HOW TO START YOUR OWN
CREDIT AND DEBT COUNSELING
SERVICE
Here's a business idea that meets all the aspirations of the American Dream. 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.
The first, and most important thing to learn is the "thought processes" in
the minds of people and firms that lend money. No one lends money with the hope 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 a small portion of the money he originally loaned out. Thus, the
lending institution will generally do everything possible to work with the borrower as
long as he continues to show good faith by 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 to 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 frightened at the thought of people from the loan company calling them.
Although they generally won't admit it, many are aware that they're having problems
managing their money. They're embarrassed about it, but 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 several years, personal and small business bankruptcies have soared to
record numbers. 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. This is where you step in with your Professional
Credit and Debt Counseling Service. You should never have any trouble finding clients.
Your job as a Credit and Debt Counselor is to meet with the overextended borrower,
listen to his problems, 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 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.
You'll need to hold a first meeting with the client to hear his problems and to make
your proposals. A second meeting will be needed in order to polish and endorse the
planning. You may wish to hold a third meeting at the end of the first month to assist
your client in making his payments and to insure that the planning took into account all
of the obligations he has. Finally, you'll want to keep in touch with him and ask how he
is doing from time to time.
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 decide to use an office, make it as
unobtrusive and as confidential as possible. A sign stating "Money Management
Consultant" would be appropriate, or a name such as "Financial Systems."
Gaining the confidence and trust of your clients will be the secret of your success. And
do not underestimate the power of "wordofmouth" 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, 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 may require a license for your business.
Step one 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, medical, 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
deposits a predetermined amount in each of these envelopes each payday. Thus, if his
mortgage were $500 per month and he brought home $750 every two weeks, you'd probably
advise that he "deposit" $250 each payday into the mortgage envelope. Have him
do the same with all of his other fixed expenses and their individual envelopes. 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.
Step two is to notify the client's creditors. After developing a budget, this is the
first instruction (or job) that you give to the client. 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 collectors. 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 threeyear 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."
Of course, the most important thing you want to advise your client to do is destroy all
his credit cards. Best of all, have him cut the card in half and return it with a short
note to the creditor explaining what he is doing and why--getting a handle on his debts
according to actual income. Basically, that's all there is to your counseling service.
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
"fasttrack" and everchanging world. People who are poor money managers
today 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 should charge approximately $100 for your services: three counseling sessions.
Stagger the payments at $10 per month spread over ten months, and include an envelope for
your portion of the client's income among his other monthly bills. Explain your fee during
your first contact. 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 to each meeting, complete with any necessary supplies. If
meeting a client in his home, 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 psychologically proved--just believe it, and be guided
accordingly.
Include in your briefcase several yellow legal pads 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 welldressed, 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 wellgroomed. 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 problem has happened to many stable,
conscientious people. Maintain an attitude of understanding and a sincere desire to help
the client work his way out of his current tight spot." Don't let him get going on a
deprecatory tangent, either. Should he start down that path, simply tell him, "These
things happen to everyone, and what's done is done. The important thing now is working out
the solution to the problem."
Your only real expense in setting yourself up in this business will be for advertising.
Even that does not have to be an immediate and large cash outlay. You can start off by
planning to run a two column wide by threeinch deep advertisement in your 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 usually bill you after
the ad has run, and allow you thirty days from the date of your billing to pay.
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 plan on having a flyer made up describing your
services. About once a month, hire teenagers to hand these out for you in the busy
shopping centers. Another good place to distribute them 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, contract for an advertisement and listing
in the yellow pages of your telephone directory. Telephone directories come out on a
regular (usually annually) schedule; so check ahead, and anticipate the cost and date you
may expect results.
A good place to check for help in writing your advertising is your area colleges. The
advertising students will generally help you in exchange for the opportunity to build a
portfolio. There's never a need to pay the 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 them. The important thing 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 a confidence within you that it will bring in the customers.
Use the "AIDA" formula: stimulate the reader's ATTENTION, INTEREST, DESIRE, and
ACTION!
An attentiongrabbing headline (or first line) that appeals to or arouses the
selfinterest of your potential customer is a must. Second, develop a
"hooker" or imagebuilding description that causes the prospect to picture
how much better his life will be as a result of using your services. Follow it with a line
that relieves the prospect's fear of making the wrong decision (such as "Satisfaction
Guaranteed"). Finally, issue a demand that the reader take immediate action such as
"CALL NOW!" Do not approve nor run any ad that does not contain all these
ingredients. Below is an example of an ad that should work very well for you:
HOUNDED BY BILL COLLECTORS?
Now there's a way to stop those constant letters and embarrassing phone calls. Get out
of debt completely--without bankruptcy! Preserve your good credit rating and maintain your
present lifestyle. Stop worrying about bill collectors! For just an hour or so of your
time, your money problems can be solved! Your satisfaction is guaranteed! Call
1234567 right now for an appointment.
Heartwood Financial Systems
1027 D'Argent Drive
A suitable classified ad to accompany your display ads might read:
Money Problems? We'll help you solve them easily with this completely legal solution.
100% guaranteed anywhere in the U.S. Call Now! Consumer Credit Solutions, 1234567.
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. 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. After any free radio and TV talk shows or newspaper feature stories
about your business, the next best method of spreading the word about your business will
be as a guest speaker at civic club meetings. And don't forget the women's clubs in your
area. 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 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
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 wellknown
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
$10 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, many
feel that when there is a cover charge, the basic information you'll be giving will be
more useful than 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 your presentation,
without the possible pressure they may feel when they have come "for free."
Seminars are one of the fastest and most lucrative 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 as that 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 who need special help to call your office and set up an appointment for
personalized counseling service.
Even before you officially open for business, you'll want to have a tentative list of
people you can 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.
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 total number of customers you or your counselors talk to each day. You should strive
for an average of three new counseling sessions per day, five days per week, before
seriously considering additional help. At $10 per month from each account, this will allow
you to collect $150 personal collections per week and a total account balance due of
$1,350 per week (15 X $90). By factoring your accounts at 20% of their total value, you'll
have an immediate cash income of $1,230 ($150 + $1080) 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. Once you're established and
have a few commission counselors working for you, the business can easily gross $150,000
per year in even small to mediumsize cities. You now have the knowledge. The
rest--the step to action--is up to you. Best of luck!
