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Michael Bovee: Hi there. This is Michael Bovee with Consumer
Recovery Network and I am back for another episode of T-Shirt Tuesday.
I am going to keep up on the Tuesday moniker because we tend to do these things
on just about any day of the week and today I want to thank Charles Phelan from
ZipDebt.com for being on the show and this is an absolutely fantastic show I have
been waiting to do because so much of what Charles has done in, you know, the market
place to help consumers resolve debt emulates, what CRN has done, and actually
you will find out here shortly enough that Charles and I have worked together over
the years. So Charles thanks for being here.
Charles Phelan: Michael. Thanks for having me on the show, good to
be hanging out with you today. It is a pretty good technology.
It is my first time doing the hangouts so it is interesting to see how it works and...
Michael: It is an awesome medium. Yeah. You bet.
Charles: Yeah it is great.
Michael: So listen, Charles, debt settlement companies need people,
they need to enroll people because that is how they are going to make their money. And in
that efforts they have done an exceptional jobs, some over the top, into the extent of
you know fabricating things and trying to instill this notion that people who want
to settle the debt, they want to avoid bankruptcy, actually
need a debt settlement company. You and I both know that is wrong.
What's your response to the way debt settlement companies trying and still fear
and how they need a company to help them settle their debt?
Charles: Well you know there other types in the presentation.
One of the biggest things that I take issue with is that debt settlement
companies always try to convince the consumer that if they hire a professional negotiator,
they are just going to get a better deal than they would if they are doing it on their own.
The problem with that is of course it ignores the fact that they are charging
really high fees so you know even if it were true which it isn't the consumer
is going to end up paying more out of their own pocket anyway, by the time you add you
know 15% of the debt or 25% of the savings or whatever they are charging.
And the fact of the matter is it is just simply not true, you know what I tell
people over and over and over again is that debt settlement is something that the
consumer can do on their own because it is a mechanical process.
You know every one of these major creditors has something like a conveyor belt.
It is a my collection and when you default you are on that conveyer belt
and that leads to settlement automatically. It is programmed into the collection process.
It is the creditor's that are the ones that want to do the settlement.
When you hire a debt settlement company you are under the illusioned that you
are going to be hiring somebody that has this magic rolodex and they are going to
be able to call you know a special guy at a desk J. Spank or whatever and get - the
quality instead that deal is going to happen anyway, the consumer can take
advantage of that on their own. What they need is somebody to help them
take the fear out of it, the uncertainty, the doubt that comes
with you know waiting right in and of course that is what I have tried to do
with the training course and the coaching that I provide.
Michael: So you are very unique, in fact when I met you, you were probably the only
person out there doing what you did and I really want to make that known to anybody
watching the show, to anybody that later watches this video is that you were kind
of a pioneer. I have always and you know this because I
joke about it with you, but I you know I call you the granddaddy of the DIY debt
settlement movement, but you didn't start off with 'oh you know what that settlement
work so I am going to write this course and I am going to train people how to
do it that effectively on their own.' Charles: Right.
Michael: You have a different kind of background, still debt settlement, can you
tell us a little bit about that and what led you into why and this principle since
2004 of showing people how to do for themselves?
Charles: You bet, I mean I go back to 1997 actually so you know I don't claim to
have invented it or you know been the guy that was the first one out there doing it,
but there is very few people in the industry that have been at it longer than
I have so I started out in 97 doing what I call -- where I am basically just sitting
down at the local table with the consumer here in the San Diego area and I would
take on a small roster of clients and help them negotiate when I was a professional
negotiator for them well before we got into the do it yourself concept.
And then of course as you know debt settlement really started to take off,
it became big nationally right around 2000. I was part of one of the first companies
to go national, became senior Vice President of operations so I have seen it
an attempt to scale it up to the big time, but a lot of things really part of the
decade and one of the things that really soured me on that approach was the shift
from charging the fee after the negotiation to loading the fee up on the
front end and that really rubbed people the wrong way.
I kind of resisted that big time and led you know to my exit to going back to solo
practice, but what really made the light bulb go on for me was that when I was part
of the large company we would see this time and time again, you know back in
those days creditors were almost send an offer in a mail to a client.
We still see that today, but not with this much consistency as we did back in
the day. So I was having an embarrassing
conversation after conversation with -- here I am and I hired you 4 months ago
and I got this letter from the bank saying they will take 40 cents on the dollar,
what do I need to pay your fee for? And I had a really hard time you know
convincing people -- earning that fee and so it sort of was a light bulb moment for me
and after I left the industry you know I tried to figure out whether I should go back
into regular practice, but then I thought you know consumers - and it is not that I
invented it, I was one of the first people doing this
on a, you know systematic basis but the people have been settling their own debts
for decades it is not rocket science and really that is all that there is to it.
So what I found is that what people want is they don't want a book or a course even
though I feel I have a very good course that I provide people what they wanted was a coach.
They wanted somebody to kind of take their hand and lead them through the
process of debt settlement and that is what I have perfected is a system that
is coaching where there is a course involved which saves me a whole lot of you know
repetition or saying the same thing over and over again.
And it has been very, very effective, I challenge anybody else in the traditional
settlement industry to match my track record.
Michael: So this is getting into some really good stuff that I want to hit on
and some of our history working together so it was for me when I was out
researching and you know some of the history but some of the viewers wouldn't,
back in 2004 as I kind of grassroots efforts and I thought you know, "Hey,
we are the only ones doing this." Because I wasn't as aware of all of the
players in the market, we wanted to educate people, we wanted to show people
what they can do for themselves with some coaching and recognize that coaching attribute.
And as that model and that grassroots effort progressed it was time to put together our
own material and it was in that research we where out looking for information, DIY, debt
settlement and the likes, where I came across your website and I reached out to
you and we hit it off from Day 1 and as a result of that Consumer Recovery Network
for many years we actually used your kit, the Debt Settlement Success Seminar,
and branded it with your permission and agreement and that is what our members
used for gosh, what 5 years? Charles: Yeah.
Michael: Extremely successfully. So I know you have probably you know an
hours worth of stories or a days worth of stories, what people experience with
that course material is, but that is coming from you. I want the viewers to
understand that working with consumers to effectuate, to do their own debt
settlements better than they could do and getting better deals on their own than they
can usually get even from hiring a professional. Saving a bundle in fees, being out of debt
much quicker than would have otherwise been possible, I mean look, we worked with attorneys.
We have had, this is CRN and I know you have had many different kind of
clients as well. We had you know a homemaker all the way
to blue collar workers to attorneys. You know very active attorneys.
They just don't specialize in this area of dealing with creditors and anything
and everything in between, anybody from every walk of life from you know somebody with
an $8,000 debt load all the way to our largest file, I think was about a little
over $470,000 worth of credit card debt real estate investor, commercials real
estate investor with that [inaudible 00:09:06] in it you know the housing down term.
And resoundingly in fact most of the testimonies that you might see on our
site still today are a result when they talk about the kit, you can read those
testimonies on the CRN side. They are actually talking about your work
about your education that you can put together. Charles: That is great.
Michael: And you just can't make an improvement on it, people - and I in fact,
I think what haven't you found even your former or some former
clients that have tried to you know duplicate some of your work and pass it
off you know as they are an expert. Charles: Absolutely.
Michael: Yeah that is how good your stuff is. It trains people so well that they
actually are efficient. Charles: Thanks a lot you know, I have
had clients come to the program and all of a sudden I would find that you know that
a year later they are the expert and they are going to
help people. And they had basically taken my stuff and you
know changed it up a little bit and signed their name to that.
You know they say imitation is the sincerest form of flattery, but when you are on
a receiving end of it, you might not think that, but yeah, it has happened commonly.
I have had my eBook you know written - even had one guy basically
copied my entire business model and put his name on that
he even tried to go after the same people you know promoting.
That is just competition. That is just business I just overlook that.
What most of those people don't realize is how hard it is,
you have to be dedicated to do this to be a coach you have to be there for people,
you know this from your own effort. You have to be their constantly and you
have to be able to give them the right information [inaudible 00:10:41]
and if you have a heavy work load you know that can be a lot. So being a workaholic
helps a little bit, you know being able to deal the heavy client load and to be able
to be straight with people that this feels very, very important.
You know I don't sugar coat anything. I tell people on the front end this
is what you are up against with debt settlement. These are the pro's and cons, so I've never
had you know, knock on wood, I have never had a single complaint to the better
business bureau in the entire time I have been in the industry.
Michael: You know and that is unique in it of itself.
You know a lot of folks out there are never going to know some of the industry
ins and outs and everything like that, but when you offer what is often termed as
a yeah or a problematic industry the BB itself calls it that and to maintain no
complaints an A rating and you know serve as many people as you have.
I mean that is that in itself is an accomplishment. I want to share a few other things that
people may not be aware of about your kit. Charles: Sure.
Michael: I think what you are on your third or fourth printing?
Charles: Well, it depends how I count them. It is just the second version that I
recorded completely rewrote the material but I mixed to the workbook every couple
of years or so, so it is the second recorded version, but over that fourth or
fifth update to the workbook.
Michael: So it is so solid, I am going to share this little tip bit because I think
it is relevant. I've participated as you know and in the telemarketing sales rule
promulgation you know as a, just providing public comments and invited
as a panelist to DC back when those things were going on in 2009.
Charles: Right.
Michael: And you know earlier the first workshop I took several of your kits,
you know 'branded to CRM' and you know I distributed them to you know people that
actually care about this issue and care about protecting consumers and you know
some of these folks had already seen it and there is actually you know some
awareness the build from that effort or some of my prior outreach grassroots kind
of efforts.
One of the follow up comments that I did with the federal trade commission,
it included just a couple of excerpts of emails that I have gotten back from people
about you know working with CRN or specifically of course.
Charles: Yeah.
Michael: One of them said, and it was a woman in Florida that and I am not going to quote this verbatim
but just in general was that she appreciated you know the material,
I think she had 5 accounts, and she was able to get 1 knockdown on her own
and because the material was so thorough she didn't need us anymore for our ongoing
support which is fine, We want that. And that she felt very
confident about moving forward with her other 4 creditors on her own. And that
is exactly yeah, I mean that is just. Again, I can't speak well,
there is not enough I can do to encourage people to go to ZipDebt.com, get if they
are considering debt settlement, get your course even if they just start at the
basic level. It is beyond the affordable.
Yeah, I mean just that investment alone, very small investment will save you
thousands and effectively you will be able to do much of this and of course work with
a coach because that is the real value is knowing the real time data and what to
shoot for and what creditors are doing because that fluctuates.
But just start out there. So if you want to talk or if you could
talk to this question. Over the years debt settlement has gotten this you know
because of bad actors in the industry and the front loaded fees that caused you to
leave the industry, there is this messaging from people that
compete with debt settlement. Maybe it is credit counseling, maybe it
bankruptcy attorney's whatever it is. But because there are so many good examples of
how bad a debt settlement company or a debt settlement sales person can be you
know it is hard to argue with this whole debt settlement as a scam thing.
Well it is not a scam. It actually works quite effectively.
But people are willing to scam people. So with all that negative messaging out
there I mean what is your take on that. What would you do to distill the fact
that look it is not debt settlement, it is who you work with that scams people
what is your response? Charles: Well when I'd respond initially is
let's take a look at who is a good fit for debt settlement.
Because I think a big part of the problem with the industry is the fact that it has
been over sold, it has been over promoted. You know back when I got started the
pitch if you want to call it that was that debt settlement was away to avoid
bankruptcy, but there was no distinction made between filing chapter 7 versus
filing chapter 13. And as you know those are two completely different things as far
as the consumers perspective under chapter 7 the debts wiped out completely and they
pay the cost of the filing plus the trustee matter of much. So chapter 7
bankruptcy remains the lowest cost, fastest solution for the consumer who
qualifies for it which about 70% of bankruptcy filers [inaudible 00:15:57].
It is the other type of bankruptcy where I feel debt settlement comes in to play
and I don't think the industry would have had any were near the negative image that it
is guarded over the recent years if there is an option an alternative to chapter 13.
Because if you look at chapter 13 we are talking about 3 to 5 year plans typically
5 years now after the have change the law at 05 and that is torture for the average
consumer aside from the fact that the high failure rate continues with chapter 13
about 2 out of 3 people don't complete those plans.
It gives up a lot of control financially on the consumer side and they are basically
under the supervision of the court trustee. So I argue, look, if your situation is bad
enough that your considering bankruptcy and you would be stuck with the chapter 13
flavor of bankruptcy well then it meant well to look at debt settlement as plan A
if you have any shot at all of coming up at the resources that you need to fast
track the settlement process. Where do the companies get in trouble
is they try to stretch this forward 5 years. I have had people tell me they recorded
89 months debt settlement programs, I just used an extreme example.
You know I mean come on, that is crazy, that is past statute of limitations in
most states. Now first you get the payment down to
hook the consumer in especially back in the day when they were charging all the
fees up front, but we still see a lot of long stretched out quotes because they
were just trying to bring business in the door and the average creditor is going to
wait for your 4 years to get paid. So the lawsuits get out of control
that tends to push the concealer back toward bankruptcy, but now they are upset because
they have spent money over here on fees or on settlements unnecessarily.
So if we funnel it down to who is a good a fit, then it is a question of the fact
that the banks are the ones that want to settle. There is nothing evil about debt settlement.
It is the banks that want to settle. All you have to do is know what the
differences are from bank A to bank B, how to go about it and how to work the system,
how to be on that conveyor belt they call it of collections without getting knocked
off of it because if you stack you are going to get settlements, they are mechanical.
They just get spit out of the other side. There is some tricks to the trade that
is what I teach people, but we are not talking rocket science here.
So in the context of some of the messaging that gets out there about you
know debt settlements whether it is a sensationalization or you know a lot of
height from a sales guy that wants to enroll people and get a commission. Or the
other side of the coin where people are talking it down.
One of the identifiers and I knew this right out of the gate when we first met
is you have a very strict, what they call underwriting, but who you think should
even try debt settlements. And not that you or anybody else and this
is not for you if you cannot do it in x number of months. And at the time you were
probably the most strict, who you thought settlement would be approved for and you
would actually turn business away. And that it was 12 months.
Do you still keep that same timeframe?
Charles: Yeah, I really do try to stick with the 12 months or less.
Of course I make exceptions from time to time you know if I am dealing with
a client for instence out of the great state of Texas you know when there is no way to
garnish that down there and there is no way to practically lead in a prop a lot
less collection litigation in that state, a couple of other states that have none
garnishment features, so I am certainly willing to make exceptions in some cases.
But the argument I would make is you are looking at debt settlement one option to
the chapter 13 which is typically going to stretch over 5 years.
So if you start taking 3 and 4 years you are really kind of diminishing
the effectiveness of the solution, against chapter -- having to risk that you don't have
under chapter 13, but I really do try to get people to fast track it if I look at
my data somewhere around 80% of the
settlements they claim [inaudible 00:20:07] happen within what I call phase 1 of the
collection process which is the first 6 months that leads up the charge off.
So we get about 80% of our settlements negotiated prior to that charge off
deadline and the rest fall in to the post of the charge off phase what I call phase 2
where the original creditors still owns the account, but they are trying to
collect through an outside agency. Very few of our debts make it
all the way to phase 3 which is the debt purchasing phase and I would argue that
is probably where a lot of the settlements in the settlement industry are taking place
and the later phase 2, phase 3 so they are at inflated balances and a lot more risk
to the consumer. By fast tracking a lot of the growth of
the debt that might happen over 2, 3, 4 year period that some of these renders
retroactively inflating the balance since they buy the account from original creditor.
And it is just -- at while the stress comes in or out of the process faster you
get their life back that much more quickly so I really you know put a friendly pressure
on people you know to come up with the money, you know fine fitted handled and it
is much, much more effective and they are in and out quickly. So yeah I am still trying
to stick with the 12 months or less parameter and you know, but I take it case
by case and if somebody -- look better and they are in a good state you know we may
agree to go on. But generally the faster the better, you want to get in
and get out of dodge before the shooting starts.
Michael: Yeah, I like that, I like that. Get out of harms way and move on
with your life you know because that is really what this whole solution you know
settling with creditors when you can't afford to keep your payments current,
that is what it is about. Charles: Yeah, exactly.
Michael: Yeah. So on your website there is a ton of
information, ton and one of the things that you do that many won't do
and probably can't do because it would tell the truth to people that if their stuff
don't work, you publish you know a lot of your data.
You talk about you know how much litigation occurs with clients in your,
out of your database, and it is exceptionally small as you know any
company that operates the way yours or mine has
Charles: Right, right. Michael: So you got real dynamic numbers
people can really, really get a feel for what you are about, what the process
is about, what the likelihood of their success is, using your material, using your
coaching and the style of what we are talking about is finishing quickly in all
the things and keep you out of harms way.
You know one of the few guys that puts all that on their websites so are you
working on anything right now that you want to you know, do you have any projects
going that you are building out for the website. Any additional tools that you are going to
be putting up there?
Charles: I wouldn't say I am building additional tools, but I am always writing
content because you know people are hungry for good information that gives them
enough to go off and you know research the issue or it gives them you know an
understanding that might not get just from a quick article on [inaudible 00:23:10] .com
or something like that. The most recent project that I did was
a series of posts which I posted on my blog to ZipDebt blog.
You can get to that just go to zipdebt.com and on the upper right there is
a link to the blog section of the website and I have been writing for years on the
blog so there is a ton content there, but the most recent project was a series of
articles I wrote called 'The myths', the 'DIY myths of debt settlement', it is a projected
10 total, I have written 9 of the 10 posts and they are all up there
and available over the last few months. I have got one more to write to a complete
the series and planning to get the people the information they need to sort of
counter that marketing message coming from the traditional industry at large that we
are talking about earlier.
Let me just give you one example of wanting to do that.
One of the objections that people have is, "I don't think I have the time to
handle these negotiations on my own". You have heard that one a couple of times I am
sure, yeah. So you know just masking fear that the
consumer has because they have this misunderstanding that they are going to be
on the phone you know every 5 minutes for the next year to get these results.
Well the system that I teach, what we do basically is screen those calls to
voicemail jail in the form of a track number and then we call the creditor back
only in twice month, let's say. So let's take an example of like a single
credit card out of a group $10,000 balance. You know the client might have to call
that creditor twice a month for a few months, a few extra phone calls when
they are actually getting some haggling going.
So 15 phone calls over 6 months to get the account settled and maybe 20 minutes
average which is probably too long but let's say be conservative.
So we are talking about 5 hours of talk time balance and let's say they get a typical 30%
settlement so if they save 7,000 bucks for 5 hours worth of effort that is $14,000 an hour
I am pretty sure they are not making that right now at what they are doing, so I would argue you
can't afford not to do it yourself. You are going to make more money
by doing it yourself than you possibly ever could you know going to work at whatever it
is you are doing now, so you have the time. And so this is one out of the 10 myths
that we run into all the time and it is because people are afraid.
They don't understand. It is new territory, but they can be
coached if you just get a little help, you don't have to pay a fortune, just get some
help and you can be successful. If you are good fit for it in the first place.
Michael: Awesome. So listen, I want to put a wrap on this
with this, and it is just the further testament to having work with your
course materials, having work with consumers, navigating their way through
the process using your debt settlements success seminar as their foundation. And it
is kind of a metric that we know from the CRN database, that over 70%
actually at 76.4 of the last time the numbers were done and that is last year,
but 76.4% of the accounts that are market settled in the CRN database were done by
people themselves. We have had a hybrid approach and you know we
want people to do DIY, but we get that they [inaudible 00:26:33]
for whatever reason so we step in. Right, so we give him the 2 options
and out of those 2, I mean look that is a huge proportion that are able to do this on
their own. They signed up with the expectation
that 'oh well I'll get CRN to do it because they charge lowest fees in the industry',
but what they ended up doing was not paying us anything because your materials
are that good and this does work and I want people to know that.
I want people to find you on the internet and I hope they really got some
information from you and got to know you a little bit throughout this video.
Anything you want to close with.
Charles: Well sure, I would just invite people to come by the zipnet.com you know
there is a ton of content on there and I put a lot of information out there.
I answer questions on the blog so I do a lot of work, pro-bono if you wanted to use
that term, just in the blog. So people are welcome. Come by and get the tires you know read
the information that I have there. Not everybody is a fit for this approach
and if you really wondering about whether it is a good fit for you or not you can
download a port that is free on the website. I promise I won't spam you with
a bunch of email if you download it. There is also another report for people
that have really high balances. I wrote a separate report for people that
have 100K and up and you know that might be the small business owner or
a consumer that got in really deep for you know whatever reason. So there is a lot of
information there that will help people make the decision whether to go farther or
not and offset some of the junk that they are going to hear in terms of the websites
that are out there and the sales pitch. You know don't fall for the sales pitch,
come on and buy the ZipDebt and feel free to request a free 20 minute consultation
with me if you really want to talk to me in person and find out if it is a good fit.
I will be straight up with you and tell you whether it is going to fit or not
because I don't, the way I joke about it, I don't charge enough unless you are going
to be successful - I want you to be successful and I've structured that that way
if you know if I don't think it is a fit I will tell you that straight up.
If it is I will tell you what I think it is going to take in order to get the job
done and what the likely outcome is going to be. You'll get a straight answer without sugar
coating or sales pitch, feel free to stop on by ZipDebt.
Michael: Awesome and what people also may need to know or want to know, and they will
find out when they go to your website, if you are still on for this, but it is just
unheard off, you will offer a 12 month money back guarantee.
I mean really not much to lose there and a lot to gain.
Charles: Absolutely, yeah, I don't get too many of them back, but hey, every once
in a while somebody starts out on this path and they decided to go to the
bankruptcy route instead and I don't want people to be out of pocket if I am not
going to do the work. So, we don't get too many refunds, but I want people to have that
piece of mind and I think that is a big factor that there is so many scams now
days, you know, people need that assurance that you know they are going to
be taken care of and that you know they can get a refund if things don't work out
the way they intended. But that is just there you know it is something that
I offer and people can take advantage of it if they go another way. But what I want
people to do is decide upfront if they are really good fit for this before they go
down that road and that way success is [inaudible 00:29:47] outcome.
This is life changing. If debt settlement works for you it will
change your lifes and I have been able to teach people how to negotiate and come out
the other side and good luck when they do that.
Michael: Awesome, awesome. Well, thanks again for being here
and actually I am excited for another show that we are going to do.
I am not sure when we are going to get to it, but on a totally different topic,
financially related, so I want people to say to the DebtBytes YouTube channel to
for the next interview with Charles and some other heavy hitting information.
Thanks Charles for joining me today.
Charles: Thanks for the invite Michael. Michael: Awesome.
Charles: All right take care.