 Welcome to, here we go. Hi, everyone, welcome to Financial Planning Day and our session on debt. We'll get started here in a moment, but the session is being recorded. And we have everyone on mute, but you can put any questions in the chat on the chat functionality and we'll cover some of those at the end if we have time. We are limited on time. We have a lot of sessions going on today, so we'll get started here. But we are very lucky to have Ezra Berger with us today. He is a certified financial planner and a personal friend of mine. I'm very proud to say and Ezra works in a very cool space that often gets overlooked in financial planning, I think, where he really focuses on people who are in financial distress and what are the tools available to them to help with getting out of debt and laying a solid financial foundation. So Ezra, thank you so much for joining us today. Thanks, Karen. Thanks for the introduction. Hi, everybody. Thanks for joining. We're probably going to have people coming in, popping in as we go. But I want to respect the time of the people that are here now and just launch right into things. So I'm going to share my screen and you should be able to see a blue getting out of debt. Do we see it, Karen? That looks great. Cool. All right. So this session is called Getting Out of Debt. My name is Ezra. I'm a certified financial planner. Just a little more background information so you know who it is that's talking to you today. I'm a certified financial planner like many or all of the presenters today. I'm based in Oakland, California. And as Karen mentioned, I have a different focus than most CFPs in that I specialize specifically in consumer debt and credit issues. And the primary demographic that I serve is individuals and families who are experiencing financial distress. And typically that means they have some debt and they need to address it. And so that's my area of expertise. That's why I'm giving this presentation today. We're going to go through a lot of information. My contact information is here. I don't know how much time we're going to have for questions. I would love to get to as many questions as possible because I know for most of the people that are joining a session like this, you probably have specific concerns that are maybe causing you a lot of anxiety, concern, fear, potentially. I would love to get to questions, but I do have a lot of content I want to share. So apologies in advance if we're not able to get to your question. I am including my email address here. I'll pop it up again at the end of the session when you'll be better able to decide whether or not you want to use it. It's my personal email, so so be kind to it. But if you have questions, if you need access to additional resources that I can help with, feel free to contact me there. I will also be distributing or the library will be distributing this presentation to anyone who wants it after today's session. And really, it's designed for you to review it on your own time. You're going to see there's a ton of text. There's a lot of information I try to include as much as possible. There aren't a lot of similar resources out there. And so I tried to make something a little bit unique that would help someone who is in debt to really kind of navigate what their options are, where to go and how to think through the process. So without further ado, feel free to type your questions into the chat as we go. We will try to get to them at the end. If we have time, I'm happy to stay a little bit late if if people want to stay afterwards for questions. So let's get started. Just a couple of disclaimers. This is all educational information. Nothing I say today should be construed as financial advice, nor should it be construed as legal advice. We are going to talk about some legal topics. I'm not a lawyer. I can't give legal advice. You should consult with an attorney if you have any questions about your own personal situation or if you need a legal opinion. OK, so first, who's this presentation for? Let's see if we've got the right people in the room. So I think this presentation is first and foremost for anyone who is struggling with debt, and that could mean that you are proactively trying to get out of debt. It's not a problem for you, but you have some debt you want to get rid of it and you want to get rid of it in the most efficient or effective way possible. Second group of people might be, you know, you're you're not in trouble yet, but you're worried that you might be falling behind on some debts. You're worried about what might happen or you're finding it increasingly difficult to keep up with your your current debt obligations. And then third group would be a group that I personally deal with the most, which is people who are already falling behind on their debts, really struggling to pay their debts, maybe dealing with debt collections, maybe dealing with lawsuits. So if you're in any of those camps, this is the place for you. Similarly, if your friends or family of someone who is experiencing something like that, hopefully this can be a place for you to gain some insight, gain some empathy and learn about some some tools that you can share with your loved one. Also, just for the general public, if you're just curious, you know, what are people, what if I were to get into debt one day? Or what are what are the options for people that are in over their head with debt? I think you'll learn a lot today about what the different options are and kind of the process for for thinking through how to get out of debt. And then finally, if we have any financial professionals in the room who work with clients who maybe experience debt related issues, hopefully you'll you'll get some knowledge and skills today that can help you to better support those people. It's not it's not an area of expertise that is particularly focused on among financial advisors. And so I'd love to be a resource if there's anyone out there who wants to learn more so you can support your clients if they're experiencing this stuff. All right, let me quickly run through what we're going to cover and then we'll get right into it. And just to reiterate, because I know a lot of people are joining late, I am going to go through a lot of information here. I am not going to probably have a ton of time for questions, but feel free to type them into the chat and at the end of the session, I'll stay as long as possible to answer whatever questions there are. So first, the way that this presentation is designed is that we're going to go through a step by step process for anyone who is in debt and wants to get out of debt to figure out the most effective way for you to do it. Everyone's going to have a unique situation. Everyone's going to have unique finances, unique personal goals and objectives, unique personality, unique emotional constraints. So we're going to talk about all those things now. You can choose the best option for yourself to get out of debt the way that works for you. We're going to go through some six specific strategies for addressing your debt. I've got them listed here. I'm not going to go through them all now, but we will go through them one by one and we'll talk about the pros and cons, different factors to consider when you're looking at those options and strategies, as well as resources to learn more about each one. I want to talk about the types of debt that we're going to be talking about today. There's a lot of different types of debt and the different types of debt have different rules and different strategies that are applicable to them and not applicable to them. The types of strategies and debts that I will be talking about today, everything that I'm talking about is primarily going to be applicable to the following types of debts. OK, credit cards, personal loans, and that's just any any loan you take from a bank or a lender that's not attached to a car or a house or some specific object. We'll talk about what we talk about will generally apply to auto loans. There's some special rules here and there, but mostly it all applies to auto loans, phone bills, telecom bills, medical bills, even utility bills, as well as any debt that have been sent to collections or like sold to a third party debt buyer. OK, so all those debts are going to be all the strategies we discussed today are going to be applicable to these types of debts here are debts that in general topics that we're not going to cover in detail today. I'm just going to run through them so you understand a lot of these will will be what we'll talk about them maybe a little bit here and there, but this is not a presentation focused on this. So we're not going to talk about credit scores and how credit scores work. That's a big part of the getting out of debt process for a lot of people is they want to know how is it going to affect my credit? What are what are my options for preserving my credit or trading my credit to save money? I will talk about the credit implications of each one of the strategies that we discuss, but I am not going to go into detail to explain how credit scores work. We're not going to talk most of the stuff we talk about today is not going to be applicable to mortgages and foreclosures. That's a special case. Not going to be applicable to student loans, but I will on the next slide talk just for a moment about student loans because I know it's such a hot topic. This isn't going to cover business debts. This isn't going to cover child support, alimony or other court ordered debts. It can it will cover debts where if you've been sued and then the court has given a judgment to one of your creditors and they're like garnishing your wages or they placed a lien on your property. Some of the strategies we discuss will apply to those types of debts, but not court ordered debts like if you were liable for a tort or child support, alimony, things like that. Generally, this stuff's not going to be applicable to tax debt. And then we are going to talk about one type of bankruptcy today, which is a Chapter 7 bankruptcy, which is my favorite bankruptcy. We are not going to talk about Chapter 11 or Chapter 13. OK, so I said we won't talk about student loans, but obviously student loans are a huge issue. The reason I'm not going to talk about them, I'll just briefly cover here. But I do want to give you a little bit of information about them. So just in a nutshell, just so everyone understands, there's really two types of student loans, such federal student loans, which are from the US government, the Department of Education, and there's private student loans, which are from a private lender like a bank. Neither type of student loan in general, 99 percent of cases, can be eliminated through bankruptcy, which is a big bummer and is the main reason that they're not covered here. Because they're not covered in bankruptcy, they're much more difficult to get rid of without actually paying them back some way or another. Federal student loans do have a few special repayment options associated with them. If you go to the Department of Education website, you can learn more about them. There are repayment plans that are based on how much money you earn on your income and there's special loan forgiveness programs for certain situations. Of course, there was the big student loan forgiveness that was recently done by the Biden administration. I just want to kind of caution everyone that there are ongoing court battles that are challenging that until the dust settles, we're really not going to know whether or not that debt forgiveness of $10,000 per person is actually going to stand. So don't take that to the bank yet. Finally, just a little little distinction about private and federal student loans, you know, sometimes private student loans can have lower interest rates, but just in general, in my experience, and I'm not really a student loan expert, but one thing that I do know is if you just you can take your federal loans and you can refinance them with a private lender. But if you do that, you typically permanently lose access to these special income based repayment plans and loan forgiveness programs forever for those loans. So if you're trying to top of your student loans and you're thinking of doing a refinancing, which is probably less likely these days. But could be the case. Just you really want to make sure that you understand you can consult there are specialists out there, specifically attorneys who specialize in student loan debt. I would consult with one if you're thinking about it, or at the very least read up about what options you lose if you refinance federal student loan with a private lender. OK, that's everything I'm going to say about student loans today. I want to get into the meat of things. So we're going to go now through the six steps to get out of debt. And this really applies to anyone. Anyone who has debt, it doesn't really matter where you're out. These are the steps you're going to need to go through. They're very generic, but we will go into a lot more detail on each one. So you're going to define your debt. How much debt do I have? What types of debts? What are the monthly payments? Just basic information about your debts. That's going to be step one. Step two is to understand your resources. What do I have available that can help me get rid of these debts? Step three is clarify your priorities. What are your personal goals and priorities? We'll talk about what types of factors you might be thinking about when you're setting those priorities to people with the exact same debt load, the exact same resources could have a totally different set of priorities. Choose a completely different path to get out of debt. Fourth, this is going to be the meat of the presentation is you need to review your options and I'm going to walk you through the six major options for major strategies for getting out of debt. And that's going to be on the simple end, just paying off your debt regularly, using what we call the debt snowball, and then graduating to more and more sophisticated techniques after that. Finally, you're going to need to execute your plan. You can do that alone or you can do it with help. We'll talk about where to get help. And then you want to check on your progress and adjust if needed. You don't want to just make a plan and stick with it blindly. You need to check and see if it's working for you. So that's where we're going to go. Let's get started. All right. So step one, you decided for whatever reason, you've decided that for you, you would like to get out of debt. Maybe it's a huge problem. Maybe you've missed payments. Maybe it's it's really a crisis. Or maybe you just have decided that I've had some debt for a while. I've always paid it, but I think I'd like to move on. I'd like to become debt free. Maybe you have some financial objective, like I want to buy a house or I want to start a business or I'm having a kid. And I need to kind of readjust my financial situation. Whatever it is, it doesn't matter why you're coming in. You're going to follow these steps the same pretty much no matter what. So what's first? First is we need to understand what that you're dealing with. OK, if you think about getting out of debt like a journey, you know, like you're taking a trip, you're going from point A to point B. The first step in that process is going to figure out where am I today? What am I dealing with? Because that's as we're going to see going to really inform what our options are. So we're going to need a list of your debts. And this is to be honest, when I work with people, this is where I lose this is the step where I lose the most people. Because most people do not enjoy putting together information about their debts. It's painful. It's not fun. You're essentially making every one you add to the list hurts. Oh, gosh, another debt, right? Oh, and I owe money to that company, too. If you have a whole lot of debts, you know, it can be an exhausting process where you have to go through and make a list of each one. The truth of the matter is I don't know a way to to help someone to optimize their path out of debt if we do not know what your debts are. And in fact, it would be a very bad idea to try to make a plan for what you're going to do, which strategy you're going to use, what your plan is to get out of debt without actually knowing the details that I'm going to describe here, because you could make a plan that's totally not applicable to the debts that you have. So we want to make a list of these debts. It's going to be the name of your creditor, the name of the account, maybe it's your target card, maybe it's your Toyota car loan, whatever it is, the type of debt. And that's really simple, just a credit card, personal loan, auto loan, whatever it is, again, the balance today, the minimum monthly payment. What's the amount of money? Every debt has an amount of money that you need to pay every month just to make a state current, to not fall behind. You want to know what that amount is. That's going to be really important. Finally, you want the interest rate that's helpful for determining which debts have the most drag on your finances. And then what's the status today? Have I missed any payments on this debt or is it current? And I'm just going to show everyone an example of what this can look like. OK, so this is a little messy here. But if you make a list of your debts, this is what that can look like. It doesn't need to look that complicated. You can do it on a piece of paper if you prefer. I used Google Sheets. I didn't use any formulas or anything fancy. I'm just putting in information. So we've got here's a list of four fake debts. This is OK. We have my Bank of America credit card. Here's the account number for reference. I owe five thousand dollars on this debt today. I checked and I my minimum payment every month is three hundred and twenty five dollars, my interest rate here and I'm current on this debt. OK, and you can see just an example here of what this type of thing might look like. So you got a couple credit cards, maybe a personal loan, maybe a car loan. And at the bottom, we're going to add up a couple of things. OK, we're going to add up the total balance to figure out how much debt are we dealing with? Right? What's the what's the top line number that I need to get rid of? So in this case, this person knows thirty seven thousand dollars in total debt. And then we want to know what's the minimum payment that I need to make every month in order to not fall behind. And it's not that you're necessarily going to make that payment. We'll talk about the different options. Some of them you don't you don't make that payment where that payment gets reduced, but you need to know what it is now so you can decide whether or not it's something that you can keep up with or if it's something that's going to be a problem for you. Let me hop back into my presentation. This will be a little bit messy. Sorry, folks, but I do want to show you some examples of what things look like so that it's not just theoretical. Where do you get that information? This is where a lot of people get tripped up and I get it. It's not something that if you don't do it every day, if you're not used to, you know, pulling financial information and putting it into a spreadsheet like I do every day, then it can be a really daunting task. So I want to give you some resources for where you can go to get this list of information, OK, because you see here, it's not that many things, right? It's like creditor name and account number. Like that's on your credit card. That's on, you know, you know, your your car loan is with the dealership or with the credit union, whatever the type of debt, you know that. It's a credit card. It's a car loan. It's just a regular personal loan. But the info that you're going to maybe have a harder time finding is the balance, the minimum payment, the interest rate and the status. And so to figure that stuff out, the first place to go that's going to be your best all in one resource is your credit report. And your credit report is just we're not going to go into detail, but it's just a list of all your debts as as recorded by the credit reporting agencies, which are private companies that collect information on your debt. And you have the legal right to see copies of your credit reports from there's three credit reporting agencies. You get one from each agency for free each year. And it might be through the end of this year, I think you can get one for free every week because there's a residual COVID exception that that made it a lot easier to see your credit reports. You want to go to annual credit report dot com. That's the designated government website to see your credit report and pull a copy of your credit reports. And then you're going to look at that list of your debts on the credit report, and you're going to be able to find almost all the information that you're looking for. You're going to be able to find the balance, the type of debt. Typically, you'll see the minimum monthly payment listed there, and you'll be able to see whether it's current or late. And if it's late, how many months of mispayments do you have? The only thing that you may not be able to find is the interest rate. OK, and the interest rate is just that's the cost of the debt. That's the price that you pay to borrow the money. And it's it's very helpful to have. So there are some other resources where you can find that if you have an online account with your lender, a chase credit card, go on your chase account. You can look up your interest rate there. If you have the original loan document, if you bought a car and you have the contract for the car loan, look on there. It'll tell you all this information about the interest rate, the payment. Monthly statement from your creditor, one of the easiest places to get this. So your creditors are required by law to provide you with a monthly statement that tells you how much do you have left to pay? What's your next payment to do? What's your interest rate on the debt and a bunch of other information? They either have to send it to you in the mail or they have to send it to electronically. So if you get it electronically, check that electronic statement, if you get it in the mail, don't throw your next statement away. Actually, open it up and look at it. So we want to get in the habit of opening all the mail about our debts. And that's one of the things about the mindset of when you've decided you want to tackle your debt, what a lot of people experience when they're in debt. And I get it is you don't want to think about it because it's painful. We put our head in the sand, we look away. It's too scary to want to deal with. But the fact of the matter is if you decide that you want to get out of debt and you're ready to take this journey, one of the first changes you're going to have to make if you have that head in the sand mentality is you need to be hungry for information about your debts. OK, you need to want to know everything that you can find out about them. So open your statements, look at them, look for this information, make yourself a little list of your debts with the information here. We'll send this deck out so you can see what those what those categories are. And then last but not least, you can always call your creditors to ask, right? And they'll tell you over the phone, all customer service. Hey, I'm just wondering what's my balance, what's my minimum payment, what's the interest rate on this debt, how many payments have I missed? All that stuff, they will tell you. OK, once you've got that list of your debts, now you need to understand what are your resources for getting out of debt. At the end of the day, just a math problem. OK, it's you owe this much money and you have this much in assets, maybe, and you get this much in income every month, right? So what we want to do is we want to figure out how do we use these resources that you have to attack these debts that you've got? So first question really basic and this is another area that people hate to do. And I understand it, but it doesn't need to be quite as painful as people make it out. I don't use the B word in this. I don't use the budget word, but I will say you need to figure out your monthly cash flow and what do I mean by cash flow? I pretty much mean how much money do you have coming in every month from your job, from any other sources of income that you have? And then what's the combined cost of all your required living expenses? OK, that's usually kind of the hardest part for most people is you got to go through and figure out what do I spend each month and which of these expenses are really required expenses for me and which ones are discretionary expenses that I could afford to reduce or eliminate altogether. And I'll talk in the next slide about where where you can go to get that information, but you need to have that. And so once you've got your income and you've got your your required expenses, rent, food, medicine, transportation to work, you know, other things that you need in order to maintain your life and continue surviving and not become homeless, then we figure out how much money do you have left over and whatever you have left over, that's the money you have to play with to pay off your debts and we're going to figure out is that enough? And if it is, we can make a plan to take advantage of that. If it's not, we'll talk about a lot of different options that that you can go to. OK. Once you've figured out also your, you know, how much is coming in and how much is going out every month, the other question is, what other assets do you have? You own anything else of value? So this could be cash in your wallet, under your pillow, in a bank account. But, you know, how much cash do you have? This could be investments. You know, if you have investments, if you have retirement accounts, like an IRA or 401k, I'm not telling you that you should definitely be cashing out your 401k early to pay off your debts. But you want to know what your assets are because there will be certain situations where that could make sense, depending on your priorities and your financial situation. OK, so you just want to get a really clear understanding of everything that's available to you before you make any decisions. And then finally, you know, in terms of assets, maybe you have physical items, maybe you have jewelry, maybe you have a nice bike or a car that you can sell, things that you could sell to generate cash to get out of debt. Now, where do you find this information? For your income, for most people, it's going to be to look at your paystubs, right? If you're an employee or if you're a contractor to look at, you know, how much how much you're being paid each month, you can go to your bank account and actually just look at the bank account history and see what were the deposits into my bank account every month. For most people, your checking account is where everything, everything comes together, right? So you can usually see all your expenses and all of your income by scrolling through your bank account statement. So look in there, see how much money did I receive from my direct deposit, from, you know, any jobs that I have. And then finally, these days, a lot of people use peer to peer payment systems. What do I mean? That's like Venmo, PayPal, Ash app, Zell, if you use those, you also want to look for them in your look through your list of transactions in each of those apps. So I use Venmo. If I use Venmo, I want to go through for the last month or two and see how much money did I send people via Venmo for expenses or how much did I receive from people via Venmo as income. And then similarly for expenses, you want to check your credit card statements. If you use a credit card, you want to check your bank account statements. If you use a debit card, if you have other bills or just records from vendors or from people that you pay for stuff, you have an auto mechanic bill, you have a car insurance bill, you have a utility bill, check your bills and see how much they add up to. This is the stuff that probably takes the most kind of thought about, OK, what are all my expenses, you know, look around your house, think through your week, what are the things that I did? Where are the places that I went? How did I spend my money? I'm going to assume that you all can do this. I'm going to keep moving forward. OK, so once we've got an idea of our assets and our income and our expenses, which is the basics of our financial situation, we've already got our list of debts. We want to take a look at those resources and want to ask ourselves, first of all, are there any ways I can improve this situation? Can I earn more income, at least in the near term? Is there some way for me to boost my income? Are there expenses that I can afford to reduce and that I can afford to reduce? Right. This isn't I'm going to stop paying my rent to pay off my credit card. That doesn't work. OK, there's a hierarchy of expenses. And there are certain ones that you need to cover to survive and to remain in a position to be able to earn the income to pay your other debts off. So if you drive to work, you need your car so that you can keep earning income. You probably need to keep your place to live. You probably need to keep feeding yourself. But do you need an example? Do you need Netflix and HBO? Are there subscriptions you have? Can you eat out less? Can you, you know, everyone has their own things that they spend money on. Some people have a lot of things they spend money on that aren't necessarily needs. I don't know what they are for you. But think to yourself, what do I spend money on now? Might I be able to go without or at least a period of time while I'm focused on getting out of debt? Then you can look at your assets. You can say, is there anything here I want to sell to come up with some quick money so that I can pay down some of this debt? And then finally, and something I really encourage people to do is, you know, there's a lot of stigma around debt in the United States and probably all around the world, I just live here, right? But there are emotions of shame, of anxiety, of fear, of guilt, of, you know, really, really challenging emotional issues that make it hard for many people to discuss their debt with others. And I was just looking at the Journal of Epidemiology, had a study recently that they published that showed that people who are experiencing a significant financial hardship, it increases the risk that they will attempt suicide by about 20 times. It is a real challenge out there. And so especially for people, you know, here who are maybe not in debt themselves, but who are loved ones or friends or family members. And maybe you don't know, but someone you know might be struggling with debt. If they open up to you about it, I really encourage you to be as kind and supportive as possible because it is an extremely emotionally draining, often private burden that people bear. And it takes a lot of courage to to come out and talk to people about it and ask for help especially. So if you have friends, if you have family members, you know, community groups, nonprofits, think about government programs. Are there any resources available that could help you to to pay off your debt, right, to address your debt? And maybe it's not just to pay off your debt. Maybe it's to help you connect with a professional. Maybe you have a lawyer in the family and you can ask them, hey, you know, any bankruptcy attorneys I can talk to, do you know any, you know, you know, someone who works at a bank, hey, do you guys know anyone who does lots, but it's you really want to think about who are my resources, not just my financial assets, but my human assets. And just one more thing I want to emphasize here when we're talking about, you know, I say, can I reduce expenses? You really don't want to cut those key expenses just to be able to repay your debts. If you get to the point where you're making a decision between paying your debt and buying food for yourself or your family or paying your rent, you really need to be talking to a bankruptcy attorney. I'm not telling you to file bankruptcy, but you need to go out there and understand what that option is for you, because if you're in that scenario, odds are you're probably going to be able to eliminate all that debt for a very low cost, for a very minimal impact on your actual financial situation, which we'll talk about in more detail later. OK, so we've got our debts together. We've got our resources together. Next step, we need to clarify our priorities. OK, getting out of debt, as you're going to see, there's different strategies and they involve trade-offs. OK, and so we want to think about what priorities are most important to you. Do you want to get out of debt as cheaply as possible? Do you want to get out of debt as fast as possible? Is there some goal that you have that's going to require your credit to be at a certain level at a certain point in time in the future? Right? Maybe you have a goal of buying a home in two years and you think you need a certain credit score. I would push you and say, if you're struggling with that right now, is it realistic that you will be in a position to buy a home in two years? Some people, the answer is yes. Some people, the answer is no. In general, I find people overemphasize preserving their credit when trying to get out of debt rather than exchanging some credit damage for significant savings. There's others on here I want to keep moving, because if I really want to get to the options now, this is the meat of what I want to talk to you about. So I want to review six strategies for getting out of debt. We've got and I'm just going to jump right into it because we're so tight on just a few notes before I go into these. We're going to talk about not all these strategies work for every type of debt and every situation. We're going to talk about the pros and cons briefly. We're going to talk about the process. What does this mean? And just note that some of these strategies can actually be used together. OK. Oh, and before we go into the four main factors that most people I find think about when they're looking at what strategies to use to get out of debt is one, what's the financial cost? How much money is this going to save or cost me, right? To speed how fast is this over with? How long does it take? Third credit impact, like I said, what's the impact on my credit going to be? And understand for some of these things, it's going to be well. In the first three months, it'll have this impact. And in the next eight months, it'll have this impact. And so it can kind of there can be a variety of credit impacts even for a single strategy. And then finally, and honestly, most importantly, you want to think about the emotional psychological impact of whatever strategy you choose. Some of these are much easier than others. OK, some of these strategies are smooth sailing. You know, maybe you're you're putting in a paper application somewhere. You find that it reduces your monthly payment by a certain amount. As long as you make those payments, you're going to get out of debt. Fine. Others much more confrontational and much more adversarial risk of lawsuit credit damage collections process that you're going to have to deal with for some people, that's a total turn off. No way am I going to deal with that for some people? No problem. I don't mind. I'm I'm that doesn't scare me. So just think to yourself, what are my priorities? OK, here we go. Strategy number one. So this is the most simple strategy to get out of debt. It's called the debt snowball. And this is really just taking a look at that spreadsheet that you've built of how much your minimum payments are each month and how much money you have left over to spend to pay off your debt after you have finished covering all your basic living expenses. So I'm going to go back to my example spreadsheet here and just show you. So in this scenario, we've got thirty seven thousand dollars in debt combined and the minimum payments are one thousand five hundred dollars a month. OK, that's what we need to pay just to not fall behind. Right. And this will slowly pay down the debt over time if we make these payments. Ideally, we want to make more than just these payments because if we just make these payments, it's probably going to take several years to get out of debt. We're probably going to pay a whole lot of money in interest. Because it's going to be expensive and it's going to take a long time. So we take a look over here. We have a little mocked up budget. Let's say that you look at your income, you get five thousand dollars a month. You've looked at your living expenses. It costs three thousand dollars. And so you've got two thousand dollars of disposable income left over. Well, if we apply that to your debt, that means the first fifteen hundred is going to be spent here just making the minimum payments. And then you've got five hundred dollars left every month. The debt snowball says you're going to take that money, that five hundred dollars, and you are going to look at the balances of your debts and find the debt that has the lowest balance. On this case, we've got a debt that's fifteen hundred dollars at the smallest balance. Not only are we going to pay the minimum payment of one hundred dollars on that debt every month, but we're going to take that entire five hundred dollars that we have left over and just throw it at this debt. And the idea is that we're going to pay this debt down as quickly as possible until it's at zero. And what that's going to do is two things. One, it's going to give you an early victory. Right? It's the fastest route to victory, picking the smallest debt, and it's going to keep you motivated. And this is what they've done behavioral studies on this. This is what we find is that people stay motivated if they pay off their smallest debts first because you actually see progress. Imagine that instead you chose to start paying off this twenty three thousand dollar debt first. Well, it's probably going to take you. I'm just doing a little mental math here. Like a couple of years before you've paid this one off. And meanwhile, you're just making minimum payments on the rest of your debts. It's really hard to do this for a few months, let alone a few years. If you're not seeing some of your debts go away. But that's why we're going to focus all of our extra money every month on the smallest balance. And as soon as that debt's paid off, guess what? You no longer have to make this minimum payment because this is going to be at zero. And what that means is you now have a hundred extra dollars a month to throw at your next smallest debt, which would be this five thousand dollar debt. And that's what we call the snowball is because it builds up speed at paying off your debts as you go along, because every time you pay off a debt, you no longer have to make the minimum payment on that debt. And you can instead spend that money on paying off your next debt. So you get out of debt faster and faster and faster. Let me run back to my presentation here. So. That's the debt snowball. It works for any type of debt. There's no restrictions. The only requirement is really you should only be using this on accounts where you're current or you haven't missed payments. Once you've missed payments, you might be able to save money doing something different. I'm not going to go into detail on all these things. There's too much text. Again, I'm going to send this out for the library. We'll send this out later. I'm just going to summarize here, but this is a relatively expensive option. It also tends to take longer than many other debt payoff options. It really just depends on how much money you have. If you have a significant amount of money, you can pay them off fast and then it doesn't need to take that long. The credit impact is very positive. You're going to stay current on your debts the whole time. You're going to build up a history of on-time payment. Your debts, your accounts are going to stay open. You know, your credit card accounts, you're not going to have to close them, which is good for your credit. So overall, very positive for your credit. Probably the best option for your credit in the long term. And then emotionally, psychologically, it requires a lot of discipline. OK, you are cutting your expenses. You're trying to increase your income and you're doing that month after month after month. You get the benefit of seeing the debts paid off one at a time, but it is not easy. Plenty of people start this out and then maybe they have an unexpected expense that puts them behind or sets them back. And that can be extremely frustrating and difficult. So you just have to be prepared for that. Overall, it's simple. There's no special techniques needed. Those are the main pros. You don't have any pressure from your creditors. You're just paying things off normally. The main cons, it's expensive and time consuming. Things to avoid here, just avoid making an unrealistic plan. You're not going to be able to stick to. If you start doing a snowball and you do it for several months and you realize this actually wasn't a good plan for you, you would have saved more money and probably gotten out of debt quicker if you had just figured that out and chosen a different strategy to begin with. That said, hindsight's 20-20. So don't beat yourself up if you do start and you need to adjust. All right, strategy two, strategy one. Strategy two, the slightly higher intervention. So here we're talking about refinancing your debt. What does that mean? That means I owe money to these five companies over here. I'm going to go and borrow a new loan from this one company over here. And I'm going to use it to pay off all those debts. And now I owe money to this company over here. And when does this make sense? It makes sense if the loan that you're going to get from this company to pay off these debts is going to be either lower interest rate or have lower monthly payments than your current set of debts. OK, that's the reason to do refinancing is it's either going to reduce your total cost that you pay back or it's going to reduce your monthly cost. And if you're lucky, it'll do both. Works for any debt and really works best for debts that are current. You don't want to really be refinancing to cover a delinquent debt in most cases. You must have a pretty good credit score in order to qualify for a lower interest debt to replace your current debt. And also you're just going to if you're unlucky, like kind of right now you might be where interest rates are going up. It might be difficult to find a lower interest rate than what you're currently paying, so kind of depends on the environment. They should save you money compared to the snowball in general. There's no guarantee it depends on the type of refinancing you can do. But if you're refinancing and it's not going to save you money, I would question why you're doing it. The speed is variable if you get a lower monthly payment, but it's it could be longer period of repayment could be maybe you're paying back, you know, $500 for 12 months on the current debt. Well, now you're refinancing, you're paying back $300 a month, but it's over 24 months for the new debt. So it just depends on the terms of the deal that you take. Really hard to say what the credit impact is going to be. It's just too complicated to factor in, could be positive, could be. In general, it's probably going to be positive. There's not many scenarios where this is going to hurt your credit that much. And then emotionally, you know, it can reduce your stress if it reduces your monthly costs. I'm going to keep moving here refinancing pretty simple. Who do you go to if you want to refinance? You go to a bank, you go to credit unions, and you can look for other reputable lenders online. You don't want to go to a high interest lender. You don't want to go to a payday lender. There are some useful resources online where you can go to compare interest rates at typical lenders, nerd wallet, bank rate. There are others. Again, I'll send this deck out. Right. The third option. Let's say that you look at refinancing, you look at your debt snowball, you go, gosh, this is going to be really hard for me to pay. This is going to take way too long. I'm going to be doing this for two and a half years, cutting my expenses to the bone. I don't think I can do that. Let me try to refinance. Interest rates are higher right now. My credit's kind of down because I owe so much in my current debts. OK, refinancing is not an option for me. Next step is called an individual hardship plan. What does this mean? This is primarily applies to credit cards and to some personal loans. Most banks, if you contact them and you have missed one payment on your credit card, one to two, maybe even three. But usually it's if you've missed one or two payments, call customer service and say to them, hey, I'm experiencing a financial hardship and having a really hard time paying my bill and I'm worried I'm not going to be able to keep making my payments. What can you do for me? Very often, the bank will have something called an internal hardship plan where they will reduce your interest rate and or put you on a lower monthly payment plan to pay off your debt over a longer period of time, but with much lower payments. You need to call your bank and ask in order to find out what the options are. It's different for every single bank and it can be different for specific products at that bank, so two different credit cards might have different hardship plans available. Main things to know about this is that it's going to close your account permanently if you enroll in the hardship plan. That's always going to be the case for the rest of the options that we talk about, all the rest of the options we talked about, they will save you money and they will require you to close the account because the creditor says, hey, look, you can't pay me back what you said you would. I'll do a deal with you so that you can at least pay me back what you borrowed, but I'm not lending you any money in the future, at least not for the next several years. The other thing about a hardship plan is you need to miss at least one payment to qualify if you call and you're current and you say, hey, I'd like a hardship plan. They're probably not going to give you anything. If you wait and miss a payment, you call back the next month. Very likely that if they offer plans, they will have something for you at that point. Sometimes your creditor just doesn't offer a hardship plan, and then you're out of luck. Just in a nutshell, again, these are the four factors. Cost, it should reduce your cost more than just a regular snowball. How it affects the speed really depends on the individual plan. Same with the credit impact. Emotionally, it can be easier psychologically because the payment is lower and you know that you've got a deal in place with your creditor. They're not sweating it. Everything is smooth sailing. I'm going to move on this strategy for being mindful of the time, which is going quickly. So the fourth is called credit counseling or it's also known as a debt management plan. In a nutshell, what this is, is this is just like a hardship plan where you're going to get your interest rate lowered, you're going to get your monthly payment reduced, but instead of going to your creditor directly to get that done, you're going to go to a third party called a credit counseling agency. And these are companies that actually work with the banks and the credit card issuers to come up with preset deals that they can offer you if you're experiencing a financial hardship. It's a really simple process to enroll. Usually takes about 30 minutes, either on the phone or online. You're going to fill out some really basic budget information and they're going to look at your credit report and then they will give you a non binding quote that tells you, hey, we can give you a deal that includes these five of your credit cards and right now you're paying a thousand dollars between all five of these and you're paying it to five different places. Instead, you're just going to pay us one payment every month, seven hundred and fifty dollars and we'll go and distribute it to your creditors and you're going to do that for a period of three to five years. That's how long these plans can take. You can always pay it off early if you want to. So they're going to reduce your payment amount by something between 20 to 50 percent. That's usually what they reduce the payment by big range. It really depends again on the specific accounts that you have. And it's going to simplify your your debt management process because you don't have to make a bunch of different payments every month. You just make one and the other really nice thing about a debt management plan is while they do close the accounts once you enroll them so you can't charge anything else on them and they'll be permanently closed once you're done. Every month that you make a payment counts as an on time payment on your credit report and so you are going to build a really strong credit history as you pay off the debt management plan so that when you're finished with it, you will likely have a very strong credit score and be able to kind of go about the rest of your your life with, you know, leave the plan and have good credit. Right. I'm going to pause because I know I'm I'm about at time and Karen is giving me the simple here. Go ahead. Do I need to stop? How many more slides do we have? Well, you've got maybe like 12 more slides. OK, I'll give a quick wrap up just because we do have other sessions going on. But if you'd like to keep on going after that, I'm sure there are some people who would stick around. Wanted to thank everybody for coming to the session on debt today and letting you know that right now we have a second session that is about to start at three o'clock on college savings and there the recording of this you can get from the library, but thank you for coming out today and thank you Ezra for your time and there's a lot of information here and you're really charging through it, so appreciate all the detail that you've provided. Thanks, Karen. Yeah, feel free to please if you're interested in college planning or any of the other topics, go ahead. I'm going to stay and continue run through the last few of the strategies here as long as the library will kindly continue to host this Zoom. And then I will potentially have time to take questions at the end. Anything else, Karen? All right, great. So thanks for coming for those of you that are heading out for the rest of you. We'll continue. So we're talking here again about a debt management plan. In general, this is only going to be available for debts that are not super delinquent. So really, once you get past 90 days late, even for many credit cards, like if you miss two payments or 60 days late, you might not have the option to enroll in the debt management plan. But you can always ask and there's really no harm in asking. And what I would what I would do if I were in your shoes and you're interested in the debt management plan is contact a few different credit counseling agencies and get quotes from a few of them because you'll find that some credit counseling agencies have better offers than others. Some of them might work with one creditor and not with another. And you want to find the one that is hopefully kind of a sweet spot for you. So shop around with the credit counseling agencies when you're looking at a debt management plan, I'm going to go through a few more details of DMPs. So like I said, in terms of cost, this option is going to reduce your monthly payments by 20 to 50 percent. The credit counseling agency charges a little fee like up to $50 a month. And that's if you have like several accounts enrolled in the plan. But in general, it will still be cheaper than if you paid them normally. It lasts three or five years. Like I said, you with pretty much all these options, you want to go and talk to the talk to the professional, talk to the provider and get as much information as possible. You don't need to make a decision right away. So go talk to them. They'll tell you here's how long your plan would be. Here's what your monthly payment would be. I think I've talked about the rest of these things. In general, the main cons of a DMP are DMP, standing for debt management plan. Again, you have to permanently close all of your accounts. Right. So you're not going to be able to retain any of the accounts that are included in the plan once it ends. If you miss a payment, even one, they can cancel the plan. And then you're back to your regular interest rates and having to pay all your individual creditors. So best not to sign up for this if there's any question of whether or not you can actually follow through on it. That said, three to five years, kind of a long time to be able to say whether or not you're going to make a payment every month to this DMP management plan provider. So it is a long term commitment, longer than most of the other options, especially if you're at that five year end of the range. Things to avoid here, you don't want to work with. There are a lot of different credit counseling agencies out there. They are all not for profit. It's required that they're not for profit. That doesn't mean they're all great companies that are warm and fuzzy and that you should definitely work with. OK, there are good, well respected, high quality credit counseling agencies. And there are ones that have very poor customer reviews and might have somewhat predatory practices. OK, so that's why I say you should shop around. You should look at the reviews for the company, see if see what people say. You can look at Better Business Bureau. You can look at there's a lot of different review sites these days. See what you can find. It's kind of wild west out there for reviews. But look and see if they've been sued by the attorney general in your state. If they have any recent enforcement actions against them from regulators. And then, you know, don't just take the first plan you're offered. Get a couple of quotes. It's free. It takes 30 minutes. A lot of it can be done online or in a very simple phone call. These are not adversarial phone calls. It's a very friendly person. They want you to enroll in the DMP. And so also you want to be careful that you don't let them pressure you into a DMP if you decide it's actually not the best option for you. So. Where can you go to actually get help with this? Credit counseling agencies are the place to go. They're their main website is NFCC.org. And that's the credit counseling agencies over overarching group. They're a couple that I have personally worked with that I respect and think do a good job. They're these are based in other states that they're both in like East Coast states. It doesn't matter. You can work with a credit counseling agency anywhere in the country. OK, you don't need to work with one in California, California, Cambridge credit counseling, a great company that I've worked with a lot. Consumer Education Services Inc. Another company I have no referral relationships. I have no business relationships with these companies. I just think that they are good debt management plan providers. So you can look them up. All right, fifth option. Now we're getting into the juicy stuff, debt settlement. So a lot of people have heard about this. There's a lot of misinformation out there about this option. And there are a lot of predatory companies out there that offer this service. So let's talk about it in a little more detail. What is that settlement? What that settlement is, it is just a name for the fact that if you owe money to a bank or credit card issuer or whatever, you don't pay your bill for several months, the odds are really good that that bank will just make a deal with you and forgive a portion of the debt as long as you can pay them something. This is especially true once the debt has is close to what's called charging off, which is for a credit card when you've missed about five to six monthly payments and for a loan when you've missed three to four monthly payments. But right around there is when this option starts to become available for most lenders. And what happens is they will do something called a settlement. A settlement just means they're agreeing to accept less than you owe and to resolve the debt for that amount. So if you owe five thousand dollars, maybe they will make a settlement agreement with you to accept two thousand dollars and forgive the remaining three thousand dollars. And that's called a settlement. OK, important to know that if you make a settlement that for given amount, so you owed five and you end up just paying two thousand, that three thousand that they forgave, you may owe income taxes on that money. OK, you need to talk to a tax professional about that. I can't give tax advice. I forgot to put the tax disclaimer. No, I'm not giving tax advice here today. No financial advice, no legal advice, no tax advice. But if you're thinking about doing this, talk to a tax advisor. I think it's a pretty straightforward analysis, no matter what you're saving money either way, unless you have a tax rate of over one hundred percent, which doesn't exist. So but that can be an extra cost here that you want to make sure that you account for when you're thinking about settlement. The way that this really works and I don't have this process laid out in detail here is I'm very familiar with this process. I've done it with many people and essentially the way that you settle your debts is the first step is you must become delinquent. And for some people, you're already delinquent. You have already missed several payments on your debts. And in that case, this is just a naturally available option that has become available to you for other people. Maybe you are current on your debts and what. What I want to warn you, not against, but just about is if you decide that you want to settle your debts, you will have to stop paying your creditors. They will not negotiate with you if you're current on your debts. I don't care what you read. I don't care what you've seen online. I've been in this industry for several years. I've seen thousands of settlements. I've never seen a company and I've seen settlements with dozens or hundreds of different creditors. OK, I've never seen a company settle a debt that wasn't severely delinquent, but they just don't do it. The least delinquent debt I've ever seen where they offered a settlement with 60 days late, and that was for a loan and that was in the middle of covid. So you are going to have to miss several payments if you want this option to be available. What does that mean? That means that you're going to incur interest fees, interest on your debt. Right. You're going to incur late fees on your debt. So your balance is going to go up. Could go up by as much as 10, 15, 20 percent until the debt charges off. That's that six month mark for credit cards or that four months of nonpayment for loans. Once the debt charges off, once it gets to that mark, it stops accumulating interest. It stops accumulating fees and the debt is frozen. The balance is frozen and that's the balance that you would be negotiating with your creditor to get a discount on. So if you are considering if you're current on your debts and you're considering that settlement, just know you'd have to miss those payments. That's going to cause your credit score to go way down. It can come up afterwards, but for the duration of the time that you're negotiating with your creditors, you are going to have very bad credit. In addition, there is a risk that you could be sued by one or more of your creditors, and that's if you miss even one payment. OK, once you miss five or six, then depending on your creditors, different creditors are more or less aggressive. And depending on the balance that you owe, they could come and sue you in court. And that's a really important thing to understand about this process is this is the most adversarial and I would say difficult, psychologically difficult process to go through. The only other comparison I would make is debt snowball. If you have debt snowball and it's going to take you a really long time to pay off your debts normally and you're comparing it to debt settlement, I've seen people doing debt snowball who are really, really, really stressed out just trying to make their payments and cut their expenses. That's the only other scenario where I see people as as stressed as you can get during debt settlement. Why is it so stressful? Well, first of all, your credit's gone down. Second of all, you know that you owe you stop paying your debts. And for a lot of people just knowing that feels yucky. Maybe you've never done that before. You know, so that's a new experience. You will be subjected to the collections process. What does that mean? That means that either your creditor and eventually usually a third party collection agency that they hire will call your phone and they will leave your voicemails asking them to call you back. If you pick up the phone, they will try to get you to pay them money. They will maybe berate you, maybe shame you. You never have to pick up the phone when they call. By the way, that's what I tell everyone who's who's negotiating their debt. You don't have to talk to that collector on the phone until you're ready to write, but you will receive those phone calls. You will receive collection mail. They'll mail you letters telling you that you need to pay them. And then, of course, they could potentially sue you. And if they sue you and they they win in court, they could get a judgment against you. And that means that they could potentially garnish your wages, that means they can reach into your paycheck and take money out before it even hits your bank account. They might be able to levy your bank account, which means they can reach into your bank account and take money out of there, not just the paycheck, but the bank account itself. And they might be able to place liens on your property. So if you own a car, they could make it so if you want to sell that car, they get to take their cut or whatever you owe them before you get any of the proceeds of the sale. So that's kind of the worst case scenario. If you go down the route of not paying your debts with the hope of settling up. And it's really important to understand that up front is you are running that risk if you miss payments. So if that sounds like something and many people it does that you are not interested in experiencing, then this is not going to be the route for you. But let's go into a little more detail about settlement. And then I'm going to talk about the last option and then we're going to wrap up. I'm sorry that this has been long-winded, but as you can see, it's a lot of information. I just don't have any other good resources to point people to that that sums this stuff up, so I want to cover it in as much detail as I can. The cost of that settlement. So depending on the creditors that you have, your luck and how quickly you can come up with the money, which is probably the most important factor. In the best cases, you could save between 60 to 75 percent of that final balance that you end up on. So if you owe $20,000, three different creditors in total, it's possible, or let's say 10, because it's around $10,000, you could end up saving up to, you know, maybe $7,000, $7,500. That's a best case scenario. The average settlement that I see is about 50 percent, but it's better for people that negotiate themselves with their creditors than for people that hire someone else to negotiate with them, which I'll talk about in a second. What's the speed? So that's the cost, right? Pretty significant savings for debt settlement. If you're lucky, if you're not lucky or you can't get the money together, you're not disciplined, you're, you know, for whatever reason, you can't get the money together, it can, maybe you won't save anything at all. And maybe they'll get a court judgment against you. So it's the riskiest of all the options. High reward, high risk. Speed, how fast does it happen? Again, totally depends on how quickly you can get the money together to settle. Just remember that you're not going to be able to even open a conversation about settling your debt with your creditor until it's become severely delinquent. So if you're current today and you want to settle your debts and you decide you're going to start missing payments, so you can settle your debt. Just know, you've got a credit card, you're going to be waiting six months before you can even start the conversation. And for some people, that's great, because that's six months for you to get together the money, right? You stop paying your credit card, you're taking that money, you're putting a bank account to use to settle. But for some people, that's a really long time where they're just sitting twiddling their thumbs, getting collection calls, and they don't want to do that. So that's the speed. Credit impact, if you have good credit today or average credit today, you stop paying your bill, your credit's going to drop like a rock, you're going to have a really bad credit score. Fact, period, full stop, right? Your credit will be in the dumpster. That said, once all of your accounts have been settled and you have paid them all off, then your credit can recover and it's highly variable. I have seen people's credit recover as quickly as six months after. Sometimes it can take a year or two. It really depends on what you do after you settle those accounts. Do you rebuild your credit? Do you go get a secured credit card? You know, a secured loan. Do you have some debts that you start to rebuild your payment history or not? If you don't, it's going to take a lot longer. But if you successfully settle and then you get new trade lines added to your credit report, new debts that you're making regular payments on every month, that's the fastest way to help rebuild your credit and you could rebuild it into the average range like high six hundreds to maybe 700 within, I'd say, six months, that's what I've seen. Emotional psychological impact of this, this is a difficult one, right? And I think I've probably beaten this dead horse, but you will get calls, you will get mail, you could be sued. If you have several different debts, you are potentially going to be negotiating with multiple different creditors at once, which can be stressful and a big problem here, but one that I will address in the next slide is that there are not a lot of reputable professionals in this space that you can go to for help with this. So, OK, I thought it was on this side. Well, let's see. I will talk about reputable professionals in a second. Yeah, I think we pretty much covered this. OK, so things to avoid. I'm going to skip to the bottom here. There are companies called debt settlement companies. You may have heard of freedom financial. You may have heard of national debt relief. There are dozens, if not hundreds of these companies. I'm not here to say that all these companies are bad companies, but in general, they charge extremely high fees. OK, that I can say most of these companies, they will say, hey, you don't need to negotiate with your creditors. We'll do it for you. OK, all you have to do, you stop paying your creditors and you start setting aside money in a special bank account with us. And then when when we're ready to settle, we'll go and settle your accounts for you. All you have to do is sign off on the deal and make the payments. And in general, that is true. They tend to get more expensive settlement deals than people could get on their own. But on the other hand, you don't have to do it. So if you're the type of person that's not going to do it on your own, this is a feasible alternative is have someone else do it. They'll get a better deal than no deal at all. The other thing is they charge very high fees. The average fee that debt settlement companies charge is between 20 to 25 percent of the balance of the debts that they settle for you. So that means if you owe ten thousand dollars and they settle it for you, their fee alone could be two thousand to two thousand five hundred dollars. That's not even counting paying the actual settlement. That's very expensive. There are practitioners out there who instead will use a performance based fee. And by that, I mean they will they will charge a fee based on how much money they save you in the settlement. I think that's a much more ethical way of going about the business. And I'll send you to or I'll note some websites that you can go to that charge a percentage of savings fee. And they are companies, some of which do the negotiation for you. A lot of them will coach you through the process. They've done it with thousands of people to get really good results. I have no financial stake or association with any of them, but I just know their work. So who can help you with this? What I would recommend, if you can, is a debt settlement consultant. That's some of the places listed below. People who can help you do it yourself or if they do it for you, they're going to charge a performance based fee. They're typically cheaper. They're typically more ethical. They're going to be more transparent up front and tell you what the risks are and what the potential outcomes are. And they can help you make a really nicely tailored strategy because they know what all the different creditors out there, all the different banks will settle for and when because they're in the business. So they can help you to make a strategy that you just wouldn't be able to make on your own because they have inside information. The second option is debt settlement companies and distinguishing between consultants and companies, companies are much larger organizations. They settle the debt for you. You don't do any work. They're usually more expensive. And I forgot to finish writing here, but they're also usually less transparent and they can be sort of predatory in kind of obscuring what's going on a lot of the time. But some people are very happy with their results there, just they're very expensive. So some resources that I like and these are not just like places where you can go to hire a professional, but they have a ton of publicly available information about how to settle debts yourself and just how this whole thing works. The best one is consumerrecoverynetwork.com. OK, CRN, consumer recovery network. That's been around for almost 20 years, tons of information there. You can leave comments and ask questions. You can get free advice. You can see other people who are settling their debts, really detailed information on the types of outcomes they're getting. Zipdebt.com, another great resource, Damon Day.com. He's another consultant that I know of who does good work. HelloResolve.com, full disclosure. I used to work for that company. I have no affiliation with them anymore, but they also provide debt settlement services for just a percentage of savings, not not a percentage of the balance, so a reasonable fee. All right, strategy six, it's Halloween. So we'll end with the one that everyone thinks is spooky, which is chapter seven bankruptcy. And I know that for a lot of people, the B word really turns them off. But I want to ask you to just sit tight and listen to me explain what it actually is, because what I've found is that if I explain this to someone and I don't tell them the name of it and I just tell them what it does and the pros and cons, they tend to really think it's it's a great option. A lot of the time. And it's only when I tell them the name of the option that it's bankruptcy, which I'm telling you upfront, maybe I should have waited, but full disclosure. Right, we're talking about bankruptcy. It's only then that they go, oh, no, I would never file bankruptcy. That's that's the worst. And I just want to be clear. There has been a concerted marketing effort over the past many, many decades to essentially give bankruptcy a bad name because bankruptcy is by far the most powerful debt relief tool out there bar nut, it is the most powerful. And you can see why in my yellow highlighted first sentence here, chapter seven bankruptcy permanently eliminates all consumer debts except student loans and it can eliminate an unlimited amount of debt. There is no limit to how much debt you can get rid of in a chapter seven bankruptcy. Zero, no limit. You could have ten billion dollars in debt and you can file a chapter seven bankruptcy and I'll go away as long as it's the right kind of debt. OK, being a little over the top here, but really that that's true. What do I mean by unsecured consumer debts? I'm talking credit cards, personal loans. If you had a car loan and they repos your car, but you still owe them money, it can get rid of that. Those are the main ones that you're going to see that covers the bulk of consumer debt, but that's what we're talking about here. The way that this process works is it is a extremely familial predictable, boring process. And it is what let's talk through it. OK, so first step is you're going to go and look up some local bankruptcy attorneys and you're going to schedule free consultation with them because that's what they almost all offer is a free consultation. You're going to get on a phone call or a Zoom call or if you want, you can go to their office and they're going to talk to you for 30 to 45 minutes. They're going to ask you some basic questions about your income, about whether or not you own a home and if so, how much equity you have. And about a few other really basic aspects of your financial life. And then they're going to give you a quick and dirty assessment of whether or not you qualify for this type of bankruptcy. If you don't qualify for this type of bankruptcy, you'll qualify for another bankruptcy that we're not talking about today, called the chapter 13, which is, in my opinion, a much worse type of bankruptcy. So I think lucky number seven, chapter seven is great. Unlucky number 13, chapter 13 is not great. That's the shortcut. So if you can qualify for chapter seven bankruptcy, it will be the most cost-effective way to get out of debt. So you talk to your attorney and you discuss, you know, you get an idea. You talk to several attorneys. OK, and I don't want you to just talk to one. I want you to talk to two or three and a lot of people, this is another area kind of like building your budget where people get really hung up and they go, oh, I don't want to, you know, I don't want to go talk to an attorney. That's scary. This is just just informational. You're just gone. This is what these people do every day. This is their job. It's boring to them. They're not judging you. They've seen cases that are 10 times as bad as whatever you've got to bring through the door. This is just what they do. OK, and so you don't need to feel ashamed. You don't need to feel worried. It's going to be very professional. And if it's not, you can hang up the phone, walk away and so I'm not working that attorney, but in my experience, most banked attorneys, very professional, very, you know, knowledgeable, and they're just going to explain to you, well, here's what you're what it would look like if you followed chapter seven. And I'm going to tell you in a generic sense what that is. So you would hire that attorney to walk you through the process. They're going to help you fill out some paperwork. OK, you're going to do this in the comfort of your own home, maybe in their office with the help of one of their paralegals. You're not going into court. You're not putting on a suit and tie. You're just going out to paperwork. It's about your income and your assets and your debts. And then at some point, you're going to file that paperwork with the court or your attorney will and then you're going to wait and wait several months. And then you're going to get an appointment with something called the court trustee, which is just a lawyer that works for the court. And you're going to have a meeting with them for anywhere from Iverted takes 15 minutes to up to an hour. Let's say it's 45 minute meeting. They're going to ask you some questions about your filing. That's what we call the bankruptcy application is your filing. And assuming they have no issues, which in 99 percent of cases, they do not. More than 99 percent of all chapter seven bankruptcies that are filed are discharged, which means they work. They are successful. You meet with that trustee. They sign off on your bankruptcies to OK, it looks good. And within a total of six months from the time that you filed to the take six months and then your your bankruptcy is discharged. That's the term for it. And that means all of the debts that were included in the bankruptcy that you listed out are permanently eliminated forever. That's the chapter seven bankruptcy. A lot of people get worried because they think, well, hold on. Chapter seven bankruptcy, isn't that the one where I have to sell the clothes off my back on my shoes and my car and I have to get rid of all my stuff in my kitchen and sell everything to pay back my creditors? So technically, yes, that is possible. Less than three percent of all chapter seven bankruptcies actually result in the person filing, having to sell any assets. So if you qualify for chapter seven bankruptcy, there is a 97 percent chance that you can do the whole thing without even having to sell anything or liquidate, as they call it, any of your assets to pay to partially repay some of your debts. You've got a collection of cars because you collect cars or you have, you know, six nice laptop computers or, you know, you have sort of assets beyond what the court will set as what they call exemptions. Yeah, you may have to sell some of those assets. It's extremely rare. OK, so what what the financial institutions and the financial industry want you to think is that filing bankruptcy A is a terrible horrible process that's really painful to go through and B, that it causes you to sell all your stuff and put you in the poor house forever. And I'm here to tell you that's not how it works. Right. It's like work with people gone through bankruptcy. I don't do bankruptcy that you need to be a lawyer, but I've worked closely with people that have done it. I've seen their outcomes. That's not at all what it's like. OK, a few more things to know about it. You can only do it once every eight years. This is one of the most important things to know about bankruptcy. So you can file a chapter seven bankruptcy once every eight years as long as it's successful. If you're not successful, you can always refile. So what that means is once you file and you discharge your bankruptcy, you get rid of those debts. You don't have that option again for eight years. What does that mean? Let's think about what that means from the perspective of a bank or a creditor. A lot of internet websites out there, a lot of like conventional wisdom says, oh, once you file bankruptcy, you're never going to be able to qualify to borrow money again, your credit's going to be shot. Don't get me wrong. If you have good credit and you file a bankruptcy, it's definitely going to hurt your credit, but you're going to receive solicitations to apply for a credit card within a month of filing your bankruptcy because the creditors know, hey, here's a great person to lend to. If they can't pay me back, they can't fall bankruptcy for eight years. So I'm definitely going to go go get my money from one way or another. Right. Their escape hatch has been used up. You usually get out of jail for a card once every eight years. It actually makes you somewhat attractive borrower for certain types of lenders. So, you know, Capital One, Credit One, probably going to email you or mail you an offer to open a credit card with them within a couple of months of you filing bankruptcy. OK, Ezra, how much does it cost? What's the cost of filing bankruptcy? The average cost to file bankruptcy, Chapter Seven in the US is two thousand dollars. That includes court fees. You usually have to pay a couple hundred bucks to file your bankruptcy and attorney fees. You're going to have to pay your attorney maybe fifteen hundred bucks, maybe a little bit more, a little bit less, depending on where you live for their services. Like we said, there's no limit on the amount of debt that this can eliminate. So you can see there's a set cost, two thousand bucks, unlimited upside, right? You could get rid of ten billion dollars in debt. So it's by far the most cost effective way to get out of debt. How long does it take? Sorry, Ezra, I'm sorry, we have to pull the plug now. So can you please blast out your contact information that was really thorough? So some of the questions got answered. But if people have additional questions and want to reach out, I'm sorry. But there's another problem right after. This is my email, Ezra, letter K, burger at gmail.com. Feel free to email me if you have further questions. I will do my best to get back to you in a timely manner. Thanks so much for coming today. OK, and I want to reassure everyone that this was recorded and will go on our YouTube channel. And if you registered with your email address, you should get a copy of the recording. So I want to thank everyone for sticking with us. That was a lot of information. Thank you, Ezra. And hopefully we'll talk to you again soon. All right, take care, folks. Enjoy the other sessions. Bye bye.