099-C? There is simply no software out there that is built to handle that type of situation.

Due to the difficulty in understanding how to calculate insolvency and how to fill in Form 982 correctly, every year taxpayers leave millions of dollars on the table by simply ignoring the insolvency exclusion and then paying taxes on the canceled debts, even when they would have qualified for an exemption. Or worse, they ignore the Form 1099-C entirely, don’t claim the income, and then get audited for underreporting!

The IRS instructions for Form 982 indicate that approximately 11 hours of time should be allotted for this one form!!!

If you are preparing your own taxes and need help with handling a 1099-C, YOU NEED THIS CALCULATOR!

If you are a professional tax preparer, you already know what a headache it is to calculate insolvency and reduction of tax attributes. Here is the calculator you’ve been waiting for!

Click Here to Buy the Insolvency Calculator for Instant Download

Product Features

    • Easy to use calculator in Excel spreadsheet format (requires Excel 97 or later version)
      • Quick Start Guide will have you up and running in minutes!
        • No need to understand formulas, just input your data and the results are calculated for you automatically!
          • Detailed 38-page User Manual, with line-by-line instructions
            • Includes support for multiple settlements, multiple 1099-Cs, expandable as needed
              • Also covers cancelation of mortgage debt
                • Detailed extensive examples provided for different tax scenarios
                  • IRS Form 982 and Publication 4681 included for reference
                    • Includes detailed information on how to calculate insolvency, full or partial
                      • Includes calculator for determining what to show in Part II of Form 982 (Reduction of Tax Attributes)
                        • Shows total taxable income (if any) and total reduction of tax attributes
                          • Fill in Form 982 quickly and easily with help from this amazing calculator

                          Click Here to Buy the Insolvency Calculator for Instant Download

                          Filed Under: Debt & Credit Tagged With: 1099-C, calculator, canceled debt, cancelled debt, debt cancelation, debt cancellation, debt settlement, forgiven debt, Form 982, insolvency, IRS Form 982, taxes

                          Debt Settlement Solutions: Slow Torture vs. Fast Relief!

                          October 4, 2013 by Charles Phelan 1 Comment

                          Consumers researching debt settlement solutions need to be aware that there are two very different approaches to the strategy: the Long-Term Method or Fast-Track Debt Settlement™ (pioneered by ZipDebt). We might also call these “Slow Torture” or “Fast Relief.”

                          The Long-Term Method is where you start the project with nothing to work with – no nest egg, no stocks or savings, no IRA, no family assistance, no assets to liquidate, and so on. You have hope and that’s about it. When your only financial resource is your paycheck, the source of settlement funds is limited to the stream of cash previously associated with the minimum monthly credit card payments, now diverted to a set-aside account for settlements.

                          Since the pace at which funds build is slow, it’s usually only possible to settle ONE ACCOUNT AT A TIME. This will go fine for a while, but eventually the ones you haven’t settled will escalate out of control. Once multiple lawsuits kick in, the project gets derailed and you’re right back to the bankruptcy conversation all over again.

                          Fast-Track Debt Settlement™ means starting the project with some financial resources, such as a 401k loan or a private loan from a family member. Supplementing lump-sum funds with additional monthly savings from the household budget allows you to take advantage of multiple settlement opportunities as the accounts reach their respective charge-off deadlines. The whole point of this approach is to SETTLE QUICKLY and AVOID LAWSUITS.

                          If you’ve shopped debt settlement solutions, you know that most of these companies still talk in terms of 36-48-month programs – “Slow Torture,” in other words! This is pretty crazy from my perspective, since I’m the person who invented the 36-month settlement program in the first place! I abandoned it long ago as no longer effective.

                          Things change. Debt settlement companies, apparently, do not, so they still quote 3-year programs knowing full well that most of their clients will see multiple lawsuits if they take that long to settle. The odds of litigation climb sharply in the second year of collections. There is also risk during the initial 12-months, but it’s typically a risk that can be MANAGED, compared to risk that is OUT OF CONTROL.

                          Fast-Track Debt Settlement™, or “How to Get Out of Dodge Before the Shooting Starts!”

                          Here are the key reasons why you want to settle inside the 180-day charge-off deadline (or shortly thereafter) whenever possible:

                          1. Mechanical settlements – Most of the major credit card banks have automated processes in place that are designed to present settlement offers to customers. These processes are in operation through the charge-off deadline and beyond.

                          2. Improving offers – The settlement offers presented by bank collection reps tend to improve (i.e., decrease in required settlement percentage) as the account winds its way toward charge-off.

                          3. Fewer collection agencies – The fewer collection agencies involved, the easier the project becomes for the average consumer. While there may be third-party collection agencies involved in this early phase, most creditors work their accounts using internal reps up to the charge-off deadline.

                          4. Limited lawsuit risk – Risk of getting sued before charge-off is limited to certain specific creditors on larger balances. The risk of lawsuits is therefore much more manageable during the initial 6-month period.

                          5. Better predictability – Most of the major credit card bank settlement practices are pretty well established, and therefore predictable within certain limits. After charge-off, things get much less predictable, and virtually ANY account is at potential risk of litigation if enough time lapses without settlement.

                          6. Better settlements – Settlements negotiated directly with the creditors before charge-off are nearly always at or below 50%, with this being an upper boundary. In 2012-2013, we saw most of the major creditors settling in the 30-40% range, and one or two down in the 25% bracket. These are simply better deals (negotiated with less hassle) than are usually available via many collection agencies – especially when aggressive attorney collections are taken into account.

                          When you settle your debts on a Fast-Track™ basis, all the negotiations are conducted in parallel and as many of the settlements as possible concluded before the charge-off deadline. (Bear in mind that settlements often involve installment payments that extend 1-2 months beyond the deadline.)

                          There can be one or two very stubborn creditors who choose not to offer a reasonable settlement figure before charge-off, so the above guidelines do not apply 100% of the time. However, any accounts not resolved before the deadline can usually be settled within 3-6 months after charge-off, putting the whole project within a 6-12 month timeframe depending on the specific creditors involved.

                          OK, let’s review:

                          * You can file Chapter 13 bankruptcy and restructure the debt under a 5-year court-supervised plan where you pay monthly on a fixed pace.

                          * You can take the Long-Term Method and stretch out your settlements over 3-4 years, and get sued into Chapter 13 bankruptcy anyway.

                          * You can adopt the Fast-Track Debt Settlement™ strategy and be debt-free in 12 months or less.

                          Rather a “no-brainer,” isn’t it?

                          Filed Under: Debt & Credit Tagged With: charge-off, collection agencies, creditor lawsuits, debt settlement, DIY debt settlement, do it yourself debt settlement, legal action

                          Why FREE Debt Settlement Advice Can Often Be the Most Expensive

                          October 3, 2013 by Charles Phelan 1 Comment

                          Virtually every single debt relief company offers a “free consultation” where you can call a toll-free number and speak with a counselor about your situation. Depending on whether you’re seeking debt settlement advice or information about credit counseling, there may be different titles for this position, such as “debt counselor,” “certified debt consultant,” or “senior debt advisor.”

                          Buyer beware! After 16+ years in the industry, I can tell you firsthand that such titles are meaningless. The reason is because there is no government agency certifying the credentials of individual debt consultants.

                          This is not the case with most professions involving financial products or advice. If you want to sell insurance, for example, you have to get a license from your State’s Department of Insurance. Yet there is no such corresponding license for the people who dispense debt settlement advice or make debt-related financial recommendations.

                          As a result of this lack of oversight, what prevails in the marketplace is a SALES mentality.

                          Even at many so-called non-profit credit counseling agencies, counselors are expected to “enroll” a sufficient number of callers, or they lose their job to someone who’s better at signing up new clients. And of course, a number of large debt settlement firms utilize aggressive high-pressure sales tactics via boiler-room operations. (Fortunately, this approach has been largely squashed by an October 2010 rule-change by the Federal Trade Commission which banned advance fees for third-party debt settlement firms.)

                          So whether you’re looking for debt settlement advice or information on other approaches like credit counseling or bankruptcy, be wary of the “free consultation.” Too often, you’ll simply be speaking with someone who has a financial incentive to sign you up for an expensive program or service. With thousands of dollars in potential commission income at stake, can you really trust a “debt consultant“ to provide you with objective advice?

                          Here at ZipDebt, we provide free consultations too. And while this might seem like a contradiction to what I wrote above, there are three key reasons why our consultation process is totally different from the sales-driven approach:

                          Our training course (“Charles Phelan’s Debt Settlement Success Seminar™”) includes a thorough discussion of ALL legitimate debt relief options, and provides a decision-tree to assist consumers in choosing the mathematically correct approach for their financial circumstances. We first educate you so you can make a fully informed decision on which course of action that makes the most sense given your particular situation. We don’t take a one-size-fits-all approach to debt relief.

                          We offer our program with an ironclad 365-day moneyback guarantee. This gives consumers an opportunity to fully review the training material before making a final decision on whether or not to implement a debt settlement strategy vs. other approaches like bankruptcy or credit counseling. And of course, our refund policy makes it totally pointless for us to “sign people up” just to make a sale, as this would just lead to refunds requests based on the decision-tree information provided in the training program!

                          At ZipDebt, we do not employ sales representatives. Consultation requests are handled ONLY by a seasoned professional. Further, we do not pay any form of commission or incentive compensation for “sign-ups.” This ensures that the advice you will receive is unbiased.

                          The key point here is that you should beware of “free” debt settlement advice, or free debt-relief advice in general. Make sure it really is free, meaning with no strings attached (like a big fat commission for enrolling you!), or it may just be the most expensive advice you ever receive!

                          If you would like to discuss your financial situation with us and get some good solid advice (minus any sales pitch), please go to the consultation request page and follow the simple instructions provided there. We promise to give you a straight answer on whether or not debt settlement is right for your situation.

                          Filed Under: Debt & Credit Tagged With: advance fee ban, credit counseling, debt consultants, debt consultations, debt settlement, debt settlement advice, FTC ruling

                          ZipDebt Clients Enjoy Great Results! Success Tracking Update, 2006 through 2012

                          May 23, 2013 by Charles Phelan 1 Comment

                          In July 2010, I published “Debt Settlement Done Right,” which included ZipDebt’s success tracking statistics for the period 2006-2009. As far as I know, I was one of the first in this industry to publish actual data on my results. Today, it’s still quite rare to see a debt settlement firm publish transparent information about actual performance results vs. the claims made in their marketing materials and sales pitches. There is a reason for this. Their data would show they do a poor job, get their clients sued on a regular basis, and fail to settle most of the accounts for most of their clients.

                          This is the latest update to my published success tracking statistics, and the data include the pool of clients who purchased one of my programs from 2006 through 2012. The updated stats demonstrate a track record I am very proud of. I’ve achieved excellent results in coaching consumers how to settle their debts quickly and safely on their own, with no need for professional negotiators or the sky-high fees they charge.

                          Please note that these figures pertain to clients who settled unsecured debts (primarily credit card debt). I’m not including data for clients who required assistance with settlement of second mortgages or HELOCs, a phenomenon that is unique to the past few years of the financial crisis. The process of settlement is different for mortgages, so it would not be appropriate to mix the data together. This will be especially important in the reporting of the amount of debt settled by clients, and the overall percentage achieved, since mortgage balances are usually much larger and the settlement percentages lower than for credit card debt. But it’s also important to recognize that the timeline for mortgage settlements is not the same as for credit card debts or other unsecured accounts. In general, mortgages require a longer timeframe before settlement can be reached.

                          Here is the hard data on ZipDebt Success Rates for clients who did DIY debt settlement on credit cards and other unsecured accounts. For the exact methodology employed, please see the original July 2010 post.

                          ZipDebt SUCCESS RATES (Cumulative) 2006-2012

                          1. Total Number of Clients @ 2,232
                          2. Number of Refunds @ 62
                          3. % Refunds/Total @ 2.8%
                          4. Coaching Not Included (Basic) @ 306
                          5. Insufficient Contact to Determine Results @ 722
                          6. In Progress @ 32
                          7. Pool of Coached Clients @ 1,092

                          8. RESULT A_ COMPLETED @ 501
                          9. RESULT B_ 80% Finished @ 294
                          10. RESULT C_ 50% Finished @ 82
                          11. RESULT D_At least 1+ Settlements @ 148
                          12. RESULT E_Filed Bankruptcy @ 67

                          13. BASE SUCCESS RATE (= RESULT A + B) @ 73%
                          14. 50%+ SUCCESS RATE (=A+B+C) @ 80%
                          15. SUBSCRIPTION SUCCESS RATE (A+B+C+D) @ 94%

                          BASE SUCCESS RATE – This is the most conservative definition of “SUCCESS” relative to my program. The group of “Completed” plus “80% Finished” clients are all success stories. These are people who made the program work and achieved the desired outcome. They settled all their debts, or had settled 80% or more of the starting balances by the time their coaching subscription ended. I am proud to announce that based on this simple criteria of “getting the job done right,” ZipDebt has a base success rate of 73%.

                          This is an inversion of the normal success rate for a traditional debt settlement company. Most of them have a FAILURE rate higher than 73%! It is also common knowledge that Chapter 13 and credit counseling programs have a high failure rate as well. I am quite proud of the excellent results achieved by ZipDebt clients. This 73% figure for my base success rate represents HUNDREDS of success stories – these are ordinary people who cleared out their credit card debts via self-negotiated settlements.

                          50%+ SUCCESS RATE—It’s important to remember that this is a do-it-yourself (with coaching) program. Clients often learn enough in their first 6-12 months with me to keep going on their own after their coaching subscription has expired. Some people choose to renew to extend their coaching service, while others really take the DIY-spirit to heart and finish out on their own. Including clients who were approximately half finished with their settlements upon expiration of the coaching subscription, the success rate climbs to 80%.

                          SUBSCRIPTION SUCCESS RATE—Considering that 94% of clients reported at least one successful settlement during their coaching subscription period, virtually every one of these customers received full value in return for the cost of their subscription fee, and most would say their savings on the first settlement alone paid for the program cost many times over.

                          BOTTOM LINE: My data clearly shows that consumers are capable of negotiating settlements on their own and achieving BETTER results than those obtained by third-party debt settlement firms.

                          To consumers considering debt settlement: It’s not for everyone. It’s imperative that you be a good fit for this approach in terms of your financial situation, and that includes having access to sufficient resources to negotiate your settlements quickly. ZipDebt clients are so successful because they move FAST – the majority of our settlements are negotiated before charge-off, or shortly thereafter. To learn more about this very successful approach to debt settlement, please read my Free 32-page report, How to Eliminate Your Debts Quickly and Safely Without Filing Bankruptcy.

                          Filed Under: Debt & Credit Tagged With: debt settlement, DIY debt settlement, DIY-with-Coach, do it yourself debt settlement, legal action, negotiate debt, third-party settlement companies, zipdebt

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