I had this idea for an article to look back to my early days in the debt relief world, back when I was running Myvesta, a non-profit credit counseling group, and show you examples of what I did wrong and learned from the experience.
The irony is people don’t realize when I review a site today and point of mistakes or issues that the reason I spot them is that I made many of those same mistakes myself in the past.
Here is what the site looked like in early 2000. Even back then we ran ads on the site. The old banner ad placement can be seen, but broken.
I had not seen those old pages in the past decade and expected them to be full of really rookie mistakes. Looking back and being critical of myself, I did make some mistakes, but I found that I also did some really good things as well.
Let’s put those days into context. Back then when someone enrolled in our debt management plan (One-Pay program) they actually could have a substantial drop in their monthly minimum payment because the monthly minimum payments were higher from the creditors directly than they were in One-Pay. This gave people some real breathing room to step away from the financial abyss and regroup to actually avoid bankruptcy if they were able to make changes in their lives. Creditors and collectors also promptly noted the consumer enrollment and stopped collection calls. It was a different time.
I was also pleasantly surprised to see the link to the debt settlement service we offered way back then as well for a flat fee of $200 per account. If we were unable to settle the account promptly we refunded the fee. The difference in the debt settlement service we provided was that we only took on clients that had already experienced a financial hardship and had at least 50% of the balance in cash on hand before we would sign them up. And guess what, if you put good criteria in place to screen clients before you enroll them and have a fair process you get great results and happy clients.
The archive pages also offered a Debt Eliminator program. That was a computational program that took data about the consumer’s debts, entered it into a program and then it spits out a printout showing the optimum way to repay the debt. Consumers then used the report, like a debt snowball. Now you see why the issue I once had with California so ridiculously surreal. It wasn’t a debt management program at all.
Let’s Start With What I Did Wrong
Nobody is perfect and hindsight gives you the clarity you did not have at the time. Here is where I could have done a better job.
- Bankruptcy In the 2000 archive bankruptcy page I could have done a much better job of explaining the pros and cons of bankruptcy. Filtering that message through the life experiences I’ve had in the past decade I wish I had done it differently and suggested bankruptcy more often as a legal solution for debt problems.
Here is what I had said about bankruptcy in 2000.
“Bankruptcy can be the right choice for you, but too many people file for the wrong reasons. Many consumers file because they can’t face their debts or can’t handle the collection calls anymore. What they don’t consider are the long-lasting, negative effects of bankruptcy.
You may already know that bankruptcy will remain on your credit report for up to 10 years. But did you know that if you apply for a job with a salary above a certain amount, or if you apply for insurance or a loan above a certain amount, the fact that you filed bankruptcy will be disclosed for the rest of your life? Also, applications for a job, credit or insurance ask if you ever filed bankruptcy, not if you filed within the last 10 years. Twenty-five years after filing bankruptcy you will still have to answer questions about it.
Because filing bankruptcy doesn’t teach you how to change your spending behavior, 10 percent of people who file bankruptcy once end up filing again. To help you better understand bankruptcy we have prepared the publication “Bankruptcy: Is It Right for Me?” If you’ve already filed bankruptcy and want tips on how to avoid it in the future, take a look at our publication “What To Do To Never File Bankruptcy Again.” You’ll need the FREE Adobe Acrobat Reader to view these publications.
Our One-Pay® program gives you a manageable alternative to bankruptcy without long-term consequences.”
Man, I really blew it with that message. I seem to have scared people away from bankruptcy instead of providing them with more balanced information.
The part of the message that I should have included and spoken more about was that bankruptcy was a legal alternative to any debt relief approach and that bankruptcy would cease collections, terminate lawsuits, and forgive debt without tax implications. The irony is now people accuse me of mentioning bankruptcy as a solution too often.
- The Message Became a Sales Message I don’t care how pure your intentions are when you get started in debt relief services. At some point, you may find your organization growing, hiring staff, taking on overhead commitments and before you know it you need sales to generate revenue so you can meet obligations.
My friend and I started Debt Counselors of America in 1994, later to become Myvesta, because I lived through the pain of debt and wanted to help others. It seems like there could not be a better reason to become involved in helping others with debt relief.
By the time the 2000 site was archived, we had moved from our dirt cheap offices to nicer digs. The staff had grown as well. Revenue was coming in because people were saying all sorts of nice things about the services we offered. My salary had risen way up. Life felt great.
But along the way, something had slowly changed. The obligations were becoming large and no matter how much the mission was to just do the right thing, an awareness of the need for sales was growing. This is the exact same problem every debt relief provider faces as they become successful. They become focused on selling their widget to generate sales rather than providing the best fair and balanced information they can on all the debt relief alternatives.
I attempted to counter the tunnel vision of just selling X product by providing a wide spectrum of solutions for people current or behind on their bills. This gave the staff a place to direct the consumer so they got the best solution and not just THE solution.
When a debt relief provider focuses on just one solution it seems to be that human nature is to focus on promoting that one product and every caller is pushed to be appropriate for it.
- More Free In-Person Seminars Looking back I wish we had found a successful way to offer more free seminars to the public in order to help educate those struggling with debt. We did host a series of about six but attendance was low. I wish I had stuck with it for longer and found a way to attract more people to them so we could have provided more free education. No matter what we had tried, people just didn’t want to come to a public gathering of what they perceived to be people who were infected with debt.
- I Should Have Filtered Out the Sales Messages Better. Here is an example of a message I could have written better.
Remember how happy you were before being deep in debt? Our One-Pay program can help get your debt under control and make your life happy again. Use our One-Pay program! Stop collection calls and get your debts into one easy monthly payment without being rejected for a loan or filing bankruptcy. If you are past due or just getting by, One-Pay can help you get out of debt fast. – Source
The “One-Pay can help you get out of debt fast,” could have been omitted or at least better qualified so people knew Chapter 7 was the fastest way out of debt. I blew that.
- More Information About Potential Credit Impact. I wish I had done a better job or a more lengthy job of explaining the potential impact of the DMP program.
Myvesta.org will serve as a good credit reference if you maintain a good payment record while on One-Pay. Many clients successfully purchase homes and cars while on One-Pay. We can even help you get a mortgage if you have a good payment history with us.
While all of that was certainly true I should have stated the possible impact at the same time and prominence that I explained the possible benefits. That was wrong of me to do.
- The Crisis Relief Team Program Was Eventually Disappointing. Our Crisis Relief Team (CRT) was designed to be a collaborative team to address difficult consumer situations. On the team we had staff members who were psychologists, Certified Financial Planners, attorneys, accountants, employment specialists, trained negotiators, and myself. The CRT would evaluate the consumers’ situation and put together an extensive review of the situation with a proposed repayment plan that would allow the creditors to be repaid without bankruptcy. It would give the client a detailed step-by-step plan on what changes needed to be made and concessions obtained to avoid X where X was the thing they wanted to avoid. That was not always bankruptcy.
While we had many success stories we also ran into impossible roadblocks with creditors where just one creditor would not participate and it blew the whole plan apart. Does that sound familiar debt settlement friends? So no matter how brilliant the team or plan was all it took was a capricious Capital One, or some other creditor, moment to result in disappointment.
While the consumer had been through a detailed process and in doing so had closely examined all of their options with our team, I just still wish that we’d had some legal authority to force those plans in place. In hindsight, that authority was called Chapter 13 bankruptcy. Some of the clients that were not able to achieve those results were disappointed and so was I.
The lesson learned is that the only way to achieve an almost guaranteed long-term plan to get out of debt is generally to use bankruptcy or credit counseling, which is a defined process with known results, or to take all the creditor offers at the moment and develop a plan to meet those offers by altering life to do that.
A Look at What I Think I Did Well
In glancing back ten years I was happy with some of the things I did do.
- The One-Pay Application. The One-Pay (DMP) application was actually very good. One of the things I always insisted on doing was placing the terms and conditions of the program online so consumers could read them before giving up any personal information or even contacting us. The old online application has the link to the terms of it. – Source
We also gave people multiple ways to apply for the program to make it easy for them. They could do it online, by mail, or by fax. We made it easy so they could easily get our help when they were ready for it.
- Voluntary Client Contribution. I think we did a good job of making people understand there was no fee for the service expected from them and asked for a voluntary contribution. We suggested people donate a contribution but we helped people no matter how much they elected to give or none at all.
- Express Service. I still think the express processing we offered for a fee was a good thing for consumers. This allowed people, who were anxious or had time-sensitive issues to move to the front of the line and have their account setup within hours. When express applications arrived they were immediately carried to staff setting up accounts and processed immediately.
- A Wide Variety of Solutions. We offered a variety of hands-on and helpful services for people that had money troubles or worries. That was a good thing.
If people were behind on their bills we offered a DMP, more intensive creditor intervention programs, expert consultations, and free online anonymous chat capabilities.
For people that were current on their bills but wanted to do better, we offered the Debt Eliminator service to show them how, comprehensive financial tracking through our Ultimate Spending Plan budget tracking books, online bill payment capabilities, and Financial Recovery Counseling for those that had spending issues they wanted to overcome.
- Payment Tracking & Web Access. While it is ubiquitous today we always made every effort for our clients to have complete access to information and transparency about the current status of their payments. We were the very first group in the country to provide web access for debt relief payment history and we even went so far as to send payments via FedEx and put the tracking number online with the payment to the consumer could track it online as well.
- Debt Chat. We had a full-time staff member that monitored the free and anonymous chat section of our site. Hooray for Chatmaster Tina.
There was no requirement for chat visitors to identify themselves and Tina would provide free advice and answers to their debt questions.
I’ll stop there with the good stuff but looking back now I’m pleased that for the most part, in 2000, we got it a lot more right than wrong.
Lessons Learned Along The Way
Looking back on it now and including all of my years of experience in providing debt relief services, since 1994, I think the fundamental lessons I’ve learned are:
- Be Open, Wide Open – Be as open and honest as possible. Share as much of yourself as you can and don’t be afraid to reveal your own experiences if they can help others. It wasn’t till after the date of the site I reviewed that I came forward with my own bankruptcy story. I should have done that much sooner, for me and others.
- Transparency Rules – When I had moved to England for a couple of years and worked with the government and debt relief services I got sick of hearing the word transparency. But over time it really struck a chord with me and now I’m a firm believer in transparency. That means to take openness a step further and make your business transparent so people can understand who your relationships are with others and how you run your business. You can read my site terms as an example of transparency.
- Try Hard to Do The Right Thing and Not Sell Just Your Widget – Consumers are best served when you don’t consciously focus on just selling them only your widget. Both potential clients and you win when you are as open and direct as possible about the pros and cons of what you have to offer. The more informed the client is the less unrealized expectations they will have and the fewer refund requests and unhappy clients you will have.
- Do Good Things and Good Things Happen – Life is so much better when you always try to place your client first and do good things for them rather than just view them as a revenue generator and profit center. Make clients friends and not numbers. If you do that then good things will happen to you and your business. Before you know it those clients will become raving fans of your service, tell others, and bring you new business without spending a penny on advertising.
- Keep Your Business Smaller Than You Think It Needs to Be – I so wish I could have turned back the hands of time and kept my debt relief company at less than ten employees. Growth killed the fun we had and only loaded us up with overhead that then became a master which drove part of our efforts.
- Keep Your Salary Small – In line with keeping your business small, you should also consider keeping your salary within reason. Big salaries are hard to scale back and feed in transitional times.
- Focus On Building Big Cash Reserves – If you keep overhead in check and your salary within reason you can then build a business emergency fund. In the debt relief world, regulations can change and reserves are needed to ride through difficult times. If you are running your business where you can’t fall back and regroup on big reserves then an unexpected or unanticipated change in regulation may put you out of business, hurt your clients, harm your reputation, or lead you to make sales to feed your overhead beast. Those wrong sales will come back to bite you on the ass.
- Comply With Every Regulation – I mentioned before my issue with California back in the day. If I had to do it over again I would never have waited to try to get clarification from California if a regulation applied or not. Instead, I would have made sure I proactively applied for every registration, every licensing requirement, and every regulation the company may have had to comply with, everywhere we did business. Thinking about doing that on a nationwide basis is a huge task, but the consequences of being found not being in compliance are just not worth it.
- Be Fair In Every Way – Rather than a lesson learned, it was more a lesson confirmed. There is absolutely no alternative to treating every customer in a fair way. That means if a customer or client is unhappy that refunds should flow fast and whatever caused the underlying unhappiness issue internally should be addressed and fixed to prevent it from happening again if possible.
There is no winner when the company takes advantage of the relationship between the client and company for profit.
Clients need to know they can reach out to you first and get treated fairly. When clients feel they are not treated fairly or they’ve already been trained by you that they don’t matter to you past the sale then the first stop for complaints is going t be the BBB, state regulators, Attorney General, or court. There is no reason to let unhappy clients head in that direction.
Being fair in every way also means telling the client the truth before you sell your widget so the consumer can make a fully informed decision before signing on the dotted line and both of you can win.
- Don’t Go Along to Get Along – Avoid every temptation to join groups or be part of things you don’t have input or control over. This includes associations or trade associations which do not mirror your core beliefs and goals. When you join up with the crows, you get shot down with the crows. Speak up when groups you belong to don’t represent you and leave them behind if they head in a different direction. Groups and associations like this drag you away from your core values and slowly box you in from doing what you know is right. If you are a member and you don’t agree, say it publicly or vote by walking.
- Sales People Lie – I don’t care if you are using external affiliates or internal salespeople, they lie to accomplish their goals. Now the impetus of the lie might be innocent enough, like just trying to please people above with performance, but I have found that unchecked or external salespeople can create a nightmare. Make sure you are regularly monitoring calls of your internal sales staff and if you are using external affiliates or shopped out sales teams, my advice is don’t.
- Instead of Using Sales People Use Your Staff – The best salespeople you can have are the very staff members that will actually process the client application and work with their creditors. These staff members know the reality of the program and are going to have better answers to client questions. Will it hurt sales? Yes. But will it result in happier clients, with fewer complaints and a better reputation for you and your company? Hell yes. In the long run that’s a much better result for you.
- The Mark of a Good Debt Relief Company – The mark of a good debt relief company is not if mistakes or problems will occur, they absolutely will. The mark of a good company is how they handle them and learn from them. If a client is unhappy you just need to keep saying to your staff, refund, refund, refund. You absolutely must understand that people with financial problems are viewed as a disadvantaged class of consumers and no matter your excuse for not giving a refund, you will come out as the bad person if you don’t give a fast and full refund to an unhappy client.
- Realize You Don’t Always Win – Be ready to lose. I love the American spirit and push to win but at some point, you may realize that not achieving your goals is better than risking too much and selling your soul to achieve it. What’s that all mean? It means that if you follow all the advice above you may sometimes realize that if you hold those goals to be your core values you may not always survive in the debt relief business through no fault of your own. When the time comes that you can’t achieve your core goals and values, don’t compromise. Instead think long and hard about providing clients with an orderly transition and shut it down or scale it way back.
(Originally published October 11, 2010)