People who have fallen behind on their credit card payments usually end up being buried in debt. As a result, they mostly look for debt settlement companies that may be able to help them out. These companies offer debt relief to their clients by serving as a mediator between them and their creditors. They attempt to reduce the amount of the original debts of their clients. Also, these companies are required to be highly regulated as well as follow the strict regulations regarding financial advising and fee collection.
If you want to open and operate one of the debt settlement companies in the country, you should contact the Department of Commerce in your state. You should verify if you are indeed eligible to start such business. You should realize that there are states that prohibit profitable debt settlement companies. So if you live in one of these states, then you may not be allowed to open a debt settlement company. Also, you may not be allowed to open such a business if you have bad financial situation or credit history.
See to it that you are familiar with the entire process of debt settlement. Before starting your own business, it is ideal that you work for a debt settlement company in order for you to learn about their practices. Of course, you should also have sufficient funding. The start-up costs may not be that large. Nonetheless, you still need to invest in office supplies and furniture, leasing money, and advertising costs.
If you are really serious about opening a debt settlement company, you should establish it through limited liability company formation or setting up a partnership. Then, you should register it with your state secretary and acquire a federal tax identification card from the Internal Revenue Service. See to it that you review all the state and federal laws regarding debt settlement companies. The Credit Repair Organizations Act, for instance, is one of the most important laws that you should learn about.
You can ask the Department of Commerce to give you state literature. Also, you may be regulated when it comes to how much fees you can charge clients. Likewise, you may be regulated with regard to your methods of collecting and disclosing information. Do not forget to acquire a surety bond from the Department of Commerce. You should also obtain liability insurance in the amounts that are required by the state in which you live in. Then, you should gather financial statements from every owner or partner of your business.
You should also be accredited as a credit counseling provider with the Association of Settlement Companies if you plan to provide such services. If not, you may have to show an affidavit that verifies that you will not offer these services. You should develop a standard agreement, as well. You should have a debt settlement services agreement that includes a payment plan to provide your clients. You should inform your clients how you intend to collect their fees. Do not forget to apply for a debt settlement services provider license.
Finally, you should sign up for the United States Organization for Bankruptcy Alternatives. It is an organization that is committed to guaranteeing that the voices of debt negotiators are heard. If you are a member of this organization, you will be informed about the most recent amendments and regulations in the industry. They will also help you out in voicing concerns regarding certain regulations. Moreover, your business will receive a degree of legitimacy so you can ensure your clients that you are honest, reliable, and legitimate.