Selecting A Debt Management Company

7 Key Rules every Consumer Should Know

FMI knows that individuals often feel overwhelmed when they come to a point in life where they must ask for help from a credit counselor or debt management specialist. Without some specific guidelines to assist them along the way, many may make poor decisions and, in the long run, only compound their original financial problems. But what is debt management, and what does it really involve?

Debt Management, defined simply, is a process by which debt is eased and eventually reduced through the managing of consumer assets and direct negotiation with creditors. Debt management is usually offered by qualified debt "counselors" or a certified debt management company as is the case with FMI. These debt management companies use what are called "debt management plans (DMPs)" by which consumers deposit set funds each month into specific accounts that are then used by the debt management company to pay off consumer credit card bills, student loans, medical bills or any other form of unsecured debt.

Choosing a debt management provider is not something that should be taken lightly. What do you look for when choosing a credit counselor or debt management firm? There are dozens of factors to consider, but these 7 key rules to choosing a credit/debt management firm can make the process less stressful and may get you much closer to financial comfort faster and easier then you ever thought possible.

1. Get a Referral - Ask someone who has been in a similar situation. Take time to ask questions, to determine if they had a good experience with a particular firm or a bad experience. Getting information directly from another consumer who has used credit counseling or debt management in the past is an excellent way to learn before you agree to pay for services. In addition, a reputable company should be willing to provide examples of good results, without revealing another person's private information.
2. National Accreditation - While no specific national or state accreditation will guarantee success, there are organizations in the U.S. with the soul purpose of promoting high standards and ethical practices in the consumer credit industry. The American Association of Debt Management Organizations are one of the most prominent in this industry. Members of this organization specialize in credit counseling, debt management plans, budget/finance industry education and much more.
3. Better Business Bureau Membership - Contact the Better Business Bureau in your city or region and ask for information about the credit counselor or debt management firm you are considering. You may also want to talk to someone in the State's Attorney or Attorney General's office to see if the company has been the subject of any regulatory action. Finally, if the firm in question has a website, check to ensure it's a member of the www.bbbonline.org online arm of the BBB and has been awarded its coveted "Reliability Program Online Seal" View our BBB online certification here.
4. For Profit vs. Non-Profit Experience - Many consumers have a misunderstanding about Not-For-Profit debt management companies vs. For-Profit companies. They both offer concessions for the consumer whereas some states require non-profit status before the company can do business in the state. Credit card companies fund most Not-For-Profit credit counseling companies with Grants and Fairshare deductions as a way for them to recover money from consumers who are currently not making their payments. The biggest difference is that a Not-For-Profit does not pay taxes whereas a For Profit does. Study the company carefully to see if it uses "non-profit" status simply as a marketing tool. In addition, you should select a firm that has been in business for a number of years, such as FMI, so that they have a track record you can see.
5. A Written Plan - A reputable credit counseling firm or debt management company will take time to review your situation, help you with budgeting and money management, and put your individual plan in writing. This personalized plan should include details on how creditors will be paid, as well as realistic goals for returning you to full financial health. Some firms even offer a free debt comparison quote which is an excellent way to see how much money you can save, what your new interest rate may be and how long it will take you to get debt free on your debt consolidation program right out of the gate. Unrealistic promises should not be part of the plan. For example, a debt management or credit-counseling firm does not have the authority to change your credit report nor should it ever imply it has done so in the past.

Before taking these above few key steps toward resolving credit or debt troubles, look closely at your current budget to determine if you can pay a bit more than the minimum on your debt. If so, you may be able to rebuild your credit or handle your debt situation privately without the assistance of an outside counselor. If this is not possible, it may be time to call in professional help.

Coming face-to-face with financial trouble may seem to be more than you can handle, at first blush. Fortunately, there are many reputable credit counselors and debt management companies out there who can help get you started again in the right direction. Following these 7 simple guidelines when choosing a firm will go a long way in ensuring you final choice is also the best choice for your current financial circumstances.

Thanks for visiting FMI today. Please contact us today for more information on our programs. Take control of your finances today, we can help!

Part-1 Student Loan

Hello everyone there is major concerns regarding our student loan crisis so I felt compelled to put this small post together for you. This is part-one of a series of post that I will be providing so please share this information with others who may be in default.

When repaying a Federally Consolidated Loan, you may choose from multiple repayment plans such as Graduated, Extended and Income-Based with various term selections.

The consequences for defaulting on student loans is devastating after 9 months of non-payment such as-immediate increase in the interest rate of your student loans up to 18.5% in addition to fees added by collections agencies-Immediate loss of your Title IV Financial Aid benefits-Negative reporting to the three credit reporting agencies-Withholding of your federal income tax return by the IRS to repay the defaulted student loans-Administrative Wage Garnishment of up to 25% of your paycheck and this is in addition to the IRS taking your tax returns every year. Getting out of default can take 4-8 weeks or even 9 months depending on what methods use.  

An Administrative Wage Garnishment (AWG) is an action taken by the guarantor of your Federal student loan to recover payment on your defaulted student loan or loans by ordering your employer take up to 15-25% of your wages per pay period. Your employer cannot ignore this order or they face possible fines for every non-compliance incident of the order.

There are several options. One is settling of your loan or loans with a full repayment of the loan or loans. The settlement amount will be equal to no less than 95% of the payoff amount. Your outstanding loans can also be paid off through a Federal Loan Consolidation based on certain lenders and criteria. You may also need to work out satisfactory repayments with your lender/lenders to get the loan out of garnishment status. Unlike credit cards or any other type of private lender debt, Federal student loans cannot be included in a bankruptcy.

Unfortunately, student loans cannot be discharged because you feel your institution provided a poor education or had unqualified instructors or inadequate equipment. The U.S. Department of Education does not endorse the school's educational programs or guarantee that the school will deliver the services for which a student contracted. Therefore, this discharge cannot be granted if the school did not provide job placement or other services that it promised, or if you were not able to find a job in your field of study.

Part- Two of this series will be released 3/31/2012
Financial Management Institute, Inc
Kenneth Grayer CEO & President
kgrayer@teamfmi.com

Sales Team Vs. Credit Department

Getting your sales team and your credit department to work in harmony can have its challenges and its rewards. Having a great sales team is critical to the success of your business and so is the revenues generated from your sales team.  You have to remember-you hired your sales team to generate sales and making sure that your team is adhering to your credit and collections policy is a challenge at times.

Sales wants accounts approved ASAP! (Meaning while they wait on the phone) and the credit department says it’s not going to happen ASAP!,  Being the aggressive sales team you hired, that’s just not acceptable; the concern is the potential client is going to take their business to a competitor, and the company needs the business. 

Everyone in the credit department should be sure to maintain a good working relationship with the reps and managers in the sales department. It is very important that each understands the others job and priorities. It can only create conflict if the right hand doesn't know what the other hand is doing.

Make sure you, know as much as possible about any new promotions or specials the sales department is offering during a month or week.  Meet with the sales department manager on a regular basis--every day would be great. The more information you can gather from sales, the better. Hopefully, your company's first and most frequent contacts with customers are through the sales department and not the credit department.

Who Is Kenneth Grayer .....Really

Spontaneous Idealists like me are creative, lively and open-minded people. I am humorous and dispose of a contagious zest for life. My enthusiasm and sparkling energy inspires others and sweeps them along. I enjoy being together with other people and often have an uncanny intuition for their motivations and potential. Spontaneous Idealists are masters of communication and very amusing and gifted entertainers. Fun and variety are guaranteed when I am around. However, I may be sometimes somewhat too impulsive in dealing with others and can hurt people without really meaning to do so, due to my direct and sometimes critical nature.

I am a keen and alert observer; I miss nothing which is going on around me. In extreme cases, I tend to be oversensitive and exaggeratedly alert and I am inwardly always ready to jump. Life for me is an exciting drama full of emotionality. However, I quickly become bored when things repeat themselves and too much detailed work and care is required. My creativity, imaginativeness and originality become most noticeable when developing new projects and ideas - I then leave the meticulous implementation of the whole to others. On the whole, Spontaneous Idealists attach great value to their inner and outward independence and do not like accepting a subordinate role. I therefore have problems with hierarchies and authorities.

As a Spontaneous Idealist I am one of the extroverted personality types. I enjoy working in a colorfully diverse group of people who interest and inspire you. Working in a “secluded room” is not my thing. My sense for the motivation of others is almost eerie. I constantly observe that which happens around me and have no problems noticing all sorts of things simultaneously or communicating with several people at the same time.

My enthusiasm is contagious to others and that is why my colleagues and friends all appreciate me as an important member of their team. My articulateness and sensitive ear for nuances in conversations with others obviously play a role. For me, this team-oriented environment is very important because I need to receive positive feedback and recognition like other people need air to breathe. It would be practically impossible for me to contribute everything I need to maintain my high ideals, by myself.

Variety, challenges and fun are important ingredients in my area of responsibility. I appreciate receiving new stimulation, meeting new people, and continuously collecting unique experiences. However, too much routine, too much detail work and the necessity to stick with one project for a very long time is not my thing. My strength are creative problem solutions, discovering new ways and opportunities, the conceptualization of new ideas on one hand, but not so much their concrete implementation on the other. Ideally, I have a staff of capable colleagues that takes over my concepts and runs with them.

This Is Me!! ….

Should-a, Would-a, Could-a, ...Are You That Business Owner or Entrepreneur

Entrepreneurs are persistent, and yet vulnerable.  When an entrepreneur is locked onto an idea or a thought, they will stop at nothing to see a project succeed. Entrepreneurs think “Do Now”- develop the plan along the way.  In the beginning there is only one direction and that’s up-maybe you take a couple of hits along the way but that’s all part of the journey. The plan that should not be developed along the way is your “Getting Paid Plan” 

The start-up phase of anything is exciting- it’s dealing with the bumps and bruises along the way that if you are not prepared can leave you and the business vulnerable or even bankrupt.  What is the most important aspect of a business? Is it sales, marketing, or cash flow? It’s all of the above if you don’t market the business; there are no sales thus any cash flow. The guru’s say “If You Don’t Plan-You Plan to Fail” are the so called guru’s giving you the complete “Plan For Success”?  

It has been my experience that most businesses fail due to cash flow management- what I mean by that statement is  entrepreneurs don’t think about policies and procedures until it is too late. In the beginning you should be thinking-what are my policies and procedures if a client is not paying me, or is a slow or sporadic payer, at what stage should I consider outsourcing, what skill sets if I hire an accounts receivables representative have, what resources are available for credit & collections training, how much money am I losing if the receivables stay on my books etc..  There is not enough emphasis placed on Entrepreneurs and Small Business owners to get the education they need in order to efficiently and effectively manage their accounts receivables.   

As I have stated in the past most small business owners and entrepreneurs are reactive in nature instead of proactive.  You should of done-ABC, which would have done-XYZ and prepared you to handle obstacles that came your way that could have yielded a more positive result.   At some point entrepreneurs, small business owners and the gurus should stop take a step back and realize just how important it is for businesses to have a plan in place for their credit and collections.  Oh-how does that saying go “If You Don’t Plan-You Plan To Fail”

Let’s Get It Right The First Time

Thanks For Reading My Blog
Kenneth Grayer

Establishing Your Credit & Collections Policy

A credit and collections policy is a document for your business and your clients. Whenever you aren’t paid immediately for the product or service you just provided; you have just extended your client a line of credit even if this was not your intentions.  Let’s look at the other side your client does pay you immediately but the check was no good, the clients bank account was closed or perhaps the client was not happy with the product or service you provided or maybe the client is a slow or sporadic payer.

A credit and collections policy addresses all the issues above and much more.  Here is the bottom line you went into business to make money, be in control of your destiny well I hate to break the news to you without your own established policy it’s easy to let your client’s control you based on what their needs are.  There is an old business school joke that says “You Set the Price, I will set the Terms” and your clients literally did and do.

Some Consideration in Setting Your Policy

Let’s take the guess work right out of it and get started in setting up your policy by asking yourself the following questions:

1. How do I want to receive payment cash up front, Cash On Delivery (C.O.D) or extend credit
2. When I establish a new customer what processes do I have in place I.e.…credit application, detailed explanation of services to be provided
3. Establish a survey that ask question such as: were you satisfied with the product or service provided...(Optional) however this limits the possibility of any disputes and addresses any issues or concerns the clients may have.
4. Will I accept deposits for work performed or shipment of products?
5. What contract forms do I need and what type of language do I need in my contracts.
6. Debt Management Recovery Plan (what action will you take to recover outstanding receivables)Recovery Action by (This is where you are to select an agency for collections activity) Debts in excess of $______ (example $1,000.00) will be referred out for collection Delegation of Authority (Whom will have authority to place accounts for collections) This is Typically the responsibility of the CEO, President, CFO When account is unsuccessfully recovered (Forward flow to Legal Counsel for litigation)

Any number of credit and collections policies will do the trick; well I should not say that, the policy should be industry specific.  The main idea is to establish your credit and collections policies before you open your doors for business.  I know that could be difficult but it will eliminate spur of the moment decisions and will allow you to think clearly when you begin to discuss your policies with your clients and staff.   

An informed client is a happy client. The issues that I see when it comes to your credit and collections policies are enforcing them, this is not a document that should be taken lightly and your clients should be aware that you do enforce your credit and collections policies.   

After your policies are established it is important to sit down with your executive team and review this policy with them.  Especially your sales force since they are the ones that will be selling your product or service.  As a start-up it is ok to not have such a rigorous financial policy we don’t want to scare customers or clients away.  On the other hand it may be in your best interest to eliminate the business that has issues with signing contracts with you or make firm commitments

Who's But Are You Covering

When it comes to not getting paid for the products or services that you provide, I always ask my students "Who's Ass Are You Covering"? I get blank stares-we all know the look "Deer In Headlights" I would like to ask you that same question, Who's Ass are you covering and then immediately after that ask yourself-Why?  At a minimum here are the top items small business owners spend money on:

- Business Cards/Brochures
- Website,
- Incorporating Services
- Marketing

Here is what we spend time thinking about Sales, Sales and more Sales - this is not a bad thing. It's exciting when you make your first deal, but always take a deeper look at your new potential client do your homework "Cover Your Ass".  Run credit checks, pick up the phone and contact references and inquire about how they pay, contact their bank etc...   

Tip: When contacting banks you might want to say "that you need to verify funds on checking account number in the amount of $10,000 thank you"  if you noticed I did not ask "if it was ok to verify funds on account number" you’re asking for permission will more than likely get a No response every time.  You have to assume that they are going to provide you with the information-you might get some push back but keep trying.

Tip - do not refer to your potential new clients as babe, buddy, honey, sweet heart, brotha, bro, homey; for obvious reasons.

Prior to doing business with your new potential client take 15 minutes to go over your credit & collections policy this way there are no surprises if your new client begins to have problems paying their A/R's on time?  Remember not every sale or client is a good sale or client to have.

Thank You for reading my Blog
Kenneth Grayer CEO/President
Financial Management Institute Inc
Email: training@teamfmi.com
Web: www.teamfmi.com