Debt Reduction Service Might Add Financial Stress | EYES IN ...

As a single mother of a special needs child and a fourth-year medical student, Katherine Ritter sometimes needs to pay her bills using a credit card. Although she has never missed a payment and her credit remains solid, her card balances have soared.

To manage her growing debt, Ritter has opened accounts, transferred balances and spoken to her credit card companies in hopes of getting lower rates. So she was caught off guard in July when the Elite Planning Group in Tempe, Ariz., called her, unsolicited.

The Elite Planning representative told her he had gotten permission to call her from a consumer credit consolidation company she had called months earlier. He said that for a one-time fee of $990.90, Elite Planning would guarantee a single-digit interest rate on all her credit cards for the life of the loans, Ritter said.

Unconvinced, the Hinsdale resident asked the man how his company could get such low rates.

"He persuasively argued that banks and government agencies had signed an exclusive contract with Elite to only offer this service to 'low-risk consumers with good credit' such as myself, because creditors would gladly accept a lower interest from well-meaning debtors than nothing at all from clients who would find themselves spiraling into debt and bankruptcy," Ritter said.

The Elite salesman told her that banks were too busy and understaffed to manage this service themselves, Ritter said.

"Although I was skeptical at first, he had found my Achilles' heel," she said. She did a quick scan of the Internet and found no complaints about Elite Planning, so she agreed to the service.

She charged the $990.90 to her credit card, "and felt a tremendous relief that my monthly debt burden would soon be much lighter," she said. A week later, an Elite financial adviser called her, Ritter said.

"When I asked directly what the specific plan was to lower my interest rates, I was shocked to hear that Elite's solution would be nothing more than to transfer balances, request credit line increases, and open new credit cards with low initial APRs," she said. "I informed the adviser that I had already unsuccessfully tried everything he mentioned."

The adviser then suggested one other solution, Ritter said: She could stop paying her bills altogether, hoping the credit card company companies would accept half the original principle in exchange for writing off the debt.

He explained that her credit rating "may experience a slight decline," Ritter said. In a moment of clarity, Ritter realized she had purchased a service she did not want.

She told the Elite Planning representative she wanted to cancel the service and asked for her $990.90 back. When Elite refused, she threatened to report the company to the Better Business Bureau, she said.

"Imagine my surprise when I promptly received a phone call from a manager who distinctly informed me that she would return my money on one condition only ? that I did not report Elite to the BBB," Ritter said. "And so it was that I sold my silence because I believed that was the only way I would ever see any of my desperately needed money again."

Over the next five months, Ritter said she called Elite repeatedly, and was repeatedly told the refund would be processed within days or weeks.

[Article courtesy:?Chicago Tribune]

Source: http://www.eyesin.com/finance/2012/debt-reduction-service-might-add-financial-stress/

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