Are you dealing with debt and finding it hard? Here is what to watch out for while negotiating with the credit card companies and other creditors.
By Dan Couvrette, CEO, Divorce Marketing Group, Divorce Magazine and Family Lawyer Magazine.
Guest speaker: Ed Portelli, Debt/Credit Specialist. Ed Potelli is the owner of OCCA – Consumer Debt Relief. OCCA is an independent firm offering confidential debt management and repayment plans to Canadians. View OCCA.
SUMMARY OF THIS ARTICLE:
- How to overcome the burden of dealing with credit card or other non-secured debt
- What is the process for dealing with credit card companies and other creditors
- What to watch out for if you try to negotiate with institutions on their own
- How they can get their financial life back on track.
HERE IS THE TRANSCRIPT OF THE PODCAST:
Dan Couvrette: Hi my name is Dan Couvrette. I’m the publisher and CEO of Divorce magazine and divorcemagazine.com and Family Lawyer magazine and familylawyermagazine.com. Every month we invite professionals to talk with us about issues and information that can help divorcing people and professionals serving the divorce market. Those podcasts can be found on divorcemagazine.com and on familylawyermagazine.com.
Today I’m very pleased to have Ed Portelli from the Canadian firm of OCCA Consumer Debt Relief with me on this podcast. Ed is an expert on the area of debt and finance and I’m very pleased to have him, because he’s going to share information that will be of interest to both people who are either going through a divorce or recently divorced who have financial debt issues and also professionals who are serving the divorce market—whether that be family lawyers, mediators or other financial professionals as well who may lack advice and information that they can give to clients about how to deal with debt. So thank you very much Ed for joining me on our podcast today.
Ed Portelli: Thank you. Glad to be here.
Dan Couvrette: Great. Ed, to start off, can you just give me a little bit of background about the type of work that you do and what inspired you to get involved in this type of work.
Ed Portelli: Well we help people get out of debt. I mean it sounds simple—Like it sounds like a simple strategy, but everyone is in debt for different reasons. And I myself and my wife who started this company ten years ago, were in the collection agency industry for a long time. We got to see what happens with people, why they’re there, what they could have done differently, what they could have done differently that sort of thing.
So when we started our own it was with the goal that people come into debt for different reasons and we’re not here to judge those reasons, life is life, things just happen. So what we’ve done is said—listen we know what would be the smartest answer if we were in debt, we know the system, we know how it works, we know—We have moral values, we have all these different things and so we—Based on helping friends of ours and relatives and that sort of thing we decided to go public with what we know and start helping people—Helping protect them.
We found that the only remedies out there were ones that were still institutional-based, they were still systematic, where you know the creditors had no problem with it, they agreed with it or they supported it or they paid for it and we wanted to truly represent an individual and not just try to mediate or try to enhance the agenda of the creditors and you know get as much as possible from a person. We took their situation and started from scratch, filled out their budget, found any additional income that they may have, additional money to pay towards these creditors and we took that amount of money and used that and that alone to offer repayment back to creditors.
Dan Couvrette: So Ed, when you talk about debt, are you only talking about credit card debt or are you talking about any other type of debt that you might be able to help people get a better handle on
Ed Portelli: Well it can include their entire situation. There are certain roadblocks to that, if you have a secured debt of any sort, then there is no real way for us to get in between the creditor and the asset.
Dan Couvrette: I think people probably know that a secured debt would be something like a mortgage
Ed Portelli: That’s right, it is a mortgage or a car loan, anything that you borrow that is directly related to an asset where if you stop paying, you risk losing that asset.
Dan Couvrette: Right:
Ed Portelli: Now what we do is we take all of the unsecured debt—the credit cards, loans, you know gym memberships, anything that is unsecured and we can renegotiate, we can negotiate with the creditor with some strength. Now in a lot of cases people have lost their vehicle or have lost their home. Now the residual that they owe, the additional money they have to pay, is no longer secured, the security has been compromised or taken and so we can now include that as well, but our goal is to try to use things—To take care of things like mortgage first and food of course and all the necessities and then anything secured including—You know in this case I would guess there’s divorce lawyers involved in some cases, we want to make sure they get taken care of because people need their assistance, so those—To us we consider that a secured debt, because it’s a service you don’t want to lose.
Dan Couvrette: Right.
Ed Portelli: That’s what we mainly focus on, there are certain avenues, certain things that we can’t specifically deal with, directly like a student loan or taxes, but we can and we do help people walk to through the process to get that negotiated either down if its possible or to get them lower payment arrangements that they can afford. So we’ll still hold their hand, because that’s what people need, they still—They’re not aware, its very difficult to understand the process of every creditor that you have.
Dan Couvrette: Right.
Ed Portelli: And so instead of trying to figure this all out, we know exactly where everything stands, we’re upfront. Say—“look this is very difficult to deal with, there’s nothing we can do here, but we can fix our arranged payments or protect you in all these other areas, that’ll allow you to take care of that.”
Dan Couvrette: Intermission
Ed Portelli: Well firstly we—From the family lawyers that we’ve spoken with, we found that there is a lot of misunderstanding or a lot of lack of information as far as what to do when an individual is in crisis financially. Now from what we understand there is a lot of the mental counselling, there is the sorting out, you know as far as how to divvy up assets or how to protect an individual in their case and that sort of thing. But what we do is we take the money—the debt owed and we take that off their hands and we will actually handle their financial situation as far as debts go.
We will look at it on an approach that starts as I said earlier, from the beginning and sees what their new financial position will look like, what they can truly afford, because we found a lot of people jump the gun too quickly and pay off creditors, sell houses and use that money and they’re not using it wisely. Because a lot of times the money is not enough to clear them outright. So they start to pick and choose what they should pay down, what they should pay off, maybe its by the one that they feel is the most pressing or they received the most calls about and so we eliminate all of the personal and emotional feeling from the negotiations with the creditors. We look at their situation clearly, look at what the new situation is going to be like, sort out what they can afford and then we will protect them and defend them, while we’re negotiating with the creditors so that nobody is squeezed beyond their means.
And when you’re already going through a tough situation, the last thing you are capable of handling from what we see is the specifics of what’s the smartest way to go? What’s the best thing to deal with? Who can you negotiate with better than who? And in a lot of cases individuals are trying to clear these things up or the lawyers are trying to help them clear these things up one debt at a time or again the one that’s causing the most flack, we will take it from the beginning and start with as if you’re business is now downsized. So lets say that—So you’re an individual, but you’re also a business, I mean you have financial obligations, you have things to take care of, so we want to make sure that you have an entire plan, that makes sense before you put out another penny.
And in a lot of cases there’s disputes, there’s co-signing—As far as there’s two individuals on a debt, there’s one on some of them, so we want to sort out who’s is who’s, what you’re responsible for and if we—In a lot of cases we have both individuals that come here, both divorcing individuals and they have separate accounts and we make sure that the finances are taken care of, it doesn’t hurt the other individual anyway, because we’re not dumping the problem on someone else, we’re simply taking your position, your situation and helping sort if out for you.
Dan Couvrette: We already touched on this a bit Ed, but lets say I owe $10,000 to Visa and I owe $10,000 to MasterCard and there’s just— No way that I can pay these off—Certainly going through a divorce is a financial challenge and— I just run out of money, don’t have any way of paying those off and the interest rate is somewhere between 18 and 22per cent.
If I just pick up the phone and I call Visa and say—sorry guys I can’t pay you. What are they going to tell me?
Ed Portelli: Well I’ve heard some stories—I’ve yet to really verify any and I didn’t want to say that there are none, but if you were—You can always negotiate with your creditor. But the unfortunate part is 99per cent of the time, that negotiation has to be done when you’re still in a position of strength, you still have a good potential to pay, you’re looking for maybe a minor adjustment, but with most credit cards, most people that carry a balance are paying the minimum already—
Dan Couvrette: Right.
Ed Portelli: And even if they reduce the interest, the minimum payment, the amount that’s built around budget these days, if you look at your Visa statement carefully, its actually now legislated that they have to tell you how long it will take you to pay. And in most cases you’re looking at 40 to a 100 plus years. But you know up until now, it’s been the same, its just now they have illuminate that by putting it on your bill, but I look at my own bills, we all have bills, I look at them, it took me a couple months for it to actually register that its coming up on my bill, its kind of innocuous, its just sitting there in the same font as everything else.
And at the same time, because it really—You really can’t do much more, it really has no significance to people, they look and they see how ridiculous it is, the length of time it’s going to take, but their budget has mostly squeezed them in a position where all they’re doing is making minimum payments anyway. So now you split up, all that does to—In my understanding, all it really does is it gives you—And a lot of people it gives them their first real opportunity to review their situation and see how they’re doing. Because up until—There always has to be—It seems like there always has to be a critical point, a crisis, a car repair, a loss of work, a divorce, something to tell you to actually look at your credit card statement, your financial situation. So what we do is we say—listen you can’t—You’re not going to be able to pay this back, as is, it’s not going to make any sense, you’re going to have to ask for lower, you’re going to have to lengthen the term, which already doesn’t get you anywhere, so those sort of things—You know those sort of things we don’t recommend.
But when people get divorced, we consider it like you have started a new company. And we review what your new company is capable of and how quickly you can get out of this. And if you cannot get out of it quickly, then we’re going to need to negotiate to get you out, there is no advantage to paying every last cent that you have, indefinitely. So we’re—Our goal is to speed things up, to force the issue with creditors and say—they’re either going to pay you what they can afford or there is no advantage to them paying you anymore, because this is going to go on forever.
Dan Couvrette: And I can understand why they would be better off using a company like yours, rather than trying to negotiate with each individual creditor, because I assume that your company is going to give the creditor the plan, you’re going to say—this person owes this, this, this and this—
Ed Portelli: Mm-hm.
Dan Couvrette: And here’s our plan and because you’ve got ten years of credible experience that the creditor will be more likely to go along with the proposed plan. Would that be an accurate statement?
Ed Portelli: That’s accurate and at the same time its—You know to be honest we’re not as interested in that end. I mean we are interested in starting with what can they truly afford? What is in their best interest?
Dan Couvrette: Right.
Ed Portelli: And from there the creditor can choose to accept that if they like, they can choose to flex their muscle if they like, they can choose to be oppressive in some way if they like, that has no bearing on our company at all. We’re not worried, we’re not upset, we’re not saddened, we don’t feel guilty, we are just simply saying—look we are here to reconstruct their business, which is them as an individual and their life.
And this is what they have to offer. If you choose to accept it, that’s terrific. If you don’t, then you have two choices, you can either walk away and in which case in a place like Ontario there is—After two years the debt becomes statute barred and what the statute says is after two years of non-payment, the file cannot brought in front of a judge any longer. So if they—And we use that, because we’re showing them that look—if you really realize we and we force you to realize there’s nothing better here, we’re not going to make them borrow any more money, we’re not going to make them take food off their table just to pay these things right now, we are going to do everything we can to protect themselves, if you don’t want to answer me, then in two years, the debt is no longer a legitimate debt you can chase in court.
Now it doesn’t mean the person still doesn’t owe the money, but for the sake of argument, it means there is nothing that can happen to them any more. And so what we found is we have to push these creditors into those situations, because otherwise they provide minimums that they require regardless of the person’s situation and in most cases they can’t afford it.
Dan Couvrette: Right.
Ed Portelli: When you talk about a non-profit credit counselling for example, they need creditor approval or the deal is off. And we don’t need creditor approval, if they give us the approval to take the deal, great, if they don’t, that doesn’t mean we don’t help you anymore. And in the case of a firm that tries to reduce the amount of payments you make or the interest, in most firms, that’s what they’re looking at. They’re looking at a fix that can help you a little bit, get you a little bit further, but really has no actual plan on how to get you out of the whole thing.
Secondarily if you are on credit counselling on a payment plan and your situation changes and becomes worse and you can’t make those payments anymore, all the interest is reapplied, the two years starts all over again and you’re kicked off the program. So for us we are more realistic and we will offer deals based on the situation even if the deal gets approved, if their situation changes down the road, we will negotiate a new arrangement again. Say all bets are off, we’re starting again.
Dan Couvrette: So you don’t pick—if somebody has five different creditors, you don’t pick a—Have a picking order as to who’s going to get paid first or second, you have a plan and you offer it out to the five different creditors, is that how it works?
Ed Portelli: As a matter of fact, it is close, but the truth of the matter is it is not a formal consumer proposal.
We do what we label as an informal proposal. Which means if we choose to, we will offer it fairly and prorated to all creditors, which is our initial attempt. But if some don’t want to deal with it, some do, we have the flexibility to decide that you know this individual now, this creditor we are no longer going to offer anymore, they don’t want that, then we’re not doing that, if there is one that wants to pursue it harder, we can focus more attention on there. So you’re not stuck with either everyone agrees or you don’t get the deal. And in a lot of cases the people these days don’t have enough money to make a reasonable offer anyway, so the offer—And reasonable of course is in quotes. Reasonable and realistic are not the same thing anymore. Realistically, if the reality is that you have $3 a month that you can pay back, that is the offer that we make and we also limit the time to three years, as a typical—this is a typical answer, okay because they can—you know if there’s room to move and a little bit more flexibility on our part that the individual—that it works for them, then we’ll stray off our policy to make sure that everybody has a fair shot.
We’re not blanketing everybody with one strategy. But if it becomes to the point where it is no longer worth your time or it’s not worth paying this back if it goes on forever, we basically call it laying the creditor off. There’s no other way, so as an example if we had an employee and we paid them $20 an hour, our new financial situation is such that I can pay you $2 an hour. Now is that reasonable? It’s not reasonable. But is it realistic? Yes it is their reality is
Dan Couvrette: Right.
Ed Portelli: I can afford to pay you if you accept two bucks an hour. If not, you have two choices, you can walk away or you can attempt to bring in the labour board and some legal action and that sort of thing. Now we will defend against that. If in the very, very rare case and we haven’t hit any of these cases yet, but if for some reason this person wants to continue spending their money attacking and wasting their money trying through us, if at the end of the day, you’re forced to pay that 20 bucks an hour, then your company’s going to fold, which means you’re going to go bankrupt anyway.
In either case, its sad, but it’s a strength and weakness, saying—look this is the reality, nobody is asking you, you know for what’s reasonable, we’re only offering you what’s real. And beyond that, to make it better than that, means they have to do things that are no good for them. They’re going to have to borrow from someone. They’re going to have to borrow for a longer term. They’re going to have to sell things that they need, they’re going to have to cut back on food. And we don’t—In this society we don’t agree that that’s fair, that was not the agreement to begin with, the agreement was all things being equal, will you pay this? And yes we will and we’ve done that and now unfortunately all things are not equal anymore.
And they have remedies—They have remedies they can raise your—I mean when somebody’s in trouble, they will raise your rate, so that on its own tells you there is no actual personal interest vested interest in each individual, their customers, it’s a process.
Dan Couvrette: Right.
Ed Portelli: So our process simply stands by you as an individual. We have to remember these days’ people don’t recognize this, this is a civil dispute, this is not you against the system, it’s not you against the government, and it is one entity against another entity. Now we have gone further than that to identify and we have proven in several cases that you never should have loaned him this money, because you knew there was reasonable expectation to get it paid back in full. And in most people’s cases that’s—
Dan Couvrette: Right.
Ed Portelli: The case, their goal is to get people to pay interest for as long as they can. So if we identify that their situation previously and currently is such that you should have known they couldn’t pay this back, then we can have that thrown out and we have.
Dan Couvrette: It’s called an unconscionable transaction, it’s in the law, They have as much responsibility lending the money as you do paying it. So we—Our company has fought vigorously, we have defended people from payday loans, we have fought that in court several times, where the individual companies have brought it all the way to trial and we’ve proven prior to the new rule changing, that their contracts are actually criminal and the individuals didn’t even have to pay the principle back based on the law.
The judge could not force them to pay it, because it was a criminal contract. Now that’s the angle that we take, we focus on using the law to your advantage and for some reason that seems to leave a bad taste for people in the—Even in the courts, they just for some reason people have a problem with a person—An individual being vigorously defended. They feel like it’s just an instinctive feeling that this person is trying to screw the system.
Ed Portelli:And we’re of the mind that you’re incapable of screwing the system, you’re not—you know we’re not that strong, we’re not that big, we’re not that powerful, so we—why can’t we use the system and the laws that are in place to help protect the person.
Dan Couvrette: Right.
Ed Portelli: And so that’s what we do.
Dan Couvrette: Is everybody at the OCCA as passionate as you are about defending people and helping people because if our listeners don’t feel passion from you, they’re asleep and unconscious, you’re passionate about what you do and how you can help people—
Ed Portelli: I hope so. I believe so.
Dan Couvrette: Yeah, that’s great.
Ed Portelli: I believe they are. I mean we have a lot of meetings, like we have—you know we are a business, so we do try to operate as a business, but we try as the business goes on, as he days go on, we try and make sure our sole concern that will keep our customers and keep us in business, is to make sure that we truly believe this. So I spend at least one meeting a month with all of the employees, reinvigorating them on our position, because it can get very draining, every creditors, including in a lot of cases the courts, everybody seems to have a problem with vigorously defending a person. They feel like its their fault in some way, its like us trying to—it’s like us trying to get—you know we’re trying to help you quit smoking, but everyone agrees you signed a contract that you’ll take ten cartons of cigarettes a month.
Dan Couvrette: Right.
Ed Portelli: And we’re saying well—and they say—well they agree, I mean they’re the ones who said they’ll do it. like okay they’ve done it, congratulations you’ve sold them a lot of cigarettes, you forced them in a position, but their lung is black, they’re dying now, they can’t—and it seems like we’re one of the few places that actually cares that way, we’re not—we are trying to work around and through the system as opposed to working along with it, because if we worked along with it, we have to average out our responses, we have to say—look 70 per cent is the best we can do for anybody. But you know we’ve had creditors call us and say if you have an individual that signs up with you, we’ll give you no interest and 70 per cent right off the back.
Dan Couvrette: Right.
Ed Portelli: And I said that’s amazing, unless they can’t afford it.
Dan Couvrette: Right.
Ed Portelli: And of course the answer that comes back is well that’s not how an agreement works. And I’m saying well I can’t have anything to do with that agreement, because everyone is an individual and if he can offer you 1per cent, unfortunately that’s what we’re going to offer you. And so far—you know the worst case scenario that we’ve seen, if someone wants to go all the way through to trial, we end up making an arrangement for the balance and in most cases there’s no interest anyway and that is the worst that we’ve encountered.
Dan Couvrette: Right.
Ed Portelli: So we are doing it right. We are doing it against all odds as far as I’m concerned and against the popular belief. It’s amazing how people only really care when its their situation, other than that we’re kind of—our culture is to kind of feel that there’s blame on the other guy, their marriage fell apart because of this, he owes money because he must be doing this, he smokes because he’s this sort of fool here and it takes a while for people to realize so are you, we’re all the same, we all are in those spots. We gotta stop resenting everyone else for being in trouble and recognize the system is a very tough thing to deal with.
Dan Couvrette: Right.
Ed Portelli: And so is life. So when you get down, we are going to help pick you up and that’s it and we’re not apologizing for that.
Dan Couvrette: Our guest today on our podcast is Ed Portelli from OCCA Consumer Debt Relief. Ed’s firm—Well as you’ve been listening to this podcast, he’s shared a lot of information about how his firm can help you. So if you are a person who has debt and you don’t know how to handle it, I recommend that you go to Ed’s website occa.ca, that’s occa.ca, not .com and you will get a bit of information there and talk to one of the people who works at OCCA and they’ll tell you how they can help you and then you can move on from there and hopefully, you know get a new beginning for your life. That’s what Ed and his firm are hoping to create for you.
Ed Portelli: If I have an opportunity—do I have one opportunity Dan, I know we’re cutting out time close here.
Dan Couvrette: No problem. Go ahead.
Ed Portelli: If I can share one thing that I believe that especially divorcing people seem to be confused about and it’s just a fact, it’s just one separate note from what I was talking about. When you have your debts—When you decide with your lawyer and with your ex-spouse who takes care of what debt—
Dan Couvrette: Yeah.
Ed Portelli: If you are legally bound and responsible for that debt, it doesn’t make a difference to the creditor or to the courts who is responsible or who you make responsible. So if we agree, lets—for example my wife and I divorce and we agree that there’s certain debts in both names and you’re going to handle these and we’ll put it in writing, my wife handles this debt, I handle this debt. If the person defaults on that debt, you’re both still fully, severally, jointly responsible for the debt.
Just because you made an agreement with each other has no bearing on the courts. Now what will happen is the individual that is now supposedly not responsible can be sued, can be attacked, can be—they can come after you for that, now you have the piece of paper that allows you to lets say go back after your spouse, because you have an agreement that they should have taken care of it.
Dan Couvrette: Right.
Ed Portelli: But in a lot of cases we found that mental step is missed where people think that once we’ve split, I don’t owe that money anymore, now they do and that is not the case. And I want people to be very aware of that, more than anything, that just because you split it, that is your own personal agreement, that has nothing to do with the creditor or the courts. However it does give you a chain of events where if you end up getting sued for it, you can in turn sue your spouse. So it does leave a track, lets say a path where you could follow, but it is not the answer on its own.
Dan Couvrette: Yeah, I think that may be true both in Canada and the US.
Ed Portelli: That may be the case in Canada, I wouldn’t just want to speak about that, but I’m pretty sure it would be the same, but again all the states may have—you know there’s so much in the States that’s different that I wouldn’t want to just express that to people, but the fact of the matter is if you follow the logic, if I loan you money, you can’t decide to pass that off to someone else and then I have to agree.
Dan Couvrette: Yes.
Ed Portelli: But if you make an agreement to pass it off, that’s fine, but I still come after you, you can go after them.
Dan Couvrette: Exactly.
Ed Portelli: And that’s a case a lot of people have been put in, they come here saying my agreement was my husband or wife—ex-wife would take care of this and they’re not, so I don’t owe it. That’s not the case, that’s why they’re calling you, because you can’t just—you know you can’t have a private agreement that exempts you from a contract in that manner. Now we help with those and we can sort it out, but you can’t rest back comfortably knowing once we’ve split these debts, that person is going to take care of it and I’m off the hook, because it’s not the case.
Dan Couvrette: I encourage people to check out Ed’s firm’s website, its www.occa.ca. I also invite you to listen to our other podcast that you’ll find on familylawyermagazine.com and on divorcemagazine.com. Our goal is to help you through this process and Ed was generous enough to share his time to let you know how his firm could help you through the financial challenges if you’re over your head in debt, you’ll certainly need help and if you’re going through a divorce, it’s doubly compounded by the divorce. So please seek help, I encourage you to check Ed’s website and to contact his firm. Thank you again Ed and thank you listeners for tuning into our podcast.
Ed Portelli: Thanks for having me.