When the Attacks Get Personal, You’re Hitting a Nerve
Steve Rhode and Damon Day have been targets of personal attacks from debt settlement companies for years. Not because they’re wrong, but because they tell consumers to gather all the information before making a decision. That simple message threatens the sales machine, and the response from the industry has been predictable: attack the messenger.
The Anatomy of a Debt Industry Attack
When Damon speaks out against a company hurting consumers, the response is never a factual rebuttal. Instead, anonymous websites appear claiming to be “consumer warnings” written by “consumer advocates.” No names, no links, no accountability. Just allegations designed to scare people away from getting a second opinion.
“They can’t really attack the message of ‘feel free to talk to everybody and then talk to me and make an educated decision.’ So they have to attack me personally.”
— Damon Day
The irony: the attacks drive more consumers to find Damon and Steve. People Google the claims, find the websites, read both sides, and consistently conclude that the people offering free information make more sense than the companies trying to silence them.
The Never-Ending Cycle of Debt Relief Scams
Steve profiled Harvey Warren, former president of the National Consumer Council, which the FTC shut down as a “bogus credit counseling group.” Warren is back promoting debt settlement through a book. This pattern repeats endlessly: the same operators move from credit counseling to debt settlement to whatever comes next. The vehicle changes. The goal of separating people from their money does not.
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With new FTC rules banning front-loaded fees, the debt settlement industry trade group predicted 85% of their members would go out of business. That means consumers currently enrolled in these programs could find their company gone, fees already paid, debts unsettled.
Financial Advice Without Context Is a Sales Pitch
Damon makes an important distinction: he never recommends a solution without understanding the client’s goals first. The two biggest goals he hears are saving for retirement and saving for kids’ college. Both have massive opportunity costs when money goes to debt repayment instead.
If you have $100,000 in debt and need to raise $50,000 over three years for a debt settlement program, what could that $50,000 do in a pre-tax retirement account? If you’re retiring in ten years with nothing saved, the math changes everything. That’s why context matters and why a salesperson who recommends a program without asking about your goals is selling, not advising.
“Is it more important to pay for the past or to save for the future?”
— Steve Rhode
Real People, Real Bankruptcy Opinions
Steve’s homeless project asked real people on the street to answer debt questions from GetOutOfDebt.org. One woman, Willamina, started firmly against bankruptcy. By the third question, she was recommending it. Robert, who had never worked in finance, suggested a reverse mortgage before anyone else thought of it. Neither mentioned debt settlement once.
This Show Is For You
The Get Out of Debt Guy Show with Steve Rhode and Damon Day exposes how the debt relief industry really works, who’s trying to separate you from your money, and how to make informed decisions. Subscribe wherever you listen to podcasts, and visit GetOutOfDebt.org or DamonDay.com for free help.
Dealing With Debt? Understanding your options is the first step. See how all your debt relief options compare — including ones most sites won’t tell you about. The Find Your Path quiz gives a recommendation based on your actual numbers, and the Scam-O-Meter checks any company’s complaint history before you sign. Federal Reserve research shows bankruptcy filers recover faster than those who don’t file.
Free Tool — Contract Decoder: Have a contract from a debt relief company? The free Contract Decoder analyzes it for red flags, hidden fees, and problematic terms — before you sign anything. Decode My Contract →
Key Takeaways
- Debt settlement companies attack consumer advocates personally because they cannot attack the message of 'gather all the information and make an educated decision.'
- The debt relief scam cycle repeats: cowboys exploit credit counseling until regulators shut them down, then they move to debt settlement, and the pattern continues with each new vehicle.
- Front-loaded fees in debt settlement mean you pay all the company's fees in the first 6-18 months, leaving no money for actual settlements and no recourse if the company goes out of business.
- A debt settlement salesperson directed a consumer to wire $8,500 to their personal bank account, illustrating how rogue actors exploit desperate people.
- Financial advice given without understanding your goals and context is not advice at all. It is a sales pitch.
- The opportunity cost of debt repayment is often more damaging than the debt itself. Money spent on debt settlement could be building retirement savings or a college fund.
- Bankruptcy should never be dismissed without examination. Even people initially opposed to it often change their mind when they see the full picture of their financial situation.
Full Transcript
Click to expand transcript
Episode Introduction
Steve Rhode: Welcome back, you’re listening to Steve Rhode and Damon Day. Damon is at DamonDay.com and I’m at GetOutOfDebt.org. This is Steve and this is Damon.
Damon Day: Hello Damon.
Steve Rhode: And we’re back again talking about credit and debt issues. We’re debt coaches, we’re debt experts. We help people all the time who have financial problems.
Personal Attacks from Debt Settlement Companies
Steve Rhode: We write about stuff on our mutual websites and the response, rather than to have a discussion about the facts that somebody might disagree with, instead the response is to levy some personal attack or slam against us and totally avoid talking about the facts.
Damon Day: They’re attacking me because I guess I’m an easy target. But the main thing is that when I speak out specifically against specific companies, and the reality is if I see a company doing something that in my opinion is hurting people, I’m gonna write about it.
Damon Day: What I typically tell consumers is, talk to everybody, anybody that you want to, gather all the information you want, get all the opinions out there, and then come talk to me. We’ll sort through it together. They can’t really attack that message. There’s really no way to attack the message of, feel free to talk to everybody and then talk to me and make an educated decision.
Damon Day: So they have to basically attack me. “Damon owes back taxes, he’s not a licensed CFP, he’s a menace to society, don’t ever talk to Damon.” I mean, the reality of those attacks is that in the long run they only serve to drive more people to your site.
Steve Rhode: If you’re saying something that somebody feels compelled to launch a personal attack at you, you’re probably striking very close to home. You’re hitting the truth, so they’re trying to distract from that.
The Front-Loaded Fee Debate
Damon Day: Mainly it’s debt settlement salespeople. They’re definitely afraid because I essentially say just get all the information then come talk to me, and they understand that usually what they’re doing is selling a program that the client probably doesn’t need.
Damon Day: Someone responded to my challenge about how front-loaded fees benefit consumers. Their response was that it’s better to pay all fees up front because you can’t settle debts for at least six months. So if you pay all the fees up front, you can get them out of the way sooner. That doesn’t make any sense.
Steve Rhode: I had an interesting comment on the site today. A person’s debt settlement salesperson told them they had reached an agreement with their creditors and needed to wire $8,500 immediately. The salesperson gave them their personal bank account information. The consumer ended up wiring $8,500 into the salesperson’s personal bank account.
Creative Debt Relief Marketing
Steve Rhode: Listen to this credit counseling ad from Hawaii: “You know these companies are unreal on the mainland offering credit card bailout programs. Let me tell you something, there are no credit card bailout programs. Learn the truth from a company that does business the island way, from the heart.”
Damon Day: Their whole thing is essentially everybody on the mainland is out to scam you. It’s kind of like the old Christian debt relief strategy. You don’t want to work with anybody, you’ve got to come to the Christian company. I’ve found a lot of these debt settlement companies cloaked in Christianity are doing the exact same thing that all the other companies are doing. They’re just using it as a hook.
Harvey Warren and the Cycle of Debt Relief Scams
Steve Rhode: Harvey Warren was the president of a nonprofit credit counseling group called the National Consumer Council that got shut down by the FTC because it turned out to be a big scam. The FTC called it a “bogus credit counseling group.” Now he’s apparently back with a book still promoting debt settlement.
Damon Day: When you look at credit counseling back in the day, there were a lot of cowboys. A lot of these guys that are in debt settlement now used to be in credit counseling, making money hand over fist. Then the regulators came in and shut it down. A flood of people came over to debt settlement and they’ve been cowboying that industry for five, six, seven, eight years. Once regulations kick in, they’re just going to go on to something else. The cycle is just going to continue. The name of the game is separating people from their money.
The Homeless Project: Real People on Bankruptcy
Steve Rhode: Not too long ago we shot a three-part series talking to homeless people and having them answer questions from my GetOutOfDebt.org site. This week’s segment is about bankruptcy. What’s interesting is Willamina was at first totally against bankruptcy. She said no, nobody ever should file bankruptcy. But by the end of the third question, she was saying, “Do it.”
Damon Day: It’s interesting that even as astute as Robert was, he didn’t come up with debt settlement once. That’s how many people play on that fear of bankruptcy.
Why Context Matters in Debt Advice
Damon Day: I never will make a recommendation to a client unless I understand the context. If you don’t understand the client’s goals, you’re not making a recommendation in context. The two biggest goals when I talk to clients: they want to start saving for retirement, or save for their kids’ college. Both of those goals have an opportunity cost when debt is involved.
Damon Day: Sometimes even though bankruptcy might not be something you really want to do, if you can qualify for a Chapter 7 and literally wipe out your debt, and one of your biggest goals is your kids going to college in five years, you have to put a major importance on the opportunity cost. What’s the cost of that $50,000 you’d spend on debt settlement that could be going into a pre-tax retirement account?
Steve Rhode: You know the line I always use: is it more important to pay for the past or to save for the future?
Damon Day: I took that from you, Steve. I always tell my clients that now. Financial advice given out of context is a sales pitch.
Show Wrap-Up
Steve Rhode: You’ve been listening to Get Out of Debt with Steve Rhode and Damon Day. We’ll be back again real soon talking about scams and helping to keep you safe. Stay safe for now.
Frequently Asked Questions
Why do debt settlement companies attack consumer advocates?
Debt settlement companies attack advocates like Steve Rhode and Damon Day because they cannot attack the message of encouraging consumers to get all available information before making a decision. The advocates threaten sales by helping consumers understand what they are actually buying.
What are front-loaded fees in debt settlement?
Front-loaded fees means the debt settlement company collects most or all of their fees in the first 6 to 18 months of a 3 to 4 year program. This means your early payments go to the company, not toward settling your debts, and if the company goes out of business, you have paid fees for services never rendered.
How do debt relief scams keep recurring?
The people running scams simply move from one vehicle to the next. Many who exploited credit counseling moved to debt settlement when regulations tightened. When debt settlement gets regulated, they will move to the next opportunity. The core business model of separating people from their money stays the same.
Is bankruptcy worse than debt settlement for your credit?
No. Debt settlement results in delinquencies, settled accounts, and potential 1099-C tax liability, all of which damage your credit for years. Bankruptcy is a different path but not inherently worse, and it provides a legal fresh start that debt settlement does not.
Free Tool — 1099-C Tax Calculator: Received a 1099-C for cancelled debt? The free 1099-C Tax Calculator runs the exact IRS insolvency math from Publication 4681 Worksheet 2 — and covers the partial insolvency case most people miss. Run the Calculator →
What is the opportunity cost of debt repayment?
The opportunity cost is what you could do with the money if you were not paying it toward debt. For example, $50,000 spent on a debt settlement program over three years could instead be invested in a retirement account, potentially growing significantly over time.
How can I tell if a debt relief company is legitimate?
Be wary of companies that attack their critics personally rather than addressing facts. Look for companies willing to explain exactly how their program works, what the risks are, and what alternatives exist. A legitimate advisor will ask about your goals before recommending any solution.
