Aged debt leads are a great way to grow your debt business and help a lot of debt challenged customers. However, how you help debt customers is important to how you manage your debt leads. Are you a debt management company or debt settlement? Make sure your customers know the difference and manage the leads differently.

Debt Management or debt consolidation is typically a program that takes one payment from you and distributes it among your creditors. These programs may include the debt management company negotiating lower interest rates with your creditors to help you accelerate getting out of debt.

Debt Settlement, in contrast is a formal agreement between a creditor and debtor to settle outstanding debt for a specific amount. These programs often involve the creditor charging off a significant portion of the debt for some payment so the principal instead of the interest rate gets reduced.

Each of these are viable methods for helping a consumer recover from crushing debt. However, from the perspective of the debt company they significantly change how you should be handling your leads.

Debt Management

You are more than likely dealing with a less severe case of debt. Often these are cases of debt problems arising out of ignorance, behavior, or poor money management. These are debt scenarios that are most likely won with education and accountability.

In the debt management business you are looking for clients (debt leads) with jobs and income, but are short on education. Have this discussion early in your counseling process. Determine the source for the debt issue before you attempt to solve it.

If debt management becomes your process to help the debt customer then you need to appropriately handle the debt lead as such. Here are a few recommendations:

• Immediately begin providing education and money management tips
• Establish a budget and repayment strategy
• Set-up a regular contact management plan to check-in on client
• Either help them make the payment or create an accountability system

Debt Settlement or Debt Negotiation

In the case of debt settlement, you are engaging the debt customer in a much more aggressive debt recovery process. You are negotiating with creditors to write-off much of what the consumer owes. As settlement does not occur until the consumer has become so behind on payments that the charge off date is rapidly approaching, the consumer’s credit score is sure to suffer.

For this reason, you not only have to make sure the struggling consumer (debt lead) understands this strategy, but you also better make sure they see it in writing repeatedly. You need to manage debt settlement leads in a very disciplined way.

If you recommend debt settlement to your client I would recommended some of these important processes:

• Start with education and disclosure
• Make sure all communications and contact is documented
• Keep customers informed about every step of the negotiation process
• Help customers learn how to reestablish their credit rating

Remember that debt consolidation and debt settlement are two very distinct debt recovery processes. Also remember that most consumers you talk to will not understand that–educate them early and often about your method of debt recovery.

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Debt Management or Settlement is only half of the equation in solving your clients’ debt problems. If you want to be a top debt company you need to offer the complete solution. Part of that solution is repairing the damage that debt resolution does to a client’s credit report.

This is why I recommend building a strong referral relationship with a credit repair company. This relationship is sure to be a strong base of referrals.

Often consumers are confused as to what to pursue first debt repair or credit repair. As a result they are likely to end up at one or the other. Ideally, whether you are a debt settlement or a credit repair firm you will have established a partnership with the complement.

If you are in the debt settlement business:

You will certainly impact the client’s credit report. The methods you use, although critical to getting a client back on their feet, are not something creditors like doing. The natural result–lots of derogatory information showing up on that happy client’s credit report.

So, if you want to create a really happy client you will need to help him with the FICO score clean-up. And that is a different animal from debt repair.

If you are a credit repair business:

You are going to get a lot of people that want help repairing their credit, but really are in a debt crisis. So, regardless of how good you are at credit repair they, with their debt management problems are going to quickly unwind your efforts.

If you want to be successful in making clients happy and productive with their credit reports you need a strong debt management partner.

Here are some great referral partners:

Credit Repair -Credit Advisory Alliance

Do you know of other great credit or debt repair companies that I can recommend to clients as partnership opportunities?

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Any sales call often hinged on the first 15 seconds. This is when you get the clash of the customer mounting a defense based on bias, you attempting to aggressively open a discussion, and both of you are not listening. This is why this first 15 seconds is so hard.

However, being successful with aged debt or mortgage leads hinges on that initial engagement. So, here are a 10 tips to maximize your opportunities with any sales lead:

1. Review the lead for openers. Any sales lead is full of clues as to what will help that customer engage. You have addresses, product requests, loan amounts, and a variety of other data elements. Look for an opener. If they are from Texas it might be Longhorn Football, if they are in New York it might be the Yankees/Mets debate.

2. Script your first 15 seconds. This part of an aged lead call is too crucial. Script it. You can change it frequently, but prepare it so it is immediate and smooth.

3. Customize opening script by marketing source. Every marketing source you use is going to produce unique customers and expectations. Ensure that you take that into account as you are preparing your scripts.

4. Lead with a connection. Is there something that connects you to that customer? If so, use it. You will be amazed how easy it is. Do they live somewhere you are familiar with, or somewhere you would like to visit, is their last name in your family tree, dig into the lead and be creative. Also, don’t forget to listen for connectors on the call.

5. Engage with a question. This is a great way to break the ice and the defenses–ask them a question. It can be about their online inquiry, their objectives, their expectations, or their past experiences in finding a mortgage or debt solution.

6. Acknowledge their time is valuable. This is a great way to pivot off of the “I don’t have time objective.” Tell them you understand that and will respect it. Then do it.

7. Set expectations. Let your sales lead understand your value proposition. Establish expectations that you are concerned about their needs and reinforce that with small incremental promises. Then meet those expectations to build trust.

8. Ask them to follow-up. Don’t leave the call, even if you get a rejection without asking to follow-up. This quick acknowledgment and permission can expand your pipeline with future opportunities. Each aged lead, even rejections should make it into your database marketing program.

9. Acknowledge objections and pivot. You will definitely get rejections and objections, lots of them. Write them down, study them, and build ways to pivot and overcome these common objections. These should be weaved into your 15 second script revisions.

10. Refine opening scripts daily. You are hopefully learning everyday. Reflect that learning in revisions and improvements to your scripts.

Aged lead calls are certainly not cold calls, but they do require a good opening impression. Making your first 15 seconds count is 90 percent of your overall conversion success–script it, improve it, and perfect it.

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Since I have started this blog I have met a lot of smart people in the blogosphere and on Twitter. Each of these folks have strengthened my knowledge and can do the same for you. So, I thought I would give you a quick list of people you should be following in the debt industry.

Debt Bloggers:

• Good Credit Living
• Eliminate Debt Blog
• My Debt Blog
• Blogging Away Debt
• Destroy Debt Blogs
• Debt Help Blog
• Christian Debt Help
• Dave Ramsey’s Blog
• Zip Debt Blog

Debt Twitters:

• @crocks
• @eliminatedebt
• @frugalinva

I am new to this, but I am already surprised by how may debt bloggers and twitters are those that are in debt, trying to find their way out versus experts showing people how to get out of debt.

If you have a favorite debt expert blogger or Twitter please let me know.

By the way don’t forget to follow me @troywilson.

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(photo credit: josh russell)

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Sometimes that medicine is bitter, but necessary. This is often the case with debt settlement. Especially, as it applies to a client’s credit score.

One of the big mistakes many in the debt settlement business make is failing to adequately explain and prepare debt clients for this effect. If you have clients that are current on all their minimum payments, but are about to collapse under the overall debt–debt settlement may be a bitter pill that must be taken. However, in this circumstance the client’s credit score with take an enormous hit.

This can be hard for a debt client to understand. From their perspective they have been struggling all along. However, from the perspective of the creditor this is new and very bad news. If a creditor is forced to settle your account at a loss he is very likely to report your account to the credit bureaus in a derogatory manner.
Weighing the positives and negatives of debt settlement, particularly the damage to their credit score, is of central importance to any successful debt resolution plan. The more education you provide on this point the better.

CreditCards.com gives an example of a question and answer you can have about how debt settlement works. This article articulates the double impact debt settlement can have to your credit report:

“Making no payments to your creditors is reported to the credit bureaus, and your credit score will tumble quickly. Once the creditor has agreed to a settlement amount and your account is settled, that will also be reported to the credit bureaus. Although the account will be marked paid, it will be not be marked paid-as-agreed, which is how you want any account that has a negative listing to be resolved.”

However, as this debt settlement blog post illustrates often the debt settlement arithmetic makes a lot more sense than the credit card arithmetic.

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I am getting a lot of inquiries about Debt Management organizations, training, and conference opportunities. I will try to keep a running list of opportunities, but here are some of the best ones I have come across thus far:

Debt Management Organizations

American Association of Debt Management Organizations (AADMO)
Association of Independent Consumer Credit Counseling Agencies (AICCCA)
National Foundation for Credit Counseling (NFCC)

Debt Settlement Organizations

The Association of Settlement Companies (TASC)
United States Organizations for Bankruptcy Alternatives (USOBA)

Debt Training Courses

National Association of Certified Credit Counselors (NACCC)
International Association of Professional Debt Arbitrators (IAPDA)

Debt Conferences

AADMO 2008 Fall Conference: October 20-22, 2008 (complete)
USOBA 2008 Winter Conference: November 9-11, 2008 (complete)
AICCCA 16th Mid-Winter Conference: January 21-23, 2009
TASC 2009 Annual Conference: April 5-7, 2009

If you have others please comment below or contact me.

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(photo credit: flacflickr)

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Debt Settlement USA, a debt settlement company that publishes the Consumer Debt Index (CDI), an index modeled after the Consumer Price Index (CPI) reported that in the third quarter the CDI was up 6.5 percent from the previous quarter and up over 30 percent from a year ago.

Debt Settlement USA explains the significance of the CDI measurement:

“The CDI is a statistical analysis developed by Debt Settlement USA to measure key economic factors that are most severely impacting Americans who face an increasing burden of credit card, car payment, mortgage, and other consumer debt. The Index is comprised of the Consumer Price Index (CPI), consumer credit outstandings, the mortgage delinquency rate, and the consumer loan delinquency rate.”

Of course, the real question is what are you, as a debt management or settlement professional doing to lower this index? What is your strategy to help as many Americans as possible leave the roles of “delinquent debtor?”

Make a resolution today to do as much as possible. Here are are few simple suggestions that will make your debt business more successful and help more people:

• Write down 5 ways you are going to find more people to help. Maybe: start a blog, publish an online article, write a guest column in the local newspaper, organize a debt education seminar
• Write down 5 ways you are going to make debt settlement easier to understand. Maybe: create a simple budgeting worksheet, design a simple case study pamphlet, or add a debt calculator to your website
• Write down 5 ways to help keep your clients on track. Maybe: start a weekly or monthly debt avoidance newsletter, send out check-up postcards, start a regular checking-in call system

Now you have a plan. As Nike says, “Just Do It!”

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Have you ever found it difficult to communicate the beneficial mathematics of debt settlement to a client hopelessly burdened with credit card debt. I know that is one of the top frustrations I hear from my debt settlement clients.

You know the scenario–a debt client with more debt than they know they can reasonably pay off continuing to just make the minimum monthly credit card payments, yet they can not understand the arithmetic that can give them hope.

It is certainly hard to communicate on the telephone, especially with the anxiety that you know is eating at your client. So, I suggest making it as simple as possible. Here are a few examples I suggest you mold into your own educational approach:

• Here is a great blog post about debt settlement arithmetic. You can do a similar blog post, article, email, or brochure. It allows your client to leave the call and methodically read and review the opportunity you have suggested to them with a lot less pressure.
• How about an easy visualization, eBook, or presentation that walks a client through the steps of debt settlement start to finish. Simplify the scenario and make it personal. This approach can take away the mystery and set expectations for your potential relationship.
• If you are technically inclined or willing to invest a few dollars I suggest a simple debt settlement calculator. This is a simple widget that you can put on your website. It will allow potential debt clients to review their own situation with privacy. Once they engage you they will be ready to get started.

Debt settlement is scary and the math to see hope can be overwhelming. Try to help simplify the opportunity for your prospective clients. It will quickly ease the client’s frustration and your own–helping your client get to a settlement and financial freedom faster.

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(photo credit: Mr. Boxhead)

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Whether you are looking for a good company to help with settling your mounting debt or you are a debt settlement company looking to help debt overwhelmed consumers this list is for you. During a recent Federal Trade Commission Workshop the following top 10 list of debt settlement guidelines were issued in consensus by hundreds of debt settlement industry representatives and regulators:

1. Have written policies and procedures about debt settlement program.

2. Be a member of the Better Business Bureau.

3. Have a comprehensive “Debt Settlement Company Certification” similar to what creditors may require for their collection agencies and other vendors.

4. Have an open door policy to regulatory agencies and vendor certification for creditors.

5. Have a customer dispute resolution and review process.

6. Have in-house legal counsel with significant experience in credit industry compliance.

7. Every client is serviced in-house (from beginning to end) by the same company. Clients should never have to speak to a third-party.

8. All program fees and costs must be discussed with prospective clients prior to the start of a debt settlement program.

9. The company only works for the clients, not any other third party from whom they might be receiving referrals or placements.

10. Full disclosure is a minimum standard and is enforced through an active monitoring and compliance program. The debt settlement firm provides prospective clients with an in-depth review of their program multiple times before an agreement is entered into.

These are all great recommendations and as a seller of debt leads I know it is imperative for you to follow these practices. In fact, I find that those who adhere to the highest standards quickly gain the trust of the debt client faster and convert their leads at a much higher rate.

I believe being one of the good guys in the debt business is the quickest way to success in your business and brings the most value to your clients.

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