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As the economy struggles, debt is on the rise, and many are fighting to restore their credit, the industry needs Debt Counselors.
Opening a Debt Counseling Business is rewarding, as it fills an essential gap in the marketplace, and you'll be helping worried individuals in need of good advice. Debt counseling has been a lucrative business since the mid-'60s and is showing no signs of slowing down. If you're looking to start a Debt Counseling Business, it takes educating and certifying yourself before opening up your practice. This blog will tell you everything you need to know about starting your own Debt Counseling Business.
A Debt Counseling Business helps debtors (consumers) who struggle to pay unsettled credit card debts on time. Therefore, a Debt Counselor is tasked with renegotiating payment rates to lower and spread out over a more extended period.
A Debt Counseling Business will supervise consumers' repayments while delivering support, after-care services, and budget guidance to reduce their anxieties and financial burdens. Debt counselors do this by negotiating a personalized financial plan acknowledged by all the creditors involved. They will also acquire validation from the bankruptcy court who consents to the new repayment terms while allowing debtors to retain their assets.
You must understand the basics of what starting a Debt Counseling Business entails before jumping into things. Each state has its own rules and regulations, meaning you should search up the minimum requirements to see if you meet them.
Research the reasons people become indebted, how to obtain credit facilities/loans, advise clients about their financial situations, and other topics concerning debt, credit, and counseling. Often, classes or workshops are provided on credit repair and responsible credit usage by colleges, financial institutions, libraries, and business schools. Books, articles, and publications offer additional information about reducing financial debt and negotiating with creditors.
Because you are working with people and their problems, human psychology, active listening, communication skills, and empathy will also be part of the job. The majority of individuals coming for help will be depressed, anxious, and helpless because of their financial situation. Educating yourself on making your clients feel heard and understanding their emotions is equally as important as the financial aspects of debt counseling. However, since debt counselors are not lawyers or mental health professionals, they cannot offer legal advice or a medical diagnosis.
Once you decide that opening a Debt Counseling Business is right for you, it's time to prove you're dedicated to your business. Enrolling in a course certified by the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling will help you help learn and gain respect.
There are certification programs offered online or in-person by universities, colleges, and debit/credit associations. You will build your confidence by acquiring the skills and knowledge to be an effective Debt Counselor who adheres to industry standards, which consumers will appreciate.
Having the education and certification is not enough in a regulated industry like Debt Counseling. Gaining valuable experience in a company while receiving constructive feedback from a qualified supervisor/mentor is necessary. Practicing your new skills with various real clients from diverse backgrounds and situations will offer you a taste of what the job is really like. Putting together case studies while gathering resources/organizational systems will earn your future client's trust once you open up your Debt Counseling practice.
You can also volunteer for friends/family by helping to spot any discrepancies in their credit reports and giving sound advice on maximizing their financial wellness, which gives you additional experience.
Come up with your business name/brand/logo and write a business plan for your Debt Counseling Business. This will involve a mission statement, SWOT analysis, methods of achieving goals, identifying clients/competition, branding, marketing strategies, technology/staffing/office equipment and space, profit margin, and more. Registering a business means abiding with federal/state/local tax laws and receiving a Federal Tax Identification Number from the IRS. Insurance coverage programs will protect your Debt Counseling Business, so make sure to do risk assessments and find a reputable licensed agent.
Get the word out there that your Debt Counseling Business is ready to take on clients by appearing at financial, social events, and conventions. Contacting and networking with bankers, credit bureaus, lenders, lawyers, counselors, real estate agents, and social workers will send potential clients who need debt settlement services your way. Credit repair is important if consumers want to be eligible to apply for loans, which is where your business overlaps with others in your networking ring.
There are several ways to promote your Debt Counseling Business and build a good reputation via strategic marketing.
Writing on subjects relating to your profession will show others that you are an expert who knows what they're talking about. A high-quality website with a subscription box where guests can give their names and contact information allows accessible communication and turns visitors into clients.
Having an online presence will help establish your brand and bring traffic to your website/blog. Posting videos on Youtube, uploading images/photos on Instagram, and using Facebook/Twitter to reply to messages or post relevant content are all key to pulling in clients.
Although it's "old school," having your column or making contributions where you write about money management and debt targets your local market. In addition, you can distribute brochures, leaflets, business cards or even have your own ad space in phone books or billboards.
Leading free workshops/seminars or giving presentations to consumers on financial planning and credit/debt will raise your credibility as a professional in your industry.
Reaching out to individuals and offering reduced fees or pro bono services can be beneficial because it attracts future clients and gains your exposure for your business.
Positive reviews and testimonials left by former clients are evidence of your first-rate services, so try to include them on your website.
The salary range for each certified Debt Counselor per year can be anything from $69k to $86k. However, this amount varies due to location, education, training/certifications, additional services/skills, and years of experience spent in your profession.
There are limits on the amount debt counselors can charge, and these vary by state. In California, for example, monthly fees may not exceed 8% of the amount paid to creditors or $35, whichever is less.
Most Debt Counseling Businesses offer a free initial consultation. If the client decides to move forwards, then a consumer agreement is signed, which discloses the terms of service and the fees of services your business provides per client. The agreement includes a disclosure that allows your client several days (depending on the state) to cancel after signing it.
Debt Counseling Businesses charge consumers for applications, debt-repayment negotiations, and monthly after-care services for supervising credit repair/debt. If you do well, you'll work with the client until a clearance certificate is issued (when the debt is officially paid off).
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