July 18, 2017 | By RGR Marketing Blog

Tips for Debt Settlement Professionals to Better Serve Clients

If you’re in the debt settlement industry, it’s your business to know the current state of American consumer credit. If a recent report by the Wall Street Journal is any indication, you and those like you are doing their jobs. According to the report, the average consumer credit score is an impressive 700 on the FICO scale that ranges between 300 and 850. In addition, there are fewer than 40 million people with credit scores below 600. So what’s the explanation?

Many experts feel we are seeing people finally pulling themselves out of the hole caused by the subprime mortgage crisis and the recession that followed it. During the recession, many people moved away from generating more debt and chose to save money and to pay down their current debt instead. This strategy seems to have paid off, as consumer default rates are on a steady decline and credit scores have been rising.

The Hidden Threat

However, it’s not all good news for consumers in today’s economy. There are certain types of debt that are quietly growing, and if the economy falters again, these debts could bring things crashing down once more. In particular, student loan debt is skyrocketing.

Student loan debt is an infamous drain on people’s economic status. The pressure to go to college causes people to borrow more money than they ever would dream of borrowing to purchase anything else short of a house, before they have the ability to generate enough income to pay it back. They then put off paying back that debt until it becomes a constant stain on their credit report.

In the first quarter of 2017, student loan debt shot up to an unbelievable $1.4 trillion. Another high debt threat, auto loan debt, also grew to over 1.1 trillion dollars.

What This Means for Debt Settlement Professionals

With interest rates rising and unemployment down, the temptation for many people may be to view their current financial situation as a surplus and to begin buying more rather than saving, raising their levels of personal debt once again.

This is a good opportunity to help prior or potential debt settlement clients refocus their efforts on paying down their auto loans or student loans. If they do, they are much more likely to remain on firm footing if the economy takes a downturn once again.

What this means is that you should be prepared to offer your clients debt restructuring as well as debt consolidation. Debt restructuring, as you are probably aware, is a way of negotiating a consumer’s debt to make things easier to pay off. If someone is resisting paying off a student loan, this could be just what they need.

What it also means is that the debt settlement and debt consolidation industries aren’t going anywhere anytime soon. If you are in the debt settlement business and have felt that recent events have put your business in jeopardy, it may be wise to simply stay the course and let the economic cycle play itself out.

Remember that as a debt settlement specialist, you are offering a professional service. As such, you need to be prepared to adjust your methodology in order to best serve your clients in changing economic times.

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