Loading summary
Transcript29 lines
- [00:06]
A
Chances are you've seen a too good to be true ad that promises an easy way out of debt fast. No purchase necessary. Must be easily fooled to win. But here's the truth. Most debt relief schemes don't actually make your situation better, and in many cases, they actually make it worse. So before you sign up for anything, let's walk through exactly how these companies work, what they don't tell you upfront, and what your better options actually are. Right this second, though, the best option of all, subscribing to this channel and liking this video. And shout out to delete me for sponsoring the channel. More on that later. All right, I want to start with the tip of the cap to Coffeezilla, aka YouTube's Human Lie Detector and last bastion of hope for suspenders. Bringing them back. He recently dropped an in depth investigation into the debt relief industry and it is the perfect setup for us to see exactly what's going on here.
- [00:49]
B
Here's a taste most people haven't heard of, mostly because it goes by so many names.
- [00:54]
A
I like something called the Debt Backpack method.
- [00:57]
C
I recommend national debt relief to anyone who wants to become debt free.
- [01:03]
A
It's called the rapid relief method.
- [01:05]
B
It's called the Debt Clear method.
- [01:07]
A
Is this hemorrhoid cream they're selling Rapid relief. The only time you should use that in your marketing is for a hemorrhoid.
- [01:14]
B
That's right. According to celebrities, there's an easy method to get your debt settled. The problem is the banks don't want you to know about it.
- [01:21]
C
Banks don't want you to know this, but there's a national debt relief program specifically designed to help Americans with $10,000 or more of credit card or personal loan debt.
- [01:31]
B
I'll be honest, when I first saw this, I was curious what the big secret was. But the second or third time I
- [01:37]
A
started to get suspicious.
- [01:38]
C
Banks don't want you to know you to know this, but there's a national debt relief program specifically designed to help Americans with $10,000 or more of credit
- [01:45]
B
card or personal loan debt.
- [01:46]
C
They hate this program. They hate this program. They hate this program because if you qualify, they can help you settle.
- [01:51]
A
Are they trying to use AI George in this? This guy looks like a brother from a different mother.
- [01:56]
C
40 to 60% of your debt and
- [01:58]
B
one simple yeah, it's pretty strange, right? And as I investigated, what I found was there were thousands of ads like this with a bunch of variety micro targeting different groups. Seniors, Christians, factory workers, Anyone with over $10,000 in credit card debt and a polls but worse, many of them were featuring total lies. Like take for example, this cluster of ads about debt elimination for veterans.
- [02:21]
D
So the veteran administration is handing out the debt elimination for all veterans and no one's even talking about it?
- [02:28]
B
Yeah, no one's talking about this headline because it doesn't exist. This is a fake photoshopped headline from the Department of Defense. Here's the real one. And these people lied about it to push veterans into debt settlement. And they use the same lie for seniors on Social Security too.
- [02:41]
D
Practically handing out debt elimination seniors and no one even talking about it.
- [02:47]
A
Who are you talking to? And let me encourage you guys, go watch the full 16 minute video if you want his full 60 minutes investigation. So let's break down how these companies operate by answering answering three questions today. First, what exactly is a debt relief company? Well, these companies offer to settle your debt for less than you owe. And here's the pitch. You pay them a bunch of money, they attempt to negotiate with your creditors, and maybe they wind up settling your debt for less than you owe. And they always start with some vague statement about how banks hate this before promising quick, easy relief for anyone who's carrying credit card debt behind on payments, dealing with collections, or feeling stuck with no clear plan. AKA people who are vulnerable, feeling desperate and will click on any ad promising a way out of this mess. And I gotta say, they make it seem like a compelling product. I mean, not even the ShamWow guy did this good of a job. And if you're wondering how old Vince Offer is doing, the first Google Auto result is Vince Offer arrested. So yeah, not thriving. But the real issue with debt relief is how this happens and what it costs you along the way. Which brings us to our second question. How do these companies work? Let's walk through the four steps. Step one, they tell you to stop paying your creditors. This is the crux of their entire strategy. They straight up tell you to stop making payments on your debts. Not even minimum payments, just stop paying altogether. The idea is that creditors will be more willing to settle once your accounts are severely delinquent, a la that goth kid who was always late for social studies. Step two, you send money to an escrow account. Instead of paying your lenders, you send money to an account set up by the debt relief company. The theory being that the debt relief company use that money to negotiate settlements down the road. Step three, your accounts, of course, go delinquent while you're waiting. Late fees add up, interest continues to accrue, your credit score drops significantly, and your Accounts likely get sent to collections. But this is not an unintended consequence. It's the whole strategy. Once your accounts go delinquent, these companies start using that as leverage to bargain with the people you owe. Which brings us to step four. They attempt to negotiate. After months, sometimes even years, the company will try to negotiate settlements for your debt. And the goal here is for your lenders to completely lose hope in your ability to pay back the full sum of what you owe, to the point that they accept a much smaller payment and call it square. Now, you might be thinking, well, that's genius. Makes sense. Sounds good. Sign me up. Hold your horses. Buck up. The reality is that creditors are not required to settle. They can reject the debt relief company's offer, completely ignore it, or sue you instead. Which means all of this trouble could end with you in a courtroom. And it's gonna be nothing like your favorite courtroom reality shows. Way less fun and probably far less methamphetamines. Not that methamphetamines are fun. Kids do not. Do not do metham. Do. Gosh, do they even do dare anymore in these schools? This in chemistry, okay, this is arts. But that's only scratching the surface because this approach to debt payoff creates several other serious risks that are often minimized or completely glossed over in the sales pitch. Starting with, number one, your credit is intentionally destroyed. But George, I thought you didn't care about credit scores. Correction. I don't care if you have a good credit score. I'd rather you not have one at all because you're debt free and you're never touching the stuff again. But if you have a bad credit score, that's going to be a problem. Especially if you get there by destroying it on purpose. You're going to have a difficult time renting an apartment. You're going to have higher insurance premiums, trouble setting up utilities, potential issues with employment screenings, and more risk number two, your debt balance could grow. Because interest and fees continue stacking up while you're not paying, your balances can and often will increase, which means a larger settlement, a more difficult negotiation, and fewer savings. Risk number three, lawsuits are a real possibility. Now, I mentioned this earlier and it's one of the most under discussed risks of using a debt relief company. Because if a creditor decides they've waited long enough in the midst of your cat and mouse game, they can sue you. And spoiler, you are the mouse. Oh, and debt relief companies are not legal representation, which means if you do get sued, you'll either be on your own or forced to pay an attorney. Risk number four, forgiven debt can be taxable. If a creditor forgives part of your debt, the IRS may treat that forgiven amount as taxable income. So you could wind up with less debt. But also get a surprise tax bill, which is the equivalent of a surprise birthday party catered by Long John Silvers. Sweet chili shrimp wraps all around. Kids better come with a shot of Pepto Bismol in the house. That's all I gotta say.
- [07:07]
C
Hope you're wearing your long johns.
- [07:10]
A
Was I funny? No. That extra tax bill is in addition to the crazy fees you could wind up paying. Because here's the thing. This isn't free. Most debt relief companies charge 15 to 25% of the total debt you enroll. Not the amount saved, the total balance. And they typically get paid regardless of the outcome, which is how they can afford to pay shark tank billionaires to do their ads. So at the end of the day, they have their best interests in mind, not yours. Unlike Fairwinds Credit Union, a sponsor of today's video. While most banks want to trap you in a cycle of payments, Fairwinds actually cares about your success. And that's why Fairwinds is to banking as Jelly Roll is to country music. A true diamond in the rough. They're not interested in shoving debt products in your face because they want to see you win with money. And that always puts me in the mood for a hard fought, heartfelt, been through heck, Hallelujah. Right now they're offering a smart bundle, complete with a no fee checking account and a high yield savings account. So stop using banks that actively work against you and sign up for Fairwinds today@fairwinds.org Ramsey or use the link in the description. And before we go over the fifth and final risk of using a debt relief company, allow me to explain the risk of letting your personal info float around the Internet unchecked. A higher chance of getting spam calls and texts. A bigger target on your back for online scams. Increased likelihood someone finds your address in 8th grade class photo. The list goes on and on. Which is why I use Delete Me, another sponsor of today's video. They scour hundreds of data broker sites to remove your info and help protect your digital privacy. Plus, they'll send you a custom report every few months, letting you know exactly how they work their magic. So sign up today for 20% off an annual plan@joindeleteme.com George Or. Or click the link in the description. All right, Risk number five with Debt relief companies scams are super common. Many debt relief companies technically do attempt to clear your debt, but not all of them. Some charge fees before they actually settle your debts, which is illegal under FTC rules. Some companies offer guaranteed results, which is not possible. And others falsely claim government affiliation or use fake AI testimonials, as you saw in that video. And I've seen so many videos of Dave Ramsey promoting this stuff, which he would never. And it makes me wonder who's going to be the next victim. Graham Stephan. Rachel Cruz, President, William Henry Harrison. Not William Henry Harrison. Yeah, you haven't heard of that name in a while. Rip King. He didn't do anything bad, did he? He didn't get like me too'd but like 1800 style, did he? I need a website to be like, hey, is this person cool? Are we still good? You never know.
- [09:39]
C
Oh, he's the guy who died in office, right? Right away. 32 day presidency, the shortest U.S. history.
- [09:44]
A
Perfect. All right. No, he. He died. He died.
- [09:48]
C
Yeah.
- [09:48]
A
Shortest run in office, not enough time to do damage.
- [09:51]
B
William Henry Harrison's wig.
- [09:53]
A
But here's the deal. The smooth operators in this industry that don't break the law still oversell best case scenarios, downplay worst case scenarios, and hide the crazy amount of risk behind fine print. Even when nothing illegal happens, the structure itself is stacked against you. Which means these debt relief companies are a no go. We can't just leave it there, though. That would be sad and depressing. There is a reason so many people are turning to these debt relief companies for help. After all, a third of Americans are struggling or in crisis with their money. And debt has a lot to do with that. And the sad part is they're going after our veterans. They're going after our elderly, which is not okay. While debt relief companies are a terrible solution, there are way better options out there. For starters, if you're already facing lawsuits or serious legal action, you can contact an attorney who handles consumer debt cases. Working with an actual lawyer is very different from using a debt relief company. They're not selling you in some kind of program. They're simply using their expertise to help you navigate the legal reality of your situation. If you haven't got to that point yet, good. Your best option is to simply handle the debt yourself. I know it's not as exciting as filling out one form and having your debt disappear, but as we've already discovered, it's probably not happening. And the reality is that you have the power to negotiate your debts, just like these companies. And when you work directly with the creditors instead of having someone do it on your behalf. You can avoid large fees, reduce the risk of getting scammed and limit the long term damage. You also leave the power in your hands to negotiate, prioritize the balances you choose and make progress without intentionally wrecking your credit. And most importantly, you stay informed along the way. Debt relief companies sell the idea that you can just outsource responsibility and delegate all of this. But getting out of debt isn't a trick, it's a process and you have to be involved. We gotta change the behavior that got us here. And if you want to know exactly how I paid off $40,000 of debt without a middleman, I broke it down in this video that's coming up next. So click here to watch it or use the link in the description. It's a clear, safe, step by step plan that millions have used to become debt free and you are next. Thanks for watching, we'll see you next time.