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.