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In the last few years I have done several consultations with consumers that were considering enrolling into New Era Debt Solutions for assistance in negotiating their debts with creditors. One thing that I have noticed pretty consistently is that consumers are confused as to the amount of fees that New Era Debt Solutions actually charges their clients.  Part of this confusion comes from the fact that sometime toward the end of 2008 or the beginning of 2009 New Era changed their settlement fee from 33% of the amount that they saved their clients to 15% of the total debt enrolled. (high fee, typical of most companies in the industry)

Another reason for the confusion is that even though New Era charges their fee on total debt, it is charged at the time the accounts are settled as opposed to upfront and before settlements are reached. Charging fees at the time of negotiations as opposed to upfront like most settlement programs is a much better situation for consumers. However, because the fees are charged at the time of savings, many consumers mistakenly believe that the fee is 15% of what is saved as opposed to 15% of total debt. Considering that this fact could double what a client believes the actual fees are, it is imperative that clients understand this difference.

HERE ARE THE FACTS IN THE CONTRACT

1.  They charge a retainer fee of 3% of a clients total Debt.  This is paid out as 1% of clients debt per month for the first 3 months of enrollment.

2.  They charge a maintenance fee of 29 dollars a month starting the 4th month in the program.

3.  They charge a settlement fee of 15% of a clients total debt. This fee is charged on each account at the time of settlement.

4.  If a client completes the program within 180 days, half of the 3% retainer will be refunded.  Completion of the program after 180 days entitles client to 1/3 of the retainer fee refunded.

5.  If a client completes the program, the total overall fee paid by client to New Era Debt Solutions will be 16.5% of total debt if completed within 6 months or 17% of total debt if completed after 6 months. Plus a 29 dollar a month administration fee starting on the 4th month and continuing until the completion of the program.

6.  In addition, New Era Debt Solutions requires clients to set up a third party escrow account that also carries a $9.50 monthly fee and a $15.00 fee whenever settlement funds are dispersed.

HERE ARE A FEW THINGS  I FOUND ON THE WEB

1.  25 complaints with the BBB (not a very large amount considering the size of the company)

2.  They are currently under investigation by the New York State Attorney General.

3.  New Era Debt Solutions also goes by the name DTS Financial

4.  A review site misrepresenting New Era’s Settlement fee as 15% of savings as opposed to 15% of total debt.

MY THOUGHTS ON THE PROGRAM

Overall New Era Debt Solutions is not as bad as a typical debt settlement program that charges all of their fees over the first half of a program.  I was not able to find a large number of complaints on the Internet which leads me to believe that they likely have a good customer service department that supports their clients and delivers the promised service.  However, I am unable to recommend them at this time for 2 specific reasons.

1.  Even though they charge a majority of their fees at the time a clients account is settled which is great, they charge what I would consider to be an exorbitant fee of 16.5% – 17% of a clients total debt plus a monthly fee of 38.50. (when you include the fee for their trust account)  That monthly fee might not seem like a big deal, but it will easily add 1,000 to 2,000 dollars in fees over the life of the program.

Most debt settlement companies will charge a client 15% of their total debt as a fee.  My personal opinion is that 15% of debt is much too high for a consumer to pay for this service. So the fact that New Era charges even more than most companies is a huge red flag for me.  The more a client pays in fees, the less they have available to settle their debts with creditors and the longer a program must be stretched out in order to fund settlements.  So these high fees put consumers at a greater risk for an account to go into litigation.

2.  Clients seemed to be misinformed of the actual cost of the program.  Explaining the pros and cons of debt settlement, and telling the client the specific costs of a program are one of the most important things that must be done.  Clients are unable to make educated financial decisions for themselves if they are misinformed and not clear on the facts.

Had I only spoken to 1 or 2 consumers that had confusion over the fee structure of New Era Debt Solutions, I would have figured one of their representatives just wasn’t doing a good job.  However, when I read a copy of the contract that New Era sends out, I could see how a client might easily assume the 15% settlement fee is based on the savings. If they were given this impression over the phone by a sales rep, the contract does not do a good job of correcting the misunderstanding.

As a final note about the confusion, I was very disturbed to come across a debt settlement review site that was praising New Era Debt Solutions for only charging a fee of 15% of what they saved a client. The entire review was based on the false assumption that New Era charged half of what the average settlement company charges, even though in reality they charge much more than most programs.

Now, these review sites are a dime a dozen and I normally would not have paid attention, however, the very first comment of the review was someone claiming to be Dan Smith – the president of New Era Debt Solutions.  He came on praising the reviewer for such a great and ACCURATE review, even though the review was clearly a misrepresentation.  Here is a copy of the actual review, the comment supposedly left by Dan Smith, and a reply comment from me.
*************************************************************************************************************************************

Setup Fee: 3%
Monthly Fee: $29
Settlement Fee: 15%

TASC Members: Yes
BBB Complaints: 0 (39 as DTS Financial)

In Business Since: 9/2000

New Era Debt Solutions, formerly known as DTS Financial, has a much different program structure than most debt settlement companies. They have a small setup fee (3% of your total debt amount) and a settlement fee of 15%. They also charge you $29/month after the first 90 days. Lets take a look at their fee structure compared to most other settlement companies:

With 15k of total debt, you would pay an average debt settlement company $2250 plus monthly fees. With New Era, if they settle your accounts for 50% (industry average), they are going to make $1125 from the settlement fee. This means that not only will you pay less in fees, you won’t pay them any fees until after they have done the work. This gives their company a real incentive to save you as much money as possible.

New Era Debt Solutions is an accredited member of TASC. They are one of only 12 companies nationwide to be Elite BSI certified by TASC. They also offer a money back guarantee is you are unhappy with their services.

1 Comment »

1. Comment by Dan Smith

I love the idea of a web site like Debt Settlement Reviews that honestly reviews and rates Debt Settlement companies with accurate information. I, as president of New Era Debt Solutions, would love the opportunity to speak with the owner of this web site.
Thank you! Dan Smith

• ·  Comment by Damon Day

I am a bit perplexed by the review on this site as it is incorrect. You state that New Era only charges a fee of 15% of the savings. That is not correct. They charge a fee based on 15% of the total debt. This is a critical fact, since the point of your review is to say that they charge half of what most debt settlement companies charge. I am reading their contract and this is the line that states clearly their fee is 15% of the total debt.

“c. Settlement Fee: A fee charged each time CLIENT agrees to and/or enters into a settlement with a creditor that has been submitted by CLIENT to NEW ERA for negotiation. The fee is an amount equal to fifteen percent (15%) of the amount of each account when entered into the program (”Account Balance”).”

I understand your error because I have spoken to many consumers that have been mislead by New Era sales people to also believe that the fee is only half of what it is.

I thought it was only prudent that I bring it to your attention as I know you want to keep the integrity of your reviews.

However, what I am the most perplexed by is that Dan Smith would come on and praise the review with such a clear and significant error.

Clearly the president of New Era Debt Solutions must have noticed that this review mistakenly misrepresented the fees and claimed that their fees were half of what most companies charge. Not only does he not correct the error but he claims the review is accurate. I find that to be the most telling part of the review as it pertains to New Era.   – source

*************************************************************************************************************************************

To be fair, I do not know for sure if the person who left the comment was actually Dan Smith, and I sure hope it wasn’t.  However, it is clear that the reviewer was also confused about the actual fees that New Era Debt Solutions charges their clients.

In sum, while New Era Debt Solutions is on the right track by not charging a majority of their fees until they are able to settle an account for their clients, in my humble opinion, they completely missed the boat by turning around and charging even higher fees  than most settlement programs that already charge too much.  If New Era would cut their fees down and quickly take steps to clarify their fee structure in both their client presentation and their contracts, I think they could be a company worth consideration.

As always, if you would like to contribute your thoughts, and have something to add to the article, please do so by commenting HERE

Be sure not to miss out on any of my future articles, where I frequently expose ripoff programs and provide insightful financial tips to consumers. You can get them delivered directly to your inbox the moment I publish them.

Please help other consumers and share my article via Twitter, Facebook or your favorite social network by clicking one of the icons below.

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This is the 4th in a series of 5 articles aimed at educating consumers on what I believe to be the true motivations behind The Association of Settlement Companies (TASC).  If you have read my previous 3 articles, you have likely come to the same conclusion that I have. Contrary to what debt settlement salespeople claim, TASC is not a consumer watch dog at all, and in fact, many of their member companies are some of the most egregious offenders when it comes to ripping off consumers.

If TASC is not really an industry regulator and consumer watchdog, then why are most consumers under the impression that they are? Simple, brilliant marketing and dare I say it “propaganda.”

Debt Settlement Companies use TASC as a Marketing Gimmick

Think about the simplistic brilliance of TASC from a marketing standpoint.  A group of debt settlement companies get together to protect their own self interests. They throw in some fluff guidelines that they suggest their member companies follow to give consumers the impression that they are looking out for them. Then they go out in full force and beat it into the public that TASC is an industry and consumer watchdog. They repeat that mantra ad nauseum until eventually, consumers simply accept it as if it were true.

Once consumers accept this without question, then becoming a member of TASC simply gives the debt settlement salesperson another trick to distract consumers from the bad financial solution they are probably selling. Think about it.  What is the benefit for a debt settlement company to become a member of TASC? Debt Settlement companies can do everything that TASC suggests they do without becoming a member and paying large monthly dues to TASC.  So why do they pay the money?

In a word, Sales.  They use it to get consumers to let their guard down.  They can lull a consumer into a false sense of security by claiming they have been vetted and approved by this great industry regulator known as TASC.   After all, if TASC, the great protector of consumers has approved them, then you know you can trust them with your finances.  Right?

Here is an example of why you cannot trust TASC to vet a settlement program for you.  About a month ago I got a call from a consumer that was looking for help. She had enrolled in a debt settlement program a few weeks prior. Then she received a call from another debt settlement salesperson that was a member of TASC. The TASC salesperson really impressed upon her how important it was that she only work with a program that was a member of TASC.  The company she enrolled with was not and she would surely be sorry if she stayed with them.  They were not certified by TASC and therefore could not be trusted.

The salesperson was successfully able to convince her to sign up into his program simply because he was a member of TASC. She faxed me over both contracts to review and asked for my opinion. The fee that her original program was charging her was 15% of her debt ($11,000) the TASC member company actually charged 18% of her debt ($13,000) as a fee.  Both of these programs charged the fee over the first 24 months of a 48 month program. The TASC member company didn’t do anything that her original company didn’t do but actually charged 2,000 dollars more.  Yet, they were able to successfully waive the TASC logo in front of the consumer to distract her from the fact that their program was actually much worse than the one she was already in.  Remind me again how TASC is helping consumers?

Now both of these programs are absolutely bad news for consumers.  They both charge way too much money and charge it all upfront, which is a surefire way for consumers to get burned.  However, it is easier for a salesperson of a TASC member company to rip off a consumer because they can stick the TASC logo in a consumer’s face to distract them while signing them up for financial ruin.

Now if that rubs you the wrong way, I haven’t even told you the most egregious part of this story yet.  During my consult with this consumer, she told me that her main source of income is an investment account, that given her current expenses will be completely out of money within 12 to 18 months.  Remember, both of these settlement programs had her on a 48 month program and collected all of their fees upfront.  Had she continued with either one of these programs, she would be completely out of money within 18 months, and have paid these thieves thousands of dollars in fees with absolutely nothing to show for it.

So here you have two settlement companies, one a member of TASC and one who wasn’t, yet they both were more interested in signing her up into their BS programs then they were about actually helping her with the financial Armageddon she was facing. These companies would have bled this consumer dry with fees for a year and then simply dropped her when she no longer had the money to pay them.

TASC Does More Harm to Consumers by Pretending to Look Out for Them

The example above is certainly not an isolated incident by any means.  If this is the sort of thing we can expect to see from members of TASC, where does TASC get off claiming to be an industry and consumer watch dog? As I ponder this, I can’t help but think, that TASC is actually doing more harm to consumers by posing as a consumer watch dog organization and letting their member companies rob consumers blind under the moniker of a TASC certified organization.   At least if consumers were not under the mistaken impression that TASC would be looking out for them, they might not let their guard down quite so easily when the salespeople start bumping their gums and pushing bad financial solutions.

What can we learn from all of this?  I would say, that if a company is a member of TASC, that doesn’t automatically make them a bad company, but it certainly doesn’t mean we can automatically assume they are a good company either.  As far as a consumer should be concerned, TASC is little more than a marketing gimmick trotted out by debt settlement salespeople, to distract consumers from the fact that they are being sold into a program, that likely does not make good financial sense for them. You must do your own research and due diligence before entrusting your financial future to any company. TASC is looking out for the best interests of their own member companies, not yours.

This article was the 4th, in a series of articles taking a closer look at The Association of Settlement Companies (TASC).  The series currently consists of the following:

1.  TASC – A Closer Look
2.  TASC – An Introduction
3.  TASC – Debt Settlement Lobby or Protector of the People?
4.  TASC – Just Another Marketing Gimmick (this post)
5.  TASC – The Nail in the Coffin

As I finish up the articles, you will see them hyper linked here.  If you like my content, be sure not to miss out on the rest of the series.  You can have the articles conveniently sent directly to your email inbox as soon as they go live live by clicking Here

As always, if you would like to contribute your thoughts, and have something to add to the article, please do so by commenting Here

Please consider sharing my article with others via Twitter, Facebook or your favorite social network by clicking one of the icons below.

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5. Credit Solutions of America – Sued by Florida Attorney General

Why were they being investigated?  Because they were doing what most debt settlement companies are doing. Ripping off consumers! Charging large fees upfront, stretching out client programs for 4 years, misleading consumers, getting them sued and not providing the promised services among other things.

So this is great news for future consumers that will not be able to fall victim to Debt Relief USA.  What about their current clients? Well unfortunately they got screwed.  In a letter from the Texas Attorney General sent to each current and former client of Debt Relief USA he states:

“IF YOU ARE A CURRENT DEBT RELIEF USA CUSTOMER (the company was holding your “set-aside” funds in order to settle your debts): The Texas Attorney General is working with the Chapter 7 Trustee to ask the Bankruptcy Court to refund your “set-aside” funds to you as fully as possible. Because of the limited funds in the estate, it is unlikely

that you will receive a refund of any fees that were paid to the company“.

You can read the actual letter here

If you just paid a debt settlement company 5 or 10 thousand dollars in fees, how would it feel to get a letter like that in the mail?

If you are a victim of this company what can you do about getting your money back?  Nothing. You can’t do a single thing but wait and hope that when the bankruptcy attorneys are finished taking all of the money out of the company, there will be a little left to refund consumers.  I hate to be pessimistic here, but speaking from personal experience, there is almost never any money left for consumers.  The case will stay tied up in bankruptcy court until there is no money left to fight over.

If you are thinking of hiring a debt settlement company to help you with your debts, how can you protect yourself against a company collecting all of their fees from you and then going out of business?  Simple.

DON’T ENROLL INTO A DEBT SETTLEMENT PROGRAM THAT CHARGES ALL OF THEIR FEES BEFORE SETTLING ALL OF YOUR DEBT!

I can’t possibly make that any clearer.  I don’t care what the “super helpful” sales person does to wow you about being a member of TASC or USOBA, or how large they are, or what great settlements they get or whatever magic trick they use to get you to not look at the fact that they charge all of their fees before performing your service.

Any company that demands to get paid all of their fees before you can approve of their work, is the largest Red Flag in the history of Red Flags.  Don’t do it.  If they don’t tie their fees to their actual performance, that tells me they don’t have much confidence in their ability to provide you with a successful outcome.  That is why they want to collect all of their fees as quickly is possible.  Well if they don’t have confidence in their own ability, should you?

What do you think about how most of these debt settlement programs charge clients their fees upfront without any guarantee of a positive outcome? Please share your thoughts HERE

Be sure not to miss out on any of my future articles. Have them delivered directly to your inbox the moment I publish them.

Please help other consumers by sharing my article via Twitter, Facebook or your favorite social network by clicking one of the icons below.

Related posts:

1. Credit Solutions of America – Sued by Florida Attorney General
2. Debt Settlement USA – A Not So Glowing Review
3. Debt Settlement Nightmare for Phoenix Woman
4. Debt Settlement – 15 Companies under Investigation in New York
5. Top 5 Reasons Most Debt Settlement Companies Fail their Clients.

I told her that I had heard of Debt Settlement USA, but with over 2,000 or so Settlement Companies out there, it is easy to get them confused. I informed her that this sounded like the typical high upfront fee shenanigans that most Debt Settlement companies hook consumers into. I didn’t have a copy of their contract on hand so she faxed it over, to get my opinion.  When I received the contract, unfortunately my hunch was confirmed.

1.  They charge 14% of a clients total debt as a fee
2.  They charge their entire fee over the first 11 months in their program
3.  Their fee is not contingent on any sort of results
4.  If you stop making payments, they can still keep their fees, even if they haven’t settled any debt

HERE ARE MY THOUGHTS

The first thing that leaped off of the Contract at me was their Fees.  Debt Settlement USA charges 14% of a clients total debt as a fee plus a 29 dollar administrative fee.  Now, most Debt Settlement companies charge 15% of a clients total debt, so one might conclude that Debt Settlement USA must be better. Well I guess everything is relative, I personally think both of them are way too high.

However, even if a consumer decided that 14% of their total debt was a fair fee, here is the kick in the gut.  They are going to collect that entire fee over the first 11 months into the program.  Let me say it a different way. They will collect most or likely all of their fee before they even settle the first debt.

Another thing that I saw, or rather didn’t see, was a clear explanation of the fees.  Sure they told her that her fees were going to be about 500 dollars a month for 11 months but I sure didn’t see that fee totaled anywhere.  I guess if someone saw the number $5,500 in fees Upfront, they might just think twice about this program.

After crunching their numbers and double checking their fuzzy math, I actually got pissed.  Ya I was literally pissed off about the lengths that these programs will go to to trick consumers into signing up.  Let me show you what I mean.  This client had about $40,000 worth of debt.  Debt Settlement USA wanted to put her on their plan where she would pay about $600 a month.  About $500 of that would go straight to them for the first 11 months. So after 11 months, the client would have paid $6,600 yet, only have $1,100 that she might be able to use to settle her debts.  How much of that $40,000 is she going to be able to settle for $1,100? Now you can start to see why I was getting angry when I was reading this.

To add insult to injury, they are misleading her and then covering their butts in the fine print.  When I use a real calculator and check their fuzzy math, the only way for this client to finish up the program in the amount of time that they estimate and still cover their fees, would be if they settle all of this client’s debt for about 34 cents on the dollar.  Hmm, according to the President of Debt Settlement USA in response to a complaint against them, he claimed that their settlements average about 43 cents on the dollar. That means, the program is probably going to last longer and definitely cost more than their rosy scenario that they are giving the client.

In fact, lets look at the fine print.  In the fine print the consumer will learn that the quoted numbers are certainly not a guarantee. (see fuzzy math problem above).  We also learn that their fees are not contingent upon any specific result. They consider the fees earned when they receive them and my favorite, if you stop making payments for any reason, Debt Settlement USA is entitled to keep everything you have given them up to that point.

I think I am starting to understand why they have been subpoenaed and are under investigation by the Attorney General in New York. I also recently read that they had to give full refunds to all of their clients in Vermont because they failed to offer a 3 day right of rescission and violated the “Vermont Consumer Fraud Act.”

They have 158 complaints with the BBB and some quick google searches for “debt settlement usa” scam and “debt settlement usa” rip off, revealed quite a bit of unhappy clients.

I don’t know the principle officers of this company or anything more about this company than what I read in their contract and I found on the web. However, from what I do know about them, I would certainly not recommend them to any consumer.  Even if you discount the Attorney General investigation and all of the consumer complaints, I personally don’t feel that charging a financially struggling consumer 14% of their debt (all upfront) is at all beneficial to them.

Debt Settlement USA makes all of their money upfront.  Their fee is not based on their performance.  If their client has a financial mishap and can’t afford to complete the settlement program, they can keep their fees. Clients are not likely to settle any of their debts with creditors for over a year.  If Debt Settlement USA goes out of business or is shut down by regulators, clients will not likely get their money back.  Debt Settlement USA has no financial incentive to provide a client with support after they have paid all of their fees.

When I take all of these things into account, I see an unconscionable contract.  I see every benefit is provided to Debt Settlement USA and I do not see any consumer benefits.  Now, I am human, and I could be missing something, so if someone can explain to me how charging a consumer 14% of their debt, upfront, pushing out settlements for over a year and providing no guarantees, is in the best interests of the consumer, I would appreciate it if you would set me straight.   Until then, I must recommend that a consumer not enroll into the program currently offered by Debt Settlement USA.

What do you think of this type of fee structure?  Please share your thoughts by commenting Here

Please consider sharing my article with others via Twitter, Facebook or your favorite social network by clicking one of the icons below.

Related posts:

1. New Era Debt Solutions Review
2. Debt Settlement – FTC could put 84% of Companies out of Business!
3. Credit Solutions of America – Sued by Florida Attorney General
4. Debt Relief USA files Bankruptcy – Clients get Burned
5. Debt Settlement – 15 Companies under Investigation in New York