How to Get Out of Debt With the Get Out of Debt Guy » debtors

44 Lessons in Life for Debtors

Steve Rhode — Mon, 20 Sep 2010 14:00:49 +0000

Here is an excellent video that was sent to me by a friend which contains 44 perfect life lessons for debtors.

The video helps to put what really matter into perspective and to refocus us to realize that while debt is painful and immediate there are still joys and opportunities around for us to still find peace and happiness in. We just need to see them.

The tip that really struck me was “Your children get only one childhood.” It’s just so true that as parents we get so wrapped up in the immediate pain of debt that we overlook the impact that our tunnel vision is having on the kids. We can’t let our issues with out debt rob our kids of the childhood they deserve to have. That doesn’t mean a childhood filled with things, just a childhood filled with us.

I’m not sure who made the original video but I added a new soundtrack for you to enjoy.

@GetOutOfDebtGuy

Federal Trade Commission Should Allow For-Profit Credit Counseling and Debt Settlement Firms to Assist All Consumers

Steve Rhode — Fri, 14 Nov 2008 22:55:22 +0000

From How to Get Out of Debt

I understand that the Federal Trade Commission has been looking into regulating the debt settlement industry. I feel the time has come to finally address the needs of consumers for representation in credit counseling and debt settlement matters.

I have provided a statement to the FTC in order to support the acceptance and regulation of for-profit credit counseling and debt settlement groups, nationally. Nobody has paid me to do this. I offer my testimony of my own free will based on my experience and what is right.

It is important to share my statement with you so you can better understand the lack of proper representation that consumers are getting under current regulations that favor or only allow non-profit groups, paid by creditors, to represent consumers.

As the founder of a non-profit credit counseling group and after having served on the board of directors of a Consumer Credit Counseling Service office I have observed the debt settlement and credit counseling industry from the inside.

Wrongly, many in the non-profit credit counseling world make every effort to keep out for-profit groups that want to provide help and assistance to consumers. I am afraid that the primary reason for this is so that the non-profit groups can protect market share and not to improve the service and assistance given to debtors in trouble.

There is not one thing that a non-profit credit counseling group offers that could not be better offered by a for-profit group.

For-profit groups should be regulated by a federal statute to provide one set of licensing and regulatory instructions to operate under. Trying to operate under a patchwork quilt of various state laws only increases the hardship on any group wanting to help consumers and does not provide a single additional tool to allow any third-party to have better solutions to offer consumers to deal with their debt situation.

The economic cost of compliance with so many various regulations is one of the primary reasons why my group decided to stop providing assistance to consumers and to close our non-profit organization.

Not-for-profit credit counseling is severely handcuffed by current funding schemes. They are forced to please the funding sources which are the exact entities that they should be standing up to in representation of their client, the debtor.

In other parts of the world, groups that provide help are for-profit and it does not destroy the industry. The minority of help in the UK, for example, is provided by non-profit groups who appear to be even more closely bound to the creditors with former creditor executives even engaged in the management of the credit counseling groups.

It is time that people begin to focus efforts on serving the very person that requires the best representation that we can give, and that is the consumer. Consumers deserve options. If a consumer wants to go to a non-profit clinic and receive non-profit limited services, that’s fine. But a consumer should not be prevented from seeking professional representation and advanced services from another group, even if it is for-profit.

Ever since I first started helping debtors, in 1994, there has not been one single law passed that gave consumers, who want to repay what they can reasonably afford, an opportunity to do so. But there are solutions that we can pass to level the playing field and to give consumers a fair chance at debt solutions other than bankruptcy.

But consumers have not been properly represented by non-profit groups. Non-profit groups have almost no record of standing up for and defending consumers against banks and creditors. While they may make statements about budgets and finances, you will find little to no outspoken comments about the inequities of the non-profit debt management solutions because the non-profits don’t want to risk their funding and thus do not fairly or properly represent the consumers best interest.

A for-profit debt counseling or debt settlement industry in the U.S. would give consumers the opportunity to have groups want to move forward with new solutions, to lobby against creditor abuse, to fight for the consumers that are not well or properly served now, and to allow profit to attract the best and most talented staff.

There is legal aid and their are lawyers that charge for services. There is medicaid and their are doctors that charge for services. It’s about choice.

Please give consumers a chance and allow for-profit groups to exist, be creative, to fight for new solutions, to raise excellence through competition. This can be safely done with one federal set of licensing, bonding and regulatory guidelines and your action will for once, give good people with bad debt a real fighting chance at a better life.

Surviving With Less Credit

Steve Rhode — Sat, 01 Nov 2008 04:27:26 +0000

From How to Get Out of Debt

At ByDesign Financial Solutions, a debt-counseling service in Modesto, Calif., they’re working overtime these days. “Our call volume went up 97% in the past five weeks, which has left us scrambling,” says Martha Lucey, president of the nonprofit agency. “[The callers] are close to the max on their credit cards, and they just can’t figure out how to manage. We’ve seen credit-card companies decreasing lines of credit, and the [debtors] don’t have any room left. They just can’t juggle things like they used to.”

The debt binge was fueled by easy money and the belief that prices of assets — those of houses in particular — never went down; only interest rates did. That era is over. It will be replaced by what will be one of the more painful, and consequential, economic chapters in our history: the great deleveraging of America.

But the credit crunch is not anywhere near over. “It took 20 years for us to get into this situation — leveraged to the hilt — and it will take more than a couple of years to unwind it,” says Paul Ashworth, senior U.S. economist at Capital Economics. “And even when we get back to normal, that normal is not going to be the same. We won’t have this sort of freely available credit that we had before for households and businesses. It’s going to be a different reality — a more austere one — when we come out on the other end of this.”

The Perfect Debt Assistance Program

Steve Rhode — Wed, 29 Oct 2008 18:57:05 +0000

From How to Get Out of Debt

I can dream, can’t I? If I could get a wish for debtors it would be to wave a wand and implement this perfect debt assistance or debt relief program.

Here is what the program would look like.

A Sliding Scale Nominal Charge – Consumers would have to pay a sliding scale setup fee. It is too expensive to start a lot of work on behalf of clients that never follow through. So a new client would pay a sliding scale setup fee upfront to cover the initial cost of getting their plan established and show they are committed to moving ahead.

Copies of Bills – Debtors would provide copies of their statements quickly. Ideally potential clients needing help would be getting their mail via something like Earth Class Mail so they could instantly forward copies of their bills to the debt adviser. That would be wonderful! The delay in making copies and forwarding them only delays the process and creates more busy work.

Allow the Debt Adviser to Pull a Consolidated Credit Report – Allow the debt management company to pull a consolidated credit report at a reduced charge to make sure they know about all debts.

A Real Spending Plan – The debt management company would review the client’s financial situation and put together a suggested debt repayment plan that is affordable, reasonable and sustainable through total repayment. None of this cut out everything fun stuff, leave some room for a movie or occasional night out. Also, be sure to include some money going into a savings account every month for emergencies and unexpected expenses. The spending plan will need to be able to be adjusted and payments possibly reduced for living expense increases like adjustable mortgage payments, increasing health insurance, etc.

Fair Payments to Creditors – Payments to unsecured creditors included in the repayment plan would be based on the percentage of debt that the creditor is responsible for. For example, if the client owes Sears 13% of their total debt then Sears would get 13% of debt repayment dollars available, as determined by the debt advisor.

Credit Counselors Actually Dictate – Unlike the BS lie that floats around now that credit counseling groups negotiate a debt management plan, which they don’t, in the perfect plan, they would tell the creditor what they will get, not what they want. The debt adviser would contact the unsecured creditors and notify them what the amount they will receive under this debt management plan.

The Debt Management Group Has Some Real Authority – In the perfect plan the credit counselor would be required to certify that the repayment plan proposed is the consumers best effort. Creditors would be required to accept the reduced payment plan as put forward by the debt counselor.

Creditors Would Eliminate All Interest and Fees – During the repayment period, all interest and fees would be waived as long as the client is making their payments as agreed. An allowance should be made for an unusual situation that leads to a a payment missed, but a creditor would not be able to go back and retro charge a client interest for the period which they were making payments.

Creditors Acknowledge the Plan and are Bound to It – Creditors would be required to confirm the balances due when the client enters the plan and then the creditor will be bound to that balance even if they sell the account to another creditor. This will allow the client and debt management company to calculate the exact date the consumer will be out of debt if they make the payments as agreed. This will give everyone a date to mark down and look forward to.

All Collection Activity Ceases – Once the client makes their first repayment under the plan, and continues regular payments, all collection activity will cease by the creditors.

Creditors Can Pursue Clients Under Certain Situations – If it is determined that the client lied about their income or expenses or if they stop making monthly payments, the creditors can resume all collection activity.

Client Can Make Payments Or Hire A Payment Processor – Once the plan is negotiated and put in place by the debt management company then the client can elect to either make the payments themselves to the creditors or to hire a payment processor to whom they send one payment and the payment processor distributes it for the client. This is service that some consumers may desire.

Credit Counselors Can Be For-Profit – It is time to end the sham that only non-profit groups provide better service to consumers. There needs to be a free market to allow companies to compete in order to drive up the level of service and capabilities of leading companies. There is nothing in a debt management plan that requires the need for a charity. Allow for-profit companies to enter this market and attract bright, smart and talented people to create services for consumers.

Require Credit Counseling Companies to be Bonded and Licensed – If a credit counseling group is going to be handling consumer money then they need to either have an adequate employee loss or theft policy, be reasonably bonded and be licensed by the federal government.

Make Laws Governing Debt Management Companies Federal – Make debt management regulations federal instead of state based. There are just too many states to deal with. Consumers can be protected with a federal envelope rather than 50 different rules and regulations.

Paid Creditor Intervention – If a consumer is having a dispute or difficulty during their repayment plan they could hire a debt advisor to intervene on their behalf to try to remedy the situation. The debt adviser is a third-party with professional experience in handling these situations.

Allow The Debt Company to Charge For Credit Report Assistance – Allow the credit counseling group to be hired by the consumer to help correct inaccurate or false information that appears on the consumer credit report. Some people never do this themselves. This does not cover the removal of any accurate but negative information.

No Lingering Tax Liability- Unlike now, where any forgiven debt is taxed by the IRS as if it was earned as income, except for debt discharged in bankruptcy, the IRS needs to not bill consumers for the that amount owed that creditors may write off under this plan. Getting a tax bill for debt you already can’t pay is a strong disincentive for consumers to even bother with repayment.

Fixed Repayment Period – Consumers would not have to repay more than four years under this plan. The often suggested five year date is just a bit too long to provide substantial incentive for debtors to sacrifice years of their lives and gamble on the possibility of successfully completing the program. The shorter the period, the more likely that a consumer will embark on the journey and successfully complete it.

Which Presidential Candidate Is Better For Debtors? Personal Finnance Bloggers Question of The Week.

Steve Rhode — Mon, 27 Oct 2008 19:08:54 +0000

From How to Get Out of Debt

This weeks personal finance brain trust question was:

Which U.S. presidential candidate will most likely do more to help debtors and/or reform current bankruptcy regulations? Feel free to elaborate.

WC – A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin.

This question seems like a veiled attempt at asking “who are you voting for?” But just in case it isn’t, here’s what I think: whoever winds up winning this election will have to—at some point—say something to the effect of “Things are a lot rougher than we thought, and everything I said during the campaign has become obsolete. Therefore, we can’t do everything we promised.”

Unfortunately, candidates can’t really tell the truth about what they’re thinking when really bad things happen. Both candidates knew that they would have to compromise their plans due to the economic downturn we’re going through, but they can’t say that because the opponent would slam them, attack them, etc.

Either way, whoever wins will have a lot more work to do and more restrictions to follow through on what they’ve promised.

Patrick Bryan – Living in Northern Ireland, Patrick helps people in a very different environment and economy but yet, mush is universal and much is the same. Visit Patrick’s Northern Ireland blog on debt.

As both an outsider to the US elections and a lifelong non-voter I am probably not qualified to give a response to this question however my instincts say that if one candidate is going to do something for debtors, it is Obama.

Obama voted against the 2005 Bankruptcy Bill which was seen as removing some key rights for debtors and favouring the banks instead. McCain supported the Bill. Obama is a supporter of the Credit Card Bill of Rights and appears to place this issue high on his political agenda. McCain strikes me as being part of the establishment, conservative and change-resistant, and for that reason I believe that he will not want to rock the boat too much if he is voted into office.

If Obama is elected however I would certainly expect his proposals on bankruptcy reform to become watered down; members of his own party for example helped pass the 2005 Bankruptcy Bill, and any legislation he proposes will almost certainly be opposed by lobbying from the banks and other large creditors (remember the government is a creditor too, i.e. the IRS). We are finding in the UK that there is a lot of inertia surrounding proposals to reform our bankruptcy system and we are still waiting on draft legislation to be enacted which were put forward by the current government back in 2005.

Antisay – This blog is mainly about finance and self-improvement; I am in a constant race to become a better me and this blog is all about that sort of lifestyle. Visit this site.

The truth is that no candidate will help debtors. We could spend hours hashing out the different tax policies of each candidate, debate over who has the better ideas, or ague whether smaller or bigger government would be better for us as a society right now….

When it boils down to it, however, the truth is that no candidate – no president – will ever fix a debtor’s life or financial situation. It seems a majority of US citizens hold the president or the government responsible for fixing their lives, when in reality that is the responsibility of the individual. Reforming bankruptcy regulations or changing lending laws will not solve many problems… they may ease some people along, but the fact remains that those in trouble will always be in trouble until they get themselves out.

I have my opinions on who should win, but voting one way or another will never improve or lessen one’s chances of getting out of debt. With a lot of hard work, a budget, and a heck of a lot of patience, ANYONE can get out of debt. It doesn’t matter what your taxes are, what rights credit cardholders have, or if we have public healthcare or not.

Work at it and you’ll get there.

Gerri Detweiler – She has been helping consumers find solutions to their credit problems for more than twenty years. Her newest book is Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts. She serves as Credit Advisor for Credit.com.

In my view, it is pretty clear which candidate would be more helpful to debtors: Barack Obama. He voted against the Bankruptcy Reform Act in 2005 (which took a lot of courage, as many from both parties voted for it), and he has spoken out numerous times in favor of bankruptcy reform to help alleviate the current housing crisis.

John McCain appears to favor the type of reform we’ve seen implemented so far: measures that favor Wall Street but have yet to have a significant or direct impact on Main Street.

Steve Rhode – A personal finance blogger and founder of the Myvesta Foundation, a global scoial enterprise that helps people find solutions for money troubles. You can ask Steve your debt related question through GetOutOfDebt.org and he’ll help you for free.

Having lived through and closely watched the bankruptcy reform act of 2005 I will admit that I have no faith in the Bush administration to do what is best for people with financial troubles. I have also been very disappointed by the lack of effort of the current Republican ticket of McCain-Palin to speak specifically about reversing the senseless bankruptcy reform of 2005 which only hurts consumers. Just recently there was a great article about the farce that the bankruptcy reform created.

The voting record for the Bankruptcy Reform Act of 2005, bill number S 256, was:
McCain: Yes
Obama: No

I was actually surprised to see the list of those that voted against the bill, all democrats.
Akaka (D-HI)
Boxer (D-CA)
Cantwell (D-WA)
Corzine (D-NJ)
Dayton (D-MN)
Dodd (D-CT)
Dorgan (D-ND)
Durbin (D-IL)
Feingold (D-WI)
Feinstein (D-CA)
Harkin (D-IA)
Kennedy (D-MA)
Kerry (D-MA)
Lautenberg (D-NJ)
Leahy (D-VT)
Levin (D-MI)
Lieberman (D-CT)
Mikulski (D-MD)
Murray (D-WA)
Obama (D-IL)
Reed (D-RI)
Rockefeller (D-WV)
Sarbanes (D-MD)
Schumer (D-NY)
Wyden (D-OR)

On the Obama-Biden side I am both encouraged and disappointed. I’m disappointed that Joe Biden represents Delaware, the home of some of the most offensive banks against consumers and that he voted to go along with the bankruptcy reform act debacle. However, Barack Obama has a long and clear record of standing up for consumers, speaking about about credit card company tactics and rocking the boat for positive change in consumer protection to defend consumers from abusive lending practices.

As I said previously:

With so little time before the next presidential election it is a good time to take a quick look at some important issues that are impacting the wallets and purses of the American consumer.

Under the Bush administration consumers were significantly harmed by unreasonable and unfair bankruptcy reforms that clearly helped big business, hurt consumers and only made bankruptcy more expensive for the same people that still need to file for protection.

A future administration for change and putting people first should strongly look at repealing or enacting legislation to turn back the hands of time to allow consumers in an ever-tightening economy, to have more reasonable access to bankruptcy.

The Obama-Biden ticket has promoted a Credit Card Bill of Rights for some time now and it would be beneficial to see the McCain-Palin ticket pledge to work diligently to put similar protections in place.

In my research for my article on John McCain’s Bad Credit Card Rates, I also found the following information:

It appears that Barack Obama has a very good grasp on the problems faced by people in America today that are carrying credit card debt. An article in the Chicago Sun-Times reveled a number of comments that Senator Obama made regarding credit card debt.

“For too long, credit card companies have been using unfair and deceptive practices to trick Americans into signing agreements they can’t afford,” Obama said. I agree.

Obama said he knew only too well how easy it was to get caught by deceptive credit card deals: “In the interest of full disclosure, I’ve gone through this. I’ve had credit cards.” Wouldn’t it be nice to have a President that actually lived through credit card debt and cares about all the consumers in financial pain?

According to the Bankruptcy Law Network:

Senator McCain called the bill, “…an important step toward a fair and balanced approach to restoring personal responsibility to our federal banking system.”

Senator Obama did state at a January, 2008 debate, in response to a question about the 2001 and 2005 bankruptcy bills, “I opposed them both. I think they were bad ideas, because they were pushed by the credit card companies, they were pushed by the mortgage companies, and they put the interests of those banks and financial institutions ahead of the interests of the American people. And this is typical.”

So based on the previous record of Barack Obama, the hope for change, the reality of republican erosion of consumer rights on their watch, and the need for greater protections for consumers from unfair financial practices, I think any debtor looking for a positive change on consumer debt issues will find more chance of effective leadership on these issue from Barack Obama.

Source: Which Presidential Candidate Is Better For Debtors?

Five Inside Truths About Debt Management Plans (DMP) You Need to Know

Steve Rhode — Sun, 02 Mar 2008 09:51:10 +0000

From How to Get Out of Debt

People are often so confused or uninformed about debt management plans in the US that I wanted to share some truths with you. Here are the five biggest misconceptions people have about debt management plans, in no particular order.

Debt Management Plans Are Not Designed for You to Get Out of Debt

Since the DMP terms are really dictated by the creditors a debt management plan is not really designed to get you out of debt.

A true get out of debt plan would be created using your circumstances as the starting point and then crafting a plan to allow you to get out of debt from your starting point.

The DMPs of today, with creditor dictated terms, doesn’t work like that. It tries to get you out of debt using what the creditor wants as the starting point.
Debt Management Plans From a Not-Profit Credit Counseling Group Are Not Better

A debt management plan from a nonprofit, non-profit or not-for-profit charity is not any better or worse than from a commercial or for-profit company. Being a nonprofit credit counseling group does not change the basic security measures necessary for a safe debt management plan.

A nonprofit charity like a consumer credit counseling office is not much different than a commercial company. Except for the following major issues.

The nonprofit credit counseling company gets paid for collecting money from you on behalf of your creditors and does not want to “rock that boat” and fight back against creditors if that will reduce their favor or funding.

The nonprofit credit counseling company “pretends” for the most part to be a charity when in fact they generate the majority of their income as debt collectors.
Most People Don’t Get Out of Debt Using a Debt Management Plan

The majority of people that participate in debt management plans do not make it to completion and thus do not get out of debt using a debt management plan. This is not really a fault of the DMP provider but that a debt management plan takes years to complete and the debtors circumstances can change along the way.

The majority of Chapter 13 bankruptcy plans fail to complete as well for the exact same reasons. The failure of debt management programs is due to life and time, primarily.
Bankruptcy is Often Better Than a Debt Management Plan

Strictly from a time point of view, bankruptcy can be a better option. When you file bankruptcy the credit report recovery clock starts ticking immediately. In a debt management plan the history of you plan and payments can remain for longer since it can be reported from the date of your last payment.

Bankruptcy also allows many to get a fresh start and a second chance to start over. Recovering from a bankruptcy is hard but not impossible and the breathing room people get after bankruptcy is often just what they need to move forward, faster.
Paying For Help to Get Out of Debt is Good

The charitable debt management industry fails to inform you that they are paid by the creditors to collect money from you. There is no way around the fact that this can cloud their assistance because they are trying to please their pay masters and the clients at the same time. Which do you think gets the higher priority?

When you pay for debt help the company you hire is motivated to work for you. You are the client and there is no confusion about who the allegiance is owed to.

How to Get Out of Debt With the Get Out of Debt Guy » debtors

44 Lessons in Life for Debtors

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Federal Trade Commission Should Allow For-Profit Credit Counseling and Debt Settlement Firms to Assist All Consumers

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Surviving With Less Credit

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The Perfect Debt Assistance Program

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Which Presidential Candidate Is Better For Debtors? Personal Finnance Bloggers Question of The Week.

Other Related Articles to Read

Five Inside Truths About Debt Management Plans (DMP) You Need to Know

Debt Management Plans Are Not Designed for You to Get Out of Debt

Debt Management Plans From a Not-Profit Credit Counseling Group Are Not Better

Most People Don’t Get Out of Debt Using a Debt Management Plan

Bankruptcy is Often Better Than a Debt Management Plan

Paying For Help to Get Out of Debt is Good

Other Related Articles to Read