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Can Any Debt Relief Company Afford to Do The Right Thing for Consumers?

In some other comment threads on the site the issue has arisen that debt relief companies are doing the right thing for consumers by asking about their situation and getting budget numbers before qualifying the consumer for their program.

And over on this article, if you search through the long comments, I’ve engaged in comments with others if debt relief companies are more focused on business protection or consumer protection.

If companies are truly putting the consumer first are they evaluating the consumers situation and providing advice that is best for the consumer, regardless if they offer a solution to address the consumers concerns? If not, then how can the claim be made they are putting the consumer first?

This is not an argument against debt settlement specifically. Credit counselors are just as guilty of this. They qualify people for a debt management plan without considering debt settlement or bankruptcy as a solution many times.

I get the business practicals of running a debt relief company. I understand it takes revenue to make the wheels go around.

But if consumers are to be treated fairly, don’t the employees of those debt relief companies that triage consumers need to provide advice based on what is best for the consumer and not just qualifying the consumer for their widget?

A sales person, by their very job description is designed to make sales. But that’s not necessarily what consumers need. If the consumer is to be placed first they need someone to listen to their situation and signpost them to the most appropriate solution based on what is best for the consumer in a fiduciary capacity.

Fiduciary – A fiduciary duty (from Latin fiduciarius, meaning “(holding) in trust”; from fides, meaning “faith”, and fiducia, meaning “trust”) is a legal or ethical relationship of confidence or trust regarding the management of money or property between two or more parties, most commonly a fiduciary and a principal. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment. In a fiduciary relation one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests.

A fiduciary duty is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.

Example

For example, two members of a band currently under contract with one another (or with some other tangible, existing relationship that creates a legal duty), X and Y, record songs together. Let us imagine it is a serious, successful band and that a court would declare that the two members are equal partners in a business. One day, X takes some demos made cooperatively by the duo to a recording label, where an executive expresses interest. X pretends it is all his work and receives an exclusive contract and $50,000. Y is unaware of the encounter until reading it in the paper the next week.

This situation represents a conflict of interest and duty. Both X and Y hold fiduciary duties to each other, which means they must subdue their own interests in favor of the duo’s collective interest. By signing an individual contract and taking all the money, X has put personal interest above the fiduciary duty. Therefore, a court will find that X has breached his fiduciary duty. The judicial remedy here will be that X holds both the contract and the money in a constructive trust for the duo. Note, X will not be punished or totally denied of the benefit; both X and Y will receive a half share in the contract and the money.- Source

If you are saying that the debt relief company does not have a fiduciary responsibility to the consumer then by definition the debt relief company is not putting the consumer first.

By it’s very nature it could be argued that sales training for debt relief companies breaks the fiduciary responsibility of the debt relief company. If the training is based on scripts, techniques or tools that train staff to guide the consumer to the sale, seal the deal, or close the sale then have the consumers interests been placed ahead of those of the company?

I would like to see that happen, but it clearly does not. Just reflecting on many of the debt settlement sites I’ve seen, I can show you repeated examples where the sales pitch has been to use us to avoid bankruptcy because bankruptcy will hurt you. But that’s not a factual statement in many cases. The marketing message and sales staff have been trained to say that because it serves the needs of the company.

Simply asking a consumer for their budget numbers and adding them up does not lead to a fiduciary result alone. It might qualify someone to appear to afford solution X (be it a debt settlement program or a credit counseling solution) but for those of us experienced in helping people we know that a budget is not much more than a page of lies. It’s a guess on how money is spent by people who don’t track how they spend their money.

Besides, the greater factor over the calculation is that money problems are not about the money. The debt is the symptom of the underlying issues and not the problem itself. As long as you are only responding to the symptom you may not be acting in the best interest of the consumer.

If the debt is the result of a untreated spending addiction, how does the debt settlement program treat that?

If the debt is the result of under-earning and barely making it how does a debt management plan fix that problem?

If the debt is the result of addictive day trading with funds drained from retirement accounts to fuel the addiction, how does a debt relief program fix that?

Debt relief companies need to be solution providers that act in a fiduciary capacity for the consumers that reach out to them for help. If a consumer needs solution Y to best meet their situation and the debt relief company does not offer that, they should direct the consumer to a company that does even if it means losing the sale.

Example: I once had this client that was struggling to make ends meet. She wanted to enroll in a credit counseling program to deal with her debt. As I talked to her I realized the issue was not that she had too much debt but that she was under-earning based on the area she lived in. She said she was only comfortable working at the overnight shift stocking shelves at Walmart.

When I asked why the conversation eventually wound it’s way around to her feeling very self-conscious about how she appeared on interviews because she felt she had big feet. I asked her if she had a new pair of shoes that made her feel special if she’d have more confidence to go on an interview. She said “yes” and I sent her money for a new inexpensive pair of shoes.

She called back later to let me know she got the first job she applied for and now made enough money with the increased salary to make ends meet and be able to save money each month.

“Money problems are not about the money. They are about the underlying issues and the debt is the symptom, not the problem.”

So what do you think? Can a debt relief company ever put the consumer first and act in a fiduciary capacity or is it an impossible task? Can more sales training overcome those issues? If not, what’s the solution?

Can Any Debt Relief Company Afford to Do The Right Thing for Consumers?
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Matt

    Wow Andy, that was well said. We should talk sometime. (952) 388-0668 -Matt

  • Andy Faria

    Hi Matt. I think I know what you’re talking about and after reading my initial comment, I kind of both agree and disagree with myself also. (I’m allowed to change my mind, right?)

    For me to say that sales training “has nothing to do with it”, was kind of stupid actually. That’s not the case. The good sales people that do carry that “moral code” still need to be trained on what their fiduciary responsibility is, otherwise they’re not much better than the sales people that just don’t care. I wish now I didn’t say it that way, but sales training is far from the only solution to the lack of fiduciary responsibility in the debt settlement arena.

    I think we can both agree that the majority of the industry has not acted as a fiduciary over the past few years. Why is that? I believe because there was nobody watching over them, and no real set of rules to play by. It’s the same reason that steroids turned into an epidemic in baseball. They weren’t testing for it in 1998, so it was abused and turned into a new home run record followed by a decade and a half of congressional hearings and new strict rules.

    I stand by my statement that debt settlement companies must expand their offering of services in order to improve their ability to act as a fiduciary. In debt relief there is no such thing as a one size fits all solution. Yes a very small number of people are perfectly qualified to fall behind and settle all their debt, while an equally small number of people are perfect candidates for a DMP. What happens to those people that are stuck in the middle? They’re competed for and they are sold on why they should lean in one direction or the other.

  • Steve Rhode

    I’m not sure I would say my comments about bankruptcy were rosier, I’d say they were more like reality than assumption.

    See my other comment about paying back debt with bankruptcy.

    I don’t want to get lost in if bankruptcy would have been better for you. The issue to really consider is if a consumer turns to a debt relief company for help, do they have a moral or fiduciary duty to do the right thing even if it means not pushing their widget?

    It’s one thing if you are going in to buy a shovel but for people in desperate situations in a disadvantaged position who are looking to trust the rep as a debt advisor, should we expect anything less than giving the consumer the best advice regardless of the solutions the debt relief company sells when the wrong solution can screw up their life?

  • Steve Rhode

    Another something to ponder. Filing bankruptcy does not have to mean you screw your creditors. There is nothing that prevents someone from filing for the protections and benefits and still repaying their creditors.

    That’s what I did but that’s another story.

    There is no sense wasting a perfectly good mistake. The best you can do is learn from the experience and use that information to help others. Like me, your financial situation was a great learning and life experience.

    You were led to cross that bridge for a reason.

  • Travis Pizel

    Sure, Steve – I certainly understand.  I enjoy such interactions, and am afraid I came on too strong in the beginning of the discussion.   If we had talked at that decision point back in 2009 and you told me those things about bankruptcy, you certainly would have caught my attention.  However, again – as I mentioned above I could not move forward with peace of mind if I just stopped paying my creditors and not given them every penny I owed them – especially if I had the means to do so (and by being successful in the DMP for close to 2 years now I think I’ve proven that I do indeed have the mans to do so).

    I don’t second guess my decision – not for a second.  And that is for more reasons than just the DMP program itself.  Had I filed for bankruptcy, I would have have re-discovered my love of writing, started blogging, and gained that second income stream.  I would not have met all the wonderful people that I have by becoming active in Twitter.  I would not have gotten the education on how to become more financially responsible through the tools I have engaged since enrolling in the DMP. 

    I look back at where I came from, where I am now, and where I’m headed and am totally at peace with my decision.

  • Travis Pizel

    I really like your thought process here, Steve – really made me think.  I was out of town today chaperoning a field trip for my son and thought long and hard about this.   At first, I found it hard to compare what has been with the DMP with what could have been with Bankruptcy given that I don’t know anything about Bankruptcy. I think that maybe there are some serious downsides to Bankruptcy that you didn’t mention, and thus make it seem rosier than it really is most of the time.  However, when it comes right down to it, being the person that I am, I could not move forward making the future better without first taking care of the past.  It’s not that I can’t move forward, it’s just that when I opened my credit accounts, and started using them I agreed to pay them the money owed.  If I moved through bankruptcy and didn’t pay back every penny…well, that is essentially stealing – and I can’t live with that.  Given what I thought I knew about bankruptcy (whether wrong or right), I felt that the DMP allowed me to make peace with my past (by paying my debts in full), while allowing me to move forward.  Additionally, after five years on a DMP, I believe not only would I be credit card debt free, but my credit would also be in great shape.  I don’t think that would necessarily be the case with Bankruptcy after just 5 years.  I could be wrong, or maybe I’m not – maybe something just for my own curiosity to investigate for educational purposes.

    Back to your original question though…..does a debt relief company have the responsibility of telling me whether bankruptcy is the best option, even if they don’t assist with such a process?  After our discussion here, that question seems much harder to answer.  As a consumer I would say, “yes.”  I dunno if I would answer the same if I owned a debt relief company.  But then again….as a debt relief company, knowing this may be the case some of the time, why wouldn’t I have some association with a national law firm, or major firms in major markets to somehow handle all cases (DMP, DSP, bankruptcy)? 

  • Damon Day

    Their non response and avoidance of the key questions is their response. 

    It is difficult, or some would argue impossible to effectively serve two masters.

  • SeanDSLegalPlan

    Hi Matt!

  • Fitz

    I got to admit to some disappointment in not hearing more responses from DSCs to these questions central to their practices. Consumer thoughts are great, but what does the DSC CEO have to say?

  • Fitz

    I got to admit to some disappointment in not hearing more responses from DSCs to these questions central to their practices. Consumer thoughts are great, but what does the DSC CEO have to say? 

    • http://DamonDay.com Damon Day

      Their non response and avoidance of the key questions is their response. 

      It is difficult, or some would argue impossible to effectively serve two masters.

  • Matt

    Hey there, Andy! I wanted to take a moment to agree and disagree. It all boils down to leadership, vision and management. Training can lend strength to all of these, but at it’s core, ethics and moral compass need to steer that direction. I have been gifted with strengths in all these areas. I say “gifted” because I truly believe you cannot learn these traits. You either have them or you don’t. When people are trained properly and truly embrace the vision in their heart, they will stay the course no matter what the challenge. If they are led and motivated properly, they will only improve on the first function. In war, the military personnel in most cases believe in the mission at hand and act in a manner in which they were taught to fulfill that mission and/or protect their comrades over their own life despite their human nature to survive. If the agents are trained to just “get a deal on the board”, and their life revolves around nothing beyond their own needs and personal vision, (ie..to keep their job, pay their bills, make more money, etc), they will then lean on their human nature and cannot be trusted. The human heart is corrupt. I could write a book on this, but I’ll stop at the answer to the statements made above…

  • Steve Rhode

    Travis,

    Let me be clear, I entered this part of the conversation with you as an academic exercise. The last thing I want is for you to go back and second guess yourself. Your situation is real and personal for you. You made a decision, you’ve followed it, and I’m proud of what you’ve learned from it.

    You became self-aware and learned from the process. Most of all you are taking what you’ve learned and are helping others with that knowledge. For that I applaud you.

    I’m certainly not trying to persuade you that you made a wrong decision. I’m just trying to have a discussion that there is more to selecting the right decision when people reach that moment than just selling the solutions that profit the debt relief company and that, in my opinion, a debt relief company that holds itself out to the public as putting people first or being a consumer advocate, as the TASC folks have just rebranded themselves, have a fiduciary duty to put the consumer over lining their pockets.

    If we jumped back to that time and we had talked and I told you that filing bankruptcy legally prevented creditor calls, you can rebuild your credit in two years, you’d immediately be able to build an emergency fund to protect your family, you’d be able to keep your home, and you’d pay for the bankruptcy by stop making your payments to creditors; then who knows, maybe the decision you would have made would have been different.

    [FYI: I don't believe the statement about DS and the CR is an accurate one but that's for another conversation.]

  • Travis Pizel

    Your first 4.5 paragraphs were essentially right on.  I did investigate other options.  As I mentioned earlier, the first thing I did was go to my bank and ask if they had any options for me.  Refinance my house?  Nope, not with the state of the banking industry at the time.  Not enough equity in my home, too much debt.  Consolidation loan?  No loans possible.  Any options from the bank at all?  As mentioned, suggested paying down my 2nd mortgage as much as possible in order to re-finance in 4-5 years.  Mr. Banker any other ideas of what I could do?  None.

    I then researched debt relief companies online.  After reading a ton of reviews I narrowed in on one, and started reading what their customers were saying in their community.  They offer both debt management and debt settlement programs.  People that went the debt settlement route that were happy with their decision were far and few in between.  People that went the Debt Management route seemed very satisfied.  We called and discussed both products – the representative said that given our situation we were a good candidate for the DMP.  We did more research, and couldn’t find anything that would point us in a different direction.  I also did  some research on Bankruptcy.  Whether this is true or not, what I read is that you can file bankruptcy on your own, but things are complicated enough that you people are advised to hire an attorney.  I didn’t have any money for an attorney.  Bankruptcy is on your credit report for years, which thus affects you for years.

    My research told me that while a DMP may initially bring your credit rating down a little due to being enrolled in the program, it rebounds quickly.

    While I wasn’t very concerned with the initial dropping of the score (wasn’t planning on applying for any loans any time soon since my bank just told me I couldn’t get one anyway), I was really more concerned with the longer term effects.  I weighed these options:

    Bank:

    Zero options presented.

    DMP:

    Pay back all my debt in 5 years
    Credit score restored and essentially unblemished at the end of program

    DSP:

    Stressful phone calls from creditors
    Getting sued / potentially going to court
    Tax implications
    When it’s all said and done, between Tax implications and “success fees” to relief company, settlement may not be much less than full balance
    Credit report trashed (but not as bad as bankruptcy)

    Bankruptcy:

    Potential for losing home
    Unknown reaction by creditors, but I expect harassing phone calls
    Credit report trashed for a long time
    No money for attorney

    The DMP options seemed like the best choice, so we went with it.

  • Steve Rhode

    No worries. You know how they say in relationships that opposites attract? Well savers tend to attract spenders.

    So let’s go back to that decisive moment when you felt fear and took action. The path you selected started with no emergency fund and left you slowly being able to save now. Do you feel you now have an adequate emergency fund to call upon in case of a big financial surprise of $5,000 or more?

    I’m not saying this would have been right for you at the time but hear me out. One consideration is that at that moment you made the decision to fix the financial past by deciding to follow the DMP path. If you are happy with that decision, then so am I. But at the same time you could have said you instead have a greater responsibility fiduciary as a father and protector of the family to consider bankruptcy so that you could fix the financial future.

    Bankruptcy does not mean you lose the house, that you can’t repay your debts, or that you can’t rebuild your credit back better than before in a couple of years. But let’s just say you were eligible to go that route in a Chapter 7, as 70%+ of people do. In the past 23 months you could have saved $5,000-$10,000 or so in your emergency fund to better protect the family, you could have focused on easily rebuilding your credit, and you could be making payments of your choosing to your creditors at 0% interest to repay your debt.

    Just something to consider. But keep this question in the front of your head as you run into people now that are in the middle of that debt panic, “At this moment, do you have a greater responsibility to fix the past or fix the future?”

  • Travis Pizel

    Emergency fund / Savings account = 0 when we started.  Slowly being able to add to it now that we handle the finances as a team.   If we had done it together from the beginning, and I had it in me to say “no, we can’t afford that” I  think things would have been different.  I didn’t want to say “no” to things as it made me feel inadequate.

    We do both bring something different to the table – she’s a spontaneous, go live life sort of person, I’m more of a “wait, see, plan” sort of guy.  We balance each other out.  Unfortunately she’s also a spender, and I’m a “conflict avoidance” kind of person.  And that didn’t mix well.

    Once we were forced to change our financial habits, we started doing it all as a team, and have committed to each other to living within our means.

    I don’t know if “felt you were owed” is the right phrase.  I think it was more of a “felt I deserved” statement.  Maybe they’re the same….the point is, the thought process is accumulating debt actually started in college due to my inability to say no.  Then it snowballed and as our income grew, our debt grew accordingly.  We couldn’t afford what the income should allow, but we spent like it anyway.

    The last 23 months has allowed me to learn a lot about myself.  Either I step up and be the leader my family needs me to be, or we’re going to sink.  I prefer not to sink so “no” is my new favorite word.  We do our budget on a whiteboard and plan out our expenditures.  My wife and I both take to things visually well – so this process works for us.  We can see what is getting spent and when.  If it’s not on the whiteboard, it doesn’t happen (not without serious discussion and re-doing some other spending to balance it out).

  • Steve Rhode

    Oops, forgot to add. So in your case, what I read you saying, is that the underlying issue was one of entitlement spending, distractionary spending or spending to keep up appearances with unconscious spending which was exacerbated by a lack of a desire to actively manage your finances. The byproduct of this created the symptom of the unmanageable debt and when the terms changed it lead to a stressor moment that prompted you to take action.

    In taking action you were drawn to a solution that you heard advertised and spoke to a sales person (representative) at the company that made the solution available sound good for you since it allowed you to not deal with your perceived fear of possible bankruptcy.

    From that encounter you made a decision but did not actively explore all of your options at the time to see if other solutions would be appropriate. It might be said that the lack of investigation was yet another symptom of your state at the time, looking for what was perceived as a quick or easy fix to make the pain go away as quickly as possible without researching your other options.

    But this moment in time for you led to you and your wife agreeing to play a more active role in your finances, to make cuts and sacrifices, to actively gain financial clarity, and to reduce your spending to fit within your income. The course you elected was luckily free of any financial surprises along the way and led to a fundamental change in the way you look at money from that point forward. You created your own teachable moment and you were prepared to learn from the experience.

    Your aversion to investigating or even considering bankruptcy sounds like it was more a product of your fear of what you envisioned bankruptcy meant and you made decisions based on assumptions rather than fully explore that option.

    As the parent searching for the best solution for your family, did you have a duty to make the best decision for the family or the decision that felt the most comfortable?

    Besides the DMP, what other options did the company offer at that time?

    It might be that you did select the option that worked out best for you. But was that out of partial luck or because you made the best informed decision of all of your options you could have made at the time based on your situation and goals?

    Will we ever know now how your situation would be different today if you had researched debt settlement, a debt consolidation loan, bankruptcy, etc. and then used what you could have learned to make a more informed decision?

  • Steve Rhode

    What about the emergency fund/savings account. How much did you have on hand when you started and were you able to add to it as you went to protect your family from a financial emergency?

    What made you self-identify as financially irresponsible. Even though you managed the family finances do you feel it would have been different if you and your wife sat down together once a month to look at the finances for all those years prior? Do you each bring something different to the table? Maybe one is a saver and the other a spender?

    What I hear you saying is that you felt you were owed whatever it is that you wanted and those expenses that were beyond your reach landed on credit cards.

  • Travis Pizel

    After 13 years of complete and utter financial irresponsibility, the letters from the creditor indicating the policy change, and what it meant for the minimum monthly payment finally shocked me into reality of what I had been doing to my family (I handled the family finances alone).

    I was (am) married with two children.  Credit cards were our emergency fund. We had 5 accounts affected by the policy change, but we had 13 accounts that were eventually enrolled in the DMP.  The total debt on them was 100K+.   As I mentioned before, our problem is lack of financial responsibility, lack of budgeting skills, and a sense of entitlement.  Our family income is also quite high, thus the root of the sense of entitlement.  The thought process was that with a high income we should be able to buy whatever we want.  Eventually pay raises would outpace our spending and we’d catch up.  That obviously never happened. 

    What landed on the cards?  What didn’t land on the cards.  We used it to supplement our income in every way, shape and form.  Looking back, I was so very stupid for so very long.

    We had some things we could liquidate, but not nearly enough to make a big enough dent in the debt. 

    I would not have been harmed by being encouraged to talk to a bankruptcy attorney.  In my mind, as stated, that was a last resort.  I was afraid of what it meant from a credit report standpoint, and I hell bent on paying back my debt.  My understanding of bankruptcy is that you end up paying back only a portion of what you owe.  I was the one who racked up the debt, and I was determined to pay it all back. 

    Our credit score was in the low 700 the last time I was told what it was (which may have been a year or two before “The Event”).  All accounts were current, and we always made our payments on time (even if it meant taking money out of one credit card to make it happen for another).

    When we called the company we eventually enrolled in the DMP with, they asked me questions, and gave me a quote of what they thought my monthly payments would be on the DMP. 

    One of the exercises my wife and I did at that point was scrub our monthly expenses from top to bottom, made plans to simplify our lives, and cut out everything we could. When we were confident that we could make the payment (and that the company was for real – after all, I had never even heard of a DMP) we enrolled.  Paying back 100% of our debt in 5 years and not having a bankruptcy on our credit report was exactly what we were hoping to accomplish.

  • Steve Rhode

    Let’s roll back to those days when you were searching for solutions to that difficult problem. I assume that what you wanted to find was a solution that helped solve the stress of the mounting bills.

    At the time you were looking for that solution, tell me about your family at the time. Any kids? And how much cash did you have saved up in an emergency fund to protect yourself moving forward from that day. Did you have any assets on hand you could liquidate to raise cash (not retirement accounts) and what was your credit score like at that time? How much debt did you have on the five accounts?

    Besides the adjustment to the terms that push you to the edge, what was the stuff that made up most of the debt on those cards and why did it land on the cards?

    One last question for this round. How would you have been harmed if you had been encouraged to talk to a bankruptcy attorney so you could understand clearly what bankruptcy would mean for your situation rather than making an assumption or guessing?

  • Travis Pizel

    I went back and re-read this entire thread….just to go back and answer your main question:  Does a debt relief company have the obligation to say, “sorry, we don’t offer you the product that would best suit you.”  Yes, I do believe they have that obligation.  Don’t sell the customer something that doesn’t serve them.  However, should they be required to have an integrated solution to fix any potential underlying issue (other than just financial mismanagement) such as gambling addiction, etc  I think that’s outside the scope of the industry, and it’s diagnosis and handling is best handled by professionals trained to deal with those types of issues. 

    That being said, if you’d like to ask me additional questions about the days when I made the decision to enroll in a DMP, fire away, I would welcome it.

  • Mike Reilly

    That’s because you finally opened your eyes…ha ha

     
    Our business model has been performance based from inception, long before I have been voicing my thoughts here. We are not salesmen as we have nothing to sell, however, we do have programs designed to provide financial relief based on many factors that require a team (consumer/consultant) effort to uncover. Do we require compensation for our part in this short term marriage, yes, but only when we reach or exceed our partners expectation.

     
    “These are the facts and they are undisputed” Kevin Bacon as Capt Jack Ross, A Few Good Men.

  • Steve Rhode

    Knowing this is all behind you now I almost never like to go back and revisit the past decisions of consumers for fear it may lead to second guessing of an issue that is now behind you. Will allow me to ask you some questions about those days you made decisions to deal with your debt?

  • Travis Pizel

    In fairness, cigarettes and oil companies are not services.  But Real Estate and Banks do indeed provide services.  Great discussion BTW.

  • Travis Pizel

    Great Questions, Steve-

    You’re right, the DMP payment is almost exactly as the minimums before I entered the program. The difference is this:  I had 5 accounts with a major credit card company.  They sent me a letter saying that while they were not raising my interest rates, they were changing their policy such that the minimum monthly payment would now be 2.5% of the balance, whereas before it was only 1%.  That difference was enough to sink us. 

    I enrolled in the debt management program and the negotiated monthly payment was about the same as the minimum had been (about 1%).  But the interest rate was greatly reduced.  Therefore a.) I didn’t see the pending increase in the minimum monthly payment and b.) more money was going to the actual balance than before.

    With the DMP I will have eliminated my debt in 5 years.  Otherwise….what’s the estimation if you pay only the minimum 30+ years? 

    You’re right – Bankruptcy does not mean I’d necessarily lose my home.  But it certainly could have. I didn’t talk to a Bankruptcy attorney because I viewed that as a last resort option.  After I talked to my bank I started searching the internet for options, not knowing what I’d find (only that I had heard commercials for debt relief companies on the radio).  Going back to to the statement of responsibility of banks….why didn’t they tell me of the different debt relief options?  They didn’t even mention bankruptcy!  Banks advertise and portray themselves as your “best friend” there to “help you with all your financial needs.”  Well, my bank failed me miserably that day.

    And just to re-iterate, as Damon says below, if I’m driving down the road and my car acts up, I’m not pulling into Bob’s Tire Repair.

    What industries don’t put their profit ahead of mine?  That’s just a given.  Companies care about their customers only to the point of getting their  business.  You mention other industries that manage money that have to deal with the same issues.  Real estate?  When I was looking to buy a house, my agent never sat down and had a heart to heart with me about whether I really needed a new house, or what the underlying issue was that made me want a bigger one.

    Banks that provide loans have guidelines as to see if you qualify…..but is that to protect you from hurting yourself financially, or to protect their own interests with respect to being able to be repaid.  I’d guess B.

    How about cigarettes? Are they doing anything (that’s not forced by the government) to protect the consumer?

    Oil companies?  do they have my best interest at heart when they raise gas prices even though the price of oil goes down?

  • Damon Day

    You are exactly right about the Tire Shop Travis, and to Steve’s point, since they only specialize in tires, you would not go to them for advice if your car is acting up and you have no idea what is wrong with it. 

    You should first go to a mechanic and talk to someone that specializes in diagnosing overall problems with cars.  If he explains why the tires are the problem and why you need new tires, then that is when you call a debt settlement company. (Just a crossover to be sure the people following along at home are understanding the metaphor)

  • Steve Rhode

    I think I wasn’t clear enough on my tire example. A consumer is driving down
    the road and something acts up on their car. They pull into the auto shop
    that only sells tires. Guess what the consumer is most likely to be sold.

    You say if you had not gone into the debt management program you might have
    lost your home. Interesting. So the DMP payment is probably not that far off
    the regular payment if were not behind on the cards. That means you probably
    could have afforded the minimum payment. So why did you go into the DMP?

    Bankruptcy does not mean you’d lose your home, in fact, far from it. But
    you’d have to talk to a bankruptcy attorney who is licensed in your state to
    determine if your home is exempt, you have too much equity for a Chapter 7,
    etc. Tell me what the bankruptcy attorney told you when you met with them
    before launching into a DMP? Did the bankruptcy attorney discuss stripping
    the second mortgage down to market value?

    So this plan you are on now, how much are you setting aside each month to
    build your emergency fund?

    “You’re unfairly holding debt relief companies to a higher standard than
    other industries.”

    Well other industries that care for people and manage money have to deal
    with these issues. The following industries have to deal with the same
    issues: real estate, financial planners, money managers, trust departments,
    retirement planners, retirement plans, lawyers, doctors, medical personnel,
    board members, paramedics, airplane pilots, association directors, etc.

    Tell me who you expect to buy services from where you feel it is appropriate
    they put their profit interests ahead of your best interests?

  • Travis Pizel

    I don’t talk to anyone on the phone qualifying them for programs. I think may have misinterpreted me as someone that works for a Debt Relief Company – I’m not.  I’m a user of a debt relief company.

    That being said, you put forth an interesting analogy about the auto repair shop that only sells tires.   There are such places…they are tire shops that specialize in selling you tires, and tire related services only.  Specialty shops exist to provide a specific service.

    If I want a way to eliminate my credit card debt and provide me financial tools to manage my money better, I go to a debt relief company.  If I want help with my gambling addiction (if I had one),  I’ll look in the yellow pages for someone that specializes in that.

    Could there be a company that offers both debt relief and counseling that deals with potential underlying issues? Sure – and as you have mentioned, that’s exactly what you did.

    But saying that every debt relief company needs to do just that is like, well, saying that every shop that handles car maintenance issues has to handle all of them.

    I don’t mean to be hypersensitive here, but let’s get down to my underlying issue, if you will.  Outside of the actual commercials of the debt relief companies, and their own websites, you’re hard pressed to find much positive press on debt relief programs.  It seems to be “in style” to bash them and point out what’s wrong with them.

    Without enrolling in my debt management program, right now I would have probably been in bankruptcy court, lost my home, and living who knows where trying to recover financially for the next X years.  When I was at wits end, I went to my bank and asked for options – and do you know what they told me?  Pay down as much as possible on my second mortgage so that in a few years I could refinance and fold my credit card debt into my mortgage. I didn’t have any “extra” to apply to anything.   I needed Immediate help, not in a few years.  Even after I told him that if I didn’t do something immediately I’d probably default on my mortgage, the guy just stared at me like a confused puppy.  They didn’t tell me anything about debt relief companies, and how they had options that may be able to help me.

    But I don’t see anyone writing an article on how banks should be fiduciary responsible. And I certainly don’t see anyone writing an article about how banks should not just hand out consolidation loans, but look for the underlying reason why someone needs to have such a loan and fix that too.

    Which leads me full circle back to my original point.  You’re unfairly holding debt relief companies to a higher standard than other industries.

  • Damon Day

    ya, what he said :-)

    I have said for years that you can’t sell debt settlement like Chuck Norris sells Total Gyms.  Enticing ads on TV, guy calls in, sales guy “feel, felt, founds” his way to a sale.  The client can be damaged far worse than just the money spent on the program.

    Buy a Total Gym and don’t use it, then you just spent a few hundred on a fairly dangerous jungle gym for your kids. (Guilty on that one).  But I sold it on Craig’s list and got half my money back.

  • Damon Day

    See how close we have come together. ha ha

  • Steve Rhode

    So you see the problem.

    A debt relief company that does not act in a fiduciary capacity that considers all the solutions and directs people to the correct solution based on the underlying issues is not putting the consumer first.

    It’s like going to an emergency room that treats you for a broken leg without ever considering the underlying issue it may have been caused by a bone disease. A patient released would have a valid malpractice case against the doctor.

    So why wouldn’t a consumer have a valid malpractice case against a debt relief company that sold them a solution, but not the right solution?

    You might not have ever heard of a debt relief company that could do all those thing but I founded and ran just such a company.

    You can’t make the statement that products from a debt relief company offer to help you to get out of debt. You can say that debt relief company products offer to make payment for you on your behalf. If a DMP or DSP is the wrong solution and will not be inherently successful because it may be the wrong tool for the wrong problem.

    If you put a problem gambler on a DSP without helping them to get treatment for the underlying gambling problem, guess what, the DSP will fail.

    I hear you on the financial literacy point of view and that’s a logical one but what’s interesting is there is no concrete evidence that financial education alone is a band-aid to better financial behavior. In fact a few years ago the Jumpstart Coalition, a financial literacy nonprofit, conducted a survey of kids that took financial classes and they scored worse than the kids that didn’t.

    For example, artists and salespeople tend to be worse money managers despite the underlying education. You can give them all the tools in the world but they will most likely not use them for long, if at all. The answer, many of those creative folks rely on a different part of their brain that those that really crunch numbers well.

    Saying you sell debt relief products without either acting in a fiduciary capacity or examining the underlying issues is like running an auto repair shop that only sells tires. Great, you sold a tire but the radiator is still leaking.

    Try this, spend the next couple of days talking to the people on the phone you deal with and instead of qualifying them for widget A, dig deep to ferret out the underlying issues. If you want, download my free book “The Path to Happiness and Wealth” to get a feel for these underlying issues.

    I will guarantee you that if you take take the time to look for the underlying issue, you will find them in just about every client. Once you do, then you can begin to craft meaningful action plans that will lead to happier and more successful clients.

    The issue right now is that you don’t know what you don’t know.

  • Andy Faria

    This is what I struggled with most during my time in debt relief and also what led me to the conclusion that I wanted out. This exact issue. Doing it right requires that someone make the tough decision to forego revenue in the best interests of the consumer. When you see your “peers” doing it differently, and there’s no real regulatory watchdog or way to stop them, it makes you wonder if it’s even worth it anymore.  

    There are some great people in the industry that I know for a fact put their clients first and their programs are as legit as they come. Unfortunately, my observations are that most in the industry don’t know the first thing about what being a fiduciary means (or maybe they forgot).

    To answer the question of whether or not it’s important. Of course it is. When dealing with any financial industry and a consumer stands to lose as much as they do by enrolling in the wrong financial solution, it’s a must.

    If someone is trying to sell pizzas, not so much. Nobody has ever lost their home by choosing mushroom over peperoni.

  • Travis Pizel

    Thanks for engaging in conversation, Steve.

    By your text what I think I hear you saying is that you expect debt relief companies to be an “end to end” solution for the customer

    A.) correctly determine exactly what the customer needs, and if that company doesn’t offer such a solution refer them to someone that does – ie being fiduciary responsible.

    B.) Not only help the customer eliminate their debt, but also help with the underlying issues that may be causing the overspending and thus the debt.  This would include collaborating with mental health professionals.

    If that is indeed what you are suggesting/expecting, then I agree that it definitely a “put the customer first and make sure that the problem is 100% solved” solution.

    But if that is what you are expecting from the industry today, well…I’ve never heard of a debt relief company claim to do either one of those.

    Thinking that it would be a good idea is one thing, but expecting it to be true in reality is another – and in reality, that is not what debt relief companies are offering – at least not in my opinion.

    Products from debt relief companies offer to help get you out of debt.  Period.

    On your other point that “money problems are not about the money” and that “debt is the symptom and not the problem”…..While I agree that there are certainly cases where there is an underlying problem such as a gambling addiction, depression, etc….there are certainly many, many cases where it is solely financial mismanagement.  We prepare young people for adulthood in many areas through education…but how to handle finances is NOT one of them.

    Personally, I think that is a HUGE problem – why do we not teach people how to make a budget and live within your means in high school?  Look, I’m an intelligent person.  I make a good salary, have a great career, great family, the whole nine yards.  But I suck at budgeting.  My debt management company does provide tools to help people learn to budget and handle their finances.  I am making use of those resources, and truly believe that when I exit my debt management program I will have the proper tools and mindset to remain credit card debt free.

  • Steve Rhode

    Andy,

    You’ve lived in the debt relief world as well. Do you feel debt relief
    companies understand what it really takes to operate in a fiduciary way to
    the client?

    Is doing what is best for the consumer ahead of yourself really that
    important?

    Steve

  • Andy Faria

    As a real estate broker I owe my clients fiduciary responsibility. I owe them obedience, loyalty, disclosure, confidentiality, accountability, and reasonable care. I’m in a position of trust and confidence that I will always act in their best interest, even if it conflicts with my own best interests. If I ever betray that trust I will lose my license, and most likely get sued.

    The fiduciary responsibility comes with a lot of paperwork (disclosures, etc) and I need to make sure that I have each and every one of them executed correctly and saved for at least three years. At any point the re board can show up at my office and ask me for a disclosure from Joe Schmoe from 2 years ago, if I don’t have it, it’s my ass.

    I’m not only responsible for my own actions as a fiduciary, but also all of my agents. If one of my agents tells someone that the property line is “right here” and they know damn well it’s ten feet in the other direction, I’m getting sued again.

    Of course there are agents everywhere that knowingly or even unknowingly break their fiduciary responsibilty every day. Like I said before, you can’t teach ethics to the starving salesman. Some get caught and others don’t, but there’s definitely a clear cut list of what you can and cannot do, and and even clearer list of what the penalties are.   

  • Steve Rhode

    @twitter-216014199:disqus So therein lies the problem. Ultimately if you are only suggesting one of two solutions you can’t be acting in a fiduciary capacity. What if the better solution is bankruptcy but you don’t send the client to consult with a bankruptcy attorney so they can evaluate that solution as it fits their situation? Can you do what’s best for the consumer if you don’t consider all options?

    The story of the shoes is critical here because unless you understand the underlying issues that led to the debt situation then you can’t suggest the best resolution. How would putting that lady in a DMP or DS helped her to overcome her problem?

    Do you listen for clues if the consumer is depressed or unable to handle an extended path forward? What if their financial problem relates to their underlying issues with saving or spending issues that have nothing to do with financial management.

    The position that people in debt are bad money managers is an incorrect assumption. Some are but for most there are underlying issues to consider. 

    Let’s take the underlying issue of compulsive spending that leads to problem debt. Is that person a bad money manager that can repaired through a structured payment program?

    How about the underlying sense of entitlement. Is that caused by the “demonstration effect” in an effort to maintain or improve self-esteem? If so, how is an advanced fee debt settlement program going to tackle that issue? 

    Or how about the significantly depressed person who has the ability on paper to make their monthly payment and might look like a good DMP or DS client but has said they don’t know how long they can continue like this and makes some statements that, if tuned in to, lead you to believe they may crack from the pressure and harm themselves? For them a quicker solution like bankruptcy might be a better fit so they can recover and heal.

    A debt relief company should not provide mental health services unless they can be offered by trained personnel. This is why I founded the first in-patient treatment program for money troubles and I had a staff psychologist to help people over those issues. I also provided HR consultations for resume reviews and interview training to help people with under-earning issues be able to overcome those and seek more income to address the underlying issue.

    But a debt relief company should be aware of the underlying issues and work collaboratively with others who are able to address those issues at the same time or prior to tackling the symptom of debt.

    If you believe financial problems are the result of financial mismanagement, you are missing 2/3 of the help you could be giving. Just remember “Money problems are not about the money. They are about the underlying issues and the debt is the symptom, not the problem.”

  • Travis Pizel

    I don’t know how many debt relief companies you are familiar with, but the one I am enrolled with provides both Debt Management and Debt Settlement programs and works with the customer to determine which one is the best fit.  I cannot comment as to whether they recommend and/or help with bankruptcy proceedings or not, however, as I don’t know the answer.

    What I do know is that I spent hours on the phone across I believe 3 phone calls in the span of a week with a representative asking questions and working with him to determine a.) if I wanted to enroll with their debt relief company b.) which plan to use c.) how did the plan work and d.) answering any concerns and questions I may have.  BTW, one of those phone calls was made from him to me on his personal cell phone because the phone lines were down at the company and we had a pre-arranged time that he was going to call us to discuss further.  I also was directed at their online community where current and past clients discuss and comment on the programs and their successes and struggles.  I literally spent hours each day over 5 days pouring through that community.

    Was all this due to the guy at the other end of the phone trying to make a sale? Maybe..probably.  Did his need to sign me up for the company run parallel with me requiring all the necessary information before I’d sign up? Sure.  All I have to say is if that’s the case, the guy I talked to in early July of 2009 earned that commission BIG TIME. OR, you’d have to come to the realization that at least some of these people do actually care just a little bit about helping people.

    So, if you’ll bite and go along with me for a minute that at least some of the people working for debt relief companies care about helping people, let’s re-visit your question about whether they are putting the customer first.  The question I ask is…does ANY company really put the customer first?  If you walked into Caribou Coffee and described what you wanted….but they didn’t have that product…but Starbucks did.  Do you really think the person standing behind the counter is going to suggest to you that you go to their competitor?  Or do you think they’re going to find the product they have that is a “best fit” and suggest that?  I think you’re posing a question in which you’re holding debt relief companies to a higher standard than any other business niche on the planet.

    Finally, the last example that you put forth about the lady who just needed new shoes….I don’t see how that even fits into your article.  I got myself into debt due to lack of financial discipline and an unending sense of entitlement to being able to have anything I want.  I’ve figured that out on my own.  Can everyone figure out their underlying problems on their own?  Probably not.  Am I going to correct my problem on my own?  I dunno, remains to be seen…but I can tell you that I don’t expect my debt relief company to fix that for me for the $50 a month I pay them for their service.

    And if you think that should be in fact part of their offering, well, I think the entire mental health industry is going to be knocking down your door for suggesting debt relief companies can do their job for fee that is peanuts compared to their hourly rate.

  • http://twitter.com/DebtChronicles Travis Pizel

    I don’t know how many debt relief companies you are familiar with, but the one I am enrolled with provides both Debt Management and Debt Settlement programs and works with the customer to determine which one is the best fit.  I cannot comment as to whether they recommend and/or help with bankruptcy proceedings or not, however, as I don’t know the answer.

    What I do know is that I spent hours on the phone across I believe 3 phone calls in the span of a week with a representative asking questions and working with him to determine a.) if I wanted to enroll with their debt relief company b.) which plan to use c.) how did the plan work and d.) answering any concerns and questions I may have.  BTW, one of those phone calls was made from him to me on his personal cell phone because the phone lines were down at the company and we had a pre-arranged time that he was going to call us to discuss further.  I also was directed at their online community where current and past clients discuss and comment on the programs and their successes and struggles.  I literally spent hours each day over 5 days pouring through that community.

    Was all this due to the guy at the other end of the phone trying to make a sale? Maybe..probably.  Did his need to sign me up for the company run parallel with me requiring all the necessary information before I’d sign up? Sure.  All I have to say is if that’s the case, the guy I talked to in early July of 2009 earned that commission BIG TIME. OR, you’d have to come to the realization that at least some of these people do actually care just a little bit about helping people.

    So, if you’ll bite and go along with me for a minute that at least some of the people working for debt relief companies care about helping people, let’s re-visit your question about whether they are putting the customer first.  The question I ask is…does ANY company really put the customer first?  If you walked into Caribou Coffee and described what you wanted….but they didn’t have that product…but Starbucks did.  Do you really think the person standing behind the counter is going to suggest to you that you go to their competitor?  Or do you think they’re going to find the product they have that is a “best fit” and suggest that?  I think you’re posing a question in which you’re holding debt relief companies to a higher standard than any other business niche on the planet.

    Finally, the last example that you put forth about the lady who just needed new shoes….I don’t see how that even fits into your article.  I got myself into debt due to lack of financial discipline and an unending sense of entitlement to being able to have anything I want.  I’ve figured that out on my own.  Can everyone figure out their underlying problems on their own?  Probably not.  Am I going to correct my problem on my own?  I dunno, remains to be seen…but I can tell you that I don’t expect my debt relief company to fix that for me for the $50 a month I pay them for their service.

    And if you think that should be in fact part of their offering, well, I think the entire mental health industry is going to be knocking down your door for suggesting debt relief companies can do their job for fee that is peanuts compared to their hourly rate.

    • http://GetOutOfDebt.org Steve Rhode

      @twitter-216014199:disqus So therein lies the problem. Ultimately if you are only suggesting one of two solutions you can’t be acting in a fiduciary capacity. What if the better solution is bankruptcy but you don’t send the client to consult with a bankruptcy attorney so they can evaluate that solution as it fits their situation? Can you do what’s best for the consumer if you don’t consider all options?

      The story of the shoes is critical here because unless you understand the underlying issues that led to the debt situation then you can’t suggest the best resolution. How would putting that lady in a DMP or DS helped her to overcome her problem?

      Do you listen for clues if the consumer is depressed or unable to handle an extended path forward? What if their financial problem relates to their underlying issues with saving or spending issues that have nothing to do with financial management.

      The position that people in debt are bad money managers is an incorrect assumption. Some are but for most there are underlying issues to consider. 

      Let’s take the underlying issue of compulsive spending that leads to problem debt. Is that person a bad money manager that can repaired through a structured payment program?

      How about the underlying sense of entitlement. Is that caused by the “demonstration effect” in an effort to maintain or improve self-esteem? If so, how is an advanced fee debt settlement program going to tackle that issue? 

      Or how about the significantly depressed person who has the ability on paper to make their monthly payment and might look like a good DMP or DS client but has said they don’t know how long they can continue like this and makes some statements that, if tuned in to, lead you to believe they may crack from the pressure and harm themselves? For them a quicker solution like bankruptcy might be a better fit so they can recover and heal.

      A debt relief company should not provide mental health services unless they can be offered by trained personnel. This is why I founded the first in-patient treatment program for money troubles and I had a staff psychologist to help people over those issues. I also provided HR consultations for resume reviews and interview training to help people with under-earning issues be able to overcome those and seek more income to address the underlying issue.

      But a debt relief company should be aware of the underlying issues and work collaboratively with others who are able to address those issues at the same time or prior to tackling the symptom of debt.

      If you believe financial problems are the result of financial mismanagement, you are missing 2/3 of the help you could be giving. Just remember “Money problems are not about the money. They are about the underlying issues and the debt is the symptom, not the problem.”

      • http://twitter.com/DebtChronicles Travis Pizel

         Thanks for engaging in conversation, Steve.

        By your text what I think I hear you saying is that you expect debt relief companies to be an “end to end” solution for the customer

        A.) correctly determine exactly what the customer needs, and if that company doesn’t offer such a solution refer them to someone that does – ie being fiduciary responsible.

        B.) Not only help the customer eliminate their debt, but also help with the underlying issues that may be causing the overspending and thus the debt.  This would include collaborating with mental health professionals.

        If that is indeed what you are suggesting/expecting, then I agree that it definitely a “put the customer first and make sure that the problem is 100% solved” solution.

        But if that is what you are expecting from the industry today, well…I’ve never heard of a debt relief company claim to do either one of those.

        Thinking that it would be a good idea is one thing, but expecting it to be true in reality is another – and in reality, that is not what debt relief companies are offering – at least not in my opinion.

        Products from debt relief companies offer to help get you out of debt.  Period.

        On your other point that “money problems are not about the money” and that “debt is the symptom and not the problem”…..While I agree that there are certainly cases where there is an underlying problem such as a gambling addiction, depression, etc….there are certainly many, many cases where it is solely financial mismanagement.  We prepare young people for adulthood in many areas through education…but how to handle finances is NOT one of them.

        Personally, I think that is a HUGE problem – why do we not teach people how to make a budget and live within your means in high school?  Look, I’m an intelligent person.  I make a good salary, have a great career, great family, the whole nine yards.  But I suck at budgeting.  My debt management company does provide tools to help people learn to budget and handle their finances.  I am making use of those resources, and truly believe that when I exit my debt management program I will have the proper tools and mindset to remain credit card debt free.

      • http://GetOutOfDebt.org Steve Rhode

        So you see the problem.

        A debt relief company that does not act in a fiduciary capacity that considers all the solutions and directs people to the correct solution based on the underlying issues is not putting the consumer first.

        It’s like going to an emergency room that treats you for a broken leg without ever considering the underlying issue it may have been caused by a bone disease. A patient released would have a valid malpractice case against the doctor.

        So why wouldn’t a consumer have a valid malpractice case against a debt relief company that sold them a solution, but not the right solution?

        You might not have ever heard of a debt relief company that could do all those thing but I founded and ran just such a company.

        You can’t make the statement that products from a debt relief company offer to help you to get out of debt. You can say that debt relief company products offer to make payment for you on your behalf. If a DMP or DSP is the wrong solution and will not be inherently successful because it may be the wrong tool for the wrong problem.

        If you put a problem gambler on a DSP without helping them to get treatment for the underlying gambling problem, guess what, the DSP will fail.

        I hear you on the financial literacy point of view and that’s a logical one but what’s interesting is there is no concrete evidence that financial education alone is a band-aid to better financial behavior. In fact a few years ago the Jumpstart Coalition, a financial literacy nonprofit, conducted a survey of kids that took financial classes and they scored worse than the kids that didn’t.

        For example, artists and salespeople tend to be worse money managers despite the underlying education. You can give them all the tools in the world but they will most likely not use them for long, if at all. The answer, many of those creative folks rely on a different part of their brain that those that really crunch numbers well.

        Saying you sell debt relief products without either acting in a fiduciary capacity or examining the underlying issues is like running an auto repair shop that only sells tires. Great, you sold a tire but the radiator is still leaking.

        Try this, spend the next couple of days talking to the people on the phone you deal with and instead of qualifying them for widget A, dig deep to ferret out the underlying issues. If you want, download my free book “The Path to Happiness and Wealth” to get a feel for these underlying issues.

        I will guarantee you that if you take take the time to look for the underlying issue, you will find them in just about every client. Once you do, then you can begin to craft meaningful action plans that will lead to happier and more successful clients.

        The issue right now is that you don’t know what you don’t know.

      • http://twitter.com/DebtChronicles Travis Pizel

        I don’t talk to anyone on the phone qualifying them for programs. I think may have misinterpreted me as someone that works for a Debt Relief Company – I’m not.  I’m a user of a debt relief company.

        That being said, you put forth an interesting analogy about the auto repair shop that only sells tires.   There are such places…they are tire shops that specialize in selling you tires, and tire related services only.  Specialty shops exist to provide a specific service.

        If I want a way to eliminate my credit card debt and provide me financial tools to manage my money better, I go to a debt relief company.  If I want help with my gambling addiction (if I had one),  I’ll look in the yellow pages for someone that specializes in that.

        Could there be a company that offers both debt relief and counseling that deals with potential underlying issues? Sure – and as you have mentioned, that’s exactly what you did.

        But saying that every debt relief company needs to do just that is like, well, saying that every shop that handles car maintenance issues has to handle all of them.

        I don’t mean to be hypersensitive here, but let’s get down to my underlying issue, if you will.  Outside of the actual commercials of the debt relief companies, and their own websites, you’re hard pressed to find much positive press on debt relief programs.  It seems to be “in style” to bash them and point out what’s wrong with them.

        Without enrolling in my debt management program, right now I would have probably been in bankruptcy court, lost my home, and living who knows where trying to recover financially for the next X years.  When I was at wits end, I went to my bank and asked for options – and do you know what they told me?  Pay down as much as possible on my second mortgage so that in a few years I could refinance and fold my credit card debt into my mortgage. I didn’t have any “extra” to apply to anything.   I needed Immediate help, not in a few years.  Even after I told him that if I didn’t do something immediately I’d probably default on my mortgage, the guy just stared at me like a confused puppy.  They didn’t tell me anything about debt relief companies, and how they had options that may be able to help me.

        But I don’t see anyone writing an article on how banks should be fiduciary responsible. And I certainly don’t see anyone writing an article about how banks should not just hand out consolidation loans, but look for the underlying reason why someone needs to have such a loan and fix that too.

        Which leads me full circle back to my original point.  You’re unfairly holding debt relief companies to a higher standard than other industries.

      • http://GetOutOfDebt.org Steve Rhode

        I think I wasn’t clear enough on my tire example. A consumer is driving down
        the road and something acts up on their car. They pull into the auto shop
        that only sells tires. Guess what the consumer is most likely to be sold.

        You say if you had not gone into the debt management program you might have
        lost your home. Interesting. So the DMP payment is probably not that far off
        the regular payment if were not behind on the cards. That means you probably
        could have afforded the minimum payment. So why did you go into the DMP?

        Bankruptcy does not mean you’d lose your home, in fact, far from it. But
        you’d have to talk to a bankruptcy attorney who is licensed in your state to
        determine if your home is exempt, you have too much equity for a Chapter 7,
        etc. Tell me what the bankruptcy attorney told you when you met with them
        before launching into a DMP? Did the bankruptcy attorney discuss stripping
        the second mortgage down to market value?

        So this plan you are on now, how much are you setting aside each month to
        build your emergency fund?

        “You’re unfairly holding debt relief companies to a higher standard than
        other industries.”

        Well other industries that care for people and manage money have to deal
        with these issues. The following industries have to deal with the same
        issues: real estate, financial planners, money managers, trust departments,
        retirement planners, retirement plans, lawyers, doctors, medical personnel,
        board members, paramedics, airplane pilots, association directors, etc.

        Tell me who you expect to buy services from where you feel it is appropriate
        they put their profit interests ahead of your best interests?

      • http://twitter.com/DebtChronicles Travis Pizel

        Great Questions, Steve-

        You’re right, the DMP payment is almost exactly as the minimums before I entered the program. The difference is this:  I had 5 accounts with a major credit card company.  They sent me a letter saying that while they were not raising my interest rates, they were changing their policy such that the minimum monthly payment would now be 2.5% of the balance, whereas before it was only 1%.  That difference was enough to sink us. 

        I enrolled in the debt management program and the negotiated monthly payment was about the same as the minimum had been (about 1%).  But the interest rate was greatly reduced.  Therefore a.) I didn’t see the pending increase in the minimum monthly payment and b.) more money was going to the actual balance than before.

        With the DMP I will have eliminated my debt in 5 years.  Otherwise….what’s the estimation if you pay only the minimum 30+ years? 

        You’re right – Bankruptcy does not mean I’d necessarily lose my home.  But it certainly could have. I didn’t talk to a Bankruptcy attorney because I viewed that as a last resort option.  After I talked to my bank I started searching the internet for options, not knowing what I’d find (only that I had heard commercials for debt relief companies on the radio).  Going back to to the statement of responsibility of banks….why didn’t they tell me of the different debt relief options?  They didn’t even mention bankruptcy!  Banks advertise and portray themselves as your “best friend” there to “help you with all your financial needs.”  Well, my bank failed me miserably that day.

        And just to re-iterate, as Damon says below, if I’m driving down the road and my car acts up, I’m not pulling into Bob’s Tire Repair.

        What industries don’t put their profit ahead of mine?  That’s just a given.  Companies care about their customers only to the point of getting their  business.  You mention other industries that manage money that have to deal with the same issues.  Real estate?  When I was looking to buy a house, my agent never sat down and had a heart to heart with me about whether I really needed a new house, or what the underlying issue was that made me want a bigger one.

        Banks that provide loans have guidelines as to see if you qualify…..but is that to protect you from hurting yourself financially, or to protect their own interests with respect to being able to be repaid.  I’d guess B.

        How about cigarettes? Are they doing anything (that’s not forced by the government) to protect the consumer?

        Oil companies?  do they have my best interest at heart when they raise gas prices even though the price of oil goes down?

      • http://twitter.com/DebtChronicles Travis Pizel

        In fairness, cigarettes and oil companies are not services.  But Real Estate and Banks do indeed provide services.  Great discussion BTW. 

      • http://GetOutOfDebt.org Steve Rhode

        Knowing this is all behind you now I almost never like to go back and revisit the past decisions of consumers for fear it may lead to second guessing of an issue that is now behind you. Will allow me to ask you some questions about those days you made decisions to deal with your debt?

      • http://twitter.com/DebtChronicles Travis Pizel

         I went back and re-read this entire thread….just to go back and answer your main question:  Does a debt relief company have the obligation to say, “sorry, we don’t offer you the product that would best suit you.”  Yes, I do believe they have that obligation.  Don’t sell the customer something that doesn’t serve them.  However, should they be required to have an integrated solution to fix any potential underlying issue (other than just financial mismanagement) such as gambling addiction, etc  I think that’s outside the scope of the industry, and it’s diagnosis and handling is best handled by professionals trained to deal with those types of issues. 

        That being said, if you’d like to ask me additional questions about the days when I made the decision to enroll in a DMP, fire away, I would welcome it.

      • http://GetOutOfDebt.org Steve Rhode

        Let’s roll back to those days when you were searching for solutions to that difficult problem. I assume that what you wanted to find was a solution that helped solve the stress of the mounting bills.

        At the time you were looking for that solution, tell me about your family at the time. Any kids? And how much cash did you have saved up in an emergency fund to protect yourself moving forward from that day. Did you have any assets on hand you could liquidate to raise cash (not retirement accounts) and what was your credit score like at that time? How much debt did you have on the five accounts?

        Besides the adjustment to the terms that push you to the edge, what was the stuff that made up most of the debt on those cards and why did it land on the cards?

        One last question for this round. How would you have been harmed if you had been encouraged to talk to a bankruptcy attorney so you could understand clearly what bankruptcy would mean for your situation rather than making an assumption or guessing?

      • http://twitter.com/DebtChronicles Travis Pizel

        After 13 years of complete and utter financial irresponsibility, the letters from the creditor indicating the policy change, and what it meant for the minimum monthly payment finally shocked me into reality of what I had been doing to my family (I handled the family finances alone).

        I was (am) married with two children.  Credit cards were our emergency fund. We had 5 accounts affected by the policy change, but we had 13 accounts that were eventually enrolled in the DMP.  The total debt on them was 100K+.   As I mentioned before, our problem is lack of financial responsibility, lack of budgeting skills, and a sense of entitlement.  Our family income is also quite high, thus the root of the sense of entitlement.  The thought process was that with a high income we should be able to buy whatever we want.  Eventually pay raises would outpace our spending and we’d catch up.  That obviously never happened. 

        What landed on the cards?  What didn’t land on the cards.  We used it to supplement our income in every way, shape and form.  Looking back, I was so very stupid for so very long.

        We had some things we could liquidate, but not nearly enough to make a big enough dent in the debt. 

        I would not have been harmed by being encouraged to talk to a bankruptcy attorney.  In my mind, as stated, that was a last resort.  I was afraid of what it meant from a credit report standpoint, and I hell bent on paying back my debt.  My understanding of bankruptcy is that you end up paying back only a portion of what you owe.  I was the one who racked up the debt, and I was determined to pay it all back. 

        Our credit score was in the low 700 the last time I was told what it was (which may have been a year or two before “The Event”).  All accounts were current, and we always made our payments on time (even if it meant taking money out of one credit card to make it happen for another).

        When we called the company we eventually enrolled in the DMP with, they asked me questions, and gave me a quote of what they thought my monthly payments would be on the DMP. 

        One of the exercises my wife and I did at that point was scrub our monthly expenses from top to bottom, made plans to simplify our lives, and cut out everything we could. When we were confident that we could make the payment (and that the company was for real – after all, I had never even heard of a DMP) we enrolled.  Paying back 100% of our debt in 5 years and not having a bankruptcy on our credit report was exactly what we were hoping to accomplish.

      • http://GetOutOfDebt.org Steve Rhode

        What about the emergency fund/savings account. How much did you have on hand when you started and were you able to add to it as you went to protect your family from a financial emergency?

        What made you self-identify as financially irresponsible. Even though you managed the family finances do you feel it would have been different if you and your wife sat down together once a month to look at the finances for all those years prior? Do you each bring something different to the table? Maybe one is a saver and the other a spender?

        What I hear you saying is that you felt you were owed whatever it is that you wanted and those expenses that were beyond your reach landed on credit cards.

      • http://twitter.com/DebtChronicles Travis Pizel

         Emergency fund / Savings account = 0 when we started.  Slowly being able to add to it now that we handle the finances as a team.   If we had done it together from the beginning, and I had it in me to say “no, we can’t afford that” I  think things would have been different.  I didn’t want to say “no” to things as it made me feel inadequate.

        We do both bring something different to the table – she’s a spontaneous, go live life sort of person, I’m more of a “wait, see, plan” sort of guy.  We balance each other out.  Unfortunately she’s also a spender, and I’m a “conflict avoidance” kind of person.  And that didn’t mix well.

        Once we were forced to change our financial habits, we started doing it all as a team, and have committed to each other to living within our means.

        I don’t know if “felt you were owed” is the right phrase.  I think it was more of a “felt I deserved” statement.  Maybe they’re the same….the point is, the thought process is accumulating debt actually started in college due to my inability to say no.  Then it snowballed and as our income grew, our debt grew accordingly.  We couldn’t afford what the income should allow, but we spent like it anyway.

        The last 23 months has allowed me to learn a lot about myself.  Either I step up and be the leader my family needs me to be, or we’re going to sink.  I prefer not to sink so “no” is my new favorite word.  We do our budget on a whiteboard and plan out our expenditures.  My wife and I both take to things visually well – so this process works for us.  We can see what is getting spent and when.  If it’s not on the whiteboard, it doesn’t happen (not without serious discussion and re-doing some other spending to balance it out).

      • http://GetOutOfDebt.org Steve Rhode

        No worries. You know how they say in relationships that opposites attract? Well savers tend to attract spenders.

        So let’s go back to that decisive moment when you felt fear and took action. The path you selected started with no emergency fund and left you slowly being able to save now. Do you feel you now have an adequate emergency fund to call upon in case of a big financial surprise of $5,000 or more?

        I’m not saying this would have been right for you at the time but hear me out. One consideration is that at that moment you made the decision to fix the financial past by deciding to follow the DMP path. If you are happy with that decision, then so am I. But at the same time you could have said you instead have a greater responsibility fiduciary as a father and protector of the family to consider bankruptcy so that you could fix the financial future.

        Bankruptcy does not mean you lose the house, that you can’t repay your debts, or that you can’t rebuild your credit back better than before in a couple of years. But let’s just say you were eligible to go that route in a Chapter 7, as 70%+ of people do. In the past 23 months you could have saved $5,000-$10,000 or so in your emergency fund to better protect the family, you could have focused on easily rebuilding your credit, and you could be making payments of your choosing to your creditors at 0% interest to repay your debt.

        Just something to consider. But keep this question in the front of your head as you run into people now that are in the middle of that debt panic, “At this moment, do you have a greater responsibility to fix the past or fix the future?”

      • http://twitter.com/DebtChronicles Travis Pizel

        I really like your thought process here, Steve – really made me think.  I was out of town today chaperoning a field trip for my son and thought long and hard about this.   At first, I found it hard to compare what has been with the DMP with what could have been with Bankruptcy given that I don’t know anything about Bankruptcy. I think that maybe there are some serious downsides to Bankruptcy that you didn’t mention, and thus make it seem rosier than it really is most of the time.  However, when it comes right down to it, being the person that I am, I could not move forward making the future better without first taking care of the past.  It’s not that I can’t move forward, it’s just that when I opened my credit accounts, and started using them I agreed to pay them the money owed.  If I moved through bankruptcy and didn’t pay back every penny…well, that is essentially stealing – and I can’t live with that.  Given what I thought I knew about bankruptcy (whether wrong or right), I felt that the DMP allowed me to make peace with my past (by paying my debts in full), while allowing me to move forward.  Additionally, after five years on a DMP, I believe not only would I be credit card debt free, but my credit would also be in great shape.  I don’t think that would necessarily be the case with Bankruptcy after just 5 years.  I could be wrong, or maybe I’m not – maybe something just for my own curiosity to investigate for educational purposes.

        Back to your original question though…..does a debt relief company have the responsibility of telling me whether bankruptcy is the best option, even if they don’t assist with such a process?  After our discussion here, that question seems much harder to answer.  As a consumer I would say, “yes.”  I dunno if I would answer the same if I owned a debt relief company.  But then again….as a debt relief company, knowing this may be the case some of the time, why wouldn’t I have some association with a national law firm, or major firms in major markets to somehow handle all cases (DMP, DSP, bankruptcy)? 

      • http://GetOutOfDebt.org Steve Rhode

        I’m not sure I would say my comments about bankruptcy were rosier, I’d say they were more like reality than assumption.

        See my other comment about paying back debt with bankruptcy.

        I don’t want to get lost in if bankruptcy would have been better for you. The issue to really consider is if a consumer turns to a debt relief company for help, do they have a moral or fiduciary duty to do the right thing even if it means not pushing their widget?

        It’s one thing if you are going in to buy a shovel but for people in desperate situations in a disadvantaged position who are looking to trust the rep as a debt advisor, should we expect anything less than giving the consumer the best advice regardless of the solutions the debt relief company sells when the wrong solution can screw up their life?

      • http://GetOutOfDebt.org Steve Rhode

        Oops, forgot to add. So in your case, what I read you saying, is that the underlying issue was one of entitlement spending, distractionary spending or spending to keep up appearances with unconscious spending which was exacerbated by a lack of a desire to actively manage your finances. The byproduct of this created the symptom of the unmanageable debt and when the terms changed it lead to a stressor moment that prompted you to take action.

        In taking action you were drawn to a solution that you heard advertised and spoke to a sales person (representative) at the company that made the solution available sound good for you since it allowed you to not deal with your perceived fear of possible bankruptcy.

        From that encounter you made a decision but did not actively explore all of your options at the time to see if other solutions would be appropriate. It might be said that the lack of investigation was yet another symptom of your state at the time, looking for what was perceived as a quick or easy fix to make the pain go away as quickly as possible without researching your other options.

        But this moment in time for you led to you and your wife agreeing to play a more active role in your finances, to make cuts and sacrifices, to actively gain financial clarity, and to reduce your spending to fit within your income. The course you elected was luckily free of any financial surprises along the way and led to a fundamental change in the way you look at money from that point forward. You created your own teachable moment and you were prepared to learn from the experience.

        Your aversion to investigating or even considering bankruptcy sounds like it was more a product of your fear of what you envisioned bankruptcy meant and you made decisions based on assumptions rather than fully explore that option.

        As the parent searching for the best solution for your family, did you have a duty to make the best decision for the family or the decision that felt the most comfortable?

        Besides the DMP, what other options did the company offer at that time?

        It might be that you did select the option that worked out best for you. But was that out of partial luck or because you made the best informed decision of all of your options you could have made at the time based on your situation and goals?

        Will we ever know now how your situation would be different today if you had researched debt settlement, a debt consolidation loan, bankruptcy, etc. and then used what you could have learned to make a more informed decision?

      • http://twitter.com/DebtChronicles Travis Pizel

        Your first 4.5 paragraphs were essentially right on.  I did investigate other options.  As I mentioned earlier, the first thing I did was go to my bank and ask if they had any options for me.  Refinance my house?  Nope, not with the state of the banking industry at the time.  Not enough equity in my home, too much debt.  Consolidation loan?  No loans possible.  Any options from the bank at all?  As mentioned, suggested paying down my 2nd mortgage as much as possible in order to re-finance in 4-5 years.  Mr. Banker any other ideas of what I could do?  None.

        I then researched debt relief companies online.  After reading a ton of reviews I narrowed in on one, and started reading what their customers were saying in their community.  They offer both debt management and debt settlement programs.  People that went the debt settlement route that were happy with their decision were far and few in between.  People that went the Debt Management route seemed very satisfied.  We called and discussed both products – the representative said that given our situation we were a good candidate for the DMP.  We did more research, and couldn’t find anything that would point us in a different direction.  I also did  some research on Bankruptcy.  Whether this is true or not, what I read is that you can file bankruptcy on your own, but things are complicated enough that you people are advised to hire an attorney.  I didn’t have any money for an attorney.  Bankruptcy is on your credit report for years, which thus affects you for years.

        My research told me that while a DMP may initially bring your credit rating down a little due to being enrolled in the program, it rebounds quickly.

        While I wasn’t very concerned with the initial dropping of the score (wasn’t planning on applying for any loans any time soon since my bank just told me I couldn’t get one anyway), I was really more concerned with the longer term effects.  I weighed these options:

        Bank:

        Zero options presented.

        DMP:

        Pay back all my debt in 5 years
        Credit score restored and essentially unblemished at the end of program

        DSP:

        Stressful phone calls from creditors
        Getting sued / potentially going to court
        Tax implications
        When it’s all said and done, between Tax implications and “success fees” to relief company, settlement may not be much less than full balance
        Credit report trashed (but not as bad as bankruptcy)

        Bankruptcy:

        Potential for losing home
        Unknown reaction by creditors, but I expect harassing phone calls
        Credit report trashed for a long time
        No money for attorney

        The DMP options seemed like the best choice, so we went with it. 

      • http://GetOutOfDebt.org Steve Rhode

        Travis,

        Let me be clear, I entered this part of the conversation with you as an academic exercise. The last thing I want is for you to go back and second guess yourself. Your situation is real and personal for you. You made a decision, you’ve followed it, and I’m proud of what you’ve learned from it.

        You became self-aware and learned from the process. Most of all you are taking what you’ve learned and are helping others with that knowledge. For that I applaud you.

        I’m certainly not trying to persuade you that you made a wrong decision. I’m just trying to have a discussion that there is more to selecting the right decision when people reach that moment than just selling the solutions that profit the debt relief company and that, in my opinion, a debt relief company that holds itself out to the public as putting people first or being a consumer advocate, as the TASC folks have just rebranded themselves, have a fiduciary duty to put the consumer over lining their pockets.

        If we jumped back to that time and we had talked and I told you that filing bankruptcy legally prevented creditor calls, you can rebuild your credit in two years, you’d immediately be able to build an emergency fund to protect your family, you’d be able to keep your home, and you’d pay for the bankruptcy by stop making your payments to creditors; then who knows, maybe the decision you would have made would have been different.

        [FYI: I don't believe the statement about DS and the CR is an accurate one but that's for another conversation.]

      • http://twitter.com/DebtChronicles Travis Pizel

         Sure, Steve – I certainly understand.  I enjoy such interactions, and am afraid I came on too strong in the beginning of the discussion.   If we had talked at that decision point back in 2009 and you told me those things about bankruptcy, you certainly would have caught my attention.  However, again – as I mentioned above I could not move forward with peace of mind if I just stopped paying my creditors and not given them every penny I owed them – especially if I had the means to do so (and by being successful in the DMP for close to 2 years now I think I’ve proven that I do indeed have the mans to do so).

        I don’t second guess my decision – not for a second.  And that is for more reasons than just the DMP program itself.  Had I filed for bankruptcy, I would have have re-discovered my love of writing, started blogging, and gained that second income stream.  I would not have met all the wonderful people that I have by becoming active in Twitter.  I would not have gotten the education on how to become more financially responsible through the tools I have engaged since enrolling in the DMP. 

        I look back at where I came from, where I am now, and where I’m headed and am totally at peace with my decision.

      • http://GetOutOfDebt.org Steve Rhode

        Another something to ponder. Filing bankruptcy does not have to mean you screw your creditors. There is nothing that prevents someone from filing for the protections and benefits and still repaying their creditors.

        That’s what I did but that’s another story.

        There is no sense wasting a perfectly good mistake. The best you can do is learn from the experience and use that information to help others. Like me, your financial situation was a great learning and life experience.

        You were led to cross that bridge for a reason.

      • http://DamonDay.com Damon Day

         You are exactly right about the Tire Shop Travis, and to Steve’s point, since they only specialize in tires, you would not go to them for advice if your car is acting up and you have no idea what is wrong with it. 

        You should first go to a mechanic and talk to someone that specializes in diagnosing overall problems with cars.  If he explains why the tires are the problem and why you need new tires, then that is when you call a debt settlement company. (Just a crossover to be sure the people following along at home are understanding the metaphor)

  • Steve Rhode

    Andy,

    Can you describe to others here if the role of a fiduciary is stressed in your other world as a real estate broker?

  • Angelo

    I agree with Andy.  By offering multiple options and creating a commission structure that compensates equally for all products, the enrollment truly becomes about which is best for the consumer.  Company saying….if you lie, you’re fired!

  • Angelo

    I agree with Andy.  By offering multiple options and creating a commission structure that compensates equally for all products, the enrollment truly becomes about which is best for the consumer.  Company saying….if you lie, you’re fired!

  • Andy Faria

    The solution is for debt relief companies to expand their offering of services or to combine efforts and work together with the providers of the other options.

    As long as the provider can earn on only one solution it will be impossible for them to ever act as a fiduciary.

    Sales training has nothing to do with it, you can’t force ethics on sales people when they need to feed their families. It’s human nature.

  • Steve Rhode

    Steven,

    Thank you for the compliment.

    There are a lot of people here that would love to help if they can. Feel free to post your situation in the comments and let’s see if we can get you some great advice to get you headed in the right direction. What’s the situation you are facing?

  • Steven Vega

    Thank you Steve.  You are the most straightforward person I’ve ever read when it comes to these debt issues.  You are very no-nonsense and still show empathy and sympathy to folks like me who have these issues.  I look at those debt-relief folks and I will tell you from a distance: they don’t pass the smell test.  Salespeople, in general, have a script to follow–as you said–and it only leads to one thing:  sales.  I quit a job at a very popular electronics store whose name I will not mention but I’ll tell you it rhymes with “West Why?” The main reason was the script.  I couldn’t do it.  I will not knowingly steer people to products I don’t believe in nor will I coerce them into things they don’t need.  Debt relief is no different.  I watch the ads on TV and listen to them on the radio; I think to myself: could they REALLY be THAT caring and giving? Why? What’s in it for them? That’s the smell test for me.  They have no reason or incentive to do anything other than steer folks to what’s best for their company.  Thanks again for providing such a great service.  I know I need to decide for myself what I’m going to do for my situation.

  • http://www.facebook.com/profile.php?id=1514422471 Steven Vega

     Thank you Steve.  You are the most straightforward person I’ve ever read when it comes to these debt issues.  You are very no-nonsense and still show empathy and sympathy to folks like me who have these issues.  I look at those debt-relief folks and I will tell you from a distance: they don’t pass the smell test.  Salespeople, in general, have a script to follow–as you said–and it only leads to one thing:  sales.  I quit a job at a very popular electronics store whose name I will not mention but I’ll tell you it rhymes with “West Why?” The main reason was the script.  I couldn’t do it.  I will not knowingly steer people to products I don’t believe in nor will I coerce them into things they don’t need.  Debt relief is no different.  I watch the ads on TV and listen to them on the radio; I think to myself: could they REALLY be THAT caring and giving? Why? What’s in it for them? That’s the smell test for me.  They have no reason or incentive to do anything other than steer folks to what’s best for their company.  Thanks again for providing such a great service.  I know I need to decide for myself what I’m going to do for my situation.

    • http://GetOutOfDebt.org Steve Rhode

      Steven,

      Thank you for the compliment.

      There are a lot of people here that would love to help if they can. Feel free to post your situation in the comments and let’s see if we can get you some great advice to get you headed in the right direction. What’s the situation you are facing?

  • Steve Rhode

    Is sales training alone the answer to solve these issues? What do you think
    the solution is?

  • Mike Reilly

    I can’t be certain but, if I were a betting man I would bet against most debt relief companies. We can only hope things will change going forward.

  • Steve Rhode

    Seriously, what’s your take on this issue? Do most debt relief companies act in a fiduciary capacity today?

  • Mike Reilly

    It’s not impossible, and a new $3000 suit would help us all get there….ah hahahahah

  • Mike Reilly

    It’s not impossible, and a new $3000 suit would help us all get there….ah hahahahah 

    • http://GetOutOfDebt.org Steve Rhode

      Seriously, what’s your take on this issue? Do most debt relief companies act in a fiduciary capacity today?

      • Mike Reilly

        I can’t be certain but, if I were a betting man I would bet against most debt relief companies. We can only hope things will change going forward. 

      • http://GetOutOfDebt.org Steve Rhode

        Is sales training alone the answer to solve these issues? What do you think
        the solution is?

      • http://northeast-properties.com Andy Faria

        The solution is for debt relief companies to expand their offering of services or to combine efforts and work together with the providers of the other options.

        As long as the provider can earn on only one solution it will be impossible for them to ever act as a fiduciary.

        Sales training has nothing to do with it, you can’t force ethics on sales people when they need to feed their families. It’s human nature.  

      • http://GetOutOfDebt.org Steve Rhode

        Andy,

        Can you describe to others here if the role of a fiduciary is stressed in your other world as a real estate broker?

      • http://northeast-properties.com Andy Faria

        As a real estate broker I owe my clients fiduciary responsibility. I owe them obedience, loyalty, disclosure, confidentiality, accountability, and reasonable care. I’m in a position of trust and confidence that I will always act in their best interest, even if it conflicts with my own best interests. If I ever betray that trust I will lose my license, and most likely get sued.

        The fiduciary responsibility comes with a lot of paperwork (disclosures, etc) and I need to make sure that I have each and every one of them executed correctly and saved for at least three years. At any point the re board can show up at my office and ask me for a disclosure from Joe Schmoe from 2 years ago, if I don’t have it, it’s my ass.

        I’m not only responsible for my own actions as a fiduciary, but also all of my agents. If one of my agents tells someone that the property line is “right here” and they know damn well it’s ten feet in the other direction, I’m getting sued again.

        Of course there are agents everywhere that knowingly or even unknowingly break their fiduciary responsibilty every day. Like I said before, you can’t teach ethics to the starving salesman. Some get caught and others don’t, but there’s definitely a clear cut list of what you can and cannot do, and and even clearer list of what the penalties are.   
          

      • http://GetOutOfDebt.org Steve Rhode

        Andy,

        You’ve lived in the debt relief world as well. Do you feel debt relief
        companies understand what it really takes to operate in a fiduciary way to
        the client?

        Is doing what is best for the consumer ahead of yourself really that
        important?

        Steve

      • http://northeast-properties.com Andy Faria

        This is what I struggled with most during my time in debt relief and also what led me to the conclusion that I wanted out. This exact issue. Doing it right requires that someone make the tough decision to forego revenue in the best interests of the consumer. When you see your “peers” doing it differently, and there’s no real regulatory watchdog or way to stop them, it makes you wonder if it’s even worth it anymore.  

        There are some great people in the industry that I know for a fact put their clients first and their programs are as legit as they come. Unfortunately, my observations are that most in the industry don’t know the first thing about what being a fiduciary means (or maybe they forgot).

        To answer the question of whether or not it’s important. Of course it is. When dealing with any financial industry and a consumer stands to lose as much as they do by enrolling in the wrong financial solution, it’s a must.

        If someone is trying to sell pizzas, not so much. Nobody has ever lost their home by choosing mushroom over peperoni.

      • http://DamonDay.com Damon Day

         ya, what he said :-)

        I have said for years that you can’t sell debt settlement like Chuck Norris sells Total Gyms.  Enticing ads on TV, guy calls in, sales guy “feel, felt, founds” his way to a sale.  The client can be damaged far worse than just the money spent on the program.

        Buy a Total Gym and don’t use it, then you just spent a few hundred on a fairly dangerous jungle gym for your kids. (Guilty on that one).  But I sold it on Craig’s list and got half my money back.

      • Matt

         Hey there, Andy! I wanted to take a moment to agree and disagree. It all boils down to leadership, vision and management. Training can lend strength to all of these, but at it’s core, ethics and moral compass need to steer that direction. I have been gifted with strengths in all these areas. I say “gifted” because I truly believe you cannot learn these traits. You either have them or you don’t. When people are trained properly and truly embrace the vision in their heart, they will stay the course no matter what the challenge. If they are led and motivated properly, they will only improve on the first function. In war, the military personnel in most cases believe in the mission at hand and act in a manner in which they were taught to fulfill that mission and/or protect their comrades over their own life despite their human nature to survive. If the agents are trained to just “get a deal on the board”, and their life revolves around nothing beyond their own needs and personal vision, (ie..to keep their job, pay their bills, make more money, etc), they will then lean on their human nature and cannot be trusted. The human heart is corrupt. I could write a book on this, but I’ll stop at the answer to the statements made above…

      • Anonymous

        Hi Matt! 

      • http://northeast-properties.com Andy Faria

        Hi Matt. I think I know what you’re talking about and after reading my initial comment, I kind of both agree and disagree with myself also. (I’m allowed to change my mind, right?)

        For me to say that sales training “has nothing to do with it”, was kind of stupid actually. That’s not the case. The good sales people that do carry that “moral code” still need to be trained on what their fiduciary responsibility is, otherwise they’re not much better than the sales people that just don’t care. I wish now I didn’t say it that way, but sales training is far from the only solution to the lack of fiduciary responsibility in the debt settlement arena.

        I think we can both agree that the majority of the industry has not acted as a fiduciary over the past few years. Why is that? I believe because there was nobody watching over them, and no real set of rules to play by. It’s the same reason that steroids turned into an epidemic in baseball. They weren’t testing for it in 1998, so it was abused and turned into a new home run record followed by a decade and a half of congressional hearings and new strict rules.

        I stand by my statement that debt settlement companies must expand their offering of services in order to improve their ability to act as a fiduciary. In debt relief there is no such thing as a one size fits all solution. Yes a very small number of people are perfectly qualified to fall behind and settle all their debt, while an equally small number of people are perfect candidates for a DMP. What happens to those people that are stuck in the middle? They’re competed for and they are sold on why they should lean in one direction or the other. 

      • Matt

         Wow Andy, that was well said. We should talk sometime. (952) 388-0668 -Matt

      • http://DamonDay.com Damon Day

         See how close we have come together. ha ha

      • Mike Reilly

        That’s because you finally opened your eyes…ha ha

         
        Our business model has been performance based from inception, long before I have been voicing my thoughts here. We are not salesmen as we have nothing to sell, however, we do have programs designed to provide financial relief based on many factors that require a team (consumer/consultant) effort to uncover. Do we require compensation for our part in this short term marriage, yes, but only when we reach or exceed our partners expectation.

         
        “These are the facts and they are undisputed” Kevin Bacon as Capt Jack Ross, A Few Good Men.
         

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