Debt Articles

OK, I Finally Have to Answer the Debt Management Guys “Rebuttal to Steve Rhode, The Get Out of Debt Guy Dork”

In April of 2010 the Debt Management Guys published a post titled “Rebuttal to Steve Rhode, The Get Out of Debt Guy Dork.” – Source. Now, due to the reposting and linking to that attack against me in the comments of this post I now feel like I’ve got to address it.

I asked the site if they would let me post a response over there but I’m not confident they will approve my comment requesting that so I’m going to write my response here so I’ve got something to refer to.

You can see where, on their post I submitted a comment which is awaiting moderation. My comment asked if they would post my response to their attack.

Where Did This All Start?

I originally posted an article titled “ WTF Dudes!” The article was in response to a press release they had sent out, shown below.

The Press Release

(I-Newswire) February 23, 2010 – Due to over $395 billion in delinquent credit card payments, debt settlement has become one of the fastest growing sectors in business startups today. Our full service net branch opportunity provides no start up fees and a fully integrated CRM software lead tracking system to allow brokers to focus on their core business of sales so we can handle the customer service.

While so many businesses are struggling to make ends meet, our debt settlement branch offices are growing at an enormous rate due to the decline in the economy. This allows savvy business men to capitalize on debt reduction services while providing a valuable service to clients who are behind on payments or unable to qualify for bankruptcy due to the new credit counseling requirement of 2005.

As of October 17,2005 all Americans seeking bankruptcy must complete a credit counseling program. The problem with this is that so many people are unable to afford the monthly payments in a credit counseling program, and must seek debt settlement. Debt settlement is the process of making payments to a savings account while attorneys negotiate on your behalf with your creditors to reach a settlement amount. Many companies out there operate without attorneys which is illegal in many states, says Michael Hart, CEO of

While we provide debt management programs providing interest rates as low as 0% depending upon the creditor through, debt settlement is a growing business due to the state of the economy and the 10% + unemployment rate. has a nationwide attorney backed network where attorneys in each state negotiate with creditors for settlements, some as low as 10% of the original amount. With no startup fees and an aggressive commission at 9% of the debt amount, this allows companies to recoup their investment quickly while building a residual income and providing a valuable service for people in financial hardship. “Many debt settlement companies have gotten a bad name due to not disclosing the key facts.” says Michael Hart, CEO of “Our goal is to educate consumers on their options so they ultimately can make an informed decision.” Debt settlement does initially have a negative impact upon your credit score initially since 35% of your credit score is based upon your payment history, but 30% of your credit score is measured by your debt to income.” This is why its so helpful to reduce debts in 4 years or less and then focus on rebuilding your credit,” says Hart.

Whether you’re an established debt settlement company that simply wants to earn more on each file or a mortgage broker interested in turning your unqualified borrowers into a healthy revenue stream, we have the opportunity for you: You’ll earn at least 9 points on each transaction. You’ll get all the support and training you need. Getting set up is easy…you don’t need a license and you can be up and turning a profit within 24 hours. Not to mention you’ll be saving your clients an average of 50% of their debt and you’ll reduce their monthly payments in about half– -all with out charging a single penny in upfront fees. – Source

My Issue With the Release

My original issues in the release were the statements made that I have highlighted above.

The problem is that the highlighted statements appear to not be correct regarding mandatory debt settlement if credit counseling fails and I have some concerns over the licensing statement.

The Debt Managements Guys Response

The Debt Management Guys, under CEO Michael Hart, elected to respond to my concerns by printing the following statement on their website.

It appears the approach was to personally attack me as a way to distract from the issues at hand.

Let me tackle the issues Mike raised in his rebuttal, individually.

  1. Allegation: “Some people just thrive on talking smack in the case of Steve Rhode, the self appointed get out of debt guy who claims to help you get out of debt for “free”. The truth is he wants you to come to his site so he can sell your information as a lead to a debt consolidation or debt settlement company;”Response: I don’t sell leads. All of my site relationships are clearly spelled out in the site terms. I could not find where Michael Hart disclosed on the Debt Management Guys site who his referrals went to. All I found was, “Our back-end operations are accredited by the USOBA and TASC.” Source
  2. Allegation: “Unfortunately the company he recommends was sued for violating Illinois state law. (Sorry to hear that Cambridge.) Steve is no stranger to getting in trouble with the law such as the case with the state of California issuing a desist and refrain order for his unlicensed bill payment software.”Response: Cambridge Credit Counseling had been sued by more than just Illinois back in the day. That is before new management came in and cleaned things up. Because of that Cambridge is most likely the most scrutinized and most complaint nonprofit agency around. in fact the Venable Law Firm refers to Cambridge Credit Counseling by saying “present-day legitimate credit counseling agencies, including those of Cambridge itself.” – Source. You can even listen to Christopher Viale talk about the past and how he led the charge to clean it all up.Regarding the California issue they mentioned. California sent a letter in 2002 to the non-profit group I ran. I’ve responded to that letter openly about why the claims made were not factual or accurate. You can read my explanation here.
  3. Allegation: “Steve’s personal life experience led him to bankruptcy which is a scenario I consider as the absolute last option since it wrecks your credit for ten years in most cases, not to mention you have to jump through all sorts of means testing hoops based on income and state guidelines. Hiring an bankruptcy attorney in most cases will stick youin a Chapter 13 scenario where you have to repay quite a bit of your debts back and relinquish control of your assets to the courts. You also will have an even more difficult time in finding a job with a bankruptcy on your credit report for ten long years instead of 7 years if you did a debt settlement or a credit counseling program that does not affect your credit score since you’re truly trying to resolve your debts.”Response: The author of that comment may consider it to be a last resort but that does not mean it in fact is. Bankruptcy is a debt relief solution, and in fact the only one with the power of the law behind it, that can effectively address difficult financial situations.More than 70% of the bankruptcy cases filed are a Chapter 7 bankruptcy where the debt is discharged in just a few months. People are then able to begin rebuilding their credit immediately.I have not seen any study that has linked the fact that someone went bankrupt with a massive loss of job opportunities.

    Most Chapter 13 bankruptcies do not repay “quite a bit” of the debt. In fact the majority of Chapter 13 cases fails and subsequently either convert to a Chapter 7 bankruptcy or are dismissed.

    A Chapter 13 bankruptcy remains on your credit report for seven years, the same length of time the negative credit from a debt settlement approach will.

  4. Allegation: “I never implied that seeking bankruptcy and completing an education course delivered typically by credit counseling groups in order to qualify for bankruptcy meant you enroll in debt settlement. Duh! That class is required 180 days prior to acceptance in a bankruptcy. I never said the class forces someone to enroll in debt settlement. My key point of the press release was that many people are unable to afford the payment in a credit counseling program, and thus must seek debt settlement.”Response: The quote from the release I had an issue with was “…all Americans seeking bankruptcy must complete a credit counseling program. The problem with this is that so many people are unable to afford the monthly payments in a credit counseling program, and must seek debt settlement.”You say, “My key point of the press release was that many people are unable to afford the payment in a credit counseling program, and thus must seek debt settlement.”My original point and continued point is that a failure of a credit counseling program approach does not result in debt settlement as the “must” solution.

    After reading the claims made by Mike again I think he misspoke in his original release and probably meant to talk about the mandatory pre-bankruptcy filing counseling session that can be completed online versus a “credit counseling program.”

  5. Allegation: “Steve’s quick advice is to tell everyone to jump into bankruptcy because it worked for him. I find that foolish. If you could pay back your debts in 4 years with interest rates between 0-9%, why wouldn’t you do so in a credit counseling program?”Response: You wouldn’t. But that’s not what the author Mike said. The statement the author made was about the failure of the credit counseling approach, “many people are unable to afford the payment in a credit counseling program.” So I never did say people that can afford credit counseling should file bankruptcy.
  6. Allegation: “Not to mention debt settlement historically yields a higher return to the creditors . (See Briesch Whitepapers and Weinstein Whitepaper) Debt settlement certainly yields more money to banks than than bankruptcies or judgments, which is why they work for both parties not only to heal our economy but more importantly, help our clients resolve their debts and send their credit score back up. I’ve personally done a debt settlement and I’m happy to say my credit score isn’t trashed because I listened to some poor advice from the quick yet devastating bankruptcy advice from Steve Rhode.”Response: At the time the rebuttal post was written the debt settlement approach was the advanced fee model in which the trade association data even supported that the majority of debt settlement plans, failed. Here is what the Illinois Attorney General said:

    In a statistical review they have done in connection with debt settlement cases, they have found that debt settlement companies have helped less than 10% of consumers resolve any debts at all, and no consumers had had all of their debts resolved through a debt settlement program. – Source

    But I’m left wondering if the Mike is basing his assumptions on what is best for the consumer is based on what is best for the bank?

    And regarding the ability to have a good credit score after bankruptcy, it is a reality. I’ve even written a guide on how to quickly rehabilitate post-bankruptcy credit.

  7. Allegation: “The entire first half of his Steve Rhode’s website is riddled with Google Adwords links that pay him everytime you click them like some worthless spam site so he can earn money every time you click them. (We have them too but they don’t cover the entire first half of the page; we find that annoying.)”Response: So if you have them also, your objection to the ads is the placement rather than the ads. And do you not get paid if someone clicks on the Google ads that appear on your site?
  8. Allegation: “Funny Steve. If the debt settlement companies are so bad, why don’t you just take down your referral form Isn’t supporting them hypocritical?? You of all people should understand the demand and need for people to leverage income in this recession while providing a valuable service for their clients through debt management and debt settlement services if they are indeed a fit for the programs. Our press release was written to mortgage brokers who are hurting in this economy and don’t know what to do with their dead leads.”Response: I’ve never said all debt settlement companies are bad. Debt settlement is a tool to use in an appropriate situation, just as credit counseling and bankruptcy are. You may have wanted to get the potential sales off mortgage broker dead leads but your release did not limit the information contained to just mortgage brokers and it was sent to a public global audience. The only mention of mortgage brokers was:“Whether you’re an established debt settlement company that simply wants to earn more on each file or a mortgage broker interested in turning your unqualified borrowers into a healthy revenue stream, we have the opportunity for you: You’ll earn at least 9 points on each transaction.”So in fact the focus of your release was first to other debt settlement companies OR mortgage brokers.
  9. Allegation: “As for your idiotic remark about the attorney general, I’ve met him. He’s a nice guy.”Response: But I did not refer to a specific attorney general.
  10. Allegation: “Affiliates don’t need special licensing at this point in time to refer business to debt management companies in most states but the laws are changing since debt management has been the wild west. Several states are beginning to require licensing to even talk to their residents, but not all.”Response: So neither you nor any affiliates talk to anyone in Florida? While you are saying that no license is required, what about the Florida telemarketing license? Is your position that affiliates that sell debt relief services are not acting as agents of the companies?
  11. Allegation: “We’re also proud to say that our attorneys are averaging a 30% settlement on our client’s debts, and only went over 40% twice last year, which is 12% below the industry average.”Response: The FTC says that performance claims can only be used if you give the entire facts. What’s missing in your statement is what was the total settlement among all enrolled clients and the savings must include all the fees paid.
  12. Allegation: “Steve, perhaps you should take a basic phonics course and not skim our press releases, but rather read the entire article.”Response: What do phonics and skimming have to do with each other?
  13. Allegation: “Perhaps if you spent more time on helping people and less time talking crap about things you don’t understand, you might learn something. As for us, wesleep [sic] great at night because our clients are truly helped. Maybe you can take some of your adwords revenue and seek hair replacement therapy, Dr. Cole here in Atlanta is an excellent hair replacement surgeon with his revolutionary Follicular Isolation technique. We wouldn’t mind throwing a few cents in your direction.”Response: And the best finish to your rebuttal is to talk about the fact I’m bald. Really?

    So Who Are The Debt Management Guys?

    The Debt Management Guys, who appear to not be identified on their site in the “About Us” section of their site. – Source. The site also does not provide an address for them on their contact page. – Source

    But Michael Hart does identify himself as the CEO of Debt Management Guys, LLC in Georgia. – Source, Source

    He is also identified as the CEO on the Meet Us page of the site that says:

    Michael Hart is a web developer and Founder of After implementing successful online search rankings for his clients he wanted to develop an online community for helping people get out of debt. Michael firmly believes in Proverbs 22:1: “A good name is more desirable than great riches; to be esteemed is better than silver or gold.” Our Mission is Simple: Help show a benefit in a credit counseling or debt settlement program, otherwise our advice is free. – Source

    A Debt Management Guys Video


    I could not help but insert the following video put out by Mike Hart, CEO of the Debt Management Guys.

    What struck me as I watched it is he is apparently not aware that debt management companies do not negotiate with creditors for the terms they offer consumers. He says, “debt management is where we have pre-negotiated interest rates.” In fact they do not. Creditors tell the debt management companies what the terms are. There is no negotiation on the general terms offered.

    He also says that his company usually does a 40% settlement and most people do the three year option. A troubling statement especially with the new FTC telemarketing sales rules which say that unsupported claims are a deceptive practice. The FTC does offer this advice for how to calculate claims.

    Here are several important requirements for making sure your savings claims are truthful and not deceptive:

    State the savings based on the customer’s debt when he or she signs up for the program. You may not inflate savings figures or percentages by including interest and fees the credit card company adds after a customer signs up for your program.

    Example 8: Andy signs up with a debt relief service offered by Company H, owing $10,000 on his credit card. One year later, following negotiations with the credit card company, Company H negotiates a settlement allowing Andy to pay $6,000 to resolve the debt. However, since Andy enrolled, the credit card company has charged him interest and late fees totaling $2,000, so that Andy now owes $12,000. By getting a settlement for $6,000, Company H has saved Andy $4,000 ($10,000 minus $6,000) or 40% of the debt at the time of enrollment. It would be deceptive for Company H to claim to have saved Andy $6,000 ($12,000 minus $6,000) or 50% of his debt.

    Include the impact of your fees on the claimed savings. You may not inflate your savings claims by excluding the fees your customers paid you.

    Example 9: Betty owes $10,000 on her credit card, and signs up with Company J’s debt relief service. Company J gets a settlement allowing Betty to pay $5,000 to resolve the debt. However, at the time of settlement, Company J charges Betty a $1,000 fee for its work. It would be deceptive for Company J to claim to have saved Betty $5,000 – or 50% of her debt – because Betty also had to pay $1,000 in fees. Instead, Company J may truthfully state Betty’s savings as $4,000 ($5,000 minus $1,000) or 40% of Betty’s debt.

    In calculating the results you’ve achieved over time, you must include customers who dropped out or otherwise failed to complete the program. Don’t base your savings claims only on customers who successfully completed your program.

    Example 10: Company K had 10 customers signed up for its service. Each one had $10,000 in unpaid credit card debt for a total of $100,000. Five of the customers completed the program, and each saved $5,000 – for a total savings of $25,000. The remaining five customers dropped out of the program, each one still owing the $10,000 they owed when they signed up with the program. Taken together, Company K has saved its customers $25,000 – or 25% – of the total $100,000 debt they had when they signed up with the program. It would be deceptive for Company K to exclude the drop-outs and claim that it saved its customers 50% of their debt.

    Include all debts enrolled by your customers, not only those that have been settled successfully. In calculating your savings claim, you may not exclude accounts you failed to settle, even if the failure was due to customers dropping out of your service.

    Example 11: Company L has 10 customers, and each of them enrolls two $1,000 debts in the program – totaling 20 debts or $20,000. Company L is able to settle 10 of the 20 debts, each for $500. However, it was unable to settle the remaining 10 debts before those customers either completed or dropped out of the program. Thus, Company L has saved its 10 customers $5,000 or 25% of their debts in the program. It would be deceptive for Company L to exclude the 10 accounts that weren’t settled and claim a savings rate of 50%. – Source

    In Closing

    If anyone from Debt Management Guys would like to respond to my post above, you are more than welcome to post your comment below. I’m happy to address any issue you may have with what I said and hopefully you will approve my comment on your website and will allow me to respond directly there so I can link to my response here.


    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.


About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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