Why You Shouldn’t Call a Debt Settlement Salesperson

Episode Transcript

Hey, welcome back to the Get Out of Debt Guy show I'm Steve Rhode, the old original Get Out of Debt Guy. And with me is Damon Day, the less old, uh, original Get Out of Debt Guy. Uh, before we say hello to Damon, I want you to remember, you can always reach him at his website, Damon day, D-A-M-O-N-D-A-Y.com schedule a free call, talk to him about anything debt related. Say hello, Damon. How's everybody doing?

You're having a great day today. Aren't you? I'm having a great day. Started with the dead battery in the truck. Well, yeah, we started the podcast, uh, and just about got to hit record and then Damon just vanished.

Went out and my battery died in my truck. Well, you're pretty close to being able to make a country song out of it. My dog's still alive though. So I don't have an ending. So you were not here last week.

I, um, hold the show across the line by myself and you are back this week with a lot to talk about. Um, Damon, you have, you know, before we get into that, I do want to talk about, um, you know, we had somebody came into the ask Steve chat and, uh, they, I like the fact that they acknowledged that I'm still, uh, an AI bot on the site, but they really appreciate the fact that I'm there and able to answer questions from my experience and they said that their bot is quite good. It is very good. You forget it's an AI bot you're talking to actually. Yeah.

You know, I work on it every day to make it better, but, uh, I was somebody who said that they listened to us on the podcast and, uh, they've already talked to you and he, I guess it's a he, they are, um, still struggling with that whole moral dilemma about bankruptcy. They've got an appointment scheduled with an attorney. Uh, they, they've talked to you, um, and they listened to our podcast and I get it. Man, do I get that? The, the whole struggle about what is the right thing to do, and this is going to lead into our first story.

You'll see the segue here. Um, you know, when I was going through my troubles, I felt exactly the same way. And it wasn't until years later where I got to step back and take a good, honest look at that one option bankruptcy and say, yeah, wait a minute. It made my whole life better. Uh, and when you're stuck in that, I'm so in debt, I don't know what to do.

Um, you know, bankruptcy feels immoral and you know, that's what this person was saying on the, on the chat this morning. And again, I totally understand. Uh, you know, we're, we're all fed that stuff by personal finance shows and people who don't know any better. And, you know, the, the Dave Ramsey's of the world, I'm just using his as an example, but people lose sight of the fact that struggling for years and never getting ahead and leaving yourself in a financial precarious situation is not more moral, yeah, it's not, it's not, it's not, it's not, it's not, it's not. Yeah, it's not, I mean, and it doesn't even feel better.

I mean, it's, it's, I think people have gotten so conditioned to living paycheck to paycheck and always struggling. Okay. How am I going to do this? How am I going to do this? How am I going to do this?

And they, they cling to that. Well, if I don't pay this bill or if I go bankrupt, my insurance rates are going to go up, or I won't have a credit card for an emergency, or they have all these things that they've built up in their mind and they don't allow their mind to consider, what would your life be like if none of that stuff mattered anymore, what would your life be like if you weren't struggling, okay, this bill's due on the 5th, but I get paid on the 7th, so as long as I pay it by the 8th, after it clears, that bill's going to be late, but it's not going to be so late that they're going to charge you a fee, right, like doing that mental math, like every damn day as the bills come due and just, I got to make it to the end of the month, I got to make it to the end of the month, what would, just allow yourself to think about what your life would be like if you had enough money in your bank account to where when the month started, you already had enough money in your account to cover all the bills that were going to come due, just think about the mental space that you would clear up and the anxiety that you would clear up if you didn't have to spend hours and hours and hours a month, which many of you listening to this probably do, trying to figure out how to pay things, like it was already handled, everything was on auto pay, you had a savings, yeah, you can, it's not like if you go bankrupt or you settle your debt or, it's not like you're never going to have a credit card again, you can have a credit card like immediately, right, it's like all this stuff that you have built up in your head, it's like, you know, no, I'm going to keep paying this $2,500 a month in interest because these things I have built up in my head that may or may not happen, in most cases they won't happen, and it's, it's awesome for the banks that people think that way. Well, yeah, and the funny thing is, nobody, David and I don't need to sell you a plan about how you can magically rebuild your credit and recover faster than the situation you're in right now, that's not a plan, that's reality that's already free that people work hard to avoid. Yeah, and you know, we're not, again, we say this all the time, we're not pro bankruptcy, you know, you call me, I'm going to say, you got to file bankruptcy. No, no, we're pro, look at all of your options and, and evaluate them for what they are, and then if we have, uh, you know, some emotional, I don't even want to call them hangups, hangups is not the right word, if we have some emotional attachments to different things or different ways of doing things, that's fine, let's just talk through them, right?

Because I mean, everybody has a red line and it may be that, you know, you're in a situation where bankruptcy doesn't make sense, or even if it does make financial sense, you just feel strongly that you don't want to do it, that's okay. If, when, when somebody calls me for advice and we're going through all these different options and, and I, I go through and I say, Hey, look, here's, here's why I think a chapter seven would make a lot of sense and boom, boom, boom, boom, boom. If they say, Hey, look, I understand that, but I really, you know, here's my reason, X, Y, Z, whatever, I don't want to do that, I'm not going to, now I might question, I might push back just a little bit just to kind of see, you know, where they're at and where they're coming from. But it's not like, well, my advice is file bankruptcy. If you're not going to listen to me, well, screw you.

It's okay. Well, let's talk about what your life will look like to avoid that. And let's look at this option and let's look at this option because every option that we look at is going to have different pros, different cons, different costs associated with it, and I always tell clients, look, it's your money, it's your credit, it's your life, it's not mine, you know? So I don't have a horse in that race like you do. So I will walk you through it.

And if you think the, you know, alternative is better than your, you know, conviction not to want to do the bankruptcy, then that's fine. Again, it's your money, it's your life. My job is just to help offer clarity. So whatever decision that you make, you understand why you're making that decision and you're confident and comfortable in that decision. And if you're saying, look, I'm willing to spend $50,000 more, and I know what that's going to look like over my life, but I'm willing to do it and it's my money and I'm the one working every day for that money, right?

So it's absolutely your decision. But I just want you to make that decision knowing what those costs are going to be and what those cons are, because oftentimes that does change your outlook on different strategies if I present it as this will save you $50,000 and this is what your life will look like, oftentimes it's like, you know, I really want to pay this debt back, but I have been killing myself for 10 years trying to do it and it's not working and I'm not getting any younger and I think, you know, even though I don't want to do that now that you've kind of laid out those options and how it would work, I think I want to explore that a little bit more, maybe I should talk to a bankruptcy attorney and then we can work through that. Well, this is how I worked you all the way up to the segue. So if you haven't, yeah, I did, because if you, if you're listening and you haven't subscribed to the weekday emails, the free emails on getoutofdebt.org, you're missing all the latest news posts and stories that I publish because Damon, we talk about how people feel. And then just this week I published this post about a fired debt settlement salesperson keeping a journal.

And if this is the type of person that you are turning to for advice and counting on them to say magic words that make you feel better and help you avoid those emotions that make you feel like you're a failure, oh boy, because this journal comes from a court filing by an employee who was a new employee at, I do know the debt settlement firm, but I didn't put it in the story, but it's a big company. It doesn't matter. It's a big company. Cause they're, it's all the same. It doesn't matter what the name is.

Like, oh, I'll avoid this company and this company's fine. They do the same thing. Well, this one had 57 pages of exhibits. If you go to getoutofdebt.org, you want to read the whole thing yourself. Just hit the little search icon up in the top, right.

And look for a fired debt settlement salesperson kept a journal. So what was interesting about this, and this one caught your eye too, by the way. So they made it 17 days at the company before they were fired. But one of the things that they were fired for was staying on the phone too long and having a manager yelling in their ear, wrap it up, wrap it up, wrap it up. Just trying to get them to the close and, you know, it tells you exactly what the financial qualifications are of a person that you're talking to, because either you clicked on an ad, you called a phone number, you heard a radio ad or something.

If you're talking to a salesperson, they're trying to sell you something. And when you read what this person went through, it's an eye opener. And it's not isolated. It's every salesperson at every company. I mean, it's just, you know, it might be a nuanced a little bit, but it's the same experience.

Steve, you and I have been bitching about this for what? 20 some odd years now. I literally it's, and it's always the same. And, and, you know, and I get it, you know, you're in debt. You don't know what to do.

You get a phone call, you see an ad online, you get a letter in the mail, whatever. If you're in a situation where you're looking for help, I want you to go to getoutofdebt.org. And I want you to go to the search bar and find this article. If you go, if you go, what is this? July 8th, 9th, is that today?

The 9th. All you have to do is go to recent posts. It's on the first page today, but if it's late, if you're hearing this podcast later, just do a search for, like Steve said, a fired debt settlement salesman, and it'll pop up. But this is the type of person that you're talking to when you call in to a debt relief company. And, you know, nothing on, on the salesperson.

Most of these salespeople are super nice. They're just doing their job. They're trying to earn a living for their family. They're, they're probably trying to get out of debt themselves. They're trying to earn a paycheck and that's all fine.

But is that the type of person you want to call when you don't know what to do? And you're trying to figure it out and you're drowning in debt and you're, you know, playing all this mental gymnastics, trying to keep everything current and you need good advice and you call into this debt relief company and you end up talking to somebody that has been at the company for a week, two weeks, watch some sales training videos, and now has a quota. In this case, it was, was it 12 sales a month they have to hit? Yeah. And if they don't hit 12 sales a month, they get fired.

So here's the thing. It doesn't matter what your situation is. I can already tell you what they're going to advise you to do before you tell them what your situation is. It doesn't matter. They're going to advise you to hire them, enroll in their program, no matter what.

So what the hell's the point of calling? I mean, unless you already know you want to hire that company and you're just looking for specific details about that company, that's about it. Other than that, don't be calling for advice. You know, these people, what do they say they have? You know, they're, they're certified debt relief consultants or whatever it is.

Certified in what? Yeah. And, and this article was, you know, the, the, uh, the court filing was attesting to that he, he sat through a class of what, 40 new potential salespeople. And they all went through the certification process classroom, whatever it was, probably a couple of videos or whatever, and all 40 of them passed it. So, I mean, what are they qualified in?

All 40 of them passed. I mean, if you have 40 people go for a GED, not all 40 of them will get it. Well, it also describes that there was another class of 31 new hires, uh, that were told the 12 deal number, you know, you got to make 12 sales and then it was, uh, later raised to 15 with the majority of the class terminated and recycled from missing that number. So if you put a good salesperson in front of a sales quota, they're going to try to meet that quota. Yeah.

I'm, you know, if you talk about, you know, morals and things like that and obligations, that salesperson might have a wife, might have kids, who are they going to choose the kids getting a roof over their head that month and them keeping their job or telling you, maybe you should talk to a bankruptcy attorney because your situation is not one that would lend itself to their debt settlement program very well. What are the consequences for that salesperson? If you enroll in the program and give them a thousand bucks a month or whatever it is for a year and a half, then end up just getting sued multiple times, getting your wages potentially garnished cause you can't, you don't have the funds and then going bankrupt. What are the consequences for that salesperson who honestly probably doesn't even work at the company by that time anymore. So, but even if they did, you're never going to talk to that person again.

Their job is to make sales. Once they make a sale, they don't talk. So they don't even have the, the kind of that obligation you'd feel. It's like, okay, I can't, I can't bend the truth. I can't over-exaggerate because I'm going to at least have to answer to this person that I convinced to enroll in this program.

If it doesn't work, they're going to be calling me upset. No, they're not. That's kind of like how we got into that mortgage crisis back in the early two thousands when the banks figured out that they could just package up all these bullshit mortgages and sell them off in a secondary market and have no consequences for writing bad loans. That was somebody else. That was the poor sap who invested in those mortgage backed securities.

They're the ones that got left holding the bag. So what happened when all these mortgage lenders, AKA sales people, were, were, were free of consequences of the sales that they were making. They were free to sell things to people that they knew probably wouldn't work out too well, but they had no consequences on the backend. Same thing is going on here. They get credit, they get a sale, they get money with no consequences if you crash and burn.

Right. But the reason that people fall for it, it's not because they're dumb, they're desperate, right? And so they hear magic words, your payment's going to be cut in half. And according to this court filing, the consultant on your call may have passed the industry certification exam and is now working. I know.

It sounds good. It sounds, I declare you certified. But what if the whole industry is a piece of shit? You have a piece of shit certification issued by a piece of shit industry. Yeah.

I mean, you take a financial advisor that is bound by fiduciary laws to do what is best for you. No debt relief salesperson is bound by those same laws and regulations. And this particular person was working on a script on commission under an enrollment quota with managers listening to their calls, pushing him to close. Yeah. Talk about pressure.

Yeah. I mean, he's got one option for you. Everybody that calls his program is going to be the best thing you've ever heard. Yeah. And this poor guy did his best as he could.

And he got fired 17 working days later because he only sold nine people into the program, not 12. Yeah. And he came in and worked for free on the weekend to help. close some more people into the wrong solution. So let's say you're that guy's cubicle buddy and you see him get the ax, cause he only got nine.

You think you're going to be extra motivated to make sure you hit your 12? Because you get a job, you get settlement. Yeah. I mean, and, and see, you and I could talk about all the reasons. It doesn't make any sense for hours, but just that one reason alone that they have an actual quota.

And that, and that they will get fired if they don't hit their quota. Yeah. And you call in and be like, so is, you know, is this a good idea in my situation? Absolutely. Of course it is.

Yeah. Yeah. It just, it, you know, and you'll call it, you'll be on social security, you know, completely judgment proof, easy, easy, easy chapter seven, wipe out all of your debt, get a fresh start, rebuild your, you know, retirement, no doubt about it, and some guy will pitch you on, no, you should enroll in this program. And how much is social security? Oh, 2,500 a month.

Well, for only a thousand dollars a month, we can get rid of this 50 grand in debt or whatever it is. Yeah. And they will pitch you hard on that. Yeah. And what they'll say is, but, um, I know it's going to be tough and I know that it's going to be hard to afford cause you're only getting social security, but this is the more moral decision.

So yeah, they'll use that too. They'll use that moral. They'll use that, uh, you know, bankruptcy is not moral, but this is cause you're paying some of it back and see what's your, I always like your take on that, uh, but more or less moral based on how much you pay back. Do it. You do it.

Well, no. So yeah, if you, you decide that you're going to settle your debt and you pay half back. Does that make you all moral, half moral, normal, moral? Yeah. Like where's that line, right?

Like where's, well, pay none of it back. That's not moral. Don't pay half back. That's moral. Right.

Or, or what about this? What if you get in a DMP and you pay it all back, but none of the interest that you agreed to pay back. Right. Is that less moral, 80% moral. So where, you know, it's, it's mental gymnastics and we're, and we're, we're, our brain is like playing tricks on us with this kind of stuff.

It's either you honor your obligations or you don't. Right. I mean, if, and that's, I'm not saying don't honor your obligations. If you have the money and you can honor, that's fine, but you also have other obligations, right? The, the bank is not the only obligation you have in life.

Well, you have obligations to family members, friends, your kids. I mean, if you think about that, like you use that argument all the time, Steve, is it more or less, go ahead. I had, I had a client and her son had fallen on hard times, adult son with a little grandchild, came to live with her. And she was the primary breadwinner for that family. She was making a hell of an income.

And one day she was driving down the highway and had to swerve to avoid a car and went into the median strip and hit a railroad tie that a construction company had left there in the grass. And she broke her back. The car was total, she couldn't work. And she was worried about the morality of repaying her debt. Sometimes life just gives you a shit sandwich and that's not about morality, it's just about reality.

You know, speaking of shit sandwiches, I remember this from when I was a kid, I had a neighbor, his name was Mick Summers, a neighbor right, right next door. And I was third grade, fourth grade, but, uh, he was, this guy was in construction. The first time I ever heard shit sandwich was from Mick Summers. And his saying was, you know, life's a shit sandwich, but sometimes you got to take a bite. And I still remember that to this day.

I thought that was the greatest line ever as a kid. I was like, yeah, that makes a lot of sense. I'm jiving with that. Sometimes you got to take a bite. You know, you don't want to do.

I turned to a friend of mine in high school English and I don't know where it came from, but I just said to him, you know what, Larry? The earth's a ball of shit and you're just texture. And that's what we all are. Nobody's thinking about what decision you're going to make about your financial situation. And here's the thing.

Um, if we're going to talk about morality and debt, when you are 86 years old and you have no money, no savings, you spend all those years giving it up for what you thought was a moral decision 20 years earlier, how is that more moral? How is it more moral for you to set yourself up for the ultimate failure when you can least afford it and deal with it? It's not. Now there's a quote in this post, which I think is so true. It defines exactly what a sale is.

And a sale is the action and reaction of mind upon mind, salesperson against you. According to well-established psychological principles and rules. Now that sounds boring, sounds dry, but that's because it was written in 1913. These strategies are not new. The debt salesperson who is looking for your emotional button to push is doing it to close the sale.

And if you say anything about, you feel like you have a moral obligation to repay your debt. Guess what button they're going to push. So. Anyway, You are one of 12 that they need to close this month. And the thing is, you know, you know, I know it feels like, okay, I'm going to do my research, I'm not going to fall for that.

And you're going to call multiple companies, multiple debt relief options, multiple companies. But every single salesperson is doing the exact same thing. And you don't need me to tell you that you already know that instinctively. But like Steve said, you get scared, you get emotional. You're not sure what to do.

And you end up going with the one that sounds the best or sounds the most trustworthy, but every single one of them is doing the same thing. Let me tell you why my solution is better than the next guy, because I have to make this sale so I don't get fired. That's not, not the kind of pressure you want an advisor working under, you know? So people go, how am I different? Well, number one, I don't have anybody that can fire me.

So I don't have a quota, but you'll notice the difference. If you reach out to me for a consult, we will be going over your situation in detail, and we will be looking at all these various options. No decisions are going to be made on that phone call, right? You should not be making a decision on one phone call. It'll be information to go research and think about and look at and consider.

And yeah, clients do have the option to hire me for a lot more in-depth strategy sessions and, and trying to really figure out what to do, but here's the thing. You have a phone call with me. And then what's very different you'll find is like, you know, when you'd call a debt settlement company or a debt management program and you tell them, well, I'm going to, you know, I appreciate your information. I'm going to do some research. I'm going to talk to some more companies.

How do they react to that? How do they react to you telling them you're going to go talk to some competitors? Oh, they put more honey in the pot. Oh, they, they try to do whatever they can to convince you not to do that. And when you talk to me, I'm all about options.

I'm like, yeah, like I had a call last week and I was talking to a client about, you know, their options. And I was looking at the situation and I said, you know, I don't think a bankruptcy is going to work for you because of this, this, and this. And they had some circumstances where, you know, I always say, look, I'm not a bankruptcy attorney, but I can play one on TV. I know enough to be, to be dangerous. And I'm almost always right.

But I also know enough to know that I'm not a local bankruptcy attorney. And until we know for sure, we can use what I think as guidance, but we're going to verify, trust, but verify, talk to a local bankruptcy attorney. And more often than not, I am right. I get those phone calls, but you were right. The attorney said exactly what you said he would say.

But at least that way we know, we know we're working with good information. Um, and that's what happened last week. Um, I was talking to somebody and I said, look, the bankruptcy is very likely not going to work. And he goes, well, I have an appointment with the bankruptcy attorney on Monday, and this was Friday. And I went great.

I mean, you'll keep that appointment on Monday. This is what the attorney's probably going to say based on your situation, but it's a free call with the attorney. Take that call and then shoot me a text back Monday afternoon or Tuesday and let me know where you're at and we can go from there. And I got that text. You were right.

Bankruptcy attorney said this, this, and this. It's not going to work. How can I move forward with you? I need your help. And this debt settlement person was right about one thing.

When they manager was yelling in their ear, wrap it up, wrap it up. And they were forced to end that call and schedule a Monday callback. He wrote down exactly what he knew would happen next over the weekend. The customer would either be called from a different settlement company. And she was, and she texted him back that she'd gone with a competitor.

So, you know, I don't know how many more times we need to say this in our lives, but this is just the way it happens. Well, I think we have to keep saying it because to my knowledge, people still call debt relief companies, right? So obviously not everybody has heard our podcast and our, our very sound on why you should not call a debt relief, debt settlement, debt management salesperson, unless you already know exactly what you need to do. And then you're in you and you decide you want to hire a company, which I can give you a lot of reasons why that probably doesn't make sense either. But you should only call a debt relief company.

If you already know exactly what you need to do, because you've researched it. And you've talked to somebody like me, shameless plug that can help walk through it and take 25 years of experience and say, this is exactly what your life will look like on these various paths, so you can make a good decision for you and you already know you want to do X, Y, or Z, and now you just want to shop companies. That's when you would call. Okay. I know I'm going to hire a debt settlement company.

I don't think you should, but if that's your situation, then you can call multiple debt settlement companies and listen to all the sales pitches. Yeah. But then at least you know, you're getting the sales pitches and you can ask them about their fees and the nuances of their program and how, you know, what kind of fake attorneys they have working for them that are going to pretend to, you know, help you if you get sued, which they don't, but let's pretend they do like, then you can get all of that nuanced information, but calling them before you know. Yeah. If you want to screen it quickly, just call all the debt settlement companies you can, and all the credit counseling companies that you can, and just ask them right off the bat, Hey, I'm thinking about going with you, but I would like for you to send me a copy of your client agreement so I can look at it.

They will not do it. They don't want you to see it. And on the get out of debt site, uh, get out of debt.org. If you go down to the bottom and you look for my free link on contract decoder, you can decipher exactly what their contract says and learn the 14 different ways you're going to get screwed. Yeah.

You know, I, I keep going back to the, you know, there's this, this poor guy with his, you know, higher up or his boss or his manager listening in on these calls when, you know, I'm sure he's nervous, right? I mean, he's only been doing this job for a week or two. He doesn't, and he doesn't know what he's talking about. Probably. He doesn't have any background in this stuff.

He just went through the bullshit certification. He's brand new, like baby giraffe out there trying to find his legs, trying to figure out how to sell this program that he probably doesn't even understand himself, but yet is going to tell you how to do it. And now imagine I'm this poor guy and I'm on the phone with somebody. And even if I knew enough to think this guy might need to look at bankruptcy and, and say this client I was on the phone with last week and they say, oh, I have a bank meeting with the bankruptcy attorney on Monday. Now, because I'm me, I can say, great, good idea.

Let's go do that. Let's explore that. Let's see, there's no emergency here. You're not behind on anything. You're not getting sued yet.

We don't have to decide something today on one call. We got plenty of time to take a step back and look at all this information. We're dealing with a lot of debt. We're dealing with a lot of money. Why should we rush into a decision?

Well, the reason they want you to rush into a decision is because they need the damn commission. That's why they want to rush you into a decision. It's not in your best interest to rush into anything. But so you're, so imagine you're that sales guy and that person on the other end of the phone says, oh, I got a meeting with the bankruptcy attorney on Monday. Oh, you don't want to do that.

Now you've got your boss listening in and your sales guy trying to meet your quota. Are you going to say, great idea. Keep that appointment. Here's probably what that attorney is going to tell you. And here's boom, boom, boom, boom, boom.

So meet with the attorney and then give me a call back on Tuesday. If it doesn't seem like a viable option. No, a, he wouldn't know what the salesperson wouldn't know enough to tell you what the attorney's going to tell you. And B they probably fire him before the end of the month. And his sales quota was short.

He's, he's actively advising them to get off the phone and go talk to a competitor because the bankruptcy attorney is a competitor, the manager is going to say in his ear, wrap it up, wrap it up, get off the phone. I got to teach you how to counter the bankruptcy argument. It's immoral. You don't want to do that. Worst case scenario, you'll never get a credit card again.

Your credit will be ruined forever. It'll be published in the paper. Your community will shun you. You will have to move to Siberia. And yet the re the reality is that your credit will recover faster than it would have otherwise.

And you will do better financially than you would have otherwise. So, no, no, no, that's not possible. That's not possible. So, uh, speaking of bankruptcy, you want to talk about, uh, they said tax debt can never be wiped out in bankruptcy. Yeah.

Speaking of bankruptcy, because we never talk about bankruptcy. Well, we're always speaking of bankruptcy, but yeah, there's another always talk about it is because there's so many myths to unravel. Yeah. And here's the thing. I don't get paid when a client goes bankrupt.

No, like I don't get bankruptcy referral fees or anything like that. So I, if I'm recommending you talk to a bankruptcy attorney, it's not for my benefit. So there's gotta be, I mean, well, I shouldn't say it's not for my monetary benefit. So I do get a benefit out of that because I feel really good. Right.

So there's, you know, if I'm not going to get paid for something and I recommend it, there's gotta be a reason. Cause you always look, we'll follow the money. Why is he recommending this? You care about our listeners, our friends, and you care about giving them the right advice. Yeah.

And I do get paid when clients hire me for more in-depth advice and they really want some serious help, or they've got a lot of debt and complicated problems, but what they're hiring me for is to help them work through all these options. So even when they're paying me, the difference is when you pay me, you're paying me to help you walk, you know, walk through these options and go speak with the bankruptcy attorney and consider debt settlement and consider credit counseling and consider Dave Ramsey type approach and consider all the stuff in between and really work it through. So you can feel comfortable on making a decision. So you're actually paying me to help you do the things that you really need to do right now, versus you are not paying the debt settlement salesperson. They are getting paid by somebody else to sell you debt settlement.

I'm getting paid by you to help you make the best possible. That is the difference. So people say, well, you do this all for free. You don't get paid. No, I get paid.

I just created a business 20 some odd years ago that was like, what are all these people that are in debt missing? They're missing good, solid advice. They're missing a knowledgeable friend that can help walk them through this stuff so they're not making their life worse by trying to fix it. That's what they're missing out there. I can fill that need.

And isn't that what good business is? Find a need that's out there and figure out a good way to service that need. That's what I do. So taxes and bankruptcy, very poor segue to taxes and bankruptcy. But yeah, most people don't know.

Steve wrote an article, one of many articles about the subject on the website. But if you are dealing with tax debt as well as consumer debt or even just tax debt, most people mistakenly think that tax debt is not dischargeable. And that's actually not true. There is a certain rules that the debt has to meet. And Steve, what you want to explain the 3-2 rule?

Yeah. So there's the three-year test where the tax return was originally due more than three years before the bankruptcy. There's the two-year test where you actually filed your tax return more than two years before you filed your bankruptcy. And, um, the 240-day test where the IRS assessed the tax more than 240 days before you file, uh, all of those can be discharged. All you have to do is just meet some pretty simple, you know, uh, not even hurdles, but specifications.

So this is not a, your tax debt can never be eliminated. We've heard that for years. Yeah. Um, but it can. Yeah, so in plain English, if you have back taxes that were due from like a 401k withdraw in 2025 and now you owe $10,000 and you don't have it, that debt cannot be discharged in a bankruptcy because it was for tax year 2025.

So that three, two-year rule he's talking about is that the tax year has to be more than three years than the bankruptcy filing. So in this case, we would be talking about it's 2026 right now. So we'd be talking about taxes that were your 2022 tax year and older, very likely. Depending on when you file for 2025, your 2023 will be coming up at some point. But right now, any taxes that are from 2022 or older are potentially, and I say potentially because there's other tests they have to meet, are dischargeable in bankruptcy.

The other prong to that test is the return has to have been filed with more than two years before the bankruptcy. Meaning, if you have a $10,000 debt from 2022, but you did not file your 2022 tax return until 2025 because you didn't file for a couple of years and you tried to clean it up and then you filed in 25, well, that debt would still not be dischargeable even though it was in 2022 because your return has not been filed for more than two years. So a lot of strategy can go into that if you have a lot of taxes, especially older taxes do, and now we're only dealing with potentially a timing problem where it's just like, well, I have a whole bunch of tax debt from 2023 and 2024, they're not dischargeable, but in a year, 2023 will be. And two years, they will be. How long can you hold your breath?

So well, wouldn't it be nice if you had a consultant that could help strategize and come up with a plan and, well, what happens? Can I really wait a year or two years? Because people just think, what do I need Damon for? I just have to decide if I'm going to file bankruptcy or if I'm going to settle or if I'm going to do this. The actual timing and the implementation and the strategy of whatever you're going to do matters more than the thing itself, right?

So people say, well, I'm probably just going to file bankruptcy. What do I need you for? Okay, fine. Go file bankruptcy. Should you file right now?

Maybe you should wait. Well, you know, it's funny. You send some settlers out across the country in the wilderness. What do they all look for before they go? A guide.

Yeah. Hey, is there anybody here that has been out there before? Yeah. I would like you to show me. I heard it's more moral to get lost in the woods.

Yeah. No, I don't want to take a guide. I'm just going to go and see what happens. A ship comes into port and who gets on the ship before it gets into the port? The pilot who guides the ship into the port because they know what they're doing.

Yeah. Yeah. The guide can say, yeah, me and my best friend went out there last year. Only I came back. I will show you what my friend did.

He died. So we're not going to do that. Yeah, exactly. All right, Damon, we're running short on time, so let's wrap it up. All right.

All right. Put a bomb. All right. I will see you next time. If you haven't followed or subscribed yet, what are you waiting for?

Do it now. Until next time, have a great day with a fresh battery. All right, Damon. Yeah. And if you would like to talk to me, damonday.com.

I am backed up a little bit on help requests. So if you put in a help request for a free call and I haven't gotten back to you yet, you will get a response this week. I'm just backed up a little bit, but I will get to you. Damon at damonday.com. Be happy to help.

Peace. That's funny. I was backed up a little yesterday. Well, that's a different show, Steve. He is the old get out of debt guy.