How A Hollywood Screenwriter Haggled His Way Out Of $222,000 Of Debt
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"I had less than $10,000 in credit card debt, more than $100,000 in unused lines of credit, a FICO score over 800, and about $100,000 in savings even after the downpayment on my home," he says. "I even adopted a dog."
Then the bottom fell out. Within a year, a perfect storm of financial and professional mishaps would carry him down a seemingly never-ending rabbit's hole of debt.
By his fortieth birthday, he had amassed a staggering $220,000 in credit debt and spent his days sparring with debt collectors, dodging lawsuits and doing all he could to keep bankruptcy at bay.
That was until an attorney steered him toward a path he never thought he'd travel: Debt settlement––essentially negotiating his debt directly with lenders.
"The journey took me about a year and a half," Golde writes in his book,
"The Do-It-Yourself Bailout." Now "I have reduced my debt ... to zero. I have done this legally, at a fraction of the cost of the debt itself, and I saved just under $150,000."
Screenwriter Kenny Golde paid $170,000 in 2008 to finance a movie
Golde financed his own film, "Uncross the Stars" when his main investor passed away.
Gabe pumped $560,000 into the project, but "it quickly became clear that we were under-financed," Golde writes. "I called Gabe in Los Angeles to gain his support in going [$170,000] over budget, only to learn that he had been hospitalized."
Within weeks, Gabe passed away. Golde was left to foot the bill himself.
Meanwhile the Writers Guild strike left him out of a job
To cover the project, Golde took out seven new lines of business and personal credit at six different banks.
"I was carrying around $3,600 per month in minimum credit card payments in addition to my mortgage and regular monthly expenses," he writes. "I was scared."
He was also out of work. The Writers Guild of America and Screen Actors Guild were both in the thick of wage strikes at the time and the job market in film had tanked. Within six months, his savings would be depleted.
It was such a sudden and drastic lifestyle change that Golde says it was all he could do not to succumb to depression.
"In addition to my sense of failure, I was self-judgmental," he writes. "How could I be 40 years old and looking at bankruptcy?"
"I was carrying around $3,600 per month in minimum credit card payments in addition to my mortgage and regular monthly expenses," he writes. "I was scared."
He was also out of work. The Writers Guild of America and Screen Actors Guild were both in the thick of wage strikes at the time and the job market in film had tanked. Within six months, his savings would be depleted.
It was such a sudden and drastic lifestyle change that Golde says it was all he could do not to succumb to depression.
"In addition to my sense of failure, I was self-judgmental," he writes. "How could I be 40 years old and looking at bankruptcy?"
$220,000 in debt, Golde had two options: filing bankruptcy or fighting off the lenders himself
His personal life in tatters––Golde blames his financial funk on the demise of his love life at the time––he took his family and friends' advice to meet with a bankruptcy attorney.
"I call it a context change," he writes. "I changed my context from depressed and emotional to 'This is the mountain I'm on and I'm going to ski it as best I can.'"
He was ready to file bankruptcy, but the attorney had another idea: debt settlement. As Golde learned, banks were willing to settle debts for a fraction of their total value if consumers are unable to make payments.That's because it's more lucrative to them than selling the account off to debt collectors, which pay as little as 5 percent of the balance.
"I call it a context change," he writes. "I changed my context from depressed and emotional to 'This is the mountain I'm on and I'm going to ski it as best I can.'"
He was ready to file bankruptcy, but the attorney had another idea: debt settlement. As Golde learned, banks were willing to settle debts for a fraction of their total value if consumers are unable to make payments.That's because it's more lucrative to them than selling the account off to debt collectors, which pay as little as 5 percent of the balance.
He prepared to battle the banks
Golde on set.
Kenny Golde
He could have used his attorney to field bank inquiries, but when the banks wouldn't cooperate, Golde decided to take over negotiations himself.
But in order to settle debts, he needed leverage. Banks typically give customers just days to pay up and Golde fielded phone calls for four months in order to buy himself time. Then luck stepped in.
"[My deceased business partner] Gabe had left his estate, along with his interest in the film, to his nephew," Golde writes. "[His nephew] called me out of the blue to say that he would be able to [invest] an additional $45,000."
It was a crash course in tele-negotiating
With $45,000 to work with, Golde came up with a strategy: starting with his three largest cards––a combined $137,000 at two banks––he set his mind on settling for no more than 33%.
Convincing the banks was no picnic.
Both refused his offers initially, saying they wouldn't break for less than 85 or 92 percent. He hung up and decided to stick to his guns.
"After about a month of stalemate ... I seemed to enter the next 'round'," Golde writes. "One bank dropped its offer to 55%."
It was all part of a script, he says: "As the script moved to the next lower stage, their level of cordiality did also.
They insisted that I had signed an agreement to make regular payments on my loan and then questioned my honor and integrity, insinuating that I was a bad person for not paying off the debt."
The guilt trip was brutal, but he soldiered through it.
"I struggled with the contradiction between living up to my word and doing what had to be done [to get out of debt]," he says.
Convincing the banks was no picnic.
Both refused his offers initially, saying they wouldn't break for less than 85 or 92 percent. He hung up and decided to stick to his guns.
"After about a month of stalemate ... I seemed to enter the next 'round'," Golde writes. "One bank dropped its offer to 55%."
It was all part of a script, he says: "As the script moved to the next lower stage, their level of cordiality did also.
They insisted that I had signed an agreement to make regular payments on my loan and then questioned my honor and integrity, insinuating that I was a bad person for not paying off the debt."
The guilt trip was brutal, but he soldiered through it.
"I struggled with the contradiction between living up to my word and doing what had to be done [to get out of debt]," he says.
After months of abuse, he nailed his first settlement
Months went by after he stopped paying his bills before his first debt collector called. It was far from cordial.
"He launched into a diatribe about how I was reneging on my loan agreement, how I was being dishonest, asking how could I expect to succeed in the world if I didn't take my debt seriously?
But after one false start––one bank mailed him a settlement agreement two days after his supposed payment due date––Golde finally had something to celebrate.
"[A debt collector] called to say they would take $27,000, 35.5% of the $76,000 balance [on one account]," he writes. "I countered with $24,000 ... and he countered my $24,000 at $25,000, right on my target."
There was one catch: They wanted his payment upfront and in-full within 24 hours.
He hesitantly agreed to a wire transfer that day––after they faxed him a settlement agreement.
Weeks went by, and Golde never heard from the bank or the collector again. He started to worry he had been scammed.
"I sat in the space of not knowing for a month until I received a call from a different person at [the agency] saying that they were calling to collect," he writes. "Here is why having the settlement agreement is so important."
With the settlement letter on hand, they couldn't deny his debt had been cleared and settled. He breathed a huge sigh of relief.
"He launched into a diatribe about how I was reneging on my loan agreement, how I was being dishonest, asking how could I expect to succeed in the world if I didn't take my debt seriously?
But after one false start––one bank mailed him a settlement agreement two days after his supposed payment due date––Golde finally had something to celebrate.
"[A debt collector] called to say they would take $27,000, 35.5% of the $76,000 balance [on one account]," he writes. "I countered with $24,000 ... and he countered my $24,000 at $25,000, right on my target."
There was one catch: They wanted his payment upfront and in-full within 24 hours.
He hesitantly agreed to a wire transfer that day––after they faxed him a settlement agreement.
Weeks went by, and Golde never heard from the bank or the collector again. He started to worry he had been scammed.
"I sat in the space of not knowing for a month until I received a call from a different person at [the agency] saying that they were calling to collect," he writes. "Here is why having the settlement agreement is so important."
With the settlement letter on hand, they couldn't deny his debt had been cleared and settled. He breathed a huge sigh of relief.
He played smart. Golde NEVER paid until he received a signed letter of agreement from the lender. Here's what each letter should contain: a statement that payment was made in full; that no further collections or legal action would be taken; and his account number and name.
"The Do-It-Yourself Bailout"
He dodged a lawsuit by settling another account
A copy of Golde's lawsuit, filed in the Superior Court of Los Angeles.
"The Do-It-Yourself Bailout"
He showed up in court all but certain that this was the beginning of his financial end. Then the judge spoke, telling everyone in the room to leave and try to settle things one-on-one rather than leaving the final decision up to him.
He still had a shot.
"The lawsuit, like the escalating language on phone calls, was just another tool in [the banks'] box aimed at getting me to settle at the highest rate possible," he writes.
After further phone negotiations, Golde wound up settling the $22,000 account for $10,000. The lawsuit was dropped.
Eventually, he could charm cash right out of the debt collectors' hands
Since he had only $10,000 left, the deal would clean him out. He decided to take a different approach with the collector this time: He asked the man how his weekend was.
"I'm sure he got on this call expecting a battle," Golde says. "And instead he was reminiscing about a great weekend with his sons."
By the time he hung up, the collector had happily accepted Golde's lowered offer of $7,400. He had saved $2,600 on charm alone.
Getting banks to go under "the blankets" wasn't as simple
After shelling out $7,400 to settle the last account, Golde was forced to tap into his savings to keep negotiations rolling. Next up: A $23,000 account.
When he offered $6,000, the bank representative declined. Then she paused.
"Wait a moment...I have seen them do what's called a below blanket settlement," she said.
She was referring to cases in which banks go below their lowest settlement floor, something typically reserved for customers who can prove they're in real dire straights financially.
Golde settled for three monthly payments of $3,100.
When he offered $6,000, the bank representative declined. Then she paused.
"Wait a moment...I have seen them do what's called a below blanket settlement," she said.
She was referring to cases in which banks go below their lowest settlement floor, something typically reserved for customers who can prove they're in real dire straights financially.
Golde settled for three monthly payments of $3,100.
Hollywood came to his rescue again
Golde films on set.
Kenny Golde
Soon after, he learned an earlier script of his was slated for filming. He pocketed $16,000 from the shoot and settled one of his cards for $5,000.
He still had one lingering $15,000 left to pay, and Hollywood came to the rescue again.
Selling another script was enough to carry him across the finish line
Kenny Golde
"While [selling the script] didn't make me rich ... it allowed me some breathing room," he writes. "It also allowed me to settle out my last credit card."
The bank offered $7,100 for his $17,800 balance. Golde took the offer without bothering to counter.
"As with the script sale, I attribute my 100% being debt free to setting a positive vision and intent ... and staying committed to my vision no matter what setbacks threatened to dissuade me," he says.
He has zero regrets
Kenny Golde
We spoke with him to see whether he's ever questioned his decision to settle his debts manually, rather than giving in to bankruptcy.
"The process of being in charge of [negotiations] myself was extraordinarily empowering," he said. "It was more satisfying and healing than had I filed bankruptcy and avoided that process."
Sharing his journey with friends, family and his fans––he held a one-off seminar on debt settlement in 2009––was part of the joy of negotiating.
"[During that time], so many people were going through it, so many people were behind on their credit debt and behind on their mortgage payments," he said. "It became OK to go out in public and talk about your finances in an open way. I hope this continues."
Read more: http://www.businessinsider.com/kenny-goldes-212000-do-it-yourself-bailout-2012-9?op=1#ixzz26p5jMX3S
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