There's a whole industry that wants to convince you that they can magically make that debt disappear. They can slash your interest rate, they can cut your debt in half, they can dramatically reduce your payment. Well as your instinct might be telling you that is far from the truth. Imagine that a company really exists that can make that debt problem go away. Imagine there's a company that is actually going to get a lender to, you know, just forgive part of the debt that may exist. In fact, in most cases, they make your situation worse.

I want to give you an education through real life examples of why you need to stay away from these companies. I call this industry the Debt Solutions business. Once you see what I have uncovered, you'll realize that this is far from a solution. We spend a lot of time on this course is pretty much the university talking about how to get out of debt, how to get out of debt, the most effective way, the quickest way possible, how to find the extra money to speed up the process. Today I want to talk about some something a little bit different. I want to talk about how not to get out of debt.

Because there's a whole whole industry of businesses, which I call the debt solution business, that promise they can get you out of debt. They promise they can cut your debt in half. They make all these claims, and you watch these commercials, and you think could it be that easy. All I have to do is pick up the phone, call one 800 get out of debt. And that's a fictitious name, by the way, and it's just going to solve all my problems. I mean, you've seen the commercials.

Imagine you're sitting on the couch, late night watching TV and all sudden the commercial comes on. And it's a guy that he looks confident, looks trustworthy. He says, Do you have 15 to $20,000 worth of debt and your interest perks up because you're in that situation? You have $15,000 more of debt. And he says, What if I told you, I could cut that debt in half, that I could cut your payment in half, I can get you out of debt a lot quicker than you'll ever imagine. And it's funny because there's there's something going on in your psychology with this.

On one hand, you're thinking that I guess they'll say the rational part of you says, there's no way that this is too good to be true. But then there's this irrational part. And it's that part of yourself that's stressed out over the dead is that part of you that's tired of making the payments. And so you get into that irrational sell in hope that this is the real thing. You pick up the phone. And believe me, when you call these companies, when you call these companies, these people are trained to get to your emotion and get you to sign up, you sign up, and then you set a series of on consequences that is really going to affect you.

Now, when I talk about the debt service, the Debt Solutions, businesses that it is it's divided up into a lot of different things. So this is a quote about credit. Repair, which is part of that industry. And the quote says everyday companies nationwide appeal to consumers with poor credit histories. They promised for a fee to clean up your credit report. So you can get a car loan, a home mortgage, and even a job.

The truth is they can't deliver. After you pay them hundreds of thousands of dollars in fees, these companies do nothing to improve your credit score. That was from the Federal Trade Commission. This is what makes up the Debt Solutions business. First of all, there's debt consolidation, you've probably heard of these. There's consumer counseling or debt management practices programs, and then there's credit repair.

Now, we're not going to really focus on credit repair with this because of the fact that I cover it in other parts of the course. And plus, I give you what you need to know to improve your credit score, which you can do yourself. I don't know why they call it credit repair because your credit scores not broken, that needs to be fixed, it needs to be improved. So we're going to talk about these other aspects. Now. I'm going to show you proposals from these companies actually proposals that I received from listeners of my pre money radio show.

And in fact, I highlight these in my book deceptive money. And you'll see what's going on here. And it's not it's not good. In fact, it's downright fraudulent, I think, with some of the things that these companies promote in these proposals and say that they're going to do for you. Now, to be fair, in my disclaimer, there could be companies in the Debt Solutions business that do a good job, they do an ethical job, I haven't found one. But there could be what I'm focusing on are the ones who are taking advantage of consumers through these programs.

Now, here's some of the claims that they make will not hurt your credit score will improve your credit score, that's far from the truth. Take the example of the consumer, that he's, he or she they're on time they're making their payments. And they sign up for one of these debt management programs. And the ones that are very unethical will say, Now just stop me Making your payments. And we'll take it from here. Well, they stopped making their payments and guess what happens?

They go into default. And then they go into collection agencies that all of these unintended consequences start piling up and actually destroy your credit scores that's far from the truth, low competitive fees. And these proposals, I'll show you that it's certainly not true, will legally eliminate 100% of your debt. There's a commercial right now, that's airing on satellite radio. And it's interesting because they say, you know what the credit card companies don't want you to know, you've heard that that line before. How you can illegally eliminate 100% of your debt, far from the truth, reduce or eliminate interest rates.

And the last show in this proposal that doesn't work either aren't and then they talk about being protected from lawsuits. That's far from the truth as well. You know, if, if you're involved in one of these programs, a credit card company doesn't care. And if they choose to, to file a lawsuit against you, they'll do it. So it's alive. It's a lot of these claims that just aren't true.

Stop calls from creditors Actually, this is something you can do yourself, but they don't do that for you, then the lure of the one easy low payment, you know, when you're dealing with a credit, good debt type crisis in your in your life, you probably have a lot of different accounts, you're making a lot of different payments, and it gets stressful. The debt itself is stressful, but just the making sure that you're making the payments on time, making sure you're not leaving somebody out. It can be really real stressful. And I hear all the time if I could just consolidate my debt into one easy payment, consolidation. Listen to this because consolidation is a convenience and not a strategy. And don't fall for the convenience of doing that because the consolidation programs are not what you think they are.

Debt, you become debt free in months, not years. Once again, far from the truth. Remove bankruptcies in judge Not this one is a little trick that the credit repair companies play. They'll tell you, on your credit report everything that's negative on your report disputed. Now you're supposed to dispute items if they're wrong, or if there's error, but they want you to dispute everything because here's what ends up happening at the credit reporting agency level. They have to go investigate that.

And so they send an inquiry to whatever entity can validate that that bankruptcy, let's say is on your credit report. And if they don't get back within 30 to 45 days, that item gets suppressed, not removed, suppressed. I'll give you the analogy of let's say that you're playing in a football game and you get pushed to the sideline that's being suppressed. You're not being you're not asked to leave the stadium. You're just on the sideline, because when they come back and validate that that item, it's going to go right back on your credit report. Now, here's Like I said, I got several proposals that came in from these debt management companies and debt consolidation companies.

I want to go over some of this with you, as I said, I found on many occasion that the numbers didn't even add up. It was it was, in fact, some of which I thought was was even fraudulent. So this is Bill, Bill, he has not changed the names. Obviously, he has $28,809 in debt. He gets a proposal and this is this is what's interesting, and I've looked at these proposals and examine them, these proposals, act as if this is what we're going to do for you. So you're focused in on they're going to save me $14,000.

And now if you flip to the fine print, you'll see that that that's, that's not the case. The fine print talks about everything that is, is real about this contract with the proposal, once again, is very deceptive. So they're going to save an estimated $14,401 Bill's $20,000 of debt. So here's the first 14 months, he's making a monthly payment of $775. He has total money deposited by Bill is $10,850. But if you look at the debt consolidation company, they've already gotten their fee.

They're getting paid. So he really has a little over $7,000, which is not even remotely enough. That's after 14 months of in this being his program. Now let's focus in on the fine print. If he cancels this contract, he loses all the fees, the fees are paid. Number two, he sets a goal to have the debt paid off in 24 months.

And so he's got 24 months to get this done. Number three, the company negotiates on Bill's behalf and let me go ahead and read number four, then explain both of them. Bill must have the money to pay them back. And this is where they This is the biggest ripoff of this. Bill's looking for that $14,000 he said He's looking that's the goal to save because after all, the proposal states that they're going to save $14,000. Now, Bill, the debt, the debt consolidation company comes to bill and says, Hey, listen, we've negotiated this $20,000 and they're willing to come a couple thousand dollars off.

So here's your settlement offer $26,000. Well, Bill's in a position where he has to have the money to pay the bill. Yes, to have it. And he doesn't have it. So they come back again. And they say, hey, Bill, we got a little bit better deal this time.

$25,000 Is the final is the final saving, excuse me is the final reduction to in your debt. Bill still don't have the money. So here's the thing, the debt consolidation company is doing their job. They got their fee. They've been paid. And it's some point they can cancel the contract themselves after that.

24 Months more fine print. No legal representation. So if and when you get sued because you defaulted on your debt, they're not going to do anything for you. Number six does nothing about collection agency calls, even though they say that they're going to eliminate that. And once again, that's something that you can do on your own. Number seven, any disputes goes to arbitration.

I point that one out simply because consumer arbitration doesn't is not really a great process to go through for the consumer, the consumer really never gets a good shake in that a good deal, excuse me in that, that process. So it's very anti consumer as far as resolving any disputes. Then my favorite fine print. By signing the agreement, client acknowledges that the company has made no such guarantee or warranty about the subject of this agreement or the timeframe required to complete the contract or services. Let's stop there and say this. If you actually looked at the proposal, you would think this is what they're going to do.

Right now. You look at the imprint which most people don't read, which most people even if they read it, they don't understand it. And once again, we're drunk. We're being driven by hope. We're just hoping this is all going to work out. And so it's kind of human nature not to check the details because you don't want to find out otherwise.

Although the company will do the best to achieve the estimated now it's estimated settlements, there is no guarantee that these implied savings will be obtained. Client understands the contracted credit accounts will continue to accrue interest until the accounts are settled. Now read closely, creditors may impose other penalties as a result of delinquent payments, not excluding charging off a debt or filing a lawsuit to collect subject debts in the event creditors unwilling to accept a settlement or clients is unable to propose a settlement acceptable to the creditor. Boy, that is very different language. I think you'd agree that that's not really what the marketing says. That's not what the since I'll say it again this sensationalized marketing says it's it paints a different picture.

But if you look at the fine print, they have it all laid out. So Bill thought he was going to get a program that is going to help settle debt, reduce debt by 40 to 60%. Minimize credit harassment, get out of debt 24 to 36 months avoid bankruptcy. I mean, this is all you know, in the marketing as well if that's what he thinks he's going to get. But yet, this is what he really gets no guarantees of the amount of relief companies only required to get a settlement offer, his credit is going to get wrecked. Bill could get sued.

Bill has to deal with the harassment bill must have the money to settle. If you'd have done this in his on his own, and I'm going to teach you how to do this on your own and teach you how to manage the process when we go through the categories of debt and that's coming up later on the program. If you'd have done this on his own, you'd had the opportunity to be sued his credit would have been wrecked, negotiated on his own no guarantees the ability stop collection activity, additional penalties and interest, so on Bottom line is they, this debt consolidation company did nothing except take his fees and make things a lot worse. Let's talk about Betty because this proposal that came in from Betty had been the most fraudulent proposal i think i've ever come across, because the numbers that they represented on that proposal were flat out wrong.

Now, here's what the debt that Betty has accumulated. You can see the the accounts 3020 108 65 the high interest rates 2721. Pretty bad debt situation. Now, she goes, she gets this proposal from a debt management program. You see the total debt balances, the monthly payment. Now you can see they're drastically reducing her payment from 300 to 185. average interest rate the Betty's pay now is 25.99.

They're they're sitting jesting that they can get it down to 9.22. And then you can see the difference between the interest paid problems with the proposal. If they're misrepresenting because they told her that if she continues going down the route that she's going, it's going to take her 5858 months, versus it's going to take her a lot, a lot less time. If she goes to this company, and she's going to be paying less. The truth is if she kept going, as she was going back into $300 payment, and applied a few techniques that she could do as far as how she distributes that payment should have been done at 32 months, she would have been in a much better situation. It's a flat out lie on her proposal, stating it's going to take her that long when the numbers suggest otherwise.

And that's actually doesn't take 40 if she made that payment at 9.22% It would take 43 months, not 61 months what the difference between the 43 in the 61 is the fee that goes back to the debt management program, which is oftentimes lightly disclosed. Now, if you add the fees back in, you know, the cost of debt is interest. But in this case, it's the cost of debt to get that debt handled his fees as well. So if you look at the interest and the fees, you're looking at 22% interest, not a big, big adjustment. your actual interest rate in payment may change based upon the requirements of the creditors additional debts or higher balances. This is all fine print, you know, and How could my total interest paid the estimated if the proposal states I will receive this average interest rate, you can see all the problems in the deception.

But I think you can also see how this can kind of lure people in. That's why I want to talk to talk about it in the course want to bring it to your attention, so you'll never be too tempted to go this route again. Other fine print client understands that the Debt Solutions company might be compensated by creditors. The monthly payment is an estimate to continue paying until debt management program states otherwise, if 30 days late, you're in default. Client agrees to hold the company harmless you can't you agree that you're going to take action against the company. So pros and cons of Betty using the debt management program damages credit for seven years that's the con, interest rates are not guaranteed.

That's a con having to put a great deal of trust into programs that are notorious for making mistakes and having a bad reputation. Obviously a con, the length of time is guaranteed con, the interest in fees combined are more expensive. pros and cons of Betty doing it herself. And as I said, we're going to talk about this. I'm going to teach you how to do this. Pay one debt off in the first year pro potential to increase credit score and lower interest rates within 12 months because here's the thing.

32 Months, if she stays at the same average interest rate, as she pays down the debt, guess what happens? Credit Score starts to go up, guess what happens when that happens when that occurs, options to move debt around to lower interest rates. Betty handles her own responsibility. I think that's a pro by the pay the note off earlier, that's a pro and the con, writing more than one check per month, she doesn't get the consolidation. That's the only kind of taking care of this yourself. Now, why, you know proposal when they say it's going to take this long why people just accept that at face value, because most people think it's going to take that long.

I've talked to countless people that think that they're going to be paying that debt down forever. It's just not true. If you know once you know what you're going to learn and what you are learning on this course. You're going to see how you can get out of this a lot sooner than possible. Remember, as always, Say, having debt is nothing more than a season of your life that you're going to get through it. You know, bottom line is this.

We get into debt for different reasons. And sometimes it's financial responsibility. Sometimes it was that flat screen TV you just couldn't do without. Sometimes life happens. Sometimes we lose, you know, we lose a job, we use the credit cards, whatever it is, you've built that up over time. And it's just not realistic to think that just like that, by picking up a phone, that you're gonna be able to get out of debt that they the what the one point that I want you to leave, I want to leave you with you getting out of debt.

And we'll continue to talk about this getting out of debt is about personal growth. It's about changing your habits because you can't get out of debt with the habits that you got into debt. And it's about making this change and making your financial situation better. And it's not about More to come