Life can dish out some sour misfortune sometimes, and unfortunately for your clients -- this can mean getting stuck in debt. Once debt starts piling up and creditors start knocking, people often don’t know where to turn. As a credit repair business owner, you can make a positive difference for your clients by helping them get their debt under control and their lives flourishing.
When Life Hands Your Clients Lemons
As a credit repair specialist, your first step will be to get to know your clients, their circumstances, and discuss with them alternative debt relief options. Some clients will only need to learn healthier financial patterns and get out of bad spending habits; but in some cases, things happen outside of your clients’ control. Once you understand what is going on in their life, you will be able to give them guidance about managing their debt.
What situations count as significant hardships that give cause to contact creditors for alternative debt payment options?
Unemployment: Clients who have lost their job and do not have savings may truly be struggling to get food on their table, let alone pay their monthly bills. Creditors are usually willing to offer special arrangements as your clients search for work and can support themselves again.
Hospitalization: If your clients are struggling with an illness that affects their ability to make their monthly payments - or have been hospitalized for a significant amount of time due to injury or illness - contacting their creditors can offer financial relief as they focus on their health.
Military Deployment: With our military service members gone sometimes for months or years at a time, a debt can easily fall through the cracks. When creditors know the circumstance, they can work with your clients so that they can serve our country while also taking care of their financial responsibilities.
There are many different circumstances that creditors will consider a hardship in your clients’ lives. To read more about when to write a hardship letter for your client, go here.
Resolve Unpaid Debt
Before your clients can begin to repair their credit, they will need to get their debt under control. Depending on your their specific hardship, there are different approaches to managing debt. As a credit repair specialist, you will become experienced in knowing which type of approach to use with each creditor. Types of debt relief include:
- Debt consolidation: If your clients’ debt is mostly unsecured debt, it can often help to have their debt consolidated into one loan
- Debt management: When a debt has spiraled out of control and clients need outside help to get their debt manageable, they may need to use a debt management service. Once their debt is under control, you can work with them to repair their credit
- Bankruptcy: Sometimes a client may be having such a hardship that filing for bankruptcy is the best option. You can successfully help these clients navigate their post-bankruptcy credit and help them to establish healthier credit habits
Debt settlement may not be the best option for your client.
When a debt is settled directly with a creditor, it may be listed as “settled” on your client’s account. The credit bureaus report this negatively and it lowers your client’s credit score. Advise your clients against settling a debt, and utilize other debt management methods while your clients navigate their hardship and work to better their life.
Steps to Writing a Hardship Letter
After you run a quick credit audit for your clients and your software highlights the negative marks on their credit report, you will be able to assess their situation. Depending on your clients and what hardships they are struggling with, remember these steps in the process:
1. Listen to their story. Be kind and empathize to understand the hardship in their life.
2. Discuss options with your client and decide if contacting their creditors is the best path.
3. Use a hardship letter template and fill out your client’s information (NOT your business information).
4. Include your client’s particular hardship and why it is making payment difficult.
5. Include your client’s request (for example, reduced payments or lower interest).
6. Make sure your credit repair software is set to alert you for follow-up, or manually mark it in your calendar.
If your clients are only able to pay a portion of their bills each month - or can’t pay their bills at all - their debt will begin to snowball out of control. Help your clients navigate their hardship and get their debt under control so that they can repair their credit. Don’t forget - during the daily grind of life - that you are changing lives one credit report at a time.
Get Credit Repair Cloud’s hardship letter template now and get your clients debt relief.