Question: How can you deal with debt problems efficiently?

Video transcript of the exclusive interview

You can also have a look at the video transcript of the exclusive interview between Gerri Detweiler and Steve Rhode.

Gerri: Hi, I am Gerri Detweiler. I am doing a video blog for debtconsolidationcare.com.
Today I am interviewing Steve Rhode. Steve Rhode is the 'Get Out of Debt Guy'. I met Steve over a decade ago when he was starting what would go on to become one of the most successful credit counseling agencies in the country. Now he helps people through his website "getoutofdebt.org". Thanks Steve for joining me.

Steve Rhode: Hey Gerri, it is my pleasure and you know what, it has been over a decade, in fact it is probably been 15 years!

Gerri: Oh! Don't reveal it, come on! Can I edit that out. (chuckle)

Well Steve, one of the things that I have always admired about you is that you really tell like it is. Today I am going talk about one of your post. You have a post called "unvarnished truth about getting out of debt" and I am going to talk about that post because it is pretty provocative and I know that for most people debt is extremely agonizing, and a lot of moral and unethical issues come into play. But you say debt is just debt – Explain what you mean.

Steve: Well, people attach all sorts of meanings to their financial problems. They think that they are somehow losers or failures and they make bad decisions based upon what they think other people will think about it. Another thing I find ironic is in the business world, things like bankruptcies are applauded and rewarded on the Wall Street as they are appropriate and logical action that a company should take. Yet, when it comes to personal finances, consumers are easily manipulated and fooled into taking other actions, not because it is in their interests but it is in the interest of the companies that selling what ever it is.

Gerri: You know one of the comments I often hear is that Steve when I am talking about the creditors group or even in the news media is that, they'll say - "wow! people don’t pay their bills and hurt all of us'. So, what you say to that argument?

Steve: Well, I say that the creditor is being hurt because some people aren’t paying, some can’t afford to pay and then the price of the product are co-related because the product needs to be sold and this is always the way it has been. A creditor needs to price a credit product and so they included an appropriate amount of loss and they know what those losses are and that what facts the interest rate. Interest rate is actually a calculation that involves the cost of money, profit and the approximate losses. Now the people you are talking about here, who should consider bankruptcy, who need to take a good, honest, unvarnished look at the situation are people who otherwise don't have a solution to their debt because these are the folks who are draining their retirement plans just to make few more months payment.

Gerri: Well, I think that you’re referring to a post about the ultimate sin that tempts us when we are getting out of debt - Explain what you mean by that.

Steve: Well, people are afraid of the collection company calling, they are afraid what the collector might think of them, they are afraid of what their neighbors might think of them if they had financial problems and so because of that emotional fear, what they wind up doing – is draining their eye arrays, draining their retirement money in order to not satisfy debt but continue making payments and the only thing that happens then is you’re out of money but you’re not out of debt.

Gerri: Yeah, I have seen so that many times, so many consumers wind up in bankruptcy any way and at least they would have the money they really desperately for retirement had they gotten help for that situation sooner.

Steve: Well that money is money that is saved for when you're least likely to be able to earn. So, when you make nature of reaction and you blow through that money now when you’re 40 or 50 or 60, you’re not going to be able to easily replace that money and then the only thing that is going to happen is when you get old enough where you can't work, you know what you're going to do? You don't have the money any more and I'm afraid for some people it is going to be really tough times.

Gerri: Yeah, I agree. So, what you would say to someone who is conversing with you through your website. For example: He is saying "I am really struggling and I want to do the right thing but I am having a hard time paying my bills" – What you say to those folks?

Steve: Well, The first thing I ask is this - "Do you have a greater responsibility to repair the past or to fix the future? Because it is one thing to want to repair your debts because you feel like you've the moral, religious, ethical opportunities, so, but you also need to consider the implications and sacrifices that are going to be created in future to go down that path. For example: I and you, we both have seen these examples. Somebody, who decides that they're going to repay their debts at all costs and in doing that they're just living a barely month-to-month, they can’t afford to save, there are no emergency fund, they are living in an area which is not very safe and the whole reason they are doing this, is because they want to repair their past. So, let’s go to the basics first. What is the goal you want to achieve? That is always my first question.

Gerri: Okay, and then after you look at the goal you want to achieve, then, beyond getting out of debt, I imagine for other people it feels pretty bleak like “I am never going to have a future”.

Steve: Well, it does feel bleak. I filed bankruptcy myself in 1990 and it sucks. But, the bottom line to it is, is it appropriate for you? Do you want to get storm down a path that is not appropriate for you and lose more money and more time or you want to start your life over menially. Now, for example, let’s say you engage in some solutions that take you years down the road and you’re still working on repairing your debt. Now, if you had actually considered bankruptcy and gone bankrupt now, most people or 75% of people qualify for Chapter 7 bankruptcy and their debt is eliminated within few months and they can begin to repair their credit immediately. Now, some people say, you know "I am a loser, I filed bankruptcy". And I have to be honest that at one point in my life, I actually felt that too.

But, more I looked into it and more situations I saw, I realized 2 things – I realized number 1 – if business can be rewarded for bankruptcy and it is the appropriate thing for them, why isn’t for the consumers? And the number two, I realized the way I was feeling, it was about my internal feeling and not about the world. Now, I went bankrupt in 1990. I told you that. I have told the world. I told over the years. But for 10 years or so, I didn't tell the world. I was ashamed how people will think and you know what, not only did I tell my friends I have gone bankrupt but it is all over the web, the newspapers, everybody knows it, u know what, my life is not changed one bit. (Smile). So, it doesn’t take you down the dark path but what does take you down the dark path is falling for false debt relief promises, falling for these incredible benefits - "We'll get you out of debt in 12 months or "Sign up now and we'll invalidate your credit contacts" or "Sign up now and pay $9000, we’ll teach you how to trip up the debt collectors, how to sue them and eliminate your debt. These are all, almost all; unequivocally these are all scams that will separate you from your remaining money.

Gerri: Yeah, and unfortunately, it is all too common today.

Steve: Yeah, and you know, the bankruptcy attorneys is like "don't buy". And even if you decide, even if you say I am never filing bankruptcy, you owe to yourself and you owe to your family to go and talk to a bankruptcy attorney and find out the facts. Is there making assumptions and judgments, find out the facts, sleep on it, and then think about whether or not bankruptcy is appropriate for you. The thing I was here to tell you is that "if I am go bankrupt, I am not going to get credit for 10 years, I will never get credit again, I'll never be able to buy a house or a car", and that is simply not true.

Gerri: Yeah

Steve: You can get, in fact if you do a Chapter 7 bankruptcy, you'll get discharge notice in a few months and very shortly thereafter, I mean within weeks, you'll start to get new credit offers. And it is easy to rebuild your credit and once you rebuild your credit, once your debt is gone, and you're able to save again, you've the down payment, you can buy a house, a car. It is not the stigma that we hear and the people who are promoting that stigma are technically debt collectors who are trying to manipulate you in the plain and our own fear based upon what the people say, rather than what they do.

Gerri: Yeah

Steve: Well, Steve, like I said, you always say like what it is and I really appreciate your time today and any one who is watching, make sure you check out Steve posts at "getoutofdebt.org" to know more about unvarnished truth about getting out of debt in more detail. If you have questions about your credit, you can visit "debtconsolidationcare.com".