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. 
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 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 
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 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 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 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 
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 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, 
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 
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 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 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 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 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, 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 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 expect results. 

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 
embarrassing 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 
appointment. 
Nationwide 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 newspapers, radio and television 
stations in your area. Of help to you in this area will be our 
report, 'The Inside Secrets of Getting Free Publicity For Your 
Business'. 

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 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 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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End of Reports.