Debt Settlement Done Right – ZipDebt Clients Achieve the Best Results in the Industry!

In July 29, 2010

Over the past several months, there has been a steadily increasing chorus of criticism directed at the third-party debt settlement industry – criticism by state Attorneys General, Federal Trade Commissioners, financial reporters, bloggers, consumer groups, the Better Business Bureau, and individual consumers. It’s been open season on debt settlement in the media, and the theme is always the same – “Debt settlement does not perform as advertised.”

Unfortunately, that is a true statement relative to the obsolete “36-48-month debt settlement program” still touted by most companies. It is, however, most emphatically *not* true with respect to the ZipDebt approach to debt settlement. For ZipDebt clients, debt settlement *does* work, and I will provide the hard data below to prove it to a skeptical audience.

First, let me explain what led to the decision to openly publish my results. During a Senate hearing in April 2010, the debt settlement industry was represented by the legislative director of USOBA (one of the industry’s trade associations), himself the chief operating officer of a settlement company. He was asked about the success rate of his own firm’s debt settlement program. You can watch a tape of the hearing and see for yourself. (Senator Rockefeller asks a point-blank question about industry success rates at approximately 94 minutes into the session.)

Now, you have to ask yourself. Where was the preparation? You would think the real dog-and-pony show would have started at that point, with slides, charts, and graphs showing how spectacular the results are coming from the top-notch companies in the industry. After all, this was a filmed hearing in the U.S. Senate, a perfect marketing opportunity! But that is not what happened. Instead, the executive fumbled about as though totally unprepared for that question, made a very bad joke about getting grilled by the Senator, and eventually quoted a figure of 34% without providing any visuals or other supporting data.

That’s it? A 34% success rate by the best and brightest of the industry?

Frankly, I seriously doubt that 34% of the people enrolled in traditional third-party programs actually complete the process. The expert witness for the GAO, which did an undercover investigation of debt settlement, qualified this assertion by stating that it appeared to be 34% who had “some or all” debt settled. Complaints filed by various state Attorneys General state that industry success rates are below 10%. But even if 34% is a true *success* statistic, it’s pathetic! Who wants to pay thousands of dollars in fees before anything even gets accomplished, in return for a 1-in-3 chance of success? With odds like these, why wouldn’t the average consumer want to take on the project themselves?

Clearly, success rates are the Achilles heel of the debt settlement industry. The long duration programs simply don’t work as advertised. People drop out left and right under mounting legal pressure, and this translates to abysmal results. But … this really got me thinking. How would *I* answer that question? You see, I have some sympathy for the poor fellow in front of the Senate hearing. It’s not an easy question to answer, partly because there are different ways to define “success” in the context of a debt settlement program. But I wanted an accurate measurement, not marketing hype. That led me deep into my database, which I had not really analyzed until now. (I’ve been too busy *generating* the data by coaching clients one-one-one for the past half-dozen years.) Now that I’ve taken a look at the results, I can truthfully report that my results blow the doors off anything else in the debt settlement industry.

To back up this claim, I will provide some hard data in two sections. Part A (ZipDebt Success Rates) will give exact figures for my success rate and document the methodology employed. Part B (ZipDebt Settlement Results for 2010) will quote my actual settlement statistics for 2010 to date.

Part A. ZipDebt Success Rates

First the data:

ZipDebt SUCCESS RATES (Cumulative) 2006-2009

1. Total Number of Clients @ 1576
2. Number of Refunds @ 40
3. % Refunds/Total @ 2.5%
4. Coaching Not Included (Basic) @ 252
5. Insufficient Contact to Determine @ 581
6. In Progress @ 63
7. Pool of Coached Clients @ 640

9. RESULT B_ 80% Finished @ 193
10. RESULT C_ 50% Finished @ 48
11. RESULT D_At least 1+ Settlements @ 99
12. RESULT E_Filed BK @ 39

14. 50%+ SUCCESS RATE (=A+B+C) = 78%

Success Rate Methodology

In what follows, I will lay out my methodology and provide definitions to avoid any confusion over terms. I want to make sure everything is fully disclosed so there is no suggestion of having “fudged” the numbers to make myself look good. I’ve mined my data very rigorously, and I believe that the results published here would easily withstand audit by a neutral independent third party.

The explanatory notes below match the header numbers in the above chart:

1. A total of 1,576 clients ordered during the period of 2006-2009. That’s not a huge number by the standards of a large debt settlement firm, but considering that I did about 95% of the coaching work myself I think it’s a pretty good total! Further, a majority of those clients who purchased coaching privileges were carrying very high levels of debt, with totals of $100k or more being commonplace. See Part B below for figures pertaining to the millions of dollars in debt settled during 2010 alone.

2. & 3. For the success rate calculation, refunds are treated as non-customers and subtracted from the total pool. From the total count of 1,576 orders, 40 people shipped the kit back for a refund. This represents a refund rate of 2.5%, which is extremely low for this industry and even for merchant websites in general. I wish it was zero returns, of course, but debt settlement is not for everyone, and that is precisely why I offer the course with a money back guarantee. I am very proud of such a low return rate, and I believe that this speaks well to the quality of the material provided.

4. The ZipDebt program is offered in three levels: Basic, Enhanced, and Premium. Clients who ordered the Basic Program did not purchase access to coaching privileges – only the training kit itself. Since I have no way to determine results for this group, they are excluded from the total against which success rates are measured. A number of Basic clients have later gotten in touch and reported that they had fully completed the process and settled all of their accounts. But since I am excluding all Basic clients from the pool, I have not counted these completions as successes. So if anything, these success rates are *under-stated*.

5. A number of people have purchased my program, had a little contact with me at the outset, and then gone off on their own to work the system. In cases like this where communication has been spotty at best, I have no way to measure success or failure for that particular client. Where there is no reliable means of determining actual status, these clients are excluded from the success calculation. (Obviously, I could send an email to everybody, going back four years, but I simply don’t have the staff resources to handle it and I’m confident that the remaining data speaks for itself anyway. If this publication prompts any former ZipDebt clients to get in touch with fresh results, I will adjust and update the data set accordingly.)

6. The “In Progress” category are clients with active coaching subscriptions who are still working through the Enhanced or Premium Program. Since it is too soon in the process for results to have been obtained yet, this group is excluded from the calculation.

7. The “Pool of Coached Clients” represents the net number of clients for which I have reliable data on settlement results, positive or negative. Total number of clients, less refunds, Basic (non-coaching), non-reporting, and in-progress clients yields the net pool of coached clients. The RESULTS categories are measured against this figure.

8. RESULT_A is self-explanatory. These are “Completed” clients who have literally reported that every single debt they intended to settle using the ZipDebt method *has* been settled to their satisfaction.

9. RESULT_B is a category termed “80% Finished.” These are clients who had settled approximately 80% or more of their debt load, as of their final report during the active coaching subscription period. In the vast majority of these cases, only one or two small accounts remained to be settled and the client felt they had already been armed with sufficient knowledge to finish the process without further paid coaching support. Clients in this category are considered, by definition, to have successfully implemented the program strategy.

10. RESULT_C is a category termed “50% Finished.” These are clients who had settled approximately 50% of their debt load, as of their last report during the active coaching subscription period.

11. RESULT_D is the reporting of “At Least One Settlement” during the active coaching period.

12. RESULT_E is either an actual report of a “Bankruptcy” filing by the client, or a financial situation so urgent at last contact that bankruptcy is the assumed outcome.

13. BASE SUCCESS RATE – This is the most conservative definition of “SUCCESS” relative to my program. The group of “Completed” plus “80% Finished” clients are all success stories. These are people who made the program work and achieved the desired outcome, or felt they had matters well in hand at the end of their service agreement. I am proud to announce that based on this simple criteria of “getting the job done right,” ZipDebt has a base success rate of 71%. For perspective on how truly amazing this is, please see the additional commentary below. The short version is that *no other program* can touch it – not traditional debt settlement, not credit counseling, not even Chapter 13 bankruptcy. ZipDebt wins, period, hands down.

IMPORTANT! A success rate of 71% does NOT imply that 29% of my clients were unsuccessful at the process of settling their debts. (See item #14 & 15 below.) In the case of traditional debt settlement firms that claim a 34% success rate, it DOES mean that 66% of people fail at the process. The key difference is that my average program duration is 6-12 months, versus 36-48 months for traditional settlement. So all that the 71% figure means, in relation to the other 29%, is that their coaching subscription expired while the process was still under way. Many people felt they had learnt enough from me to continue without renewing and paying for ongoing coaching support. So I’m confident that 71% would climb to a much higher figure if I had feedback from all of the people who were half finished with their settlements or had started reaching settlements at the time of subscription expiration.

14. 50%+ SUCCESS RATE—I think it’s fair to also look at the fact that people learn enough in their first 6-12 months with me to keep going on their own. Some people choose to renew to extend their coaching service, while others really take the DIY-spirit to heart and finish out on their own. Including clients who were approximately half done with their settlements upon expiration of the coaching service, the success rate climbs to 78%.

15. SUBSCRIPTION SUCCESS RATE—One of the biggest knocks on the debt settlement industry is that these firms do not provide VALUE for payment received. People pay these companies $5,000 or $10,000 in fees and receive very little in return. In contrast, ZipDebt’s fees have always been reasonable. Since 2006, my program price has been $397 (Enhanced) or $777 (Premium), a tremendous value by any standard. Considering that 94% of clients reported at least one successful settlement during their coaching subscription, I am very confident that virtually every one of these customers would agree that they received full value in return for the cost of their subscription fee.

How Good is a 71% Success Rate in Debt Settlement?

In 1941, Joe DiMaggio set a record with his 56-game hitting streak that stands to this day. Nobody has come close to Joe’s accomplishment. Or, if you’re a tennis fan, think in terms of Roger Federer reaching 22 consecutive Grand Slam tennis semi-final matches. “Impossible, incredible,” are words used by his rival Andy Roddick to describe such a superhuman feat of athleticism.

OK, I know I’m tooting my own horn here, but really and truly, my results are *that* good. No fooling. Let’s put some perspective to it. You’ve already learned that a representative from the debt settlement industry claimed a 34% success rate for his firm. I think we can safely assume that the data was tortured to the maximum possible extent to yield that result. 🙂 But taking it at face value means that traditional debt settlement is a losing proposition for the majority of clients. But it’s actually much worse than this, when you consider that the average debt settlement program is “designed” to last 36 months or longer. So over a 3-year average service period, the best these firms can do is a very poor 34% on their success rate. In contrast, the average duration using the ZipDebt method is 12 months or less. How good is ZipDebt’s 71% success rate with a one-year process compared to 34% over a risky three year program? No contest. ZipDebt wins, hands down. Traditional debt settlement results are not even in the same league.

What about non-profit consumer credit counseling? How does ZipDebt compare to that approach? The National Foundation for Credit Counseling (NFCC) – the umbrella organization that basically rules that side of the industry – has done such a good job of applying its lobbying dollars that virtually every news piece discussing debt solutions is biased toward pointing consumers to member agencies of this organization. If credit counseling is so widely popular and highly recommended, it must work very well, right? Wrong. Sorry, people. Credit counseling has a track record every bit as poor as traditional debt settlement. In fact, it’s hard to believe that people seem to have forgotten about intense criticism of the CCC industry earlier in this decade. It’s common knowledge within the counseling industry that approximately three out of four enrollees never complete the program. For reliable data on this subject, interested readers can view the material published by the National Consumer Law Center and the Consumer Federation of America. Readers need not take my word for the facts on this point. Credit counseling has about a 75% failure rate. It’s the biggest marketing con-job of the past decade, in my opinion. CCC is a good collection system for the banks, and that’s about it. How good is ZipDebt’s 71% success rate stacked up against this “fox guarding the hens” approach? Again, no contest. ZipDebt wins.

What about Chapter 13 bankruptcy? As difficult a decision as it might be, once a consumer goes forward with bankruptcy, surely the success rate is 100% from there, correct? Not so, not by a long shot. First, understand that I’m only referring here to Chapter 13 bankruptcy, where the debtor agrees to repay a percentage of the debt over a 5-year period. Chapter 7 usually fully discharges the debt within a few months of filing, so debt settlement is really only a logical alternative to Chapter 13 bankruptcy and not to Chapter 7. But once the debtor is hooked back into payments over the 5-year period (at a figure determined by the court), the inflexibility of the Chapter 13 system puts people under intense financial pressure. The sad truth is that two out of three debtors are “dismissed” from their Chapter 13 bankruptcy cases once they begin defaulting on the rigid payments required by the court. (This conclusion is supported by an academic study published in 2006). The bottom line is that Chapter 13 bankruptcy has a 67% failure rate. How good is ZipDebt’s 71% success rate stacked up against the ordeal of a five-year plan with a 1-in-3 chance of success? Another win for ZipDebt.

There is simply no question about it. Clients implementing the ZipDebt strategy enjoyed results greatly superior to clients of traditional debt settlement, credit counseling, and Chapter 13 bankruptcy.

Part B. ZipDebt Settlement Results for 2010

Given the superior results documented above, the next logical question is: Why does the ZipDebt method achieve better results? That’s actually a pretty easy question to answer. It comes down to TWO things, and only two things – RESOURCES and TIME. (Well, three things – counting the need for a really good coach!) I’ll explain exactly what I mean shortly, but first some data from 2010. The following figures represent settlement activity reported by ZipDebt clients who are in the process of negotiating with their creditors.

2010 ZipDebt Settlements (Client-Reported Activity)
January 1, 2010 through July 28, 2010

Number of settlements reported @ 737
Debt balances settled = $10,062,791
Amount paid for settlements = $3,362,930
Client savings = $6,699,861
Average account balance = $13,654
Average settlement result = 33.4%

There are numerous larger debt settlement firms boasting of having settled $100 million of debt over the course of several years. Well, big deal. In the first seven months of 2010 alone, tiny little ZipDebt with its client roster in the hundreds (rather than thousands like the big boys) has managed to settle $10 million. This is partly because our average client is carrying very high levels of debt, with figures of $50k being on the low side these days, and files with $100k or more being routine. The other very obvious point is that it’s easier to settle large debt balances when you don’t have to pony up 15% before any work gets done! Without the “drag” of company fees weighing down the settlement process, clients can move much faster to get the job done.

There’s more though. Take a close look at the average settlement of 33.4%. That is not a typo. The industry average for debt settlement is approximately 49%, including files settled after legal action had commenced. (I’m actually being generous here – the true average is probably more like 52-53%, the figure quoted by the USOBA representative during the Senate hearing.) Add the usual 15% in fees, and even *successful* customers of debt settlement firms are looking at a payout of 64%. Compare to 33.4% payout for ZipDebt clients (less either $397 or $777 for the program cost), and ZipDebt wins again – by more than 30%!!! That is one key reason why this program is far more successful than the competition – clients have to come up with a lot less MONEY!

One more extremely important point: Of the 737 settlements reported this year to date, 680 of them were negotiated by clients prior to charge-off. This means that 92% of these settlements were negotiated within 6 months of initial default. Of the remaining 56 settlements, all were settled after the charge-off deadline; of those 48 (7%) were negotiated via collection agencies working on behalf of the original creditor, and 8 (1%) were settled through debt purchasing firms.

What do these figures mean and why is this ratio so important? It means that ZipDebt clients move FAST. They get most of their settlements done before charge-off. Obviously, based on my results, they get much better deals this way! Of course, this is the complete opposite of what any settlement sales rep would have you believe. I do not have hard data for traditional settlement firms (since they do not disclose this information), but I estimate that 98% of settlements negotiated by debt settlement firms happen only *after* charge-off. The reason is because no bank will even talk to a debt settlement company anymore. Settlement companies do not have “connections” with the major banks. So they can literally do nothing for the first six months except take your money and wait out charge-off. This is why their ratios are the reverse of mine, and also why my clients do 30% better on average in terms of savings.

I believe I’ve proved once and for all that consumers are better off negotiating their own settlements. The key to being successful is to move quickly. Clients ZIP to the finish line with help from ZipDebt, get it? TIMING is the key to the track record achieved with this method. Get in, get your settlements, and get out! It’s really that simple. We aim to finish the project within the timeframe of 6-12 months, not 36 to 48 months.

Of course, in order to *implement* this “fast-track debt settlement strategy” you need the RESOURCES to do it with. This post is already long enough, so I will not attempt to detail the various strategies clients might employ for raising the needed resources. My point is that these results demonstrate clearly that it *is* possible for clients to negotiate their way out of debt, and that clients *are* finding the means to do so and accomplish their objective of debt freedom. It is my sincere hope that by publishing these results, consumers who might have been confused by recent media attacks against the debt settlement industry will understand that “debt settlement done right” is an entirely different ball game!



  1. Joe says:

    It’s good to see you give some hard facts for those who have been jaded by the hucksters over-promising and under-delivering. In 2009 We used your system to settle 94k of debt with seven creditors for right at 30%. Such a simple little sentence to write, but a long difficult journey to complete. I don’t believe we could have done it without you. In my view you under-promised and over-delivered when it came to helping us navigate the mine filled waters of consumer debt. Never thought I would have ever been caught in this situation but thankful you were a man of your word who did what you said you would do. The personal coaching gave us the courage to stay the course and finish settling with each and every one of our creditors. Thanks Charles for being there for us when we needed your expertise. We now have virtually no consumer debt… I am gainfully employed once again… we are rebuilding our lives and credit… life is good. Our best to you and your team!

  2. Charles says:

    Joe, thanks so much for your comment. Glad to hear you’re working again, still debt free, and moving up! Best wishes to you and yours. 🙂

  3. Cindy says:

    Thanks Charles, It is a process that takes time and planning. I wouldn’t have been able to do it alone and didn’t want to use a settlement company. Without your coaching, I could never have been able accomplish what I have. Knowing that I had to have the right timing and funds, I can understand why so many people get duped into believing that debt settlement companies work! It is impossible to carry out debt settlement for 2-3 years or more, it just can’t be done. Thank you for helping us get through one of the toughest times in our life. We settled out debt of $86K for right around 30%. Now we can work to repair our credit and turn our lives around.

  4. Frank says:

    Great Blog Charles. I just referenced another person to your program. You truly changed my life, and we settled 80K in debt. You are one of the best professionals I have ever worked with, and the respect and dignity in which you handled my impatience, repeated questions, confusion, etc was amazing. Every time I hear or see a commercial for the other crappy debt services I scream “”. I am not sure how I found your website, beyond providence, fate or God, but I am thankful that I did.

  5. Charles says:

    Cindy, I’m late in replying, but thanks for your comment. You did great with this approach, and you will find (as other clients have) that your credit will bounce back, probably sooner than expected. Best!

  6. Charles says:

    Frank, good to hear from you again. Thank you so much for the trust in referring friends to my program! I’m hoping those bogus commercials you’re talking about will start to die down soon, now that the Federal Trade Commission has published its rule-change for the debt relief industry (which will be the subject of a future blog post).

  7. Mark says:

    I have 80K in unsecured debt I have stopped the bad behavior that got me here. Now I have to pay off. I own two homes free and clear and I do not want to levy my unsecured debt against them. I clear $750 per week. Can your program work for me?

  8. Richard Nikoley says:


    Coming from an owner of a business (I’ll give no name or URL) that has settled debt for many years, you are generally right.

    You know, I stopped going to industry conferences I think right after the last one in Vegas where you and I chatted. I operate differently and have always kept it small, on purpose. I once began to get bigger, 30+ employees, three locations. Now I have about five in one location and we work on providing good service. Still, I cannot argue with you that without the fees, things go faster.

    I think there will always be room for 3rd party intervention, but only for those who simply can’t deal with creditors and collectors on their own. But they should really be boutique operations that are intensely focussed on client service.

    Good job, man.

  9. Charles says:

    Richard, thanks for your comment, and good to hear from you again. I totally agree on the “boutique operation” concept. The minute you start to carve up the functions where one company does the marketing and another provides the “back-end processing,” that’s when things start to fall apart due to conflicts of interest. When that happens, it’s always the consumer-client who gets thrown under the bus.

  10. Charles says:

    Mark, I would not recommend debt settlement in your case. With two properties owned free and clear, you surely have more than $80k in assets and you are therefore solvent. Your creditors will be well aware of this, and you will have a very rough go trying to negotiate settlements. Perhaps there are extenuating circumstances in your case that might affect the recommendation. If you feel that to be the case, please feel free to request the 20-minute phone consultation — see the link at the upper left of this screen, thanks.

  11. Martin says:

    I am writing to happily confirm being part of the 2010 group, and due to Charles coaching we were able to settle our accounts with an average figure UNDER the published 33.4% settlement results. With Charles help we achieved on average, overall settlement results of 27.86% (range of 18.89% to 50.00%)on our 180K of debt.

    To have the needed resources, is a key component, as Charles mentioned, but also very important is the side-by-side walking of Charles when it comes to the first few settlements, where the nervousness is greatest. One of Charles best traits is his outstanding and reliable e-mail etiquette of answering e-mails in a very timely manner.

    Zipdebt works and with Charles knowledge, patience and guidance there is no comparison to the Big boys.

    Thanks again, from the bottom of my heart.


  12. Charles says:

    Thanks, Martin! Excellent results! You raise a good point — no matter how much training content I put into the audio CDs, the live one-on-one coaching always seems to make a huge difference in the outcome. I’ve heard back from a lot of former clients who purchased the course without coaching. In general, these folks did just fine, but they certainly did not get the rock bottom settlements per creditor as you did. Clearly, the coaching will more than pay for itself in terms of improved bottom line results.

  13. Kerry says:

    Charles,I was reading your Blog entry on your success rate and just wanted to provide you with updated information on my success with your program for your numbers. I was likely counted in your analysis as a C because I was confident in completing the program with little need for additional coaching after the first couple of settlements and had little communication with you. I completed settlements with all of my creditors before charge off. In the end I settled $70,283 for $21,350 altogether or 30.4%. I can not express to you how lucky I feel that I ran across your program and took the leap to purchase it at a low point in my life. I have been completely debt free since Jan 2010. I really appreciate all you have done for me.

  14. Charles says:

    Kerry, thank you for reporting back with your final results. Congratulations on your settlement success! 🙂

  15. Mike says:

    Charles, I can attest to your success rates I have settled 54k of debt for about 21k. Only one creditor would not settle so I had to enter into a repayment plan but at the original principal amount with no interest all fees where removed so still a good outcome. I could not have done this without your coaching and your system. Thanks Mike

  16. Charles says:

    Thanks, Mike. You did great even with that one sticky account on the list.

  17. Mark says:

    Charles, we have a very good success rate with settlements. Happy customers with many sending referrals. We have noticed over the last, say 7-8 months both Chase and BofA are refusing to speak with third parties with respect to settlements. We have a very solid Power of Attorney. How do you or anyone else deal with this??? Is there that “loop hole” you often speak of? Thanks Mark

    • Charles says:

      To my readers, here you have it straight from the horse’s mouth. A debt settlement company representative confirms what I have been saying, that the large banks will no longer talk with third-party debt settlement firms. Mark, there is no loophole — and if you had read my material you would realize that the 7-8 month delay is precisely why I tell people never to hire third-party debt settlement firms! You are automatically injecting huge legal risk in the process for your clients. Do it the right way, and just tell them how to get their own settlements. 🙂

  18. B J says:

    This information and process is right on. It gave me back my life. I’ve eliminated $130,000 in debt over a 12 month timeframe for about 35% on average of the total debt. I settled $43,000 of debt at 25%. It takes all the guessing and fear out of the process. It plays out just like Charles process states.

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