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 a 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 one is an empathy for people, a
basic understanding of money management, and about 500 business
cards, some smart advertising, and you're in business. Your
greatest expense or investment, of course, will be your
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 thought 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 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
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're having
problems managing their money. They're 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
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 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 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 Federal
Bankruptcy Act. In essence, this "plan" gives the debtor time to
regroup and reorganize his financial situation without hounded by
Anyone who's capable 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, the lenders
are almost 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 "little guy."
Your job as a Creditor and Debt Counselor is to meet with the
over extended 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
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 secrets 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
Step two in your service is to find out the total amount of cash
your client has coming in each month, and on what debts.
Calculate according to his current obligations, how much he needs
for living expenses: Rent or mortgage payments, 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 a
pre-determined amount of deposit in each of these envelopes each
Thus, if his mortgage were $500 per month, and be 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
Many people find this kind of system scary in the beginning, but
after they're 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 to destroy 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 counseling service.
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
It's a "fast track" and ever changing world. People who are poor
money managers today will invariably 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 stationary store
and get the most impressive one available. You should charge
$100, more or less, for services, Three counseling sessions, with
the payments at 410 per month spread over ten months is an ideal
arrangement. Explain your fee during your first contact---$100 in
payments of $10 per month over 10 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 for you.
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 righthanded; to your left if
you're lefthanded. 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 accordingly.
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 everything
being "cast in stone," and conveys the feeling of negotiation.
You should be well dressed, a portrayal of the traditional
"financing officer," and yet 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
your meeting with your client, and always diplomatically refuse
any alcoholic drinks that 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, conscientious people.
Maintain an attitude of understanding and 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 the
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 problem."
As mentioned earlier, your only real investment to set yourself
up in this business will be your 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
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
girls to hand these out for you in the busy shopping centers.
Another good place to hand them out is at the entrance to your
state's employment service offices.
Small 3 by 5 cards announcement cards or descriptive business
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 annually) schedule,
so check ahead, and anticipate cost and date you may expect
A good place to check for help in writing your advertising is
your area colleges. The students will generally help 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 it looks good and makes you feel that it will appeal to
your potential customers--that it instills 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 fears of making the
wrong decision (such as "Satisfaction Guaranteed") and a demand
that he take immediate action such as "Call NOW!" DON NOT APPROVE
AND DO NOT RUN ANY AD that does not contain all these
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 embarrassing
phone calls. Get out of debt com- pletely---without bankruptcy!
Preserve your good credit rating; maintain your present
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
for an appointment.
National Credit Counselors 123 Tenth St City, State.
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 newspaper, radio and television
stations in your area. Of help to you in this area will be our
report #3504, The Inside Secrets of Getting Free Publicity For
It's generally not worthwhile to advertise this particular kind
of business on radio and TV, unless you do os on a "per inquiry"
basis. For more details on this approach, see report #3406, 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; an
urging for support to get "back to the Basics" and teach
practical money management courses in the schools, and by example
in the home. Such talk should bring you a big round of applause
and 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. Generally, it's best to
charge a small fee-- say 45 per couple---because of the suspicion
that you're 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 you invite them
to a seminar or workshop. However, most feel when there is a
cover charge, the basic information you'll be giving will be more
useful that given when there's 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
Seminars are one of the most lucrative (and fastest) ways of
getting a new business off to a running start. When you stage
seminars, it's imperative that you flood the area with
advertising, being sure to promote the seminar, not the product
that you're really selling.
Your seminar script should be basically the same that I've
outlined for you 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 your
office and set up an appointment for personalized counseling
Even better you officially open for business, you'll 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's 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
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% for their total value, you'll 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 those services.
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're 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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