>>VANESSA MEGAW: Thank you, everyone, for taking your seats. We will now begin our discussions in the afternoon. I'd like to invite Daniel Dodd-Ramirez, assistant director in the Office of Community Affairs, and our panelists for a discussion about consumers' journey through debt relief. Dan, take it away.
>>DANIEL DODD-RAMIREZ: It just seems to be—oh, is it on? Okay. It doesn't change colors. It stays red, I guess, but I'm on. Good. You know, you see the red color, you expect it to be green whenever you're speaking, but it stays red. So it's a little bit confusing. My own journey with an audio system.
So this topic is consumer journeys through debt relief. We've got a great panel. I'm going to take a moment and quickly introduce—everybody should have the bios with the agenda packets, and you can access those if you're watching online. But I will quickly take a moment and introduce the panelists. Let me just say welcome to all of you. Thank you for being here and for everybody that's sticking with us throughout the day here. We've had a great discussion today.
My name is Daniel Dodd-Ramirez. I lead the Office of Community Affairs. We have four sections of our offices at the Bureau that are focused on special populations. My office is the office that focuses on low-income consumers. We also have an office that focuses on servicemembers, another that focuses on older Americans, and another one that focuses on students. So we are in the Consumer Education and Engagement Division. We work very, very closely with markets and with other colleagues throughout the Bureau, and I'm very excited to be here and thank you for having me moderate this panel.
First, Stephen Congdon, Stephen is down at the end, and he serves as assistant vice president and regulatory counsel for the Consumer Bankers Association, or CBA. He helps manage CBA's automobile financing default management, community reinvestment, and CFPB committees—I would say t he CFPB committees is probably a full-time job on its own—and interacts daily with CBA members on all of these issues.
Sitting next to me is Mike Croxson. Mike is president and CEO of Consumer Education Services, Incorporated, CESI. It's a national nonprofit provider of financial education and credit counseling services. Mike is a member of the board of trustees for both the National Foundation for Credit Counseling, NFCC, and the Financial Counseling Associations of America, FCAA. Welcome, Mike.
>>MIKE CROXSON: Thank you.
>>DANIEL DODD-RAMIREZ: And sitting next to Mike is Teresa, Teresa Dodson, and she's the founder and CEO of Greenbacks Consulting. Teresa has ben focused on the debt settlement industry since 2003, where she served as COO of two large debt settlement companies. She's also an executive board member of the American Fair Credit Council, AFCC, which is a trade group representing debt settlement. Welcome, Teresa.
>>TERESA DODSON: Thank you.
>>DANIEL DODD-RAMIREZ: And last but certainly not least is Jason Graeber sitting next to Teresa, and Jason practices law in Biloxi, Mississippi. His practice includes bankruptcy, tax disputes, and consumer litigation. Jason is a member of the Mississippi Bar Association, the Tennessee Bar Association, and the Harrison County Bar Association. He's also a member of the National Association for Consumer Advocates. So, again, welcome to you too, Jason.
>>JASON GRAEBER: Thank you.
>>DANIEL DODD-RAMIREZ: So we're going to go ahead and start, and as I mentioned, the full bios are in the agenda packets if you'd like to get into a little bit more about the background of this panel. But we've got a real diverse group with very, very rich backgrounds, all focused on this issue of consumer journeys through debt relief. 
The first question, I'll just pose to the whole panel, kind of a warmup. If we could just go right down the line, maybe starting with you, Mike. In one or two sentences—I'm limit you to just one or two sentences—what does debt relief success look like for a consumer?
>>MIKE CROXSON: So you've heard a lot about the people that show up in the various entities for help, and if there's any common theme about a consumer who comes—who's struggling with debt, it is that their life is out of control. They don't believe they have options. They don't know what to do, and when you can provide—what we do is provide patient, empathetic counseling and education that lets people know they have options. And when you feel like you have an option, you get control back. So when the consumer really believes they have control over their life and they know that they can make choices now to move forward, that's success.
>>DANIEL DODD-RAMIREZ: Wonderful answer. Thank you. Teresa?
>>TERESA DODSON: I would tend to agree with "options" as the keyword here. Consumers knowing what their options are is really important. To determine what is success for a consumer and resolving their debt issues is a consumer that goes into whatever program that they choose, fully understanding what the outcome is, and resolving if not all but a portion of their debt and they're better off than where they were when they started as far as how much debt that they have currently to deal with.
>>DANIEL DODD-RAMIREZ: Good.
>>JASON GRAEBER: So I represent consumers primarily, and most of my consumers when they come to me would like to try to resolve all their debts. From the perspective of success and debt relief, I would say that the debts that are enrolled in the program are all resolved successfully, and that there's nothing left to be done.
>>STEPHEN CONGDON: And I guess I would echo that, and much was said to it on the panels so far. When we think about success or consumer outcomes, it's a resolution of whatever hardship event they're facing really to completion, beyond maybe just the one line item they have with our—you know, I represent many of the creditors. Just beyond the one line item, they may have—and I'm looking at really their global health across the other issues they may be facing. A resolution on all those items, I think, is important both in our eyes to make sure that they can become current, they can become better off, and also when they think about not only this hardship event but maybe access to credit in the future and something down the line, so they still will have access to credit streams, automobiles, homes in the future, and it won't be overly negatively impacted through any hardship even they may face.
>>DANIEL DODD-RAMIREZ: That's great, great answers, all from, just like you set us off, Mike, with building confidence and just feeling that sense of control, when you're feeling out of control, to that North Star of getting to that place and feeling like you've got that ability to resolve all of these debts. And you can get there eventually. So it's a really nice way to set this up from kind of presenting this whole continuum.
The next question, I'm going to pose to Mike and Teresa, which is, What information do consumers have when they're searching for debt relief options? If you could follow up with what are the information gaps, and why do you think they exist? Either of you can go first.
>>MIKE CROXSON: Information in today's world is not necessarily accurate information, and I think that there are plenty of resources available to consumers through government entities, be they federal or state, be they through banks that may be creditors for consumers, but the reality is most of the information that consumers are presented with today is marketing-related. And it is confusing. 
So what I would tell you is—it's only one answer to your question, and that is there's a lot of marketing out there. And it's one of the biggest gaps.
>>TERESA DODSON: I would tend to somewhat agree with that. I think for the consumers, again, there needs to be options available for them. Thank God for the internet. There's lots of research, but also that's a bad thing too because there's a lot of bad information on the internet as well. But at least they have the opportunity to kind of research and do a little due diligence on their own.
One of the things that I've heard a few times today, that I definitely disagree with, is that consumers are far more educated about what their options are today than they were 12 year ago, 10 year ago. They're pretty smart, and they do shop around. And they do find out about credit counseling. They do find out about debt settlement. They do look into bankruptcy. So I think there's a lot of good information out there, and I think once they get a hold of a credible source, meaning it could be credit counseling, it could be debt settlement, bankruptcy, whatever the options are, even talking directly with their creditor, they tend to get more information that's more concise and better and more clear versus just searching for information, let's say, on the internet. So I think once they get to those entities, I think they receive good information and can kind of decide what their best options are.
Where the gaps are, I'm not sure. I think the gaps would be tied back to marketing again. I mean, I think a lot of the marketing isn't absolutely 100 percent clear, and I think that's where the gap could be, but once they do actually reach out and start talking to somebody, I think they get pretty good information.
>>MIKE CROXSON: It's interesting also that a lot of times, consumers present with a mindset about the product they want. That can be them calling to say, "I'm looking for a loan. I was told I was qualified for a loan. Do you do loans?" And what you have to do obviously is say, "Well, what makes you think you need a loan?" to get the consumer back to the conversation about what problem are you trying to solve.
What leads people to—I guess the way I would put it is, Are you looking for information about products? Are you looking for information to help you solve your problem? Do you understand the difference between where you are? Do you think you have an issue that you're trying to solve? Are you really looking for a product? Maybe that's where there's a real gap.
>>DANIEL DODD-RAMIREZ: Well, it sounds like you both agree that marketing seems to be one of those gaps, an area that's a challenge as far as helping people to discern.
I'm wondering, Mike, when you have consumers that come in, are they coming in already with a lot of notions? How are you seeing the marketing play into that? Is there a lot of confusion after they've come in or—
>>MIKE CROXSON: Yes. Typically, they are very confused. Frequently, they show up with a mindset about "Well, I was told," "I got this thing in the mail," or "I saw," "I got some kind of information from some source that said I was qualified for a loan that was going to help me pay off my debt or to give me some room because I have this debt." That's all definitely marketing-driven.
>>DANIEL DODD-RAMIREZ: Good. Anything else you'd like to say on that, Teresa?
>>TERESA DODSON: Yes. So a lot of the consumers that do come in that we speak to, they are looking for an easy—I think somebody else said it earlier. I'll steal it. An easy button. Get me out of my debt now. Well, it took a long time to get there, and it's not going to be real easy to get out. And it is going to be kind of a painful process.
And I think one of the things that's very—the gap, I should say, or one of the things consumers try to do is I want to throw myself into another loan. I want to throw myself into more debt. Well, let's sit down and talk about your situation because that's maybe not the best scenario for you. So consumers understanding what their options are or really what they're best suited for. I don't think that's necessarily a gap, but I think that's something that we can all improve upon to make sure they really truly understand what's really going to be best for them and suitable.
>>DANIEL DODD-RAMIREZ: Good. That's a good start. When you said that about a button, I almost thought about like a silence button to try to stop all the buzz from all the marketing and to have that moment to build that relationship and to discern through it and figure out what's going to work for them.
Okay. Let's go to the next question, then, and I'll ask Jason and Stephen to consider this one. What should a consumer know before they enroll in a debt relief option? From your experience, what are points of confusion?
>>JASON GRAEBER: I'll start. One of the things I wanted to ask when I came here—you all have probably seen some of the ads for debt relief, "We have the secrets that the creditors don't want you to know," and I would love to know what those secrets are.
[Laughter.]
>>JASON GRAEBER: I hear that all the time, and I meant to ask one of the folks here earlier.
I have clients come in my office with that, "I did this debt settlement deal. Was it a good idea?" Sometimes my clients end up in bankruptcy. The consequences are generally that my clients are getting sued for enrolling debts that they were trying to get resolved in the program. Their credit score has been negatively affected, and they've spend a lot of money, and a lot of what they were trying to do was to avoid bankruptcy. So by stopping paying those debts, I think it escalates the problem, and then some of my consumers are told there will be a law firm there to help them if they are sued. And that's generally not the case. So there are problems that I see from that perspective with debt relief.
>>STEPHEN CONGDON: When I think about it and, I guess, the marketing that's done to them on, I think, both aspects, when they come to a creditor, things they should know and have a knowledge of before they come to us is really an assessment of their financial health or overall financial health and the needs that they actually have, and then that can help them inform, I guess, really the reasonable expectations that we can set as a creditor and the outcomes we can set.
They might come to us—and it's been mentioned on panels earlier today that success for the creditor might mean full repayment, and they may be confused when they hear a settlement agency coming in promising a much lower term or something in that. So I think when they balance the two options, they really need to consider some of the points that Jason was just getting at, what that payment is actually going to result in, whether it's a lower credit score, you lose access to credit, enrollment fees and the service fees on that account, and as well as, you know, we mentioned earlier tax implications, 1099-C. Really, I think it's a clear process forward with many creditors once you actually get into the hardship event, once you actually get into an issue that might not be disclosed at the outset with a settlement agency that we would like to raise awareness about before they dive into something that can impact their financial future negatively.
>>DANIEL DODD-RAMIREZ: That's good. Thank you, Stephen, and actually, that went to my next question, which you just already went into. Maybe we'll ask other folks if they'd like to weigh in on that. When does it make sense for a consumer to engage directly with a creditor rather than a third party? Any of you that would like to go first?
>>STEPHEN CONGDON: I'll start. Just the tail of what I was saying, we would say almost always. We understand there are situations where we want—the customer is going to want that easy button when there's a lot of different accounts, but I think often creditors are able to supply a certain type of resolution and maybe a very similar resolution that many settlement agencies can further down the line, but I think a clear communication between the creditor and the customer before any decision made will always move to their benefit.
>>DANIEL DODD-RAMIREZ: Anybody else? 
>>JASON GRAEBER: Yeah. So as everyone in the room knows, bad things happen to good people, right? So I think we're all here trying to figure out how do we fix that problem when those bad things happen. There's bankruptcy. There's debt settlement, and I think creditors, which I usually don't deal with directly, if they're willing to work with consumers, I think that's a great way of doing it because we can remove a lot of the middle men or women that are in that process and maybe save the consumer some money.
>>TERESA DODSON: I think a really good time for a consumer to engage a creditor directly is always. I think they should probably—it they're under water and they've having a hard time paying their debts, I think the first stop should be call your creditor and see what you can do. A lot of those people we do see come to debt settlement saying that they've tried to do that.
I also think if I've only got one or two credit cards that I need to resolve, that's pretty easy to manage, regardless of the consumer situation. But the truth is that people that come into a debt settlement program are typically about seven to eight credit cards on average, sometimes more, depending on the debt load, and somebody spoke to that earlier today, I believe. It was on the panel before this. You can imagine the amount of calls coming in. You can imagine the letters coming in. It becomes unmanageable for the consumer if they're in a situation where they really can't pay back 100 percent of what they owe because of whatever life hardship has happened to them, but if they're got one or two, then I think that's easy enough to manage. And they can probably work out something that's reasonable for their particular situation.
>>DANIEL DODD-RAMIREZ: Good. It would be nice to hear your perspective on this too, Mike, and especially how do you help guide that consumer when they're coming in with the options that they've got, especially with all the information that's being kind of overloaded around them.
>>MIKE CROXSON: Well, again, as we said at the outset, I think it's really about making sure the consumer is informed and equipped to do whatever they want to do and they know how to do it.
I think there's a dimension too where when it's clearly in the consumer's best interest to push them out there to do it on their own, you should do that. You should give them the tools to do it themselves. You can coach them through it, but the reality is they should not pay me a fee to help them solve one or two creditor kinds of issues. That doesn't make sense on their behalf. That's part of the education that we provide anyways.
>>DANIEL DODD-RAMIREZ: Yeah, yeah. Good. Okay. The next question is—I think we're doing very well with time. So we'll just allow any of you to jump in on these questions, and this next one is, How do you determine the programs are the right fit for consumers? Do you ever refer them to other types of programs, and why?
>>TERESA DODSON: Okay, I'll start.
>>DANIEL DODD-RAMIREZ: Go for it.
>>TERESA DODSON: How you determine if a consumer is suited for, let's say, debt settlement, you want to make sure that you're going to do a budget analysis on them, and if they're under water by 70 percent, 80 percent, 90 percent, which is a lot of what you see, but they still have the ability to pay something but just not all of it, they have a real hardship. And you really took a look at—I mean, these phone calls for talking to consumers, it's not just one call. We're talking to these consumers probably two or three times before they decide to enroll. So we want to make sure that they're truly qualified for the program, meaning that they really understand it, and by the way, we have a whole list of disclosures that we must go through with them because the industry was regulated. It was regulated in 2010, and it was very effective. We do these disclosures with every single client, and that results in about—let's just say 100 of the clients that come to us that are inquiring about debt settlement services, only 20 of them may enroll. That's it, because after they hear the disclosures, it scares the bejeebers out of them because, yeah, it's a pretty aggressive way to get out of debt, and it does require you're going to take a hit on your credit. Even though your credit right now has been compromised because you're probably maxed out on everything, you're still going to take a hit. You're definitely going to have some tax consequences we have to talk about. We go through a whole list that we're required to go through. 
So if a consumer is not only we've determined that they are qualified for the program, so they're not in a situation where they really should do bankruptcy, which we do refer—there's a lot of debt settlement companies that are like, "You know what? You're in a dire situation where you're really so upside-down that you may want to consult a bankruptcy attorney, and we work with a couple of them. We'd like to refer you," or "Hey, better yet, you can probably pay back 100 percent of what you owe, and so we're going to refer you to a credit counseling company. We think that might be a better route for you to go." 
So through the budget analysis and sitting on the phone with a client, we're always determining what's going to be the best fit for them. I don't want somebody in a debt settlement program that's going to fail, because then it's going to make my numbers look really bad to all of you, isn't it? So I don't want them coming into a program that they're going to fail at.
Now, on the flip side of that, we have consumers that are on the brink of "Okay, I want to try debt settlement. I really do. I want to see if it works," and those people, maybe we settle an account or two, but just another life scenario comes up. Then they do have to do bankruptcy, and then that may happen later on down the road in the program as well. So those are the different things that do happen, but we're always looking at providing them of the options. We have to disclose those options. We have disclosures we have to give to them as well, and I think with that, you can make the right decision as a consumer. And you can also determine where they're best suited to be.
>>DANIEL DODD-RAMIREZ: Good. Jason?
>>JASON GRAEBER: I was going to say there's no free lunch. Everything calls something, and whether it's a workout with a creditor, which I generally don't do—I may do it with a local bank in "Small Town," Mississippi, that's willing to work with one of my clients, but generally, with credit card companies, I just haven't had that experience.
With bankruptcy, I'll tell folks, "You don't need it either. These are the problems you're going to have, or it costs way too much money to file bankruptcy to get rid of $5,000 of credit car debt. You just don't need it," and then sometimes folks are judgment-proof, which may not make anyone happy. But that's just the way it is, and they don't need to spend the money. So figuring out whether you need to do one of those options, I think it's just sitting down with someone, hopefully a free consultation, and getting some good information. 
>>DANIEL DODD-RAMIREZ: Anybody else that would like to—
>>MIKE CROXSON: What I would say is in the education and counseling component of what we do, these is, in some respects, this sort of triaging that you help somebody understand what are all the options and where are you in this flow. In terms of consumers that are a good match for a debt management plan, so I guess the solution, they're going to all get financial counseling, budget counseling, et cetera. They're all going to get that education, but if the debt management plan is the appropriate product for the consumer, the hallmarks of it are a couple of things; one, based on their budget, they can actually afford it. It's a budget that they can support and they can live with, and if they do, they can afford to pay that plan.
The second is most of these consumers that we deal with, if there's another hallmark for them, it is are you sure this is going to help me. So the notion of certainty is huge for consumers who are scared and struggling, that this plan is set up for 54 months. If you make these payments 54 months in a row, you will have zero debt. You will have paid all your creditors back, and you'll be in good standing.
Now, if in 36 months, you've paid off three of them and you've got sufficient cash flow that you feel like you've got all the tools and capabilities to step off early, boy howdy, you should, right, because you've got that option. You have that opportunity. If you want to go to the end, you've got certainty. If you get part of the way through, you've still got options, I guess, is my point.
>>DANIEL DODD-RAMIREZ: Yeah, yeah. That's great, and that's certainly something that I would imagine you're seeing a lot with people coming in and feeling that sense of desperation or a sense of the lack of control and that plea. I mean, it really resonated with me. Are you sure you're going to be able to help me? Are you sure that if I can take these steps that I'm going to see the light after all of this work?
I remember going into—I used to work in Savannah, Georgia, about 10 years. I ran a poverty reduction initiative there. We partnered very closely with the consumer credit counseling services there. I remember going in and seeing the big water tanks full of broken credit cards of the people that they had helped. I'm wondering with what you're seeing—and I'm sure the next panel has got somebody from AFCC, the president, I think, from AFCC that's going to be presenting—what are you seeing as far as your capacity these days to be able to see more clients? Are you able to—and not just with your organization, but with other organizations around the country, because I know they've been cut. There's a lot of funding and restrictions that have happened, and there's not as much funding that's available. 
>>MIKE CROXSON: Well, you know, the industry has been one that has seen consolidation for a variety of reasons. Some of it has occurred because consumers want to be served in a different way not. If there's a negative mark about the credit counseling industry from its past, in my mind, it is that it is stuck to doing things the way it wanted to do things instead of focusing on how do you serve the consumer where the consumers is.
I would tell you we've come light years in a very short period of time in trying to solve problems from the shoes of the consumer instead of the shoes of the agencies, which is about resources. So the good news is we've been able to expand capacity by using technology. We are using technology to do things like anticipate. Somebody was talking about it earlier. So we're using machine learning now as a way to anticipate, based on this consumer and their picture of who they are demographically and financially and everything else, where have all the people who have similar patterns in the past from the data, what does it tell us? We need to do a special kind of touch on this person, X period into the program, so that there's some intelligence about not treating everybody the same but treating people the way they need to be treated to make them—
>>DANIEL DODD-RAMIREZ: And helping them to take the steps for themselves. It's more financial coaching than the traditional counseling.
>>MIKE CROXSON: That's right. We know they're going to have this problem or we believe they're going to have this problem based on the data. Therefore, let's push this kind of education to them in the way that they said they want it. If they want it by mail, they get it in mail. If they want it through the internet, they can get it that way.
>>DANIEL DODD-RAMIREZ: Good. Okay. Let's move over to a question. Let's talk a little bit more about consumer experiences when we're trying to stay on a plan. What are the consequences of a consumer breaking from the program plan? How do you mitigate those risks, and how can a consumer come back on track? Anybody that would like to—
>>JASON GRAEBER: I'll jump in. I usually see folks after a plan has failed.
>>DANIEL DODD-RAMIREZ: I was going to say, yeah.
>>JASON GRAEBER: And so my consumers come to me and they say, "I wanted to avoid bankruptcy. I really wanted to pay back my creditors." Again, this may be some geographic—in my area of the U.S., it's small towns, and so everyone knows everyone's business. So there's a lot of shame and embarrassment about not paying your creditors back. 
So they walk in my office, and their head is hung. And they just think that the world is over with because they're talking to a bankruptcy attorney. I go through and I say, "Well, what did you do before you got here?" and a lot of them say, "I tried to get out of it by doing a debt settlement," and they end up in bankruptcy anyway. It's so frustrating to see those people in my office because they really don't want to be there.
The consequences are—when I got married, my wife and I went to a marriage counselor, and he said the number one strain on your marriage is going to be finances. It's so true. These folks are just as stressed as they can be, and they come with that emotional baggage. Their credit scores have dropped. They're probably getting sued. They're maybe getting garnished. These folks are hurting, and I often see that at the end of one of these programs, which is, again, frustrating. 
Bankruptcy is not a great option. It is a last option, but it does sometimes help them get back to square one or, as I say, a fresh start so they can start over.
>>DANIEL DODD-RAMIREZ: Do anything that you see, Jason, that you think or that you hear from folks about what could have been done differently, you know, what could an organization have done to help that person get back on track?
>>JASON GRAEBER: Before they came to me?
>>DANIEL DODD-RAMIREZ: Yeah.
>>JASON GRAEBER: This is probably not going to be popular. What I hear often is that "I was told one thing, and then the results were completely different." There's a lot of sales up front, and the consumer experience, which I've heard some folks talk about, was poor. "Don't worry about it. These accounts need to age a little bit, and then we'll start getting the settlements in." They get sued. The wife is calling at night after she gets home from two shifts as a nurse, being at a hospital, and she says, "They're not doing anything. I'm frustrated." She'll call and spend 2 hours on the phone, talking to the representative that says, "Don't worry about it. We'll get someone else on it. You just were transitioned to a new manager," and it's just over and over again. And that's just a frustrating experience. 
>>DANIEL DODD-RAMIREZ: Anybody else like to comment on this?
>>MIKE CROXSON: I would say, to speak specifically about debt management plans, life happens. Generally speaking, the creditors will give consumers a little bit of latitude when they're on a debt management plan and recognize there may be a month that people can't make all their payments while they're on the plan.
We've worked with a number of creditors, and Chris Viale was on one of the earlier panels. He really has spearheaded this EMS product, which is a modification plan. It basically says if you run into a financial issue that's short term in nature, less than 6 months, there's a forbearance program that will allow you to stay on the debt management plan and not go to chargeoff. It's a way to give people some room to get back on their feet, and it gives the credit counseling agency a way to have an ongoing discussion with somebody about "Okay. Let's revisit your budget. Let's see where you are. Let's see what we can do to get you back in shape and on point."
>>DANIEL DODD-RAMIREZ: That's great.
>>STEPHEN CONGDON: To that point, I completely—that one missed payment or one blip on that radar isn't always the end game. There are so many options when you're working through a debt management program that the creditors can offer you that you can skip payments, fee waivers. We have all these processes. So that's why I think communication really is so vital between the customer and us and whoever else they're working with to make sure they're aware of those options. So they think, "Oh. Well, I'm going to miss this payment in June. I might as well contact the settlement agency now and get ahead of this," when it might not be really their only option. They'll have plenty.
>>DANIEL DODD-RAMIREZ: So my office, we design a lot of education materials. One of the toolkits that we've developed is called "Your Money, Your Goals," and it's a toolkit that really helps social service agencies around the country that are helping people to certify for benefits or recertify for benefits or to get a job or to get transportation or housing or health care to have the money conversation with clients. Many of these folks, as we can all imagine are also lower income and can increase—we can all improve our confidence with talking about money and the way that we manage money, but especially these frontline workers that are working with clients. We know the intersection. We know that more and more people are looking at—employers are looking at credit. They're looking at credit scores, and they're looking at these different things in the intersections.
When we put together a booklet that accompanies the toolkit around "Your Money, Your Goals" on debt, one of the things when we were talking to social workers and credit counseling companies around the country that people were saying was—and consumers, the first thing it says is when a creditor calls, when somebody calls about a debt, don't ignore it. We know that that's probably the go-to for a lot of people. They hope the problem is going to go away, and so how do you answer the phone call and answer—and be able to respond? And then it goes into the different things you should ask and the different steps you should take.
It just occurred to me that that's really—before you can even get into the door, there's a lot of different ways that will help you to get there. We've worked a lot with social service agencies, helping them to try to guide folks to get into the door for the deeper work, whatever that is. That was just a little infomercial there.
The next question for Jason, actually, Jason, you talked a little bit about this, but if you could talk a little more about this. When you see consumers who have tried and failed other debt relief methods, what are your observations about the consequences for consumers who don't complete the programs?
>>JASON GRAEBER: Well, again, most of them end up in bankruptcy, which is where they wanted to stay away from. They wanted to try to avoid that, and that has its hit on their credit as well. And then they've lost the money. They're generally stressed out having gone through the process.
I'm trying to think of some good experiences my clients have had. To be honest, I can't really think of any. I want to have solutions or thoughts on this, and one of the things I was thinking when you were talking about was is there a way for a creditor maybe to reach out directly to a consumer just maybe occasionally or maybe when they first had that relationship and say, "Hey, look, we know life happens. We know bad things happen to good people. These are some programs." That way, maybe that's something that could be dealt with on the front end. That's probably a little altruistic, but that would be maybe a way to avoid some of this heartache and expense I see the consumers go through.
On debt settlement, one of the things I heard spoken of earlier today was the success rate of the debt settlement programs. If those are public numbers, I'd love to see them. My experience doesn't back that up, and one of the things I think that would be helpful for that industry, if they were more transparent on that, I think you would be able to diffuse that argument a little bit more that this is an industry that is sometimes hurting consumers. I am not aware of any public disclosure of success rates, which would be nice to have that.
>>TERESA DODSON: If you go to the AFCC website, we do have what's called the "Regan Report," and we have two versions of that that discusses success rate for consumers and debt settlement, and we're actually getting ready to publish the third version of that. We do it every 2 years. So that could be very helpful.
>>JASON GRAEBER: And I think the Regan Report—I've reviewed it—is a closed report. There's no analysis of the data of how those numbers were achieved is my understanding.
>>TERESA DODSON: It's through a third party, independent third party. So most of the debt settlement companies that are members of the AFCC provide the data, and it goes blindly to the third party that actually goes through that data and puts together that report. So that way, it's completely independent.
>>JASON GRAEBER: And that's laudable. I think that's good. I think it would also be good for folks in the industry to be able to see those numbers, the data, as opposed to just the third.
>>TERESA DODSON: You mean the raw data?
>>JASON GRAEBER: Yes, ma'am.
>>TERESA DODSON: Okay.
>>DANIEL DODD-RAMIREZ: I'm going to ask a question around research a little bit later too, but I'm wondering if there's anybody else that would like to—you know, what you were saying a moment ago, Jason, is there a way for a creditor to be more proactive and reaching out to the consumer, Stephen, you were talking a little bit about this earlier. What do you think about that?
>>STEPHEN CONGDON: I wish. I think our hands are often tied in various—you know, whether it's the FDCPA, TCPA, and the outreach we can do. Plus, you have to really consider, I guess, the customer friction that occurs with that. Customers already will be frustrated if we contact them in the event of a delinquency, but if we're now trying to contact them, "Oh, hey, you're not delinquent yet, but you're going to be," I could just imagine the consumer frustration that will exist there. So it's tough for us sometimes to be proactively reaching out to customers when we see there's going to be an issue.
It was mentioned in an earlier panel. We can see on the credit lines where it's coming and where a risk may start to grow. So I wish we had a little bit more flexibility in our ability to really go out there and reach out to customers. I think so many of these issues can be addressed if we just have a better line of communication.
>>DANIEL DODD-RAMIREZ: Mike, anything that you'd like to say on this point? And how do you actually reach out to consumers to let them know about the services that you all offer, and how do they discern that you're different from something else as a nonprofit, perhaps?
>>MIKE CROXSON: So sort of the first question, I do think the creditors have come—they've really come around to recognize the need to get engaged and involved in coming up with better, more tailored solutions for consumers.
The debt management plan for many years was very much a one-size-fits-all, and then we've seen some other changes over the years. It's become a little more of a tiered product, but now there's really an effort around making a much broader effort to deal with not just current debts but also charged-off debts. I think that's all very, very positive.
And I'm embarrassed, Daniel, but I forgot your second question.
>>DANIEL DODD-RAMIREZ: Well, actually, I was interested in what you were just saying, and I don't know if you could explain this also for the audience because people might not understand what you just said as far as it was a one-size-fit-all, and now it's more of a tiered—
>>MIKE CROXSON: Yeah. So it was said earlier that a debt management plan is not a negotiation. It is a workout plan that's got a structure that is set, and it is what—if you qualify for it, all the creditor's benefits are established, which provides the consumer that certainty that we talked about earlier. You know exactly what they're going to get and exactly what it's going to cost, and it is, generally speaking, substantially less than they would have paid if they stayed the way they were. So it fits within their budget.
Because life does happen and because—for example, we talked about the notion of a 72-month plan instead of a 60-month plan. They can't afford the 60-month DMP, but if you stretch the time out a little bit longer and gave them a lower monthly payment, you could still give a consumer that certainty.
What sometimes is forgotten is that the consumer is living—and I'm going to put this in air quotes here—abnormal life while they're on a debt management plan because they don't have access to unsecured debt, and it's very challenging in America today to live without some form of plastic.
But if you can find a way to stretch that payment out or to deal with the other reality, which is sometimes consumers had charged-off debt and sometimes they had delinquent debt and sometimes they have current debt, how do you have a program that can address all of those things? And those are all programs that we're working on because the creditors have actually come to the table to do that, and I think that's a big step.
>>DANIEL DODD-RAMIREZ: Very good. Thank you.
>>TERESA DODSON: Yeah. Mike, actually, the creditors have come a long way, since you're going down that path. I've bee in the industry for a long time, and years ago, it was a lot more difficult to negotiate with creditors. We always could, but it wasn't exactly fun. So it was a lot more difficult and more challenging.
Where we on both sides of the fence—I mean, we have been trying to educate on the creditor's side, collections' side of the industry about debt settlement that, look, regardless, we have consumers that fall in this one area where they need help, so let's educate you. You educate me. The AFCC does this, and a lot of the really good debt settlement companies, I mean, they take the time to go to the creditor's shop, go to the collection agencies. And they come to our place of business and understand how we all need to work better together. That stuff didn't exist until maybe—I want to say maybe 10, 8 years ago, and it continues to get better.
With that said, one of the disclosures that we have to give consumers is there's a possibility you could get sued by one or more of your creditors by enrolling in the program. Well, creditors don't really sue that much anymore. Do you want to know why? It's because they understand it now. They understand, and they've gotten an education on a consumer that's in a debt settlement program does have a willingness to pay. They just can't pay 100 percent of it, and they want to give you something versus nothing. And now that that education has happened on both sides of the fence, we've just seen it become a lot easier to work with creditors and collection agencies. So I think creditors have come a long way in understand debt settlement. Is there a long way to go? Yes. There still is, and there's still some that they're settle, but they're very difficult. But it's come a long way, and I think that's great because it's really about the consumer at the end of the day. What's going to help the consumer? Like it or not, the consumer is in that situation. How do we help them recover and get them back on their feet?
>>DANIEL DODD-RAMIREZ: Very well. Good. Anybody else like to jump in here?
>>JASON GRAEBER: I just had a question. I wonder—and by the way, disclaimer, I do Chapter 13 bankruptcy, but if no one ever had to file Chapter 13 bankruptcy again, I'd be fine with that. I wonder from a creditor perspective, do creditors prefer to see a Chapter 13 debt settlement or just straight default?
>>STEPHEN CONGDON: I don't know. I'd say it's probably straight default.
>>DANIEL DODD-RAMIREZ: Could you repeat that?
>>STEPHEN CONGDON: Sorry. I'd say probably straight default versus Chapter 13, but I can't say that affirmatively.
>>DANIEL DODD-RAMIREZ: Okay. Let's move to my colleagues in markets, the ones that are hosting this event are part of research markets and regulations, and they have a question here around research that I know that would be very useful. So what research could help inform how to improve overall consumers seeking debt relief assistance? The Bureau has undertaken a lot of research in the past, and so we wanted to pose this question to all of you.
>>JASON GRAEBER: I think we were having the question about the raw data. I think that would be helpful. This was not directly on your question, but I think, in general, the folks here do not want their consumers coming to me because that means there's been a problem that I am trying to fix for them. Generally, it's not a happy fix.
Once you get to that point, one of the things that I have found that is frustrating is arbitration provisions, not specifically what you asked, but I just thought I'd get it in there while I could.
[Laughter.]
>>JASON GRAEBER: That's a problem. If the consumer really is number one, there has to be some accountability, and we all know there's bad apples out there. There are going to be folks that take advantage of it, and when there is an arbitration provision that prevents the consumer from getting their day in court, that's a problem. Again, if the consumer is number one, that would be a good step.
>>STEPHEN CONGDON: I think we would like to see—you know, we talked a lot today about the marketing that's done—more research done on, I guess, the terms and what's marketed by many debt settlement companies to consumers versus the real cost once it's finally settled and it's done with so we can better assess the reality of that option and then the feasibility of that option as well. I think we would like that data.
>>DANIEL DODD-RAMIREZ: Teresa? Mike?
>>MIKE CROXSON: So, again, to Jason's point, I think about the consumer. A lot of the definition of success is about liquidation rates—that's a creditor view of how much do I get back from the various kinds of tools—or the guy and gal on the other side of the fence who's got a product that's not your product saying what's wrong with your product versus their product.
I think that if there were a real assessment or a renewed assessment based on what the consumers get from debt relief, what did you expect to get, where did you end up, the notion—for example, I remember for us, a debt management plan was, well, you set this plan up for 60 months, and they didn't make it to 39, so it wasn't successful. Well, if the consumer decided that they could pay in full at month 39 or they decided that "I can manage this on my own now," that's a success versus the client who misses a payment, misses a second payment. You reach out to them and say, "If you miss the third payment, you're going to lose your credit or benefits," and they skulk away, that's the way it sort of seemed. They disappear. That's a failure.
Why do those people fail, and how do you keep them engaged in the process? That kind of research would be very, very valuable. We certainly are trying to do it on our own with our machine learning effort and other sort of communication strategies, but if there were a way to really know independently, these are the things that the consumer thinks about why they fail, that would be very, very valuable, I would think.
>>TERESA DODSON: I also think the quote that 60 percent of the clients that enroll in debt settlement complete the program successfully and resolve their debts, but there's that 40 percent, understanding what that 40 percent is, because I know just being on the ground floor of consulting a lot of my clients and being in the industry, it could be a multitude of reasons. One actually mirrors what you were saying. They are in the program for a year, let's say, maybe a year and a half, and out of the seven debts, maybe three or four of their debts have been settled. But now they've rebounded. Somehow they've rebounded. They've gotten back on their feet. The hardship that they experienced before is no longer there, and now they just want to go in and take on the rest of the debt and resolve it themselves. That's one reason why they walk away. 
Another one is the bad one, the bankruptcy, or they just got in over their head and they needed to. But I think it would be interesting to track that 40 percent because to me, somebody that's been in the program that's been able to resolve, let's say, half their debt and then they decide to move on, I don't think that that's not a success. Hey, we helped them get back on their feet, and now they're able to handle the other debts on their own. That's great.
>>DANIEL DODD-RAMIREZ: Yep. Good. Okay. It looks like we are actually at the 10-minute mark, and I've only got one question left. So we'll be able to get this last question and any closing remarks. The last question that I've got here, what do you all see as key features of a program that's really serving a consumer's best interest?
>>STEPHEN CONGDON: Options. I think optionality is key, as we mentioned earlier. We don't necessarily want to push them to bankruptcy or to one option versus another, but if they have a suit, which I think everyone at the table has kind of addressed how they can make that work for a customer, that's, I think, the number one issue. 
While they might be a little overwhelmed with those options, may just want an easy—but in some points, but if they can see really the full suit of what's out there, I think customers would feel more comfortable addressing the debts they have and maybe feel less overwhelmed when they do face a hardship event.
>>JASON GRAEBER: In hearing another panel talk about using technology to meet the solutions, if there was a way that you had a platform to where the consumers could upload their debts and the creditors could see those debts and then they could negotiate some type of resolution seamlessly, that's a great solution.
I would think—and I think someone mentioned this—the problem is going to be the creditor saying, "Well, then everyone is going to want to do that, right?" I don't know how you fill that gap, but if that solution is out there, that sounds great.
>>DANIEL DODD-RAMIREZ: Interesting.
>>TERESA DODSON: Well, I could speak personally to that solution. Year ago, we developed a program called Persolvo Data Systems, and we—
>>DANIEL DODD-RAMIREZ: What was it called again?
>>TERESA DODSON: Persolvo Data Systems. We were working with a couple of banks and a lot of collection agencies to do just what you're describing, which is doing the online settlement.
We had some success with it, but the hardest thing was getting banks, not collection agencies or debt buys, but banks to adopt that. We only had one. So it was somewhat of a success, but then it was also very frustrating because we really couldn't get a lot of traction in that. So I just wanted to comment on that.
The biggest thing is options, again, making sure consumers understand what all their options are. I think when a state—because there's some states that prohibit debt settlement, and then we also just had a Google ban on debt settlement on being able to advertise. I think when you start taking options away form consumers, how is that a good thing? They need to understand them, and understanding what your options are is also making sure that each one—I don't care if it's credit counseling, bankruptcy, working directly with the creditor, debt settlement, whatever it may be. As long as you're making sure that all the disclosures are being made and you're fully transparent with the consumer on what all those options are and they're truly—and you truly understand then suitability for each one of those programs, I think that's a win. That's a win for the consumer all the way around.
>>DANIEL DODD-RAMIREZ: Good. Thank you.
>>MIKE CROXSON: When I think about the folks who we talk to every day, there's a very common sort of persona, and she's—it's a she usually. The majority are women. She has learned how to juggle over time. Something came in, and she doesn't exactly know how she got it up in the air with the other balls. But it's up in the air with the other balls, and she's robbing Peter to pay Paul a little bit but doesn't really know the details of what's going on. But she's managing, and then something happens out of her control. Coronavirus. A car engine blows up. A kid breaks their arm. Something happens. All the balls drop, and she does not know where to even begin picking balls back up to get them in the air.
So options are important, but I really think that the education piece of understanding why you are where you are and how to make a choice of the options you have is what success really looks like. When you give people the capability to make a decision on their options that's well informed, that's to me—that's what it's all about.
>>DANIEL DODD-RAMIREZ: That's a really great way to end, actually, with that voice, the consumer. I'm still remembering what you were saying earlier, Mike, about the plea that you will often get from folks, that earnest plea of "Are you sure this is really going to help me?" And we know that people are coming in with that motivation, and it's our job to work with them to help them to understand their options and then take those steps towards resolving and beginning their journey to credit relief.
Why don't we end it there. I'd like to thank you all very much, and we're ending quickly. I didn't even get a mark from Laura. So thank you all very much.
[Applause.]
>>VANESSA MEGAW: Thank you, Daniel and to the panel. We'll have another 15-minute break. I will see you back in your chairs at 1:45.