ATTENTION: Meeting is Fully Booked. No More Space Available.
Ever since I first became involved in debt relief in 1994 I always wanted to find a group of people, like myself, that had the consumer in mind and wanted to do things the best way possible. I’ve attended credit counseling trade meetings and conventions and always left a bit disappointed. And then over the past year we’ve all watched debt settlement trade associations seemingly put trade membership over consumers in an effort to continue unfair debt settlement sales practices. Those associations didn’t speak for putting truth first either.
Now that I am a full time journalist and not a debt relief provider I see things from a different perspective, from inside and outside the debt relief office. And while I think it might be possible to put together an association of debt relief provider and consumers advocates that want to do the right thing, I’m not even going to try to do that. Rather than an association with rules and dues, I’d rather help to foster an group of debt relief friends.
So what I’d like to do is invite debt relief providers and consumer advocates to what I’m calling the Rally in Raleigh on Saturday November 13, 2010 in Raleigh, North Carolina. My hope is the get together will result in like-minded individuals in debt relief to share ideas and make new friends in the field that share similar goals and perspectives.
Why This Meeting Will Be Exceptional
Rather than the typical trade meeting where participants come and are “spoken at”, my goal is to make this a gathering where I’ll facilitate the conversation but participants will be the ones heard from. Participants will share ideas and opinions on how to make the debt relief field better, how to sell services without breaking the law, what debt relief providers need to do to offer best practices, how to collaborate for the benefit of the consumer, etc.
My dream is to have people from credit counseling, debt settlement, bankruptcy, consumer advocates and others to come so multiple points of views can be heard and collaboration can be fostered.
Tentative Agenda
10:00 – 10:30 Welcome and Who’s Here.
10:30 – Noon – Is There a Need for Honesty and Integrity in Debt Relief? How Does the Group Think the Reputation of the Debt Relief Industry Can Be Improved? Where is it Now?
Noon – 1:00 – Where to Start in Delivering Exceptional Debt Relief Services. What Does the Group Think is Required to be a Debt Relief Leader?
1:00 – 2:00 – Lunch
2:00 – 3:00 – Regulation and Compliance in Debt Relief. A Need or a Nuisance? Can It be a Benefit? Are Regulators to Be Feared?
3:00 – 4:00 – Advertising and Selling Debt Relief Services. What Works and Why. What to Avoid.
4:00 – 5:00 – What Does the Group Think Needs to be Done to Make Sure Consumers Continue to Have Access to Debt Relief Services? What Happens Next?
The First Thoughts
Here were the ground rules I initially brainstormed here.
- The group discussions needs to be recorded, open and public like an FTC hearing and I’ll put the video on the site.
- I’ll pay for the meeting room and people interested just need to get themselves there to meet other like minded debt relief participants.
- No vendors will be allowed.
- I will not be involved in the formation of any association.
- Low budget all the way.
While interested parties offered their town as the host of the meeting, I’ve decided to host it right here in beautiful Raleigh, North Carolina. Raleigh has a great airport and a lovely downtown area. It’s generally inexpensive and a town I’m really proud to call home. I selected a Saturday for the meeting since rooms and transportation will be cheaper for attendees.
More Information About Raleigh, NC
For details about how cool Raleigh is, click here or here.
When
Here is the initial game plan, more details will follow.
Friday, November 12, 2010 — People arrive by planes, trains, or automobiles. Casual get together this evening at a local food establishment for people arriving on Friday.
Saturday, November 13, 2010 — Starting at 10:00 AM, about six hours of meetings and conversations broken up with breaks and lunch. Another group dinner for anyone staying overnight. Separate checks of course.
Sunday, November 14, 2010 — For those that stayed overnight on Saturday, you need to wake up and go home.
Attendees
I have commitments to attend from the following people so far:
- Damon Day, Debt Coach
- Scott Johnson, U.S. Debt Resolve
- Andy Faria, Northeast Settlement Group
- Christopher Viale, Cambridge Credit Counseling
- Alex Viecco, New Era Debt Solutions
- Angelo Anzalone, Active Debt Solutions
- Jordon Olsen, SilverLeaf
- Sean Ryan, Active Debt Solutions
- Ashley Eichelberger, SilverLeaf
- Jason Byrum, SilverLeaf
- Dan Smith, New Era Debt Solutions
- Mike Croxson, CareOne
- Robert Zangrilli, Franklin Debt Relief
- Jim Buttonow, EasyIRS.com
- Michael Reilly, Emerge America
- Steve Anello, Emerge America
- Rod Ebrahimi, ReadyForZero.com
- Jenna Keehnen, USOBA
- Anisa Sharif, Personal Credit Solutions
- Sonia Garrison, Center for Responsible Lending
- Diane Chen, CESI Debt Solutions, CEO
- Lynne Weaver, North Carolina Attorney General Office
- Ignacio Thayer, ReadyforZero.com
- Linda Remsberg, NoteWorld, President
- Bard Luippold, NoteWorld
- Chris Schornak, Debt Solutions Network
Special Guest: Allison Brown, Federal Trade Commission
Only 26 registrations will be accepted. The reason space for this meeting is limited is because I’m essentially not charging for people to attend and so I’m not paying for a big or bigger room. If you are interested in coming and exchanging ideas with other likeminded folks, my suggestion is to register as soon as possible before I have to close registration.
Meeting Location
The Saturday meeting will be held at the Raleigh Marriott City Center hotel. 500 Fayetteville Street
Raleigh, North Carolina 27601.
Transportation
I will be sending out additional information to registrants but Raleigh’s airport, RDU, is a Southwest Airlines hub, along with some other carriers. Amtrak stops right downtown, RGH, and I-40, I-85 and I-95 are great ways to get in the area.
Lodging/Rooms
I’ve already promised my extra rooms to some so the Rhode house is all full. The meeting will be held at the Raleigh Marriott City Center so book your room here. I did not go for the meeting discount rate since I’d have to be on the hook for unbooked rooms. Typically the AAA rate is pretty good anyway.
Total Disclosure
In the interest of total disclosure I have never attempted to host a meeting so while this might appear informal it is only because I’m learning as I go here. People that register will receive regular updates from me with updated information and details as it becomes available.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Do you have a question you'd like to ask me for free? Go ahead and click here.
Registration is going to be $20 and all the proceeds from registration will be donated to the Food Bank of Central & Eastern North Carolina. I’ve written about them before.
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I am sure someone attending would be happy to lend their 4G wireless card or 4G hotspot phone 🙂
Looking forward to the posting of the conference. Thanks for putting this on!
Jason,
Sorry, no. We just don’t have a stable enough internet connection in the room for a long term connection.
Next time I’ll see what we can do.
Steve
Can you have this conference live on a live web broadcast like Ustream?
Can you have this conference live on a live web broadcast like Ustream?
Jason,
Sorry, no. We just don’t have a stable enough internet connection in the room for a long term connection.
Next time I’ll see what we can do.
Steve
I am sure someone attending would be happy to lend their 4G wireless card or 4G hotspot phone 🙂
Looking forward to the posting of the conference. Thanks for putting this on!
Steve,
I agree with you. I beleive people need the guidance and if the main guidance given to Jenna was based ont he wrong principle, maybe there is leeson for her here.
If we are going to be a transparent industry, we should not really cara about who shows up. Come one come all. Those who will not comply will have many eyes overseeing and reporting their wrongdoing.
AlexV
Angelo,
I totally understand where you are coming from and I will be the first to admit that USOBA and I have smashed heads together many times in the past. And frankly I’ve kicked their ass over and over in past articles.
But Jenna is coming to learn and Michael and Mike from Loeb & Loeb said I should give her a chance, it was a reasonable request so that’s what I’m doing. Lately Jenna has been very helpful and I recognize that as an improved position.
I’m willing to help Jenna until proven otherwise. And really the burden is on USOBA to show us they really do want to change.
Steve
Am I the only one questioning why a USOBA rep is attending this meeting? Yes, I know it’s an open forum but these are the guys that would get injunction after injunction, fighting tooth and nail to keep upfront fees. Pissing off every attorney general along the way; not to mention the effects it had on all of those consumers. It’s this action that led so many states to enact their own laws restricting any kind of debt settlement strictly to attorneys. I’m all for new ideas but do we really want to be associated with USOBA at this point?
Am I the only one questioning why a USOBA rep is attending this meeting? Yes, I know it’s an open forum but these are the guys that would get injunction after injunction, fighting tooth and nail to keep upfront fees. Pissing off every attorney general along the way; not to mention the effects it had on all of those consumers. It’s this action that led so many states to enact their own laws restricting any kind of debt settlement strictly to attorneys. I’m all for new ideas but do we really want to be associated with USOBA at this point?
Angelo,
I totally understand where you are coming from and I will be the first to admit that USOBA and I have smashed heads together many times in the past. And frankly I’ve kicked their ass over and over in past articles.
But Jenna is coming to learn and Michael and Mike from Loeb & Loeb said I should give her a chance, it was a reasonable request so that’s what I’m doing. Lately Jenna has been very helpful and I recognize that as an improved position.
I’m willing to help Jenna until proven otherwise. And really the burden is on USOBA to show us they really do want to change.
Steve
Steve,
I agree with you. I beleive people need the guidance and if the main guidance given to Jenna was based ont he wrong principle, maybe there is leeson for her here.
If we are going to be a transparent industry, we should not really cara about who shows up. Come one come all. Those who will not comply will have many eyes overseeing and reporting their wrongdoing.
AlexV
Hey Jason,
Nope I agree 100%
Gentlemen,
The FTC gives companies the right to require an SPA. If that is companies belief that is better for consumers and want to require them, then clients who don’t agree can simpily find another company- this is a business 101. I am sure those companies will lose some potential clients, but the flip side is they might see higher success with the ones that they do enroll. Competing companies in industries have different view points- which creates healthy competition as long as they all play by the rules. The only thing that companies who require them need to say to consumers to be fair is that it is a requirement of THEIR company and not an industry or government requirement. Consumers could be easily mislead.
Does anyone dissagree with me?
Steve, I definitely agree. Allowing the consumer to save their money in an interest bearing account over one where they have to pay fees would be ideal. However, in practice, I believe it actually ends up hurting the client. The efficiency and speed in which the DS company can settle the debt has a huge impact on the client’s total cost which is the number that matters the most. It also can help prevent defaults on settlements due to reliable payment processing to name a few.
All in all, the debt settlement company picking up the cost of the escrow account is clearly better for the consumer than the consumer paying for it, but I truly believe that for the vast majority of consumers, they are going to have a more successful program using an escrow account.
Craig
I wonder if because the client can withdraw funds at any time from the escrow account, that there isn’t much difference between a consumer using an online savings account, like through ING, to auto-deposit funds into every month and the service offered by an escrow account. The difference is one pays a little bit of interest and the other one charges a monthly fee.
In my own experience with clients and helping them save we were always able to save money for the clients when we managed their bills but the minute they discovered how much we had saved they’d go out and want to spend it. Sometimes clients are their own worst enemy.
I suppose a value the escrow account adds is the DS company probably has better access to see what the balances are and that’s helpful to the DS company while the consumer pays the fee for service.
I don’t think the issue of where the account was would even be an issue if the DS company could incorporate the escrow monthly service fee into the service offering and then the consumer would not have to pay a monthly fee for the escrow service at all. That’s not a suggestion, just an observation.
Steve
Just my 2c, I think everyone is thinking about these accounts in terms of the role they play in a flat fee model where the client simply drafts money into their escrow account, and a large portion of that funnels straight to the DS company. However, it fundamentally changes in a performance model since the money actual sits in the account, where the client legitimately can withdraw from. Unlike in an upfront model where, although the client can withdraw from it, it’s generally barren due to the large initial fees. In a world where the fees are only taken on performance, the escrow account allows for responsible savings for the consumer, as well as visibility and tracking to the DS company, and a more reliable method of paying the creditors than relying on the client to make all the payments. IMO, it’s a win-win for both sides.
Thank you. That made my day.
Hi Guys,
I thank you for speaking your mind and sharing your opinions. I truly believe you guys are on the consumer’s side as are we. I believe that this FTC ruling is a great day for any of us who have always wanted to help consumers. I realize that there has been allot of bad players in this industry to the point where you can’t identify the legitimate companies.
We (New Era Debt Solutions) has ALWAYS been performance based. Yes we did charge a small retainer but the bulk was based on earning it.
I think we can all agree that sometimes and in the case of debt ridden consumers, there is a benefit in having the funds no easily accessible. The funds do belong to the client and they can pull it out at any time, yes we benefit by seeing that they are putting money aside. But what i think might not be realized here is the reason why that benefits the client. When you settle and account or go into negotiations, it is our responsibility to ensure the clients will be able to satisfy that settlement. They are NOT always lump sum, and if they are term settlements, determining the track record of the client will help ensure they can fulfill the obligation. If they can’t the consumer loses.
I think Damon you might agree that settling an account is also about ensuring they can fulfill the responsibility to the creditor, not just collecting a fee.
Believe me that settling the 162,000,000+ was not by accident and certainly not a cake walk.
I really look forward to meeting you all in person in NC. I believe we can really come together to help clean up the industry, bring transparency and results for consumers.
Cheers! we need to celebrate this ruling. it is a vindication for the hard working companies and the employees that fight everyday for the consumer.
See you all 🙂
Alex Viecco
New Era Debt Solutions
Hey Steve,
You’re so awesome.
Tim
Hey Steve,
You’re so awesome.
Tim
Thank you. That made my day.
Gentlemen,
The FTC gives companies the right to require an SPA. If that is companies belief that is better for consumers and want to require them, then clients who don’t agree can simpily find another company- this is a business 101. I am sure those companies will lose some potential clients, but the flip side is they might see higher success with the ones that they do enroll. Competing companies in industries have different view points- which creates healthy competition as long as they all play by the rules. The only thing that companies who require them need to say to consumers to be fair is that it is a requirement of THEIR company and not an industry or government requirement. Consumers could be easily mislead.
Does anyone dissagree with me?
Hey Jason,
Nope I agree 100%
Michael,
I wonder if that means it hasn’t been or it can’t be.
Steve
Michael,
On the settlement funds what’s interesting is the money on deposit is
the property of the client and they have access to it not matter where
it is deposited. It seems that since it is not exempt if a client was
sued and asked for an accounting of assets and listed the account I
can’t see why the account could not be levied no matter if it is at
NoteWorld or ING in a self-saving account.
I’m looking forward to what you find out. I can see how keeping exempt
benefits in an easy to delineate separate account makes good sense.
Should I move this interesting conversation to a new thread to keep it
all in one relevant place?
Steve
Damon, here’s the skinny on SPA straight from the horse’s mouth: Each account is a sub-account within a master custodial account and never has an account been seized or frozen due to creditor judgment.
Michael Reilly
Emerge America
Damon, I have messages into both GCS and Note World regarding the protection features a SPA provides. After a quick search on the web I have discovered that several Law firms post information on the subject, here’s a excerpt from bankruptcylawyers.com
Keep Exempt Funds in Separate Account
If you wish to protect your exempt benefits you should keep your funds in banks to which you don’t owe money, and you should segregate your public assistance funds in Special Purpose Accounts clearly designated as such. If you become a judgment debtor, the bank should be immediately reminded, and the creditor informed, of the purpose of the account. If the account is nonetheless garnished or set-off, you may have a cause of action against the creditor for wrongful garnishment.
Many courts allow you a formal hearing to explain why the frozen funds shouldn’t be seized or garnished. If the notice of the seizure or garnishment of funds doesn’t detail the steps you must follow, call the clerk of the court where the judgment was entered and find out the appropriate process. There usually isn’t a lot of time to protest a bank account garnishment or seizure, so it’s best to move quickly. The sooner you act, the sooner the exempt funds will again be available for your use.
Based on this, the question that comes into play is; Are the funds that are being set aside for the benifit of creditor settlement considered exempt? I will post my findings when I speak with those in the know.
Michael Reilly, CDS
Emerge America
Hey Mike,
I didn’t realize you were talking specifically about New Era. Actually I would agree that for a larger settlement company New Era has a better success rate than most other large settlement programs.
As far as some people wanting the industry to go away, I would say that anyone who is currently a member of TASC or USOBA and is funding their continued fight against FTC regulations or loop holes, is certainly going to usher in a whole new batch of even stricter federal regulations. So if a settlement company would like to stay in business, they better heed the warnings and get the heck out of TASC and USOBA and cut off the funding now.
As far as my personal opinion, Debt Settlement absolutely plays a key role in a consumers debt relief arsenal. I certainly don’t want to see the option taken away as it would severely impact the options of debt burdened consumers. The industries problem is for far too long, there were very few companies or individuals willing to stand up and call out their peers on all of the bullshit.
However, I now feel that with the new regulations, most BS settlement programs will thankfully be going out of business soon, and the tide has now shifted to I think a small number of companies waking up to the fact that if they don’t start speaking up then the entire industry will get regulated out of existence for the most part. I am glad to see some companies starting to realize that if they don’t focus on consumers they will not be in business very much longer.
Hey Mike,
I am pretty sure we are on the same side. Wasn’t out picking a fight, merely stating my opinion and as you said we are all full of them. Consumers are the ones who decide who makes more sense.
You are right, I do not provide debt settlement services. I have worked in the industry in the past and gained a unique perspective why in my opinion consumers really have the deck stacked against them with the majority of settlement providers out there. I am sure you would agree on this.
Currently I do financial consulting, debt coaching and consumer advocate work. My service is simple, consumers pay me for my advice and assistance. They pay me a fee and I tell them how to solve their financial problem. I do charge my fee upfront. My service is delivered immediately. If they don’t like my advice I provide an immediate refund.
I would be curious to know what you find out about the SPA accounts. Not being sarcastic at all, I would like to know how they would have any extra level of protection if the consumer had full access to the money. If this is true, then I could see some value in setting up an SPA and paying 10 or 13 a month for it. I suspect that up until now, the clients never had full access to the money and there was rarely any significant money in an SPA account for very long and that might be why creditors never bothered looking for it.
But I certainly would be curious to see how they could provide any extra protection since they are simply a bank account that moving forward, the client has full access to take money out of. I don’t see how they could protect that from a judgment creditor. Otherwise why don’t we all just set up Note world or Global accounts, stick all our money in them and tell the creditors sorry, no money for you. 🙂
I think you missed my point about why pay for something when you can do it for free. The point I was making is, what is the benefit of an SPA vs a consumer setting up an account and having the money automatically drafted? Why pay 500 if you receive no benefit and it would take just as much effort for a debt settlement company to instruct a client to set up their own savings as it would the SPA.
Now that clients can take all their money out of the SPA at will, how is the SPA any different than a local savings account where they can set up an auto draft for free and get the same hands off savings benefit?
Here is the benefit to the SPA. The settlement company always knows how much is in the account without having to interact with the client and the settlement company can immediately take their fee when the account is settled without having to interact with the client. Is this a bad thing? No, in fact it is very efficient for the settlement business. Which is my point. The SPA benefits the business, but it chaps me a little when it is touted as the best answer for consumers. I am not saying you shouldn’t have one, but all to often what I see is untrained sales people pulling monthly payment numbers out of their you know what and setting a client up on some automatic payment plan that doesn’t have a snowball’s chance in actually working with the clients actual financial circumstances. The result is a client who is unlikely to succeed, or is going to potentially be eating beans and rice for several years because they were sold some pie in the sky plan because it was easy and convenient for the settlement company. I am not saying every debt settlement company does this. I am simply saying, almost all of them do.
This is one of the problems with the industry. Most everything that is done is touted as beneficial to consumers, when the reality is quite the opposite. To prove my point I will defer to TASC and USOBA. I am sure you will back me on that. By the way, it is nice to finally get some industry backing on that. Kudos to New Era for Stepping up.
All that being said, I fully didn’t expect most people in the industry to agree with my opinion. I understand where you are coming from and I see the benefit to having an escrow account, but I see it as an option to be offered and not something that should be required and touted as something always in the client’s best interest.
I look forward to meeting you in Raleigh, it will be an interesting event for sure.
Go to neweradebtsolutions.com and click on Truth and Transparency all the stats are there.
I think it’s a true testament to a company in my (you don’t do this right?) industry truly doing the right thing, many try to look through or around the numbers. The bottom line is that a lot of debt settled. That’s probably 30,000 accounts settled.
Damon, I get it! Some want the industry to go away, some for self-serving reasons, folk’s will or will not figure it out, I look forward to meeting you in NC.
I gotta to tell ya Damon, at the end of the day we are all service providers, you provide a service right? How is your service paid for, before or after you render it? Also wondering (I know you don’t today) if you have ever participated or performed debt settlement?
Regarding frozen accounts, I have a clear understanding of how it works; maybe it would be a good idea to speak with one of the industry SPA providers. What I can tell you is this, in the almost 3 years I have participated in this industry, and with the many I have dealt with (some with twice if not three times more time in service), I have never had/heard of a SPA client account frozen due to a judgment so, I guess there’s a layer of protection there, trust me I will get the answer!
Responding to your last thought, people can settle their own debt for free, they can acquire debt counseling guides and advice on google for free, well that just put you and me out of business right? No, people are creatures of habit and I know you’ll agree that breaking bad habits sometimes takes drastic measures. If Mr. & Mrs. Jones got in over their head (debts that they are really struggling with) and at the end of the day a provider settles the debt at let’s say 65% to 70% all in (fees included) and then you work in the SPA fees at let’s say $500 for a 36 month program, to me that’s a win win. Unless they had the ability to do it themselves and chose not to, what did it really cost them? To me they saved a lot of money and the cost is insignificant, not to mention the time and anguish.
What about the value of time, I think my time is very valuable, how about you? What about Mr. & Mrs. Jones, what’s their time worth? We’re services providers, time is money and wondering if the Jones family truly put the money aside is time consuming and costly and in many cases could affect the outcome of the program. We’re all full of opinions but it doesn’t necessarily mean we’re right. We do what works for us and if it stops working we figure it out or move on.
Michael Reilly, CDS
Emerge America
Hey Jason,
As I said, different strokes for different folks. Some companies require an escrow account and some don’t. So consumers are free to chose what option they would prefer. Some clients want someone to take their money and others don’t.
Also I forgot your last point. 140 million out of how much?
Hey Mike,
I certainly didn’t expect many in the industry to agree with me, and that is fine. Also a consumer can’t have their personal accounts frozen unless a creditor has a judgment against them. Also, if a client has full control over their account, then how would it be protected from a judgment creditor any more than their personal bank account?
As you will see, I noted at the bottom of my comment, that my specific issue was when companies use the escrow account and claim that is in the client’s best interest to have their money taken from them. You are right that the new rules will change this a bit, but up until this point, the escrow account line has mainly been used to make sure companies would get all of their fees.
I am not grinding any axe, simply presenting my opinion from a consumers point of view and still stand behind my view that the settlement company is the primary benefactor to have a consumer set up an escrow account and this is traditionally why it is pushed.
If the client has full control of their escrow money and can take it in or out at any time, then why pay a monthly fee when a consumer can set up their own savings account for free and have a monthly draft taken from their checking account every month and deposited into their own savings account? Why pay a fee for something they can do for free?
I agree that clients should have an SPA account and not self save. Most people are not going to go from irresponsible to responsible over night- even the FTC agrees companies can require an SPA account.
I remember when I was in the hospital and they hooked me up to morphine- if i felt pain, I could push the button and inject more, however it limited how much I could inject. It felt good, but too much would be bad for you. Just like having a self save model and well… that big screen sure feels good even if it is bad for their financial health. It’s just human nature and I think the vast majority of people who use their own account to accumulate funds will not be disciplined enough to save the funds for their goal. Wake up- we are generally an over weight, none disciplined society.
Can this be accomplished from constant hand holding and support- for some people I am sure it can but they should use every tool in their belt to succeed.
Damon, the new rules in so many words state, if you require a trust/savings account it is in the full control of the client anyway, they can close it or take money from it at will, so the bottom line is, it’s their account. Alex however makes an educated point and I agree with him. The goal is to get the client saving funds, so what’s a better way than an ACH from their personal account into a special savings account? At the end of the day it’s nothing more than a layer of protection for both the settlement company and the consumer. Do you know how many consumers have their personal accounts frozen because of defaulted debt? I don’t, but I’ll bet it’s many. The emergency room at the hospital is designed to treat and/or stabilize a patient, it is then and only then the healing begins. I also think your comment regarding large businesses (in this case debt settlement) and their level of service to clients is completely out of whack. 140+ million settled is pretty effective…
Don’t let that axe you’re grinding cloud your thought process.
Just my humble opinion.
Michael Reilly, CDS
Emerge America
Hello David,
Allow me to provide a different perspective on the predominant theory in the industry that consumers are not capable of handling their own money, and like parents to children the debt settlement company must keep the money away from them for their own good.
In a small number of cases, this probably is better for certain clients, however, the act of taking a clients money away form them under the guise of it being better for the client is flawed and in fact the opposite is true in my opinion.
The argument is faulty simply because settlement companies operate under the premise that settling debt is the most important thing in the clients life. This is wrong. Settling debt is the most important thing to the settlement company because that is how they are paid, but not necessarily the most important thing to the client.
The most important thing to the client is to get out of the financial hole that they are in and learn how to better manage money and create awareness so as to not fall back into the same trap. This does not always involve settling debt with every last dollar a client has available.
Debt Settlement companies like to take money away from clients typically when they only want to focus on settling debt and not individually working with the client to help them learn how to better manage their money. How can a client learn to better manage their money if mommy and daddy debt settlement company is simply taking it away from them every month?
I would proffer that when a debt settlement company grows so large, that they have to put systems in place to treat all of their clients the same way in order to operate their business and they are unable to individually work with clients and address specific individual needs differently, then they have essentially lost their effectiveness and are not assisting the client in a way that is most beneficial to the client.
I have seen consumers achieve tremendous success by staying in control of their own money, provided they have a knowledgeable advisor working with them and helping them to make smart financial decisions as they work their way out of debt. This of course takes more resources and client time to be effective, so many companies prefer to simply take the clients money and say it is for their own good. I disagree.
Why give a man a fish when you can teach him to fish with just a little extra effort?
Just my two cents on the issue.
Also let me add, I am not saying that using an escrow account is a bad thing, but for companies to pass it off like it is always in the client’s best interest to give up control of their money, is disingenuous in my opinion. I think the option should be offered but not required.
Hi David,
I will answer based on our decade of experience. This is not to say this is the only way. Based on what we have found… Although the fee for a 3rd party Money transfer is a bit more than we would all like. I feel it is worth it! the reason is, the program is only as strong as the weakest link. In this case the clients are the weakest link. For the thousands of clients we have helped a VERY, and I do mean VERY SMALL amount had success saving their own money.
Something always came up and they tapped into the savings account and missed great opportunities to settle for great low percentages.
Leaving the clients in charge of the funds is like “leaving the fox in charge of the hen houseâ€.
With that being said. We use Note World for one simple reason. I come from the banking background and I know becoming a LICENSED MONEY TRANSFEROR is something that takes time and money to be legit. I have been to the offices of Note World and have personally seen the licenses and that pleases me to no end.
So to summarize, consumers I believe are better served to have the funds somewhere where they cannot just pull the funds out. I hope this helps. 🙂
David, are you just planning to offer debt settlement only? My opinion if you give your clients full transparency on all the available options out there regarding their financial situation and try to cater to their needs before yours, I am sure there will be a plan that will fit right for them. Best of luck on your venture.
David- Just my opinion: A self savings model seems optimum but you need to consider the value; For between $10 & $13 a month an escrow service provides a platform for real savings. Our clients, given the opportunity will spend that savings and have nothing when settlement offers arise. There are self savings options coming around a lot lately as one means for a legal model to get around the TSR (there’s more to it) but it merely appears that in that model, which charges front loaded fees, if the client has no savings they’re screwed, as usual. Further, from a negotiation standpoint, it serves the client when we have a true accounting of exactly what is available now and in the future. In certain circumstances we allow a client to self save but it’s atypical. As a business owner, it will serve you better as well to have an accounting (for the FTC too) of your clients means toward their goals.
I won’t tell you it won’t work, but for $10-/ month i believe the value is there.
Hello Steve and Alex,
I am unable to make it to the meeting, but I hope I can ask you a question. I am looking at starting a new debt settlement business, and I am wondering if the use of an escrow service like Noteworld, Global, etc is the best thing to do. Another alternative is having the consumer save the money on their own in a savings account. The advantage of the escrow service is that it makes the consumer save, and gets them through the program. The disadvantage is they are quite expensive. As we have been discussing lately at this site, we want to do what is best for the consumer. What do you feel is best for the consumer?
Hello Steve and Alex,
I am unable to make it to the meeting, but I hope I can ask you a question. I am looking at starting a new debt settlement business, and I am wondering if the use of an escrow service like Noteworld, Global, etc is the best thing to do. Another alternative is having the consumer save the money on their own in a savings account. The advantage of the escrow service is that it makes the consumer save, and gets them through the program. The disadvantage is they are quite expensive. As we have been discussing lately at this site, we want to do what is best for the consumer. What do you feel is best for the consumer?
David- Just my opinion: A self savings model seems optimum but you need to consider the value; For between $10 & $13 a month an escrow service provides a platform for real savings. Our clients, given the opportunity will spend that savings and have nothing when settlement offers arise. There are self savings options coming around a lot lately as one means for a legal model to get around the TSR (there’s more to it) but it merely appears that in that model, which charges front loaded fees, if the client has no savings they’re screwed, as usual. Further, from a negotiation standpoint, it serves the client when we have a true accounting of exactly what is available now and in the future. In certain circumstances we allow a client to self save but it’s atypical. As a business owner, it will serve you better as well to have an accounting (for the FTC too) of your clients means toward their goals. I won’t tell you it won’t work, but for $10-/ month i believe the value is there.
David, are you just planning to offer debt settlement only? My opinion if you give your clients full transparency on all the available options out there regarding their financial situation and try to cater to their needs before yours, I am sure there will be a plan that will fit right for them. Best of luck on your venture.
Hi David,
I will answer based on our decade of experience. This is not to say this is the only way. Based on what we have found… Although the fee for a 3rd party Money transfer is a bit more than we would all like. I feel it is worth it! the reason is, the program is only as strong as the weakest link. In this case the clients are the weakest link. For the thousands of clients we have helped a VERY, and I do mean VERY SMALL amount had success saving their own money.
Something always came up and they tapped into the savings account and missed great opportunities to settle for great low percentages.
Leaving the clients in charge of the funds is like “leaving the fox in charge of the hen house”.
With that being said. We use Note World for one simple reason. I come from the banking background and I know becoming a LICENSED MONEY TRANSFEROR is something that takes time and money to be legit. I have been to the offices of Note World and have personally seen the licenses and that pleases me to no end.
So to summarize, consumers I believe are better served to have the funds somewhere where they cannot just pull the funds out. I hope this helps. 🙂
Hello David,
Allow me to provide a different perspective on the predominant theory in the industry that consumers are not capable of handling their own money, and like parents to children the debt settlement company must keep the money away from them for their own good.
In a small number of cases, this probably is better for certain clients, however, the act of taking a clients money away form them under the guise of it being better for the client is flawed and in fact the opposite is true in my opinion.
The argument is faulty simply because settlement companies operate under the premise that settling debt is the most important thing in the clients life. This is wrong. Settling debt is the most important thing to the settlement company because that is how they are paid, but not necessarily the most important thing to the client.
The most important thing to the client is to get out of the financial hole that they are in and learn how to better manage money and create awareness so as to not fall back into the same trap. This does not always involve settling debt with every last dollar a client has available.
Debt Settlement companies like to take money away from clients typically when they only want to focus on settling debt and not individually working with the client to help them learn how to better manage their money. How can a client learn to better manage their money if mommy and daddy debt settlement company is simply taking it away from them every month?
I would proffer that when a debt settlement company grows so large, that they have to put systems in place to treat all of their clients the same way in order to operate their business and they are unable to individually work with clients and address specific individual needs differently, then they have essentially lost their effectiveness and are not assisting the client in a way that is most beneficial to the client.
I have seen consumers achieve tremendous success by staying in control of their own money, provided they have a knowledgeable advisor working with them and helping them to make smart financial decisions as they work their way out of debt. This of course takes more resources and client time to be effective, so many companies prefer to simply take the clients money and say it is for their own good. I disagree.
Why give a man a fish when you can teach him to fish with just a little extra effort?
Just my two cents on the issue.
Also let me add, I am not saying that using an escrow account is a bad thing, but for companies to pass it off like it is always in the client’s best interest to give up control of their money, is disingenuous in my opinion. I think the option should be offered but not required.
Damon, the new rules in so many words state, if you require a trust/savings account it is in the full control of the client anyway, they can close it or take money from it at will, so the bottom line is, it’s their account. Alex however makes an educated point and I agree with him. The goal is to get the client saving funds, so what’s a better way than an ACH from their personal account into a special savings account? At the end of the day it’s nothing more than a layer of protection for both the settlement company and the consumer. Do you know how many consumers have their personal accounts frozen because of defaulted debt? I don’t, but I’ll bet it’s many. The emergency room at the hospital is designed to treat and/or stabilize a patient, it is then and only then the healing begins. I also think your comment regarding large businesses (in this case debt settlement) and their level of service to clients is completely out of whack. 140+ million settled is pretty effective…
Don’t let that axe you’re grinding cloud your thought process.
Just my humble opinion.
Michael Reilly, CDS
Emerge America
I agree that clients should have an SPA account and not self save. Most people are not going to go from irresponsible to responsible over night- even the FTC agrees companies can require an SPA account.
I remember when I was in the hospital and they hooked me up to morphine- if i felt pain, I could push the button and inject more, however it limited how much I could inject. It felt good, but too much would be bad for you. Just like having a self save model and well… that big screen sure feels good even if it is bad for their financial health. It’s just human nature and I think the vast majority of people who use their own account to accumulate funds will not be disciplined enough to save the funds for their goal. Wake up- we are generally an over weight, none disciplined society.
Can this be accomplished from constant hand holding and support- for some people I am sure it can but they should use every tool in their belt to succeed.
Hey Jason,
As I said, different strokes for different folks. Some companies require an escrow account and some don’t. So consumers are free to chose what option they would prefer. Some clients want someone to take their money and others don’t.
Hey Mike,
I certainly didn’t expect many in the industry to agree with me, and that is fine. Also a consumer can’t have their personal accounts frozen unless a creditor has a judgment against them. Also, if a client has full control over their account, then how would it be protected from a judgment creditor any more than their personal bank account?
As you will see, I noted at the bottom of my comment, that my specific issue was when companies use the escrow account and claim that is in the client’s best interest to have their money taken from them. You are right that the new rules will change this a bit, but up until this point, the escrow account line has mainly been used to make sure companies would get all of their fees.
I am not grinding any axe, simply presenting my opinion from a consumers point of view and still stand behind my view that the settlement company is the primary benefactor to have a consumer set up an escrow account and this is traditionally why it is pushed.
If the client has full control of their escrow money and can take it in or out at any time, then why pay a monthly fee when a consumer can set up their own savings account for free and have a monthly draft taken from their checking account every month and deposited into their own savings account? Why pay a fee for something they can do for free?
I gotta to tell ya Damon, at the end of the day we are all service providers, you provide a service right? How is your service paid for, before or after you render it? Also wondering (I know you don’t today) if you have ever participated or performed debt settlement?
Regarding frozen accounts, I have a clear understanding of how it works; maybe it would be a good idea to speak with one of the industry SPA providers. What I can tell you is this, in the almost 3 years I have participated in this industry, and with the many I have dealt with (some with twice if not three times more time in service), I have never had/heard of a SPA client account frozen due to a judgment so, I guess there’s a layer of protection there, trust me I will get the answer!
Responding to your last thought, people can settle their own debt for free, they can acquire debt counseling guides and advice on google for free, well that just put you and me out of business right? No, people are creatures of habit and I know you’ll agree that breaking bad habits sometimes takes drastic measures. If Mr. & Mrs. Jones got in over their head (debts that they are really struggling with) and at the end of the day a provider settles the debt at let’s say 65% to 70% all in (fees included) and then you work in the SPA fees at let’s say $500 for a 36 month program, to me that’s a win win. Unless they had the ability to do it themselves and chose not to, what did it really cost them? To me they saved a lot of money and the cost is insignificant, not to mention the time and anguish.
What about the value of time, I think my time is very valuable, how about you? What about Mr. & Mrs. Jones, what’s their time worth? We’re services providers, time is money and wondering if the Jones family truly put the money aside is time consuming and costly and in many cases could affect the outcome of the program. We’re all full of opinions but it doesn’t necessarily mean we’re right. We do what works for us and if it stops working we figure it out or move on.
Michael Reilly, CDS
Emerge America
Hey Mike,
I am pretty sure we are on the same side. Wasn’t out picking a fight, merely stating my opinion and as you said we are all full of them. Consumers are the ones who decide who makes more sense.
You are right, I do not provide debt settlement services. I have worked in the industry in the past and gained a unique perspective why in my opinion consumers really have the deck stacked against them with the majority of settlement providers out there. I am sure you would agree on this.
Currently I do financial consulting, debt coaching and consumer advocate work. My service is simple, consumers pay me for my advice and assistance. They pay me a fee and I tell them how to solve their financial problem. I do charge my fee upfront. My service is delivered immediately. If they don’t like my advice I provide an immediate refund.
I would be curious to know what you find out about the SPA accounts. Not being sarcastic at all, I would like to know how they would have any extra level of protection if the consumer had full access to the money. If this is true, then I could see some value in setting up an SPA and paying 10 or 13 a month for it. I suspect that up until now, the clients never had full access to the money and there was rarely any significant money in an SPA account for very long and that might be why creditors never bothered looking for it.
But I certainly would be curious to see how they could provide any extra protection since they are simply a bank account that moving forward, the client has full access to take money out of. I don’t see how they could protect that from a judgment creditor. Otherwise why don’t we all just set up Note world or Global accounts, stick all our money in them and tell the creditors sorry, no money for you. 🙂
I think you missed my point about why pay for something when you can do it for free. The point I was making is, what is the benefit of an SPA vs a consumer setting up an account and having the money automatically drafted? Why pay 500 if you receive no benefit and it would take just as much effort for a debt settlement company to instruct a client to set up their own savings as it would the SPA.
Now that clients can take all their money out of the SPA at will, how is the SPA any different than a local savings account where they can set up an auto draft for free and get the same hands off savings benefit?
Here is the benefit to the SPA. The settlement company always knows how much is in the account without having to interact with the client and the settlement company can immediately take their fee when the account is settled without having to interact with the client. Is this a bad thing? No, in fact it is very efficient for the settlement business. Which is my point. The SPA benefits the business, but it chaps me a little when it is touted as the best answer for consumers. I am not saying you shouldn’t have one, but all to often what I see is untrained sales people pulling monthly payment numbers out of their you know what and setting a client up on some automatic payment plan that doesn’t have a snowball’s chance in actually working with the clients actual financial circumstances. The result is a client who is unlikely to succeed, or is going to potentially be eating beans and rice for several years because they were sold some pie in the sky plan because it was easy and convenient for the settlement company. I am not saying every debt settlement company does this. I am simply saying, almost all of them do.
This is one of the problems with the industry. Most everything that is done is touted as beneficial to consumers, when the reality is quite the opposite. To prove my point I will defer to TASC and USOBA. I am sure you will back me on that. By the way, it is nice to finally get some industry backing on that. Kudos to New Era for Stepping up.
All that being said, I fully didn’t expect most people in the industry to agree with my opinion. I understand where you are coming from and I see the benefit to having an escrow account, but I see it as an option to be offered and not something that should be required and touted as something always in the client’s best interest.
I look forward to meeting you in Raleigh, it will be an interesting event for sure.
Damon, I have messages into both GCS and Note World regarding the protection features a SPA provides. After a quick search on the web I have discovered that several Law firms post information on the subject, here’s a excerpt from bankruptcylawyers.com
Keep Exempt Funds in Separate Account
If you wish to protect your exempt benefits you should keep your funds in banks to which you don’t owe money, and you should segregate your public assistance funds in Special Purpose Accounts clearly designated as such. If you become a judgment debtor, the bank should be immediately reminded, and the creditor informed, of the purpose of the account. If the account is nonetheless garnished or set-off, you may have a cause of action against the creditor for wrongful garnishment.
Many courts allow you a formal hearing to explain why the frozen funds shouldn’t be seized or garnished. If the notice of the seizure or garnishment of funds doesn’t detail the steps you must follow, call the clerk of the court where the judgment was entered and find out the appropriate process. There usually isn’t a lot of time to protest a bank account garnishment or seizure, so it’s best to move quickly. The sooner you act, the sooner the exempt funds will again be available for your use.
Based on this, the question that comes into play is; Are the funds that are being set aside for the benifit of creditor settlement considered exempt? I will post my findings when I speak with those in the know.
Michael Reilly, CDS
Emerge America
Michael,
On the settlement funds what’s interesting is the money on deposit is
the property of the client and they have access to it not matter where
it is deposited. It seems that since it is not exempt if a client was
sued and asked for an accounting of assets and listed the account I
can’t see why the account could not be levied no matter if it is at
NoteWorld or ING in a self-saving account.
I’m looking forward to what you find out. I can see how keeping exempt
benefits in an easy to delineate separate account makes good sense.
Should I move this interesting conversation to a new thread to keep it
all in one relevant place?
Steve
Just my 2c, I think everyone is thinking about these accounts in terms of the role they play in a flat fee model where the client simply drafts money into their escrow account, and a large portion of that funnels straight to the DS company. However, it fundamentally changes in a performance model since the money actual sits in the account, where the client legitimately can withdraw from. Unlike in an upfront model where, although the client can withdraw from it, it’s generally barren due to the large initial fees. In a world where the fees are only taken on performance, the escrow account allows for responsible savings for the consumer, as well as visibility and tracking to the DS company, and a more reliable method of paying the creditors than relying on the client to make all the payments. IMO, it’s a win-win for both sides.
I wonder if because the client can withdraw funds at any time from the escrow account, that there isn’t much difference between a consumer using an online savings account, like through ING, to auto-deposit funds into every month and the service offered by an escrow account. The difference is one pays a little bit of interest and the other one charges a monthly fee.
In my own experience with clients and helping them save we were always able to save money for the clients when we managed their bills but the minute they discovered how much we had saved they’d go out and want to spend it. Sometimes clients are their own worst enemy.
I suppose a value the escrow account adds is the DS company probably has better access to see what the balances are and that’s helpful to the DS company while the consumer pays the fee for service.
I don’t think the issue of where the account was would even be an issue if the DS company could incorporate the escrow monthly service fee into the service offering and then the consumer would not have to pay a monthly fee for the escrow service at all. That’s not a suggestion, just an observation.
Steve
Steve, I definitely agree. Allowing the consumer to save their money in an interest bearing account over one where they have to pay fees would be ideal. However, in practice, I believe it actually ends up hurting the client. The efficiency and speed in which the DS company can settle the debt has a huge impact on the client’s total cost which is the number that matters the most. It also can help prevent defaults on settlements due to reliable payment processing to name a few.
All in all, the debt settlement company picking up the cost of the escrow account is clearly better for the consumer than the consumer paying for it, but I truly believe that for the vast majority of consumers, they are going to have a more successful program using an escrow account.
Craig
Damon, here’s the skinny on SPA straight from the horse’s mouth: Each account is a sub-account within a master custodial account and never has an account been seized or frozen due to creditor judgment.
Michael Reilly
Emerge America
Michael,
I wonder if that means it hasn’t been or it can’t be.
Steve
Also I forgot your last point. 140 million out of how much?
Go to neweradebtsolutions.com and click on Truth and Transparency all the stats are there.
I think it’s a true testament to a company in my (you don’t do this right?) industry truly doing the right thing, many try to look through or around the numbers. The bottom line is that a lot of debt settled. That’s probably 30,000 accounts settled.
Damon, I get it! Some want the industry to go away, some for self-serving reasons, folk’s will or will not figure it out, I look forward to meeting you in NC.
Hey Mike,
I didn’t realize you were talking specifically about New Era. Actually I would agree that for a larger settlement company New Era has a better success rate than most other large settlement programs.
As far as some people wanting the industry to go away, I would say that anyone who is currently a member of TASC or USOBA and is funding their continued fight against FTC regulations or loop holes, is certainly going to usher in a whole new batch of even stricter federal regulations. So if a settlement company would like to stay in business, they better heed the warnings and get the heck out of TASC and USOBA and cut off the funding now.
As far as my personal opinion, Debt Settlement absolutely plays a key role in a consumers debt relief arsenal. I certainly don’t want to see the option taken away as it would severely impact the options of debt burdened consumers. The industries problem is for far too long, there were very few companies or individuals willing to stand up and call out their peers on all of the bullshit.
However, I now feel that with the new regulations, most BS settlement programs will thankfully be going out of business soon, and the tide has now shifted to I think a small number of companies waking up to the fact that if they don’t start speaking up then the entire industry will get regulated out of existence for the most part. I am glad to see some companies starting to realize that if they don’t focus on consumers they will not be in business very much longer.
Hi Guys,
I thank you for speaking your mind and sharing your opinions. I truly believe you guys are on the consumer’s side as are we. I believe that this FTC ruling is a great day for any of us who have always wanted to help consumers. I realize that there has been allot of bad players in this industry to the point where you can’t identify the legitimate companies.
We (New Era Debt Solutions) has ALWAYS been performance based. Yes we did charge a small retainer but the bulk was based on earning it.
I think we can all agree that sometimes and in the case of debt ridden consumers, there is a benefit in having the funds no easily accessible. The funds do belong to the client and they can pull it out at any time, yes we benefit by seeing that they are putting money aside. But what i think might not be realized here is the reason why that benefits the client. When you settle and account or go into negotiations, it is our responsibility to ensure the clients will be able to satisfy that settlement. They are NOT always lump sum, and if they are term settlements, determining the track record of the client will help ensure they can fulfill the obligation. If they can’t the consumer loses.
I think Damon you might agree that settling an account is also about ensuring they can fulfill the responsibility to the creditor, not just collecting a fee.
Believe me that settling the 162,000,000+ was not by accident and certainly not a cake walk.
I really look forward to meeting you all in person in NC. I believe we can really come together to help clean up the industry, bring transparency and results for consumers.
Cheers! we need to celebrate this ruling. it is a vindication for the hard working companies and the employees that fight everyday for the consumer.
See you all 🙂
Alex Viecco
New Era Debt Solutions
Hi Steve,
New Era Debt Solutions, Dan and I are very happy to participate in any way possible to fight for the consumers. They absolutely need a true service that provides value and not a bunch of talk about how they might be serviced.
The FTC ruling is crystal clear and we want to support all those who will comply with the ruling. This is the time and place for the companies to step up and be heard on behalf of the consumers, I will be rearranging my schedule to be there so should any of you who plan to provide this valuable service to consumers.
I look forward to meeting many of you personally and some of you to see you again.
Alex Viecco
Vice President/Co-Founder
New Era Debt Solutions
Hi Steve,
New Era Debt Solutions, Dan and I are very happy to participate in any way possible to fight for the consumers. They absolutely need a true service that provides value and not a bunch of talk about how they might be serviced.
The FTC ruling is crystal clear and we want to support all those who will comply with the ruling. This is the time and place for the companies to step up and be heard on behalf of the consumers, I will be rearranging my schedule to be there so should any of you who plan to provide this valuable service to consumers.
I look forward to meeting many of you personally and some of you to see you again.
Alex Viecco
Vice President/Co-Founder
New Era Debt Solutions
I am excited and hopeful that this could be the start of something that actually will be very beneficial to consumers instead of the typical ruse of simply providing lip service to and using consumer protection as a front to hide the true motivation of protecting and maximizing profit for participants. Looking forward to the Rally in Raliegh.
I am excited and hopeful that this could be the start of something that actually will be very beneficial to consumers instead of the typical ruse of simply providing lip service to and using consumer protection as a front to hide the true motivation of protecting and maximizing profit for participants. Looking forward to the Rally in Raliegh.