Adam Parks (00:06)
Hello everybody, Adam Parks here with another episode of Receivables Podcast. Today I'm here with a new guest and someone that I've been looking to interview for quite some time since I had the opportunity to meet Felix at a conference last year in the debt relief space. But there seems to be a disconnect between the world of debt relief and the world of debt collection. And I think Felix has got a unique perspective and has been active for the last decade on the debt relief side. And I thought coming together for this conversation would be a great prelude to the incredible event that I'm sure he's going to tell us about today that he'll be hosting in January. So Felix, thank you so much for coming on and joining me today for a discussion. I appreciate you sharing your insights.
Felix Shipkevich (00:53)
Thanks for having me, Adam. I don't know too many people who are very excited to speak to lawyers, but hey, let's give it a try.
Adam Parks (00:59)
These are some of the best conversations for me because I get to walk away learning a little something. So the unique perspectives of the attorneys around the industries really helped me to shape some of my thoughts and my understanding of various aspects. So Felix, for anyone who has not been as lucky as me to get to meet you in person, can you tell everyone a little about yourself and how you got to the seat that you're in today?
Felix Shipkevich (01:21)
Sure, I appreciate that. I'll be very quick. I'm a regulatory attorney. run a boutique firm that's based in New York and Miami. We represent institutional players in the debt relief space, including debt settlement companies, front ends, payment processors, and other vendors. Outside of the debt settlement space, I do a lot of work in fintech space, including representing banks, fintech companies throughout the world.
And just as a side note, something that I have a lot of passion, I've been in for now almost 15 years is in the crypto side. I actually teach a course at Hofstra Law School. have a case book that came out two years ago, but people on debt settlement industry don't really know that side of me. So I'll keep it to the debt settlement, debt relief side.
Adam Parks (02:05)
think the crypto conversation is one that I definitely want to have with you as crypto becomes a more ubiquitous product, especially from a global scale. And we see the payment rails start to change around the globe and eventually will start to impact the United States. So the more that we can be prepared for those types of things coming down the pipe, I think the better off we are. Felix, how did you find yourself in the debt relief space?
Felix Shipkevich (02:27)
Adam, really by an accident, I, as, as a side investment, I had a media company that was acquired by that someone company in 2015. I nothing about the debt settlement space, nothing about that relief companies. And after selling that, company to, that settlement service provider, I've started. I've become quite intrigued. Like, what is this industry about? what do they do? As a regulatory attorney, find new areas that I haven't explored yet, just kind of interesting. So it was by mere accident and I've been in this space now for 10 years.
Adam Parks (02:57)
Sounds like an interesting introduction to the debt relief or consumer relief space. Now, as we were preparing for this podcast, we started talking about really the disconnect between the two worlds and whether it's an intentional misunderstanding or if there really is a lack of understanding. And I thought you had a very interesting perspective as you looked at, let's say the different layers of expertise throughout both sides of the industries. Could you talk to me a little about where you see the disconnect between these two worlds?
Felix Shipkevich (03:30)
Sure. Obviously the opinion is going to be my personal opinion. I am not as familiar with the debt collection or the debt buying space as I am with the debt relief space. But I was really humbled and honored to be invited to speak recently at DCS. And I thought we had an amazing roundtable that was hosted by Mark Naiman where there was a discussion about how and where the debt settlement companies and debt collection companies really interact, whether they understand each other. And so being that I represent many of the debt relief companies, I was able to chime in and also to understand the other side. So why do I think there's a disconnect? as some people may probably disagree and say, it really isn't disconnect, maybe misunderstanding or they should get to know each other better. And I think it's a combination of both. Now that I've been in this space for 10 years, I can tell you that from the large company perspective, those have been around from the debt relief side, large company perspective, the upper echelons of those companies obviously understand how debt collection and debt buying works, right? They understand what triggers a debt collector to hire a law firm and to prosecute one of the debtors. They understand how the executives monetize that space. But if you take everybody else in the industry from mid-size to small companies and even from mid-level to junior management, I just don't think there's as much understanding. just, they look at you debt collectors or debt collection companies or debt buying companies as they're just on the other side. And we need to, we work with debtors, we represent the debtors, the distressed debtors. There really isn't as much understanding of how the debt collection space operates.
Now, I shouldn't speak on behalf of that collection space, but on the other hand, having spoken to some of the attorneys who are my, I guess you could say regulatory attorneys on the other side, they echo what I view. They feel like their clients, they think that everybody's piling all the distressed consumers in the same bus, as I think though, was sort of the example, like pile them all the same bus and drive them to one company to tell them how wonderful things are by selling debt. And that's typically the perception. Again, I'm generalizing this is what the collection has about the debt settlement space. these perceptions, having negative perceptions of a space is very common and you could go to other areas, any type of finance areas. But I compare the lack of understanding and misunderstanding and the fact that When you compare to other areas, for instance, where I practice, generally institutions on both sides understand how the other side makes money, right? And the employees are typically trained, you know, not just the top echelons, but really from top to bottom. So that's kind of like my, I don't know if this was a very long-winded answer, but I just. I feel except for the top layers of the larger companies and those who've been around for a time, really there isn't as much understanding on day to day.
Adam Parks (06:27)
I think that there's some confusion between the different types of debt relief companies. And I think debt collection looks at debt relief, debt settlement, credit counseling, bankruptcy services. I think it all just kind of gets lumped together in the mind of the debt collector. And I think there's been a handful of groups out there that have made, we'll call it SEO attacks on the industry in order to try and generate their own lead base. And I think that has deteriorated some of that overall feeling between the different sides of the equation. But do think that there's a disconnect on how the different styles of debt relief are handled and how that's managed between looking at it from a debt collector's perspective when it all kind of gets lumped together when maybe it shouldn't?
Felix Shipkevich (07:13)
Yeah, absolutely. So obviously there are very different types of debt relief, right? The one that we will be discussing on this podcast is the debt settlement industry. And I'm going to bifurcate that into two sides of operators. The first one is the traditional debt settlement company that provides, that represents a debtor and negotiates debt on behalf of the debtor with creditors, right? And that bucket, right? The debt settlement companies cannot operate in all 50 states. There are some states where you're not able to operate or some states that have, for instance, few limitations. Then there's another bucket, which I think is also when I spoke to the folks on the collection side, they also lump that bucket with this bucket. That's the attorneys that just do debt settlement, whether in whole and part of their business. There are some attorneys that make debt settlement, debt resolution as part of their business model. And that unfortunately, for some reason, the lines get blurred where they really shouldn't be because those are two separate. One is governed by the judiciary in each state, right, by the bar, and the other one is governed based on state law, right, and obviously federal laws like TSR that apply to it. Of course, there are other areas, like there's debt, there are management companies, debt management companies, sometimes U.S. credit counseling companies, and those are not-for-profit companies. Here's another interesting bucket, which you could say debt validation companies that all they do is they try to validate debt. And then in that segment, some of these companies could also be viewed as credit repair companies. don't want to put, I don't want to say that all debt validation companies are credit repair companies, but certainly some could also be performing, depending on the state statute, credit repair. you know, credit repair could also be viewed at least on, you know, as a regular attorney as type of debt relief. So debt settlement, debt settlement attorneys, have debt management slash credit counseling, and then you have debt validation. And if you really want to go even further, you have credit counseling and those who do bankruptcy. And of course, bankruptcy is your traditional, you know, debt relief service. I mean, that's sort of the, you could say the grandfather of all debt relief services is bankruptcy laws, which, which arguably some of the best in the world because they generally do protect consumers and many other countries don't provide that really privilege, but I think it's not a right, it's a privilege to be protected under federal law.
Adam Parks (09:34)
It's interesting. I agree when it comes to the credit repair organizations, and I think that is the group that kind of gets lumped in with the entire debt relief industry and maybe viewed through a more negative aspect because of the volume of paperwork that they send, duplicative paperwork. And I mean, I could list off a variety of issues that the debt collection industry has with that particular operation or the style of operation in which they kind of function their businesses. But as we think about debt settlement organizations, which is a very legitimate business overall, and I think really does help consumers and provides them with options that they might not otherwise be able to achieve. I'm interested to see how. The debt collection industry has really evolved from a technology standpoint, whether it be communication technology, prioritization of accounts. There's a lot of different ways in which technology has been deployed over the last 10 years to assist the debt collection operations and really to smooth out the communications with the consumers as well and provide them with the self-service options that I think the consumers are ultimately looking for. It's my opinion that the consumer wants to communicate with a debt collector through the same or similar channel in which they originated the debt.
If they walked into the bank and they signed out, you know, filled out a credit card application, they're probably looking to send in mail and make phone calls. But if they did it over their phone, you know, on their commute on the subway in the morning, you know, they're probably going to be looking for that self-service type of technology as they look to communicate with debt collectors. Have you seen someone who gets to a lot of visibility across the debt settlement space? Have you seen technology evolving in a similar fashion throughout that industry?
Felix Shipkevich (11:11)
Absolutely. It has been, you know, in comparison to all the industries that I serve as a little bit of a slower progress, but I'm seeing it accelerate, particularly with the use of AI or AI coming into our daily lives. Right. So when I came to this industry in 2015, I can't tell you how many clients I've seen. They still use your typical Excel spreadsheets. And thankfully I see that almost everybody now uses CRMs and there are a number of CRMs that are provided that have earned, I would say, respect of the industry. So that's one, right? That was kind of my first, you could say, experience with technology. And Adam, I'm very biased because before founding my firm 15 years ago, I was a general counsel of a commodities brokerage and foreign exchange brokerage, right? So I'm used to seeing technology being used all the time. I mean, like the firm that I, you know, I saw globally on the legal side, you know, every room we walked in had screens and we had self automation tools that would get, your proprietary trades in the market. Even the clients that are present right now from FX brokers to banks to prime brokers in the
in that space, there's just so much more advanced that in the debt settlement space. And know somebody who is listening in the debt settlement says, well, that's ridiculous. No, it actually is true, right? I think in the past two years, I've seen that big spur where the debt settlement companies and debt settlement attorneys are just beginning to use the tools that really could have and should have been used for quite a long time. And I know I'm very critical.
And I don't mean to pick on this industry, but I also am comparing to other industries of service, right? I'm not known as a lawyer who's gonna sugarcoat things for space. The good news is that in the past two years, I'm seeing a tremendous growth of using automated tools, tools that benefit debtors that are just so much more easier to use. And something I'm sure you're wanna talk about is how AI is going to transform this industry and how that collection space and that settlement space are going to ultimately use and work with each other using AI.
Adam Parks (13:28)
Well, and that was an interesting conversation that came up with the Debt Connection Symposium. So I had an opportunity to attend those roundtable discussions. I thought it was quite interesting. And after the roundtables, I was talking with a few individuals and we were talking about AI bots. And as we've seen conversational AI start to be deployed more across the debt collection space, as I've talked with these AI voice vendors, it sounds like a lot of them have had success
Adam Parks (13:54)
managing incoming calls before they start doing outbound calls. So if the debt collection companies are accepting calls and those incoming calls are being answered by an AI bot, and inevitably I would expect that the debt settlement space is going to start outbounding some of their calls using some of the conversational AI, especially where they're not communicating with a consumer and it's a business to business interaction.
What is it going to look like when we come to the war of the bots? Are we going to be operating with better information on both sides and potentially coming to better resolutions? Or are we worried about the year 2000 meltdown all over again as the bots start to talk to each other?
Felix Shipkevich (14:33)
Yeah, I'm not sure we're gonna have a 2000 meltdown but I do think it's beginning to look like the original Terminator when you had your machines fighting the other machines and supposedly that was actually predates 2025 in the movie. but look I had a several of my clients do some testing of these.
Adam Parks (14:49)
Fair.
Felix Shipkevich (14:56)
bots or AI tools in order to A, provide customer service and two, discuss that settlement options. And I was blown away. I view AI as not just your industrial revolution. I think AI is more closely resembled as like finding electricity and how to transmit electricity and put lights and electricity in every home. So what is it gonna look like? I think that's, kind of, I view what you probably, I don't know if you view that way, that eventually a lot of these services will be serviced by AI, primarily or substantially. I'm sure there will be humans involved and we'll have to have humans involved. But there's an argument to make that over time as AI and especially as generative AI becomes more intelligent and makes smarter decisions than humans. And considering that we already have AI that you can't even probably differentiate whether it's a person or a computer talking to you. My hypothesis is that consumer is going to prefer to have AI, not today, but in the very near future.
And here's a very good example of why I feel this way. I don't drive a Tesla, but I'm super fascinated with FSD, right? Full self-driving of Teslas. Just fascinating watching these YouTube videos and to see how the Tesla system, right? Which is based on camera is probably better than I would say 99 % of humans on the roads and, I was actually talking to my kids to say that I probably would even feel more comfortable having in some situations the FSD work versus me driving like in Manhattan, you know, where it's nuts. So what is it to say that we wouldn't have bots on both sides do a better job than humans? I know people don't want to hear about this, and especially people in my profession, right? I'm 47 years old, and I could tell you that There are people that just a few years older than me, they're just completely rejecting AI and think that the legal profession is not going to do anything and not going to change. I look at it differently. I think that it's going to consolidate the legal industry and just like it will also consolidate, make redundant any jobs in the collection side or the debt settlement side. Sometimes, you know, maybe I don't think it's going to replace humans at all, but I do think that the bots to bot conversation is more realistic.
And I'll probably make the following hypothesis that it is possible that even today as we're having this podcast, they are maybe already bot to bot discussions. We might not know about it, right? Because I don't think that many companies are going to go out there and start saying, you know, I don't think many companies today would want to tell their consumers, right? Or their corporate clients. We're only going to be using bots. So I, I wouldn't be surprised if that's already taking place.
Adam Parks (17:43)
It is definitely already taking place. 100%. I mean, I've been watching some and maybe not necessarily just between debt settlement and debt collection, but those bot to bot interactions are already happening as you have those outbound bots. And I mean, even my receptionist is artificial intelligence. So the incoming calls that I'm receiving and every once in a while I like to listen to those in here when these bots start to interact. like I know that it's happening. just, I don't know when we'll start seeing it at any kind of scale in the debt collection world or the debt settlement world. But I do think that that's an inevitability. I think that the AI will be able to play a lot of different roles in this equation, but I don't think it ever replaces the people because there's always going to be the exception management that's absolutely necessary. The AI can do so much, especially from a compliance perspective, it can do a lot to identify those anomalies or those things that fall outside of the accepted norm but you're still gonna have to have a live person who ultimately manages it after the fact and can look at those exceptions. And the best example that I can give of that is the call recording and call listening quality assurance on I'm sure also on the debt settlement side, but definitely on the debt collection side to where we used to be, you know, the compliance professionals in an organization used to be able to listen to five to 10 % of the total calls.
Now the AI listens to 100 % of the calls, identifies the 5 % that may contain an anomaly, which then get listened to by the live folks. It did not reduce the number of live folks that were necessary in order to perform the function. All it did was focus the time and energy of those individuals in the right place. And I think that's going to be the early stages of artificial intelligence across the financial services industry is those types of use cases. And then we'll start to see it expand.
Felix Shipkevich (19:35)
Well, I agree with you 100%. Also, don't forget, I think that both on the collection side and the settlement side, ultimately both federal and state regulators want to have individuals be accountable for it. ⁓ you know, someone's ass is going to be on the line if I could say the word ass on this web, you know.
Adam Parks (19:48)
Aren't we all responsible for the output of our AI at this point? 100%. And I think, look, the CFPB was pretty clear in their assessment of artificial intelligence. The organization is still going to be responsible for the output of its AI. And look, I'm 43. And as I've gone through the evolution of my own organization two years ago, I completely banned artificial intelligence from our organization. Why am I hiring and paying these people if they're not going to be actually performing the functions. And so for me, that was probably not the best move. Last year, I spent a few hundred hours prompt engineering, learning how the systems worked and finding new and interesting ways to deploy it throughout the organization. But we do it strategically in our organizations and how we're going to actively use artificial intelligence in those ways. So I think that that evolution continues to come, but there will still be some of that older crowd that's going to stand firm against the use of artificial intelligence in the financial services world. But I think those organizations are going to be at a disadvantage in two to three years because things that I was dreaming about a year ago are reality. And I think the speed of bringing idea to reality is increasing exponentially. I'm not going to argue whether or not that's a good thing or a bad thing or whether or not that increases legal liability significantly. But it is happening right now and I think we're gonna see even more of that over the coming years.
Felix Shipkevich (21:15)
Absolutely. Let me take it one step further. I think that some technology companies and there, I mean, there's already one technology company that was able to raise hundreds of millions of dollars, at least on, not a debt relief company, but they're in the credit building space. There's a, one of the things that both the collection and the settlement side are not paying too carefully is that if you have a technology company that comes in and offers this AI technology, assuming the AI technology will get to at least on par with human level, if not better, they'll just overtake the industry. They will become the dominant player. And I know that probably listening to people listening to that, that's never gonna happen. Well, yes, mean, Amazon started to be a bookseller and look where they are now, right? So, If Amazon wanted to offer, right, as an example, right, I'm using Amazon or Meta wanted to offer, yeah, it's debt settlement services, right? So Meta, Mark Zuckerberg, when I teach my class, is a great example of somebody who has been just, you know, I would say arguably obsessed over the Meta space, which did not go very well for him, even though he named the company Meta, but he was really interested in the
Adam Parks (22:11)
a good example.
Felix Shipkevich (22:31)
payment space, right? So because he wanted to have, you know, Facebook be the platform, even though he's going to disagree that that was his intent, but let's not kid ourselves. In 2018, 2019, he wanted that to be the main payment service provider by using specific tokens that would only be used on the Meta platform. Now, If you have any one of these technology companies, whether Google or Meta or Amazon as an example, wanted to come in into the debt settlement space and offer it as an ancillary product. Now they can't offer legal services yet. So they can't offer bankruptcy services yet. But what's to say that using their technology, they can just say, if you see that you're not paying for the products that you purchased on our sites, or you're continuously writing about it and the data, that Meta has in its possession that you're in distress, why can't they just become a company and become the largest company or one of the largest? It's just not something that people want to talk about, but as we see the technology companies grow into difficult verticals, we can't ignore that. I don't know if that would be the same collection space, but it probably could be as well. I don't know that space as well, but on the debt settlement side, absolutely.
Adam Parks (23:54)
You bring up a really good point because the payment rails are changing and I'm like, I'm down here recording from Brazil right now. And for the first time in the history of the country, the their PICS system, their digital central bank currency payment system, exceeded credit card transactions already in 2025.
So we can already see that people are moving away from some of those traditional Visa MasterCard, Amex, Rails, and looking for those alternatives, which brings me back to the original crypto conversation. And while the world may not be fully ready for those crypto to crypto transactions and to start fully moving down that path, I think we can start to see movement in that direction and it will continue, whether it be on the debt relief or the debt collection side, because in the end, we're transacting with consumers.
Adam Parks (24:42)
And the consumer preferences are going to continue to change the same way that e-commerce drove the consumers to the online portals to the self-service technology and the other ways in which we're now engaging and interacting with those consumers because whoever thought in the year 1999 I never thought the text messaging would be as ubiquitous as it is today because it was difficult and time-consuming to send the text message hitting three because you have to type if you, you know, each letter. Remember that?
Adam Parks (25:11)
three times. But it was more difficult and we continued to find these new and interesting ways to improve on that technology and the convenience of that technology. And now as I look at Brazil, as I look at India and their UPI system and just the way in which QR codes are driving payment transactions in other parts of the world, I think there's an inevitability that we'll start to see that start to trickle into the United States and we're going to have to start to think about things in new ways as the payment rails change. And it could be meta, could be, you know, I don't, I'm not here to predict the future. I wish. I don't know that I can fully predict it, but it's interesting.
Felix Shipkevich (25:49)
You have to admit that the US banking system and the way we use the payment networks is just so outdated. When you travel abroad and even if you go to countries, developing countries, if it's politically correct to say third world countries, but it's all say developing countries, so I don't get banned. But the reality is that we're so much behind and so that just shows to you that even though we have all these tools and we have all these developers and geniuses in Silicon Valley when it comes to the payment infrastructure. But the payment systems between the collection side and the settlement side, it's just a few companies that operate that space. And so you have to ask yourself a question. What if somebody came in, offered those rails to both the collection and settlement side through a single channel of communication and I mean what if there was a bank right and I'm just gonna say because I don't you know I don't know many people know that but technically banks don't need to be licensed that settlement companies because banks have created an exemption and virtually every single state that they don't need to be a debt settlement company since they're in the business of collecting debt what if they offered that one infrastructure in place and then at the same time they begin to buy up all of the outstanding debt and connect the dots and that would be a bank. Talking about bots, I think that there are potentially opportunities that haven't been explored on both sides. Because everything, again, going back to your previous question, have I seen a lot of technological improvement? The short answer is yes, but you know, when I look at traders that I work with on the commodities and FX side, and you look at, you know, if you remember flash trades or any one of these like high algo trades that have been in existence for now two decades on both over the counter and exchange markets, you know, we're kind of light years away, I feel like as the consumer finance field is just slowly moving in that direction versus everything else has already been there. Right. So, on the trading side, just as a comparison.
Adam Parks (27:54)
I think it's a good comparison. think the debt collection lagged behind for a long time in terms of the deployment of new technology because of the lack of clarity from a regulatory standpoint. We were constantly being hit and fined even though no rules were defined. And so I think that caused a little bit of trepidation and it took longer for organizations to deploy that technology. But we're seeing that increase now and the use of a variety of technologies that ultimately push towards those self-service portals and enable those consumers in new and interesting ways without them having to get on the phone. I've heard it referred to as the shame factor, right? Removing the shame factor from the telephone conversation and allowing that consumer to resolve, learn about their debt, validate their debt, and to go through those processes without having to actually get on the phone with somebody. But Felix, before we run out of time, I know that you have an event here coming up shortly. Could you tell us a little about your event and what it is that you've got cooking?
Felix Shipkevich (28:52)
Sure, absolutely. Thank you. This is our sixth regulatory workshop. I call it a regulatory workshop because we provide legal and regulatory information to the debt relief space and that's going to be in the January 26th and 27th, in Irvine, California. Typically have about 200 people who have attended in the past few years and we're trying to grow our audience and not just extend it to debt relief companies, but actually we've had more and more people from the debt collection side who are interested in this space and want to understand the regulatory side, the legal side. what I try to do differently at this event is not to make it very boring with legal and regulatory stuff. actually try to, for those who have attended, will tell you, bring a lot of humor to my education. But there's also the opportunity for you to network. if you're on the collection side, you want to know more about the debt settlement side, debt relief side and meet, you know, that some companies front ends, payment processors, and vendors in the space, and just mingle. Please, it's $150 to attend. It's really nothing and you get drinks and food and education and I hope to see more people from the collection side attend. would be a really fantastic opportunity to meet all of you.
Adam Parks (30:12)
I'll be adding a link to your event down below so that those that are watching our podcast can go and register for that event and make it out to Irvine, California. I wish I would have the opportunity to attend this year. It's a little far from South America, but I will be there next year as I spend a little bit more time in the US. But Felix, thank you so much for coming on, sharing your insights with me today. I think this was a really interesting conversation.
Felix Shipkevich (30:37)
Adam, thank you so much for having me. Appreciate it.
Adam Parks (30:41)
For those of you that are watching, if you have additional questions you'd like to ask Felix or myself, you can leave those in the comments below on LinkedIn and YouTube and we'll be responding to those. Or if you have additional topics you'd like to see us discuss, you can leave those in the comments below as well. And hopefully I can get Felix back here at least one more time to help me continue to create great content for great industries. But until next time, Felix, thank you so much. I really do appreciate your time.
Felix Shipkevich (31:02)
Thank you, Adam. Thanks, everyone.
Adam Parks (31:05)
And thank you everybody for watching. We appreciate your time and attention. We'll see you all again soon. Bye everyone.
