We wanted to change things up a little with a series of “Q and A” style interviews with people who are innovating in the debt relief industry. This includes but is not limited to vocal consumer advocates and people or companies creating innovative financial products and services.
In this first interview, we are talking to Damon Day of Damon Day & Associates. Among other things, Damon is a true consumer advocate who works directly with people to demystify debt settlement, bankruptcy, credit counseling and other debt relief options.
The thing we like most about Damon is his honest and transparent approach. He’s been there and knows his stuff. Let us know if you find this interview helpful and if you have ideas for how we can improve things in the future…
Listen to the interview by pressing the “Download audio” button below and then opening the file in a media player. Or you can read the transcript in full below:
Without further ado, let’s talk to Damon about debt relief.
ReadyForZero: How did you get into the debt relief industry?
Damon: I was in college studying to be a financial planner when I got myself into quite a bit of debt. As I was researching all of my options, I was amazed that with all the information I was learning, I still didn’t have a clue as to how to resolve my situation. After going through the school of hard knocks and finally getting out of debt, I felt I found my calling. There was a lack of good, straightforward information for consumers that were going through same thing that I went through. With the info I had and continued to learn at that time, I felt I could be of much better service to consumers and focus on this niche rather than becoming a CFP. I wanted to help people that CFPs typically didn’t know how to help – those that had a negative cash flow or were in large amounts of consumer debt.
ReadyForZero: What is the most common problem people come to you with?
Damon: The biggest problem people face is not knowing where to go to get the information they need to make the right decision on resolving their debt. They are bombarded by marketing and advertising on TV, radio, and the Internet which are paid for by companies trying to sell them programs and services. There are very few places for consumers to go and get unbiased information that will help them resolve their situation. Even worse, most consumers don’t know that the info they are getting is not likely the best information available to them.
ReadyForZero: How do you help your customers?
Damon: My initial consultation with a consumer is actually an informative call that answers their questions and provides the information they are looking for and not a sales pitch. I get a good understanding of where they are at and what their circumstances are – young, old, close to retirement, etc. If you don’t take the time to do this, you don’t help consumers do what they need to do and only solve a part of their problem. You need to take a macro view of a person’s situation so you can offer good advice. When consulting with a client, I wear two hats. The first is to act as a financial consultant and debt coach to figure out what they need to do to reach their goals, based on their current financial situation. Then I become a financial advocate for my clients — give them info, tell them which companies or consultants are best for their situation. This saves clients thousands of dollars in fees and insures that if they need to hire a 3rd party debt relief company, they will hire the right company at the best price.
ReadyForZero: How do you decide whether or not a debt relief company is legitimate or not?
Damon: If someone is not putting consumers first, that is a big red flag. An easy way to know this is to pay attention to the initial phone call. If they spend the majority of time pitching you versus learning about you and your situation, then you know what their focus is. You can tell if they care about helping you make the best decision, or are simply pitching you their program.
ReadyForZero: What’s wrong with credit counseling today?
Damon: Traditional credit counseling is fine as long as the client is in the right situation. If you call a legitimate credit counseling company, you would get an adviser who is going to look at your estimated income and expenses. The problem is that in many cases, they add up all the numbers on your expense sheet, put in a fudge factor, and if it meets their criteria they will recommend that you use their services even if it might not be the best option for you. If you don’t meet their criteria, they likely just recommend that you meet with a bankruptcy attorney. The thing is, most often what is best for the company is not always best for the consumer. These credit counselors and debt settlement companies are typically more focused on getting consumers to sign up, rather than doing what is best for the client. People won’t get the best advice from people that only get compensated if a client buys what they sell. This is true for almost all debt relief solutions, not just credit counseling.
ReadyForZero: What is your process? How is it different from similar services out there?
Damon: Credit counseling and debt settlement companies have a narrow view of things – they want to sign you up immediately for their services. What I do is different. I say there is no emergency – you don’t have to make a decision today. I rarely ever refer a client to a specific strategy right away. For example, when it comes to budget sheets – most people don’t fill this out accurately. However, credit counselors often take these numbers at face value and base their plans on these inaccurate numbers which ends up setting clients up for failure. Debt Settlement companies rarely even ask about for this information, so you can forget about them. I recommend that we track actual spending for 30 days to get an accurate read on their expenses. By knowing accurate information, I can recommend a plan that will have a greater likelihood of success for my clients, rather than throwing them into a one sized fits all program and hoping for the best.
ReadyForZero: Why are there so many debt relief scams out there?
Damon: There are a large number of people that are out there that prey on consumers. People in debt are a disadvantaged class and easily preyed upon. Typically, when you make a purchase decision you talk to people within your sphere of influence. When you are in debt, you don’t talk about it with your friends and family as it is still taboo. Consumers in debt are vulnerable because they don’t go to friends for their opinions. Often times people don’t even tell their spouse about their debt. Debt relief sales people can exploit this fact and use it to their advantage by telling consumers fanciful stories about seemingly simple and painless ways to get out of debt, knowing that the consumer is emotionally invested in finding that magical answer and not likely to confide in others who might easily see the flaws with the plan.
ReadyForZero: How does the debt industry need to change?
Damon: There is big turmoil in the industry right now. Regulators are trying to chase these scammers, but they find loopholes. Regulators could pass more legislation, but I think that would hurt consumers. Perhaps enough of the good guys can band together and drive out scammers before regulators need to do more. Where it’s going to go is anyone’s guess but right now I don’t see very many options for consumers to find actual relief in the “debt relief” industry.