How Kenny Golde Talked His Way Out of $220,000 of Debt

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Kenny Golde
By Mandi Woodruff


In 2005, indie film screenwriter Kenny Golde's finances were in nothing short of mint condition.
"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."

Here's how he did it:

Golde had struggled for 11 years to secure financing for an independent film when he found his savior in a 70-year-old investor named Gabe.

Gabe pumped $560,000 into the project, but when Golde reached out to secure financing for another $170,000, he was told Gabe had been hospitalized. Within weeks, he passed away, and Golde was left to foot the bill himself.

On the brink of bankruptcy, Golde reached out to an attorney, who pitched the idea of debt settlement. When customers default on credit accounts, lenders are sometimes willing to settle debts for a fraction of their total value.

Courtesy Kenny GoldeIt was time to battle the banks

But in order to settle, Golde needed some leverage. Banks typically give customers just days to pay settlements in one lump sum. To buy time, Golde fielded phone calls for four months while he looked for work. Then luck stepped in.

"[My deceased business partner] Gabe had left his estate, along with his interest in the film, to his nephew," Golde says. "[His nephew] called me out of the blue to say that he would be able to [invest] an additional $45,000."

With $45,000 to work with, Golde came up with a strategy: starting with his three largest cards––a combined $137,000 between two banks––he set his mind on settling for no more than 33%.

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.

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."

After one false start––a 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 says. "I countered with $24,000 ... and he countered my $24,000 at $25,000, right on my target."

The highs were high and the lows were low
Banks have been known to threaten to sue customers who have defaulted on large balances, and Golde was no exception.

"The same week that I successfully settled my first credit card, I was served with my first lawsuit [by a different bank]," he says. His unpaid balance was $22,000.

Golde 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 at negotiating.

"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 says.
After further phone negotiations, Golde wound up settling the $22,000 account for $10,000. The lawsuit was dropped.

He scored a $7,400 settlement on a $39,000 account next, then haggled another bank down from $23,000 to $9,300.

At the time, he had left his two smallest lines of credit current in order to keep a roof over his head and food on the table. With cash in his pocket from a couple successful screenwriting gigs, he was ready for the home stretch. Both accounts were settled.

Why he has no regrets
Golde admits he didn't leave the battleground unscathed. His home fell into foreclosure and his credit score was obliterated.

But "the process of being in charge of [negotiations] myself was extraordinarily empowering," he told Business Insider. "It was more satisfying and healing than had I filed bankruptcy and avoided that process."

Sharing the highs and lows of journey with friends, family and fans––he held a one-off seminar on debt settlement in 2009––was all 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."

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Kobe Wild

One of the worse financial things I ever did was trying to payoff credit card debt when I was hit by the dotcom job collapse. I could not find real work for 12 months and credit card companies can tell when you’re struggling and they spring there trap. Lowering your credit line and jacking up you fees and interest rates. Tossing you to over the limit and late fees and deadly 25% to 29% interest rates. I let Credit Company’s convince me to keep making payments rather than let the account go into default. I poured cash at them rather than pouring money into my savings. By making payments I was keeping the account running and the late fees and over the limit fee’s pile on. What should have been a $2000.00 bill ended up being a $20,000 bill and that was for one card.
These types of events are really how credit card Company’s makes their profits, they don’t make it on people using and paying their cards on time.
The banks would not work with me; they would not help all they wanted was money.
Eventually I smarten up and stopped paying.
After that I started getting letters willing to settle for lot’s less. Only one of those I paid the other’s I didn’t. Final bill $5,000 that was a lot less than the $80,000 in debt.. 90% of which was interest and fees.
Never feel bad about protecting yourself first. It’s just business.

October 30 2012 at 7:51 PM Report abuse rate up rate down Reply
Kobe Wild

I don't get it, why did he take all this debt on as personal debt.
He really should have incorporated.. The boom oops my poor company failed...
I guess you'll have to deal with my shell company.

October 30 2012 at 7:19 PM Report abuse rate up rate down Reply
jpass101

all this talk of negotiating himself out of debt. Did he ever like .... produce a movie or produce anything that ever made any revenue or sales? Or is it all just now his debt seminars and book about teaching others how to borrow money and then never pay it back?

October 26 2012 at 10:12 AM Report abuse rate up rate down Reply
SEEKYOUNGER_C0M

Where love will fill in the age gap! Date much younger women or men. Feel young again.

October 26 2012 at 9:46 AM Report abuse rate up rate down Reply
Bill

He seems pretty proud of himself (for screwing people out of there money)what happened to obligation, commitment and integrity,

October 26 2012 at 9:13 AM Report abuse +1 rate up rate down Reply
dwcrete

Bad credit 7.5 years, Bankruptcy 10 - do the math.

October 26 2012 at 6:17 AM Report abuse rate up rate down Reply
ron.saltzgiver

You will only need to pay taxes if the companys send you a 99 form and even if they do you can ignore it for 7 years, the companies have so much debt that the 99 is not on their must do list.

October 26 2012 at 3:12 AM Report abuse rate up rate down Reply
1 reply to ron.saltzgiver's comment
dstonephx

Good luck with the IRS when you ignore that "99" form for 7 years. The fact is that when a lender writes off a loan as bad debt expense they are required to issue a 1099-C to the borrower for the amount written off. There is no provision in tax law for ignoring it for 7 years. It is reportable as taxable income in the year written off. The only time Cancellation of Debt income can be non-taxable is when it's a foreclosure on a main residence. And that provision is set to expire at the end of this year.

October 26 2012 at 3:08 PM Report abuse rate up rate down Reply
busyrick

All that money he saved in negotiations is going to be subject to federal taxes. It's called "debt forgiveness" and banks do not tell you about it. He will be getting a 1099C form "Cancelation of Debt" and have to pay taxes on all the money that was forgiven which could be as high as 33%.

October 26 2012 at 2:58 AM Report abuse rate up rate down Reply
marxjgm

You may have settled the debt to satisfy the creditor, but they will still report
it as settled for less on your credit report for all the world to see and keeping
your credit score low.

October 26 2012 at 1:10 AM Report abuse rate up rate down Reply
1 reply to marxjgm's comment
Bob

Don't I know it!!!

October 26 2012 at 2:03 AM Report abuse rate up rate down Reply
Scott

Most of the people every here are calling "Deadbeats" are small business owners who got slammed hard by the this long term incredibly deep recession. You can declare all the small business owners to be loser, deadbeats, lacking in morals, if you want to, but you know what... If we make sure there are no small businesses in 5 more years we will be in a depression.

October 26 2012 at 1:09 AM Report abuse rate up rate down Reply