CareOne Services Launches Dramatically Different Approach to Debt Settlement

Pilot Program Reduces Pre-Settlement Fees by up to 87 Percent from Industry Standards

Columbia, MD (Sept 9, 2009) – CareOne Services Inc. has launched an innovative debt settlement pilot program that eliminates the common industry practice of charging high upfront fees before any services are performed.

The pilot program, now underway in Alabama, helps consumers pay down debt more quickly by reducing pre-settlement fees by up to 87 percent versus other debt settlement providers. CareOne consumers are charged nominal set-up and monthly maintenance fees to establish a plan to pay off creditors. They get 24-hour access to their account balances as well as free support services, financial management advice and money management education.

CareOne’s entry into debt settlement creates a new standard that sets it apart from other providers who follow the current standard practice of charging consumers thousands of dollars in fees before settlements are reached with creditors. These upfront fees are not tied to any measure of consumer success and are typically forfeited if consumers drop off the settlement plan – even if no settlements were ever reached.

CareOne is modeling its pilot program based on standards adopted by the National Conference of Commissioners on Uniform State Laws (NCCUSL). The NCCUSL model act caps pre-settlement fees at a nominal level and settlement fees based on a percentage of the savings realized by the consumer when an outstanding debt is settled. The NCCUSL model act has been introduced in 25 states and has been enacted in six states.

Like other debt relief services, such as debt management and credit counseling, the debt settlement industry fills a critical need by helping consumers improve their economic welfare. A recent study by Dr. Richard Briesch, an associate professor of marketing at Southern Methodist University, found that debt settlement plans generate tremendous value for consumers, particularly consumers who have high debt among a few accounts.

“CareOne agrees with many of the findings of Dr. Briesch’s study, particularly the importance of full disclosure of funding sources for credit counseling agencies and the need for debt settlement agencies to be able to set up trust accounts for accruing funds to pay creditors,” said Mike Croxson, president of CareOne Services. “However, we do not agree with one critical conclusion of the study -- that consumers should continue to pay high upfront fees before any debts have actually been settled or saving generated. That is why CareOne’s fee structure is so different.”

Dr. Briesch’s study recommended that debt settlement companies should be allowed to charge consumers fees prior to achieving settlements, and concludes by saying that “any attempt to ban these fees would have a chilling effect on the industry and is inappropriate for this industry.”

Similar claims have been made by industry leaders as well. In testimony to the NCCUSL committee on debt settlement, Robert Lemelin, then co-chairman of the National Association of Consumer Debt Settlement Companies, stated that “it would be extremely difficult, if not impossible, to maintain the high level of service currently being provided by debt settlement companies” if upfront fees were eliminated or limited.

“It is difficult to imagine why any provider should charge consumers thousands of dollars in fees before any payments are made to creditors,” said Croxson. “That type of approach is not in the consumer’s best interest and has resulted in federal and state regulatory actions against debt settlement companies. CareOne believes there is a better model for this industry, and that is why we have launched our new pilot program for debt settlement. We plan to invite Dr. Briesch to evaluate the success of this new model as part of his ongoing research.”

The CareOne pilot program offers a number of features that make it a better choice for consumers than most existing settlement models. These include:

• Offering the debt settlement product only to consumers who are best suited for that solution and offering free advice on other options that may be more appropriate.
• Charging only nominal fees to set up and maintain an account that will repay creditors.
• Providing 24 hour access to information on where the consumer account balance stands.
• Charging a settlement fee only after an agreement with a creditor has been reached and savings are achieved on behalf of the consumer.
• Offering free access to support services, financial management advice and money management education while the consumer is contributing to a debt settlement fund.
• Supporting consumers with on-going outreach to encourage and support consumers enrolled on the debt settlement product.
• Capping the total of all fees charged to ensure consumers are not immediately thrown back into a cycle of debt.

“The pre-settlement fees we are charging in our pilot program in Alabama are nearly 90 percent lower than upfront fees commonly charged to consumers in this state. This approach ensures consumers can save more and reach settlements faster, as well as creating an incentive for CareOne to help consumers save as much money as possible in settlement agreements,” said Croxson. “CareOne is committed to doing the right thing for consumers, and we will continue to introduce innovative products that make a difference in helping consumers deal with debt.”

Background Information About Debt Settlement
Debt settlement providers typically negotiate with creditors on the consumer’s behalf to settle on an amount less than what the consumer owes. The consumer, meanwhile, makes equal monthly payments into a fund that accumulates enough money to settle individual debts. The service is good for consumers who can afford to pay some, but not all of the debt they owe. The average consumer seeking debt settlement owes between $30,000 and $35,000 to seven or eight creditors.

The Southern Methodist University study can found at www.consumercreditchoice.org.

For more information about CareOne Services, Inc., visit www.CareOneCredit.com.

About CareOne Services
CareOne Services Inc. was formed in 2002 to provide consumers with multiple solutions to complex money problems. CareOne Services Inc. boasts a unique Financial Fitness Center that examines each consumer's individual financial situation and develops a personalized solution to help the consumer get out of debt and strengthen his or her financial footing.

CareOne Services, Inc. has helped hundreds of thousands of consumers. CareOne takes a holistic approach in assisting customers to manage their debt, looking at an individual’s situation and creating a solution that is achievable and works. CareOne does not offer to change or improve an individual’s credit score, record or rating. CareOne goes beyond providing the standard debt payment programs, helping consumers address day-to-day life issues that are the result of being in debt along with free educational tools online.