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How to start your own credit and debt counseling service
HOW TO START YOUR OWN CREDIT AND DEBT COUNSELING SERVICE
Here's a business idea that meets all the aspirations of the
You can start small with little or no investment, develop it in your
spare time, and parlay it into a $100,000 a year income -all within
the next twelve months or so.
Really, all it takes to move on this one is an empathy for people, a
basic understanding of money management, about 500 business cards,
some smart advertising, and you're in business. Your greatest
expense or investment, of course, will be for advertising.
The first, and most important thing to learn is the "thought
processes" in the minds of the people or firms that lend money. No
one lends money with the thoughts of foreclosing on the loan and
taking away a borrower's collateral. Whenever the lender is forced
into such a situation, everybody loses. The borrower loses his
possessions, and the lender ends up with about one tenth of the
money he originally loaned out.
Therefore, the lending institution will generally do everything
possible to work with the borrower as long as he continues to show
good faith in attempting to repay the full amount of the loan. The
most important thing a borrower should do, once he finds himself in
a financial bind, is get in touch with his creditors and apprise
them of his situation. Usually, the lender will set up a meeting
for an open discussion between himself and the borrower, in order to
adjust or work out a more convenient repayment schedule.
Most people who borrow money are having money management problems to
begin with, and are actually terrified to death at the thought of
people from the loan company calling them. Although they generally
won't admit it, most are aware that they are having problems
managing their money. They are embarrassed about it, and instead of
openly seeking help, they attempt to cover up the problem, and then
hide from or avoid the very people who want to help them.
Over the past three years, personal and small business bankruptcies
have been soaring to record levels. At the bottom line, very few
people want to file bankruptcy against their creditors, because
regardless how easy it is, the thought of having "gone bankrupt,"
still leaves a stigma.
And this is where you step in with your Professional Credit and Debt
Counseling Service. You should never have any trouble finding
Remember, step one is always to notify the client's creditors. This
is the first instruction (or job) that you give to the client after
you've heard his story. The borrower should be the one to notify
the creditors, and ideally, he should call each on the phone, set up
a meeting and then discuss with the lender his current financial
situation as well as his plans to rectify the problems, and resume
payments. The plan he'll discuss with the lender will be the plan
you assist him in setting up.
If the borrower is in over his head and with no other alternative,
you should immediately advise him to file for relief under "The Wage
Earner's Plan," as explained in Chapter 13 of the Federal Bankruptcy
Act. In essence, this "plan" gives the debtor time to regroup and
reorganize his financial situation without being hounded by bill
Anyone who's capable of earning wages, salaries or commissions, can
make use of this plan. It should in no way be thought of as
bankruptcy. This is simply a court supervised method for a borrower
to pay off his debts. The borrower simply draws up a plan to pay
off his debts over a three-year period. If the court accepts the
plan, the lenders are almost obligated to accept it. While more
recent bankruptcy laws still leave room for abuse by dishonest "big
business," they fortunately have improved the outlook for the
Your job as a Credit and Debt Counselor is to meet with the
overextended borrower, listen to his problems, and help him to plan
a budget to live by, and set up a plan for the proper management of
his income that will include money for him to live on, plus regular
payments to his creditors. In the beginning, you can meet in the
borrower's home, pretty much the same way an insurance agent does.
Later on, you'll probably want your own office, but a formal office
for your business will never be absolutely necessary.
Many people are reluctant to be seen walking into a Credit
Counselor's office. Again, there's a personal embarrassment - the
thought of their friends seeing them, and the worry of what other
people will think of them. So if you do opt for an office, make it
as unobtrusive and as confidential as possible. A sign stating
"Money Management Consultant" would be appropriate. Gaining the
confidence and trust of your clients will be the secret of your
success. And do not underestimate the power of "word-of-mouth"
recommendations by grateful clients.
Follow the methods of the insurance salesman, making everything as
comfortable as possible for your clients. So long as you listen to
your client's problems, and then work with him to plan a budget he
can live with while paying off his bills, you won't be required to
have a license in most states. You simply listen, assist the
borrower in planning a budget, and he administers it himself. He
makes all the contacts with his creditors, and makes all the
payments directly to them. To give you the money and have you
disburse it among his creditors would require a license for your
Step two in your service is to find out the total amount of cash
your client has coming in each month, and on what dates. Calculate
according to his current obligations, how much he needs for living
expenses: Rent or mortgage payment, utilities, food and clothing.
The remainder of his available income is then budgeted for division
among his creditors.
One of the best (and easiest) methods of money management within a
budget is via envelopes. The wage earner marks a different envelope
for each of his obligations. He then makes predetermined amount of
deposit in each of these envelopes each payday.
Thus, if his mortgage was $500 per month, and he brought home $750
each pay day, you'd probably advise that he "deposit" $250 each
payday into the mortgage envelope. And so it would be with each
Many people find this kind of system scary in the beginning, but
after they've used it for a month, they swear by it as the only way
to keep bills up to date.
Of course, the most important thing you want to advise your clients
to do is destroy all their credit cards. Best of all, have them cut
them in half, and send them back with a short note explaining what
they are doing and why - getting a handle on their debts according
to their actual income. Basically, that's all there is to your
You'll need a first meeting to hear the problems, and to make your
proposals. A second meeting will be in order to polish and endorse
the planning. Perhaps a third meeting at the end of the first month
to assist them in making their payments from their obligation
envelopes. Finally, you'll want to keep in touch with them and ask
how they are doing from time to time. You'll find that most of the
people you serve today will need your services again at some time
within the next five years - sad, but statistically true.
It's a "fast-track" and ever-changing world. People who are poor
money manager today invariable encounter money problems again and
again, regardless of how often they get everything paid off. This
is, unfortunately, what keeps the lending institutions in business,
and presents the opportunity for you to become wealthy as a
Professional Credit and Debt Counselor.
You'll need a receipt book. Drop by any large stationery store and
get the most impressive one available. You should charge $100, more
or less, for your services. Three counseling sessions, with the
payments at $10 per month spread over ten months is an ideal
arrangement. Explain your fee during your first contact - $100 in
payments of $10 per month per ten months. You'll find the sound of a
$100 fee affords an intangible degree of respect for your services,
while the explanation of modest $10 monthly payments closes the sale
Always carry an attache case, and at each meeting, work at the
kitchen or dining room table. If it's a husband and wife, be sure
that each is seated beside you. If it's just one person, have him
or her to your right if you're right-handed; to your left if you're
left-handed. Never have a client opposite you, across the table.
Round tables are best for empathy, agreement and cooperation; this
has been proven psychologically - just believe it, and be guided
Always carry a yellow legal pad, and have plenty of pencils with
erasers available. The legal pad lends authority to your knowledge,
while leaving plenty of room for alternatives. The pencils and
erasers eliminate the symbolic fear of every thing being "cast in
stone," and conveys the feeling of negotiation.
You should be well-dressed, a portrayal of the traditional
"financial officer", and yet in warm colors to accentuate your
empathy with the problems of your clients. By all means, you should
be sparkling clean and well-groomed. Do not smoke during a meeting
with a client, and always diplomatically refuse any alcoholic drinks
that may be offered. Try to "talk" with your clients. You must
never show any signs of disapproval of the actions that resulted in
your clients being in their present predicament, nor should you
sound as if you're lecturing or speaking to children. Remember -
and you can tell your client -this has happened to many stable,
Maintain an attitude of understanding and a sincere desire to help
them out of their current "tight spot." Don't let them get going on
a deprecatory tangent, either. Should they start down that path,
simply tell them, "These things happen to everyone, and what's done
is done; the important thing now is working out the solution to the
As mentioned earlier, your only real investment to set yourself up
in this business will be for advertising. Even that does not have
to be a "saved up" cash outlay. You can start off by planning to
run a two-column wide by three-inch deep advertisement in your most
read area newspaper. Check with the newspaper office to get the
best price on a bulk space contract.
Under this kind of agreement, you sign to pay for a certain minimum
number of column inches for the next year, and as a result, your
rates are considerably lower than those paid by the infrequent
advertiser. Best of all, the newspaper will bill you after the ad
has run, and allow you 30 days from the date of your billing to pay.
You should plan to run an ad in the newspaper for at least three
days a week, especially in the Sunday editions, every week. You
might also want to run the same ad in several of your weekly
Shoppers Newspapers. Definitely have a flyer made up describing
your services. About once a month, hire 7th or 8th grade school
children to hand these out for you in the busy shopping centers.
Another good place to hand them out is at the entrances to your
state's employment service offices. Small 3 by 5 announcement cards
or descriptive business cards on all the bulletin boards in the area
will also pull in business. Finally - and most importantly - just
as soon as you can afford it, an advertisement and listing in the
yellow pages of your telephone directory should be bought.
Telephone directories come out on a regular (usually annual)
schedule, so check ahead, and anticipate cost and date you may
A good place to check for help in writing your advertising is your
area colleges. The students will generally help you in exchange for
the opportunity to build a portfolio. There's never a need to pay
the "out-of-sight" high prices demanded for professional copywriting
and advertising design by some agencies, even if you have the money.
All finished ads are unproven, and you have no guarantee that one is
better than another until you begin testing or using it.
The important element is that your ad says what you want it to say -
that is looks good and makes you feel that it will appeal to your
potential customers - that it instills a confidence within you that
it will bring in the customers. Use the "AIDA" formula: ATTENTION,
INTEREST, DESIRE, ACTION!
An attention-grabbing headline (or first line) - a line or paragraph
that definitely appeals to or arouses the self-interest of your
potential customer; a "hooker," or image-building description that
causes the prospect to picture how much better his life will be as a
result of availing himself of your services; a line that relieves
the prospect's fear of making the wrong decision (such as
"Satisfaction Guaranteed"); and a demand that he take immediate
action such as "CALL NOW!" Do not approve, and do not run any ad
that does not contain all these ingredients.
Here's an example of an ad that should work very well for you:
ARE BILL COLLECTORS HOUNDING YOU?
Now there's a way to stop those dunning letters and
embarassing phone calls. Get out of debt
completely - without bankruptcy! Preserve your
good credit rating; maintain your present
lifestyle; worry no more about bill collectors!
Just an hour or so of your time, and your money
problems can be solved! Your satisfaction is
guaranteed! Phone 123-4567 right now for an
Nationwide Credit Counselors
123 Tenth St.
A classified ad might read:
Solve all your money problems with this easy and
completely legal solution. 100% guaranteed
anywhere in the U.S. Call Consumer Credit
Solutions at 123-4567.
At the same time your newspaper ads begin to appear, be sure to get
a press release about your business to the business editors and
consumer advocates at all the newspapers, radio and television
stations in your area. Of help to you in this area will be our
report, ÔThe Inside Secrets of Getting Free Publicity For Your
It's generally not worthwhile to advertise this particular kind of
business on radio and TV, unless you do so on a "per inquiry" basis.
For more details on this approach, see `How To Get Free Radio
Advertising For Your Company'.
After any free radio and TV talk shows, and newspaper feature
stories about your business, the next best method of spreading the
word about your business will be via the guest speaker route at
civic club meetings. And don't forget the women's clubs. Your talk
to these groups should be "scripted," simply explaining the alarming
number of bankruptcies, the great losses suffered by business
because of bankruptcies; the exasperatingly poor record of the
American people with money management responsibilities; and urging
for support to get "back to the basics" and teach practical money
management courses in the schools, and be example in the home. Such
a talk should bring you a big round of applause and a continuing
source of referrals.
To carry this effort just a little further, set up Credit and Debt
Counseling Seminars or Workshops. You can arrange to hold them in
the banquet rooms of well-known restaurants in your area, meeting
rooms at your local community college, fraternal club meeting halls,
motels, or even churches - because of the suspicion that you are
setting up to sell something when you don't charge an attendance
fee. Most people are aware of the bottom line - that you are trying
to sell them something when you invite them to a seminar or
workshop. However, most feel that when there is a cover charge, the
basic information you will be giving will be more useful than that
given when there is no charge to attend. And if they have paid some
kind of fee, they will be more at ease in listening and evaluating,
without the pressure when they have come "for free."
Seminars are one of the most lucrative (and fastest) ways of getting
a new business of to a running start. When you stage seminars, it
is imperative that you flood the area with advertising, being sure
to promote the seminar, not the product that you are really selling.
Your seminar script should be basically the same that I have
outlined for your as a guest speaker, the difference being that
instead of closing with a call for more education in money
management, you briefly outline the simplicity of the "envelope
deposit" system. You then close with an open invitation for those
with particular problems or needing special help to call you office
and set up an appointment for personalized counseling service.
Even before you officially open for business, you will want to have
a tentative list of people you can possibly train as employees to
handle the workload as your business grows. Rather than pay these
people a salary, simply give them a commission for each client they
handle. In other words, you can sign a client for $100 over 10
months, sell the account to a factoring company for 80% of the
total, collect $80 in cash immediately, pay your commission
counselor $30, and bank $50 in profit with no real work involved on
your part. And if you have hired a good counselor, you can rest
assured that your client has been well served.
Basically, that is how easy it is to put this kind of business
together and make it start paying off immediately. Remember, you
must be constantly soliciting new customers, and building the number
of customers you or your counselors talk to each day. You should
strive for an average of three counseling sessions per day, five
days per week, before seriously considering additional help.
At $10 per month from each account, this will give you $150 per week
or a total account billing of $1,500 per week. By factoring your
accounts at 20% of their total value, you will have an immediate
cash income of $1,200 for the week. The factoring company will
handle all the billing and bookkeeping, eliminating your need for
The way to success in this business is, however, to keep this
happening every week. It will depend upon your advertising, the
service you give, and the reputation you build.
The prime requisite will be work and perseverance on your part, but
once you are established, with a few commission counselors working
for you, the business can easily gross $150,000 per year in even
small to medium size cities. You now have the knowledge; the rest -
the action part - is up to you. Best of luck!
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