3 Steps to Take if Your Debts are Out of Control

Published Aug 21, 2024, 8:15 PM

Americans owe more than $1.1 trillion in credit card debt—and a good portion of that is because too many of us are using plastic to pay for basic necessities like rent and food. But no matter where your debt comes from, one thing's for sure. It's stressful. According to one survey, more than half of U.S. adults with debt say they feel stressed because of it.

So what can you do if you're feeling overwhelmed? Consumer attorney and debt relief expert Leslie Tayne is here to save the day. She specializes in law-based debt solutions and today she's going to help us with the steps to take when we're feeling overwhelmed by debt.

You can download the episode wherever you get your podcasts:

Don't forget to check out our podcast page for more episodes designed to help you make the most of your money.

Are you overwhelmed by your finances?

It's not uncommon to feel overwhelmed by your debt. In fact, in this episode, we mention how Miranda made a mistake that destroyed her credit, even though she knew better. Stacy also talks about getting a handle on debt in his book Life or Debt.

We also look at some of the signs that your finances might be heading off track with signs such as:

The good news is that you don't have to remain overwhelmed by your finances. And it doesn't mean you have to move or sell your car or take other steps that might not actually be helpful.

Considerations when getting out of debt

Our guest, Leslie, points out that no one method works for everyone. Some of the tips Leslie offers include:

  • Try to detach from emotion as much as possible
  • Look at your current finances, including whether you have a variable income
  • Find ways to develop new habits and model better behaviors for your children
  • Take into account short-term and long-term financial goals

We also discuss debt consolidation vs. debt settlement and when it makes sense to seek help from an attorney like Leslie.

Plus, if you're looking for help getting your credit score back on track, you can listen to our podcast episode about credit repair.

Meet this week's guest, Leslie Tayne

Leslie H. Tayne, Esq. is an award-winning financial attorney and author of Life & Debt. She has over 20 years of experience in consumer and business financial debt solutions, which includes negotiations with large international banks and credit agencies for loans, lines of credit, credit cards and student loans. Leslie is the founder and managing director of Tayne Law Group, P.C., a law firm headquartered in New York dedicated to debt solutions. Leslie is frequently sought out for her expertise on financial, credit, and debt topics in the media. As a speaker, she regularly provides insight and strategies regarding all areas of debt and credit-related solutions to outlets like the Huffington Post, Yahoo Finance, US News and World Report and MSN.

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About the hosts

Stacy Johnson founded Money Talks News in 1991. He's a CPA, and he has also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

Miranda Marquit, MBA, is a financial expert, writer and speaker. She's been covering personal finance and investing topics for almost 20 years. When not writing and podcasting, she enjoys travel, reading and the outdoors

Hey guys and welcome to Money Talks news, the podcast that makes you richer one day at a time. Did you know Americans owe more than $1.1 trillion in credit card debt? And a good portion of that is because too many of us are using Classic to pay for basic

necessities like rent and food, but no matter where your debt comes from, one thing's for sure, it's stressful. According to one survey, more than half of us adults with debt say they feel stressed because of it. So what can you do if you're feeling overwhelmed? Consumer attorney and debt relief expert, Leslie Tane is here to save our day. She specializes in law based debt solutions and today she's going to help us with the steps to take when we're feeling overwhelmed by debt. Welcome, Leslie.

Thank you so much for having me. Thank you so much for being here. And of course, we also have uh Aaron Freeman and Miranda. He is here with us. Hey, Miranda. Hey, Aaron. Hey, hey,

hey,

let's uh let's solve my debt problems.

Let's do solve your debt problem. Does anyone I know you two have both had debt problems far in the, in the past.

Yeah,

absolutely. But luckily those debts are far behind.

Let me ask you this, you deal with people who have debt issues a lot. Why do you think so many people are overwhelmed by debt these days? There are so many reasons why people get into debt, stay in debt and then have it overwhelm them. It could be anything from life changes, family changes, dynamics like medical issues, divorce,

change of jobs, the post pandemic with the costs uh with inflation, there could be mismanagement and there could be a lot of reasons why people end up in debt. From my perspective. I'm, I'm not judgmental. I've done thousands and thousands of cases of debt but it does happen. It is part of life but there are lots of great solutions.

Cool and, and we're gonna talk about those solutions but let me ask you something. It's gonna sound like a stupid question. But how do you know when dad when you're in trouble? How, how do you know when you need help? How do you, how do you know, you know, this isn't just the way life is? I mean, what, how do you, how are you supposed to figure out whether you're in trouble or not? You know, that's a good question because so many people do live with overwhelm

debt every week. They live paycheck to paycheck or they're just paying bills and there's really nothing left over and that becomes a way of life. I think the time comes when you realize that you're having, um, an issue related to debt and it's hard to get help is when you start to see that, you know, the balances on your debt balances don't go down. When you start to have different

in meeting your financial obligations. There's no money left after you've paid all of the bills or you really anticipating your, your paycheck because there's nothing left over. Um or you, you have nothing in savings. I think those are some key situations and red flags that you really starting to have an issue and it's time to seek some help.

You know, many years ago, I did an interview with a bankruptcy attorney and I said, how do you know when you're supposed to file bankruptcy versus just working out some other way to pay off your debts? And he said, if your monthly payments are higher than your income or available income, then you should consider bankruptcy. Did I remember that? Right? Is that true?

So that is one test uh when what we try to do for most clients with debt is avoid bankruptcy. Bankruptcy can be kind of an extreme circumstance. It could impact uh business future, certainly impacts your credit for up to 10 years and it can have other, other long lasting implications and less flexibility. So it's not really just about not being able to

pay the bills or pay out more because sometimes even though you're paying out more money than what's coming in, some adjustments in the budget and some changes can help you to reduce your outlay of cash and get you out of debt. Sometimes it's just figuring what's happening within your financial circumstances and that reconfiguration could lead to financial freedom.

Now, let me ask you this too with the, well, let's talk about the different ways of getting out of debt. But, but you know, before we do though, here's another question that's really common, there's good debt and there's bad debt people say is that, is that true? And if so what distinguishes between good and bad?

Definitely there's good debt and bad debt and frankly good debt can become bad debt and some bad debt can actually become good debt. And with that said, so let's talk about what good debt is. Good debt is something that helps your credit score. That's something that um brings something to your life. Uh Perhaps it's a house, a car, uh even student loans, all that starts out as good debt. You have, you get something for the money that you borrow and you

have good intentions. If you plan to pay it, you are paying it the challenge and the bad debt comes in when that starts to change, you no longer have the ability to meet those obligations or you didn't budget appropriately. Um Interest rates change or some some other factor interferes with that and now all of a sudden it's become a strain and you're not paying it that good debt, all of a sudden became bad debt because it's now negatively impacting your credit and your finances.

Ok, cool. Yeah, I wrote a book called Life or Debt, uh, many years ago, decades ago, as a matter of fact. Um, and in that book, I basically said that good debt makes you richer and bad. Debt makes you poorer. That's similarly in my book Life and Debt. It. Um We talk in the same, same topic about it. You have a book called Life and Debt. I do. You're kidding. That's really funny.

That's funny. I got a book called Living Life while In Debt.

No, I'm joking, I'm joking.

It's

a good title though. Ok. So anyway, let's talk about how to get out of debt even maybe when it's not overwhelming or when it is, you know, whatever, if we want to approach debt, we want to get out of it as quickly as possible. Let's talk about some ways of doing that. What, what would be the first thing that came to your mind when I said that Leslie.

So the first way to get out of debt really is to look at your budget and most people don't want a budget. It's really taxing for a lot of reasons emotionally. It's straining. It's you, you know, if you're, if you're short on funds, you don't want to be looking at it. So there's a, there's a lot of psychological implications to the budgeting process and it involves math, which most people don't really care to do. So. And it's not natural. It's just, it wasn't taught on a regular basis. It just doesn't come naturally to most people. But honestly, without understanding your budget, there's

no way to get out of debt. There just isn't, you need to understand what's coming into your household and what's going out, you need to categorize the monies that are going out into different categories, wants needs, you know, certain types of expenses. Uh and then you have to take a look and say, well, what are my thing? And, and then prioritize what is my most important debt that has to be paid my house, my car, my, my food bills and, you know, for simplistic purposes

and then go from there, what's next? And then that's the only way to start. If you don't understand the budget, you don't understand the monies that come in. And then a lot of people have fluctuating incomes and that often makes it challenging. And my recommendation under those circumstances is work off the lowest common income. You know, if you, if your income fluctuates, you're a seasonal worker or you're a gig worker with 1099 and you know, you have fluctuating income, you have to budget and live off of the low

amount of money that comes in anything extra then comes in, then you can allocate for things like vacation funds or emergency funds or, or spending or paying down debt. But that's really the starting place. The station

have been doing these debt stories a long time and a lot of the factors have changed. Um I don't know, I keep reading the articles of the vast majority of the debt holders are low income or even below, just slightly below middle class and then a little bit in the middle class.

What are some of the extreme things that you tell these people? Because most of the times we always tell people the same thing over and over and you know, do a budget, try to figure out what you can get carve away and do the pyramid scheme or the snowball thing. What happens if, if this all of a sudden caught up to you, like you're living life, all of a sudden everything goes up but your income hasn't gone up and now you're using credit cards. But what's the extreme? I mean, do you start selling off your new car to

and get a used car? Do you suggest people you're gonna have to move? Your place of living is just too expensive? I mean, what's the extreme of this to get people back on track?

So, in my experience, I mean, I've been doing this for 25 years. Uh there you can't tell people you have to move and you can't tell people you have to sell your car. It, it just, it's like telling somebody that, you know, stop, you know, quit smoking,

like, right on the spot or, you know, we go on a diet immediately and stop and stop eating carbs. It just, it's not a, it's not something where you could just rip the band aid off and say, ok, do that because these are habits, these are financial habits and they are in gray and they're part of your day to day experience with your money. And so they have, it has to be done gradually and it needs to be done in a way that

works for the individual. And that's why, you know, there isn't one method that works for everybody. It's really, you know, your financial DNA, what works for you and in and the people that I've worked with over the years, you know, not there isn't one way that I would say, ok, this is, this is the Leslie Tane method and this is the best and tried and true way to get out of debt. It just doesn't work like that every method,

you know, and there's combinations of methods that work at different times in your life. One month, you might try one method in the next month. It makes sense to do another. It's that dynamic. So when you're looking at the situation and I'm advising clients, we're looking at the big picture and we're talking about goals, short term, long term goals. What are the, what's the financial situation look like? What's changing in your circumstances? Where's the money coming from? Is it stable income? You know, is the house, does it make sense? Your housing expenses? If you're over 50

percent on your housing expenses with your income, you're never gonna make it because you, you, those percentages just don't work. But if you can, where can you cut back? What makes sense in cutting back many families today just simply can't cut back. Are there ways to add income to your household? You know, are there ways to, um, to make adjustments starting slow that can help you to a better place for me to go and tell a client, you have to sell a house. I mean, the,

you know, that's, that's just not, first of all, it's not an appropriate, um, solution under circumstances. Now, even my clients that come to me that where their houses, they're behind on their mortgage payments and they're going into foreclosure sometimes, even in those cases, it's not the answer isn't just sell the house. In other cases. It does make sense if you're in a circumstance where you can't make your mortgage payments and you have equity in your home, it might make sense at that time to sell the house and not necessarily buy another house. But then again, rentals these days

or astronomical, it's as rental markets in, in very hot areas from South Florida to the New York area are, are very, very difficult to obtain if a reasonable number. So sometimes the mortgage is actually less. But, and if you've had an interest rate and you've been one of the fortunate ones to have a refinance in the last 10 years where you have a two or three or 4% interest rate in refinancing, cashing out or selling and buying another house, then doesn't make sense because you're gonna end up at 678,

9% interest rates, you know, on and you're gonna buy a lot less. Your money's just not going to go as far. So again, it's not, it's not black and white at all. We look at the totality of the circumstances and take each piece, marry them together and then come up with a plan that makes sense, including the budget, not the expenses and what's happening today tomorrow and in the future.

Yeah,

it's not black and white.

But, uh, did I understand you're right. Did you say in your user experience? The biggest thing that you've come across is bad habits is the reason people get into debt.

Yeah, they're really bad. There's, most of it are bad, bad habits. Just not, um, not necessarily seeing the big picture. So running your personal finances is a mini business. So you have to look at it, take a step outside and look at it a little bit more from a, a bird's eye view or a business perspective, your household is a mini business. So how, how is it running? Is it running efficiently? Is the person running it running it? Well, does it need a joint venture? You know,

again, if you look at it a little bit more detached from the emotional part of it, the challenge with finances is that many people are so emotionally attached to it that they can't make clear and concise decisions and it becomes very difficult. And so I usually tell if it's a couple, the person, you know, work together, but the person who, you know, can, doesn't get overwhelmed by the financial situation because it's easy to get overwhelmed. And then when you're overwhelmed, you,

you can't see clearly. And sometimes it's as simple as having a conversation with me where I say, OK, let's lay this out, let's look at this, you know, what do you see here? This is what I see here and they go, oh, I didn't even look at it like that. So sometimes it's just as much of needing just a lifeline to somebody who says, helps you think things through a little bit and look at it from different perspectives. But the habit piece is habit forming is early on. I mean, you're teaching your Children early

on. I have three now, young adult Children and from very early on, I, I've taught them the power not only the power of money but, um, the ability to think about money. What are we thinking about budget wise? We don't walk into a store and just buy because we feel like it, we think it through a little bit more. And one time my kids actually said to me when I was, uh when they were teenagers, you know, I really hate that. My mom does this because she just talks about budgeting too much.

So, but it is, it's part of like, it's part of the habits. My Children have an, an edge because of what I do. But you can, you were not taught, I wasn't taught by my parents and most people are not taught about how to manage money. I came from a generation that said, you know, my, my father said it's none of your business. You have a roof over your head and that's the end of it. So, you know, I had to learn a lot of it on my own and, and most people have

to learn it so you could easily get into bad habits. But you, you would, you would agree though, uh Leslie, correct me if you don't. Um, all of this begins with what I call a spending plan, what you're calling a budget. In other words, seeing where your money is going. Now, seeing how much is coming in, see how much is going out and where that money is going. That's where everything starts. Agree. Now you could call, you could call the spending plan, you could call it a,

you can put any name you want on it. Uh, but the spending the, the, you have to look at the numbers. You have to know that every other week or once a month because I have clients get paid so differently. Once a month, weekly, daily, you know, every other week. How are you being paid? And what money is coming in? What's the net income? Not the gross income, gross is before taxes. And then at different times of the year, it's the

tax, the numbers change because in early part of the year, you, you might see less in your paycheck than you do later part of the year when once most of the taxes have been paid out or maybe maxed out on certain tax requirements. So you have to look at that 100%. Tell me this, explain the snowball method. I mean, is, is that, is that a good way to start paying off debt? Let's assume for a moment that I have sufficient income. Uh, and I have a handle on my expenses and I want to now attack the debt that I have.

Uh, is the snowball method a way that you would go about doing that? And if so, would you explain it for us again? I, I don't, I don't think that one method is the right way to do it. So, you know, when I'm looking at, when I'm looking at an individual's finances, I'm saying? Ok. So do they have high interest, do they have high debts? What are, what are we looking at? Where is the money best spent?

So if you're looking at where the money is best spent perhaps this month, you, you needed a new, you know, it's hot out. So in most of the country, so maybe you needed an air conditioner and so you had no choice but to use the money to buy an air conditioner, but you didn't have enough money on your credit on your credit card to do that. So you ended up taking the money out of your savings account. So, you know, again, there's so many things that interfere with making the, the decision of what makes sense. Should you pay down

the high, high interest? Um, sometimes, sometimes no, but and, and sometimes it makes sense like if you're gonna prioritize, you wanna make sure that you are prioritizing the debts that you need to live off of. So if you're living off credit cards, you wanna ask yourself, why am I living off credit card? Where's the problem? Because yeah, you could say, all right, I'm gonna pay down the high debt or the high balances. But why do you have high, high interest rate? Why do you have high debt?

You know, and the underlying issue is really where it comes in to resolve it. So you could tackle it one way or another but it'll perpetuate if you don't get why. So if you're using credit cards as part of your cash flow, because you don't have enough money coming in. You could today from today until tomorrow, you could pay down the, you could try to pay down the high interest, but you're not going to because you don't have enough money. So you're only making minimum payments to say. So the method is useless if it's not looked at strategically.

So underlie the underlying issue, which usually is cash flow. So if you have extra cash and you are able to pay things down, assuming that's the case, then you might want to say, why do I have so many credit cards? Does that make sense? You know, do I have good credit? Should I consolidate those into? We have maybe a balance transfer if I have really good credit, you know, is that an option for me that might make more sense and pay 5, 10 or 12

clients with 25 different credit cards. So that might be an option. Now we now using the money this month. Ok. It's the beginning of the summer. Are you a teacher or you know, is it gonna be a situation where over the next two months you're not being paid? So therefore you're not getting a paycheck, then you might have to shift that priority. So again, even though there are these methods, there's just, there's so much more gray in between on making them work. And that's why people end up with me because

they look at these, these methods and they say I've tried this and I've tried that and nothing works. I can't figure it out because it's, it's self medicating. You know, you can walk into a drug store and you can buy 25 different cold medicines. But do you really have a cold? And is that really the proper medicine And you try to read the packet, you know, to cover up the symptoms, but you're not getting to the underlying issue. It's the same thing in debt. If you don't get to the underlying issue, none of the methods are gonna work

interesting. What about credit counseling?

So credit counseling is a uh consumer credit counseling, generally not for profit. Um, you know, there's a lot of different uses for that sometimes in the bankruptcy arena. Um, you know, there's credit counseling if you want advice and then there's credit counseling where you go in and they can renegotiate with some of your creditors for a lower interest rate, not a zero interest rate. Um,

you know, while it does work under certain circumstances again, when you're looking for a solution, you have to understand what the problem is. So if you have a cash flow issue, that's, and you can't meet your, your financial obligations, that's not gonna do anything for you reducing the interest rate. So you wanna be able, you might need to reduce the principal. So before seeking out a solution, you have to identify the issue and that's and most

people can't. So we come in similar again and I liken it again to like a doctor. We come in and we look and we diagnose what's the issue and what would be the best method? Sometimes as consumer credit counseling makes sense. But other times debt settlement makes more sense. Sometimes the bankruptcy really is the way you have to go. But you need somebody to diagnose it and look at the issues and, and sometimes people come in and they say I'm looking for a bankruptcy and we say, why

looking for a bankruptcy? And they say because I can't pay my bills anymore. And I say, why can't you pay your bills? And we look at it. I had somebody call me the other day about it and she lives in the city and I said, so how are you living in the city in New York City? That's a very, very expensive place to live. So what's the income? And why are you not working? Well, I'm not going to take a job, you know, that that's under what I'm willing to work for. I said you're not gonna have a hard time, you know, making that argument

in front of a federal bankruptcy judge that you don't feel that you should take a job to pay your bills because it's beneath you. So that's a tough, that's a tough argument. So again, when we, when we uncover and unravel what's happening, then you can find the best method. But now let, let's stop here for a minute too because this is something people are often very, very confused about is the difference between credit counseling and debt settlement. Please explain the difference between these two things,

night and day. Completely different debt settlement is where you come in and you're going to renegotiate the balances and the interest rate. When you're renegotiating the balances, the principal balance is what you owe. So you owe 10 grand on your credit card and you're paying 18 percent interest a step settlement plan would work where you go in and you, you're not making payments anymore to the creditors. So you delinquent and you go in and you negotiate that for less than a $10,000 interest.

That's basically debt settlement. We are settling it for less than what's owed consumer credit counseling service or credit counseling works differently. It's, it's looking at it's a participation process with the creditor, the creditor has to agree to it and it's usually a reduction in the interest, not in principal balance. And usually you taking the interest rate from 18 20% and making it 9% or 10% and you're paying over five years, but you're still paying the principal balance.

So you'll still pay $10,000 plus interest over the period of time versus the debt settlement where interest will stop generally and you will, uh, reduce the balance. But, you know, there's a lot of caveats, both have to be done. Right. If, when they're not done right. You know, it's like a fire crack, it'll just blow your hand off. So it, it, it, it would appear to me that the, the, the debt settlement would be better because then I'm paying less than I owed

generally. Yes. Uh You know, in my experience generally, yes, some people don't want to necessarily go through that process or they weren't exposed to debt settlement or they were exposed to it, but they were given all kinds of, you know, oh, you shouldn't do this because of that. Um So they felt like also consumer credit counseling falls under what's called not for profit. So many consumers like, oh, it's not for profit. So I can go do that. Not for profit doesn't mean that the people who run it don't get paid. It's just that it's a tax filing status but that the people

who, who work there and run it still get paid. So the there are some volunteer processes, but most of the time there's still a payment process in the debt settlement, there's so much negative press about that settlement and, and in many cases, rightly, so because again, when it's not done right, you know, the consumer is really disadvantaged, but when it is done right, it is extremely successful, both will impact your credit. However, in the, in the in the

debt settlement, from my experience, the way we do it, my client's credit scores go back over 700 while they're with us. So again, when it's done right, and it's done appropriately, the credit score issue could be managed. Tax issues are managed, payment plans are managed and there's a lot more control and it is a very successful process.

Interesting because I too have seen over the years as a consumer reporter that there were a lot of bad characters in the debt settlement business and there are still are, unfortunately, yeah, and people, people's credit gets ruined in debt settlement, right? Because at least I wouldn't say ruined, I would say damn it. We did,

we did a, we did a whole episode on how my, my credit was ruined by an accidental debt settlement situation that I thought was debt consolidation.

So I think, I think, I think when we're going through these different tool, like these different options or tools or whatever you want to call them, um It's really, it really is important to have somebody like Leslie or some other professional who understands these things to be able to guide you and keep you on track because like there are all of these terms and all of these tools that people like to use. Uh And you know, I thought I was signing a debt consolidation loan but

it turned out. I was signed up signing debt settlement paperwork and I didn't find out about it until three years in and I was being sued and my credit had been destroyed.

So

I think

it,

you bring up a really good point and I really want, I really want to talk about that for a second. So most consumers don't know what debt consolidation means. So they think that, oh, I'm gonna consolidate my debt and there are, if you call many 800 numbers or you're solicited, those are call centers and they're selling you a product. And when they're selling you a product, you don't really know. You don't know that as the consumer and debt consolidation is a very broad term. It encompasses

debt settlement, it encompasses loans, it can encompass bankruptcy, credit counseling. It's an umbrella term for a lot of things. And as a consumer, many consumers don't get that. They say I wanna consolidate my debt, but they don't really know what that means. And when you call up an 800 number, you saw it on television, you heard it on the radio, you got something in the mail, you got an email about it and it sounds like this big great company and you call them up. That is a sales call. You're calling a sales center and they, and they sell,

your call goes to one agency and another call goes to another and then what they end up doing is that's just the front end and they're sales people and there's, and they're telling you and they're talking about it. But, and then on the back end it gets serviced by a different company. And I've seen some of these agreements come through my office from clients like you who thought they were doing something and then all of a sudden they got sued and they said sorry, we can't help you anymore because you got sued and oh, and by the way, all the payments you've been making over 24 months, we took most of that money.

So and you're not gonna get it back because see a buy and good luck getting money back from us. And so most consumers unfortunately get drawn in by the solicitations, the television commercials, the the the things like the emails that come uh and because some of it contains information that's been bought and sold, they don't realize that through the credit reporting bureaus, you can buy the information and then use it as a solicitation. You could pull it off. You

public data will give you all this information. And it's very clever marketing and very clever sales people who haven't explained to you what it is that you're getting yourself into and it's electronic signatures now. So what we see in, in many of the debt world is it's everything is signed electronically. So nobody's actually reading it, autofill it, auto fills the entire agreement and that a consumer never reads it. So, and there's no idea what they got themselves into until further down the road. And you thought you were doing the,

I think it consolidated your debt and you were but through debt settlement. And so it's a, it's like the chapter is debt uh consolidation, but the subchapter is you are um doing a debt settlement program. And so that's why you ended up with that problem. Now, if it's done right, you're even if you were sued, it could be settled. All of the debt issues that you had through debt settlement could be resolved and settled pulling your credit score back to over 700. So it drops, it'll drop in that plan.

It'll also drop in debt consolidation. If you took a loan. If you thought you were taking a loan, any time you take out new credit, your credit score is gonna drop for several reasons. One, it's being checked for credit and two, you're moving money from one place to another in a credit forum and that as a result that gets reported and that's gonna, that's gonna wreak havoc on your credit score. And what if you don't have a great credit score to begin with? 6 86 40? It's gonna drop pretty low even if you have 720. It's gonna drop under any

of those circumstances in the best of circumstances. 5075 points in the worst of circumstances, bankruptcy. You'll, you'll, you'll take that credit to under 600 but in done the right way and massage the right way and managed appropriately, all of that can be um brought back up and honestly, in order to have good credit, and I tell people this all the time, in order to have no debt, you and good credit, you have to resolve the debt issue if you continue

to just pay your bills, but you have a lot of debt and your debt to income ratio is off, your utilization is high. Your credit score is never coming up and you're on, you're teetering on the edge and when you're teetering on the edge of having no cash flow and very little credit, what good does it do you to have a 7 57 80 or 800 credit score? It doesn't do any good. You need to have cash flow money in the bank savings and the credit score can be secondary to that because the it will offset the need for the credit.

Ok? Now, you know, I've done countless, I mean literally countless stories on debt over the years. I've been doing this for 30 years. You're the first time this is the first time other than a bankruptcy lawyer that I've been talking to a lawyer about this, usually credit counseling organizations that I've talked to.

Um how much does it cost for me to use services like yours? Because essentially what I'm hearing you say and correct me if I'm wrong, Leslie, what I'm hearing you say is there are lots of different options. Here's somebody who's an expert who, who's not, not committed to any certain path that's gonna help me choose the right one. Is that basically what you would, how you would describe yourself?

Yeah. So, I am a unique, you know, a little bit of a unicorn because it's not a practice area that most attorneys go into. You know, it's uh it's, it's not taught in law school. It's not uh it's not a practice area that first of all, it's not extremely desirable in a lot of ways. And it is a very challenging industry. I face the most challenging clients that many of my colleagues face and it took 25 years to build this business out of

very difficult industry. So I am a bit of a unicorn where my practice is completely focused on debt resolution. We, we do consumer debt, but we also do a lot of merchant cash advance business debt and, and student loans and other things, but all debt focused. So it doesn't cost more to work with me. In fact, in many cases, it costs less because it's one, you know, it's one stop shop where we are managing the credit issues that legally

issues the the um creditor issues and everything in one stop, we work on um a ba a fee basis that is structured within a payment plan. So the client is not billed hourly. So again, unlike typical lawyers, you know, we don't hourly bill, um and we don't um charge the way typical lawyers do. So we, we structure it where it's very favorable to the client to make it work and it doesn't cost more

in many cases. Most of the debt that we're settling uh includes they pay back less than the principal balance owed, including fees. So it's, it's a very um the, the, the program and the processes that I've designed and developed over the years is a very, very successful process and not one where someone's gonna come in and go. Oh my God. I, I'm gonna have astronomical legal fees. That that's not the case at all do. It sounds like you lean towards debt settlement. Is that true? Yes. Yeah.

No. Why, why is that? I mean, why not use credit counseling?

Debt settle is extremely successful. It would, it, it resolves the underlying issue cash flow. They don't have enough cash flow to meet the obligations. Therefore, they're close to the, the balances aren't going down, maybe they're already behind and it's extremely successful in reducing and eliminating the debt in a short period of time, 1 to 5 years, which is a very short period of time. It increases the credit score. It doesn't have

long term effects on the credit and it allows the client to have more cash flow during the process and also helps the client wean themselves away from relying on credit credit cards as their day to day go to um usage. Now, when you do credit counseling, you agree not to use credit cards while you're paying off that debt, right? That may be, but we don't do consumer credit counseling here. Oh, so you basically only do debt settlement.

We we only do well, not just debt settlement. We do, we do other debt types of plans but we debt settlement is a big part of the, of the practice and solution especially when we're talking about consumer based debt, like credit card debt. So give me an example of how much it would cost me if I come in with $20,000 of debt. And I want to try to settle it because I can, I can no longer make about four grand. I'm sorry,

probably probably around $4000 anywhere. Yeah, probably about $4000. It cost you to to take care of that over the course of you know, 2 to 4 years.

It's not, it's not unreasonable. And if we settled it for 10,000 plus the four grand and the with the amateurization schedule, you're plus 6000 plus the plus the interest, the amateurization schedule of what that would cost over the next four years. So you're probably at seven or $8000 savings. Ok, cool. Now, could I do that myself? Could I call the, let's make it simple and say I owe all this money to one credit card. 20 grand.

Um Can I call them myself and say I can either give you 10 grand or I'll just file bankruptcy and you'll get nothing. No, that's that. They don't care if you tell me they're gonna file bankruptcy because they can file a claim.

And then it's like, it's like the boy who cried wolf. No creditor cares if you're going to file bankruptcy anymore. Or if you say you're going to file bankruptcy because if you don't, if you don't file bankruptcy, then you have no credibility with them and you just lied to them and just like many people do and they then have no patience for you and then, you know, and then they're taking notes on the conversation so they can, they can check bankruptcy. How do you settle the debt? And what are you saying to them that make them take 10 grand when they, when they're owed? 20?

I am not telling them my client is filing bankruptcy. They, I've been doing this so long that they know who I am after all this time. And it also, it's, there's timing with every creditor, every single creditor resolves debt differently. And depending on where it goes and, and in many cases, American Express discover um send their accounts out

um to different various collection agencies and law firms and depending on where that end that debt ends up is going to depend on what the solution is. So just understanding the industry, just understanding the timing like with Chase Bank, what the timing is, you can call Chase Bank up after missing a payment and they're gonna tell you sorry click, we're not settling your debt.

So and most creditors will. So a lot of it is understanding the timing of when debt settlement can occur, what numbers we're looking for, what terms we're looking for and and what agency it goes to for us to then make the best decision. So it's experience and really understanding the industry and the creditors really, really well,

cool. Ok, look, we, we're gonna have to wrap this up, but before we do or as we do, let me re let me go back to the title of this podcast, which is three steps to take if your debts are out of control and, and that's basically something you don't have to exactly have three steps. But are there steps you could take to summarize this whole conversation, Leslie. Uh, if your debts are out of control, what steps real specifically and real short would you take?

Ok, there are three steps. The first is awareness. You need to be aware, you have a problem and your debts are out of control and you need to come to grips with that and say, ok, I have a problem and I need to find a solution next, figuring out the underlying issue, which is usually figuring out what the cash flow is. What funds do I have available to resolve my debt? So I can then determine the best solution.

And then I, I really believe in reaching out to a professional to say, hey, here's my challenge. Uh What do you think? And how can you help me? I'm a big fan of finding um those that specialize in their area of expertise to help me get from point A to point B in the fastest, most economical and with the least amount of impact on me. So I think those are the three steps that you take. And then finally, the, the final one really would be pulling the trigger, not

sitting on the fence because I have lots of people who call me nine months later, a year later and say, oh, I should have done this a year ago. Make a decision once you come up and you do your research and you find what's best for you and go with your instinct. If your gut doesn't feel good about the solution and you don't like who you're talking to or you feel pressure in any way where they want money up front from you, or you're not speaking to a professional who's providing you with real expertise. Don't sign, walk away and find another solution.

That's great. You know, actually, one of the pieces of advice that I've always given people too is when you're talking to anybody, whether it be a credit counselor or debt settlement company, whoever it is, if they sound like a salesman, hang up if they sound like a counselor. Fine.

But you know, but a lot of these people, they're, they're hardcore sales people. They are salespeople and they're reading off a script. And the other thing I tell people is if they've given you advice without understanding your financial circumstances, do this close your bank account, do that, do this close, this do that. I tell my clients when I talk to them, I said you're, nobody's had any chance to look at your financial circumstances, but yet they're giving you very specific advice, but they haven't looked at it yet.

I said that's, that's no good. So again, red flags to look for and that's, it's important in this arena because as, as we said earlier, there are a lot of bad apples that have spoiled it for the rest in the past. But there are some, a lot of good eggs. You just have to find those and you have to be comfortable with who you're working with and it has to work for you and don't just sign or feel pressure. Uh, if anybody's pressuring you in this area, that's the last thing you need. Yep.

That's right.

Um, you guys have anything else Miranda or, or Erin,

I do just kind of want to point out one of the things that Leslie said that I thought was really interesting because, uh, after my credit was destroyed. Uh through uh not, you know, thinking I was doing a debt consolidation loan, signing the paperwork that they sent me for an electronic signature and ending up in a debt settlement situation. Um I still had the cash flow, I still had the resources. So even with my destroyed debt,

uh my destroyed credit, I was still able to get an apartment even though I had to pay a slightly higher security deposit. Um I was still able to buy my son a used car with cash. So what she says about paying attention to the rest of your finances and not just focusing on your credit score through this whole process is also, I think something important to remember as we move forward.

And yet, you know, another thing too that occurs to me is that, you know, there's, there's debt settlement companies, Leslie is, is an independent expert on this. Uh and then there's consumer credit counseling service which has been around for a million years. Um disclosure. I used to be on the board of Consumer credit counseling service, a local one here

in South Florida. So I am partial to those people, but at any rate, what I was going to say was that you can talk to different people too. They're, they're not charging you to, to call up consumer credit counseling service and presumably Leslie wouldn't charge you to call her just at least for an initial consultation I assume

correct. It's all free. You should be able to have a conversation and that's where you should feel comfortable. I speak to almost every single potential client that comes through the door. Not like for screening purposes, but so that there's I establish a relationship and they understand that there is somebody at my level uh overseeing the process. Um, you know, and that

obviously that's very time consuming for me to do that. But I do think it's really important to properly inform a client before they become a client, um, as to the whole process and procedure and, and really see whether it's something that we can help them with and you should be able to speak to anybody and call around to different services, even different attorneys and different services and see where you, where you feel comfortable.

Yep, that's true of virtually any service from a doctor to a mechanic to a debt person. Call them up, talk to them, see what they see what they sound like. You can tell when people are on your team and when they're not. But you can't until you talk to lots of them or not, lots of them, but several of them, at least then you separate the wheat from the chaff right by talking to people. I agree with you. Cool Leslie. You're wonderful. I can tell that you're a New York City attorney. I have to say

what I would imagine what gave it away that, uh, you know, in this case, I can't imagine a person I'd rather have on my team than a, than a hard charging New York attorney like yourself. So, you know how many people tell me that, especially my clients from out of state. They're like, oh, I feel so at home listening to that New York accent.

Ok, guys, I am afraid we're out of time folks but we are never out of topic. Dig a little deeper. You're gonna find links to lots more info on our show notes. And remember we're not giving financial advice here. It may sound like it, but we're not because we don't know you personally. So we're not so make sure to do your own research, consult your own experts before acting on anything that you might have heard on this podcast. Uh And also if you like what we do, then do something for us,

our podcast, tell your friends get us some more listeners, would you? And if your goal is to make more to spend less and retire rich, your home is Money talks news.com and don't forget to check out Miranda's online home as well. That is Miranda marquet.com and visit Leslie at her website. That is attorney, is it Attorney Dash New york.com.

Yes. Attorney hyphen New York spelled out or law taynelaw.com. Cool. And you're gonna, you're gonna be in our show notes. So we're going to have your link there if anybody wants to talk to you and we hope that they do. Um I guess that's all we've got Leslie. Thanks so much for being here. Thank you so much for having me. I'm Stacy

Johnson. I'm Miranda Mart.

I'm

Aaron Freeman. Thanks for being with us guys going to see you right here next time.