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How a Hollywood Director Did His Own Financial Debt Bailout and Says You Can Too

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Sunday, 17 May 2015 11:34 AM Current | Bio | Archive

Before the recession, Hollywood film director Kenny Golde was on top of the world, personally, professionally and financially. But when an investor on his in-production film passed away, it meant that he had to cover almost a quarter of a million dollars in expenses to finish it.

The crisis ultimately took a toll and the film didn’t sell, and he was left to pay $3600 a month in just interest on his ever-increasing debts.

While an attorney suggested that he consider bankruptcy, Golde felt that there was a better way. He decided to try to settle his debts and did so successfully- settling every single one at a fraction of its original value and is now 100% debt free.

He has since authored the “The Do-It-Yourself Bailout” (published by Barricade Books and available on Amazon Kindle, iBook and Aubdible.com), and created an iPad app and a website dedicated to helping others settle their debts as an alternative to bankruptcy.

Below is some of his personal story and tips on how to bail yourself out if you are struggling with unsecured debt, like credit cards and student loans (vs. loans that have collateral against them, like houses and cars).

Do the Math: Golde said that he visited a bankruptcy attorney who described the process as having the court assign a “super creditor” to his life who would be responsible for reviewing all of his assets and debts, and making allocation determinations. After evaluating what he’d be left with, he decided that if he could pursue debt settlement rather than bankruptcy and come out ahead of those numbers, it would be worth it. There was also the fact that bankruptcy is a court recorded event and debt settlement is not.

He says that you should know that generally you can reach higher settlements sooner and lower settlements take longer. Golde was getting 50% settlement offers in a few months and 35% offers took half a year or more. His best offer, 22%, took 18 months. It depends on your temperament and your financial wherewithal. He also says to look at the dollars, not just the percentages. Sometimes on smaller amounts, going for a better percentage doesn’t mean much dollar-wise, so it wasn’t worth the time to pursue those further.

Finally, Golde figured that he could settle for a better rate himself than via an agency, because they would likely tack on a commission for themselves.

Know the Tactics: Golde says that to settle, you must stop making payments on your accounts for the bank to send you to their loss recovery or settlements departments, as they tend not to discuss settlements with anyone current on their accounts. But once you do stop making payments, the bank’s in-house collection department will call you. A couple of good things to know are that per the 2010 Fair Credit Act, missing one payment does not go onto your credit score. Only after missing payments for 60 days will it potentially reflect on your credit score.

Know the Lender’s Motivation: Golde says that when a borrower is unable to repay, the banks understand this and have a system in place to deal with it-- the system of accepting a payment for less than the amount owed to settle an account. They are motivated to do this because getting some money may be better than getting none if the borrower simply defaults and disappears or declares bankruptcy.

Know the Risks: Golde did get sued by one bank. He says, “We were negotiating on a $21,000 account. They were offering $10,000. I was offering $7,000 and hoping to meet at $8,500 when they filed suit. What I learned is that being sued is another opportunity to settle. I received my summons at my home and it stated I had 30 days to file a response. I called them back and agreed to the $10,000. They accepted and dismissed the lawsuit. This told me that a law suit was just another tool that they used in the negotiating process. In this case it worked, they got what they were asking, but they still settled.”

Get it in Writing: Golde is emphatic about the importance of getting a written Settlement Agreement before making payment. In “The Do-It-Yourself Bailout” he discusses a couple of situations in detail where this agreement was so important. Without the paperwork, the offer can go away without proof. It can also create a paper trail if the company doesn’t record the settlement properly and ensure you get what you agree to.

As for other important information, Golde says that his credit score did take a hit. What started at 800, after settling seven credit card accounts, all of which were in arrears for many months, some more than a year, and after having his house foreclosed in 2010, his credit score varied from 590 to 610 on the three agencies. It is now 646.

“Notably,” Golde says, “six of the seven credit card accounts that I settled are no longer on it at all. Only one is listed as “Account closed, paid less than balance owed.” And my foreclosure is on there for the first and second mortgages. I’m working now to have those last three items removed and my credit should be back over 700. Had I done the removal process a couple of years ago, I probably could have gotten it up even sooner.” However, Golde now avoids debt, so doesn’t remain too focused on his credit score.

He also is steadfast about financial responsibility and when you should settle debt. “I don’t advise debt settlement as a “just because I can” financial strategy,” he says.

“People shouldn’t go spend $25,000 on clothes with the intent of settling it for $5,000. But for the millions of people who have been affected by an economy in ways that are not their fault, their home lost value or their business income went down with the economy while costs went up or any number of other reasons, for those people who are struggling to make credit card interest payments while tangible areas of their lives suffer, like not being able to provide for their families, and their emotional lives are falling apart under the stress, for them I ask, is your emotional attachment to your credit score more important than paying your rent, or being healthy and happy for your spouse and children?”

While he struggled with the guilt of settling debt for less than he originally took on, he looks at it now as just a business strategy. He says that his readers have let him know about more than $1 million in debts that they were able to settle for themselves. For more information, check out “The Do-It-Yourself Bailout” and its website.

And as with any financial information, do your own diligence and check with your advisers to see if it fits your personal situation and objectives.

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CarolRoth
How to bail yourself out if you are struggling with unsecured debt, like credit cards and student loans (vs. loans that have collateral against them, like houses and cars).
debt, bail out, hollywood, director
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2015-34-17
Sunday, 17 May 2015 11:34 AM
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