HOW TO START YOUR OWN CREDIT AND DEBT
COUNSELLING SERVICE
Here's a business idea that meets all the aspirations of anyone
who wants a profitable, but easy, home business.
You can start small with little or no investment, develop it in
your spare time, and parlay it into a $200,000 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 thought of foreclosing on the loan and
taking away a borrowers 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 to get in touch with his creditors
and appraise 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've 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
help them.
Over the past three years, personal and small business
bankruptcies have been soaring to record levels.
People want to file bankruptcy against their creditors, because
regardless of how easy it is, the thought of having "gone
bankrupt" still leaves a stigma.
And this is where you should step in with your Professional Credit
and Debt Counselling Service. You should never have any trouble
finding clients.
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 at the local
courts, which gives the debtor time to regroup and reorganise 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 three year period. If the court
accepts the plan, the lenders are almost always 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 Credit and Debt Counsellor 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 as 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
Counsellor'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 licence.
You simply will 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 licence for your business.
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 a
predetermined amount of deposit in each of these envelopes each
pay day.
Thus, if his mortgage were $1,000 per month, and he brought home
$400 each day, you'd probably advise that he "deposit" $250 each
payday into the mortgage envelope. And so it would be with each
payment envelope.
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, 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
counselling 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
month to assist them in making their payments from their
obligation envelopes. 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 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 Counsellor.
You'll need a receipt book. Drop by any large stationery store
and get the most impressive available. You should charge $200 for
your services. Three counselling sessions, with the payments at
$20 per month spread over ten months is an ideal arrangement.
Explain your fee during your first meeting.
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 besides 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
co-operation, this has been proven psychologically - just believe
it, and be guided accordingly.
Always carry a yellow legal A4 pad, and have plenty of pencils
with erasers available. The legal pads 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 feelings 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, conscientious people.
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 problem."
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 an 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 advertisements for the next year or so, 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, allowing you 30 days from the date of your
billing to pay.
You should plan to run an ad in the newspaper for at least two
days a week, especially in the Sunday editions, every week. Also
you could have a circular made up, advertising your circulars, and
distribute around your area. With a little imagination and
thought, you could soon be running a really profitable business,
helping others.
