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Module Two (A)

* Debtor Client Counseling Section

The first section of this module deals with Budgeting and Financial Advice that a Certified Debt Specialist should provide to their client. The material is presented in the
same verbiage you may use when advising and presenting the subject to your client.

Making a Financial Plan

In today’s changing economic times, establishing a financial plan is very important

in building a strong financial future. The best way to establish your plan is to

create a budget. It is the only way to get a grip on your spending and see if your

money is used the way that will benefit you the most. There are several steps

to creating a budget.

Step 1: Estimate your monthly take-home income and expenditures.

• Gather all your bills, including credit card statements, receipts for groceries,

gas, or anything else that you bought with cash. You should also have
your checkbook register available to review additional expenditures.

Note: If you have not been keeping records, you may need to keep track

of every dollar you spend for a month before an accurate budget can be

created.

• Make “best guess” estimates when necessary.

Step 2: Journalize your spending.

• It is recommended that you keep a small note pad (Spending Journal) to
record all purchases you make.

• Save all receipts so they may be compared to the Spending Journal.

Step 3: Review your progress.

• Routinely compare actual spending to the budget. This will help to reduce

or eliminate some expenses.

• Identify areas that may require adjustments.

When establishing a budget, spending can generally can be separated into five

categories: housing, debt, travel, savings, and other. Each category should
take up a certain percentage of income. These percentages are as follows:

Home: 35%
Travel: 15%

Debt: 15%
Savings: 10%
Other: 25%

To determine what percentage you spend for each category, divide the TOTAL
from that category by the Total Available Monthly Income, then multiply that

number by 100.
Example: TOTAL for Home is $600, Total Available Monthly Income $2,000.

600 ÷ 2000 = 0.3

Note: To get a percentage, multiply 0.3 x 100. This would be 30%.

When the budget is initially created, these percentages may not fall within the
recommended parameters. Continue to journalize and review your spending

habits. This can help with making adjustments to your budget and allow you to
come up with additional ways to maximize your spending.

A Plan in Motion
The following is an example of how budgeting can help you to achieve your

financial goals. We will look at an imaginary individual’s Initial Budget, analyze

their situation, restructure their spending, and see an adjusted budget.

Budget Review

Home Section:
• Enrolls in utility budget plans that distribute their costs evenly over the

year. Saves $40.

• Enrolls in a monthly calling plan from the phone company. Saves $20.

• Downgrades their high​speed Internet service. Saves $15.

• Downgrades their cable service to a basic package. Saves $25.

• Cuts coupons, gets a shopping savings card, and purchases generic

products. Saves $50.

Travel Section:

• Increases their insurance deductible. Saves $25.

• Signs up for an electronic toll collection system that offers a discount.

Saves $12.50.

Debt Section:

Credit card debt totals approximately $10,000, spread over three cards (Card 1:

18% interest, $3,500 balance; Card 2 : 13% interest, $2,000 balance; Card 3 :
9% interest, $4,500 balance). The decisions made do not automatically reduce

the payment; however, they will save money in interest costs down the road.

• Moves the balance from the Card 1 card to one with a lower rate.

• Contacts Card 2 and asks for an interest rate reduction. They reduce it by two percentage points because they have a good repayment history.

Savings Section:

Because they made changes in their budget, they are able to increase their

monthly savings to the recommended 10%.

Other Section:

• Stops going to restaurants. Saves $140.

• Although they like getting take​out three times a month, they cut back to

once a month. Saves $50.

• They buy a coffeemaker and they bring a thermos to work, allowing them

to cut back on their Mucho Grande coffee runs. Saves $80.

• They cut out the snacks. Saves $25.

• Picks up the dry cleaning sheets they can use in their dryer. Saves $42.
• Joins a video rental club that allows unlimited rentals for $25 a month and

cuts out going to the movies. Saves $55.

• Joins a gym that has a lower membership fee. Saves $40.

• Shops around for a better cell phone plan. Saves $20.

Weekly Journalizing Worksheet

Instructions: Track your spending each day under the daily column. At the end of each week,

total your expenses for each category and calculate your “Total Expenses.” Use the blank spaces
to add additional items.

Expense Monday Tuesday Wednesday Thursday Friday Saturday Sunday Total

Groceries
Gasoline
Tolls
Tolls
Parking
Bus/Subway/Train
Restaurants
Take Out
Snacks
Alcohol
Clothing
Shoes
Dry Cleaning
Movies
Concerts

Publications
Hobbies
Make Up
Hygiene
Tobacco
Tithing/Giving
Other
Other
Other
Other
Other
Other
Other
Other
Other

Monthly Journalizing Worksheet

Instructions: Copy your spending for each week into the appropriate areas. At the end of
each month, total your expense for each category and calculate your “Total Expenses.” Subtract

your monthly expenses from your monthly income. Do you have excess money or are you short? Look for ways to cut back your expenses.

Expense Week 1 Week 2 Week 3 Week 5 Total

Groceries
Gasoline
Tolls
Parking
Bus/Subway/Train
Restaurants
Take Out
Snacks
Alcohol
Clothing
Shoes
Dry Cleaning
Movies
Concerts
Publications
Hobbies
Make Up
Hygiene
Tobacco
Tithing/Giving
Other
Other
Other
Other
Other
Other
Other
Other
Other

Saving - The most important thing you can do !

Saving and Investing

We all know that money can be used to buy things, but did you know you could
use your money to make money? Saving and investing allows you to build

wealth and be prepared for what the future holds.

wealth and be prepared for what the future holds.

Compound Interest

Compound interest is a very powerful tool for making your money grow, and

involves earning interest on interest you have already received. Let’s say you

put $1,000 in a savings account that pays 5% interest. At the end of the year,

you will have received $50 in interest. Now you have $1,050. ($1,000 x 5% =

$50). In the second year, you will earn 5% on $1050, or $52.50. Notice that
your money grew faster. You made $50 in the first year, and $52.50 in the

second. This is how compounding works. The longer the money stays in the

savings account, the faster it will continue to grow, so it is a good idea to start

a savings plan as soon as you can.

The Rule of 72

If you had $1,000 lying around, decided to put it into an account and never

made another deposit, in a certain amount of time that money would double.

That is the cool aspect of compound interest. By using the Rule of 72, we can see
how long it will take to double your money. All you have to do is divide 72 by the

interest rate the account was paying. Sounds simple, so let’s check it out. If

you look at an account that earns 4% on your money, you would do the math as

follows: 72÷4 = 18. It would take you 18 years to double your money. Not too

shabby!

Risk and Return

There are many ways to save money and build wealth, some of them riskier than others.

The more risk, the more potential you have to build wealth. As an example, let’s compare two ways to make your money grow: a savings account

and a stock. A savings account has very little risk; the money you put into it is

insured by the FDIC and there is very little chance of losing it. On this type of
account you would probably earn about 1.5% interest. Stocks, on the other

hand, are very risky. There are many factors that can cause you to lose your

money. Because of the high risk, over time you could probably earn an average

of between 10% and 11% in interest.

By using the Rule of 72, let’s see how long it would take to double $1,000 in a

savings account versus investing in a stock. In a savings account you would

earn 1.5% interest, so you would do the math as follows: 72÷1.5 = 48 years.

Investing in a stock, you would earn about 11% interest, so: 72÷11 = 6.5 years.
As you can see, more risk definitely equals more return.

Diversify

Putting all your eggs in one basket is not a good idea. With the high risk of

investments, you really do not want to put all your cash into the stock market.

Why? Well, the market is volatile and no stock is a sure thing. If you put all your

money there and lose it, you are ruined. By spreading your money out between

both low and high risk items, you do not risk losing everything if your investment
goes bad.

The Taxman and Inflation

There are two more hurdles you must take into consideration: taxes and inflation.

You will pay taxes on any interest earnings you make. These taxes are used on

both the federal and state levels to fund the government. Depending on your

tax bracket, you could contribute as much as 30% of your earnings to taxes.

Inflation saps the growth of your money because in inflationary periods, the value of money decreases over time. Essentially, inflation occurs when the prices of goods

and services rise. These prices rise because of supply and demand within our economy, but this is not an economics lesson, so let’s forge
ahead. Historically, inflation has grown at a rate of 3% each year. Let’s look at an example. Say you bought a soda today for $1. Next year that soda may cost

you $1.03. In ten years that soda might cost you $1.30. This will hurt you if you are not getting a greater return on the money you have in the bank. If you

were earning 2% interest, your money would be growing at a rate 1% behind inflation. If you saved the dollar for soda and were earning 2% interest on it,
next year that dollar would be worth $1.02; in ten years that dollar would be worth $1.20.

When you want your money to grow, you have to be sure that the return, or interest, is greater than the taxes you will pay and that your interest rate is

always higher than the rate of inflation.

Ways to Make Your Money Grow:

Savings Accounts: A deposit account that is offered by banks and credit unions. The bank lends your money to people needing loans. In return

for using your money for loans, the bank pays you interest, though at a relatively low rate. You do have full access to your money and may withdraw it at any time.

Certificate of Deposit (CD): A special type of deposit account that pays a higher rate of

interest than a regular savings account. The reason you are paid a higher amount is that you agree not to access the money for

a specific amount of time, such as 3 months, 6 months, 1 year, and so on. If you do withdraw the money, you will pay a penalty.

Money Market Account: These accounts act like a combination of a checking

and savings account. You earn interest on these accounts at a higher rate than

on a standard savings account. Typically, you must maintain a minimum balance,

or pay a fee if you go below it. You can write checks against the funds in this

account, but there are limits as to how many.

Bond: When you buy a bond, you are lending money to a corporation or
government. In return for loaning them money, you get a specified interest

rate which, depending on the type of bond, is paid either at specific

periods during the life of the bond or when the bond matures. These are

generally long term investments.

Stocks: By purchasing shares of a stock, you become part owner of the company.

This does not mean you can walk in and use the executive washroom, though.

If the company does well over time, the value of the stock should go up. If you

sell the stock, you make a profit. Some companies pay their shareholders

dividends, which are percentages of their earnings. Stocks are definitely a long term investment.

Mutual Funds: A mutual fund is an investment corporation that pools

together investors’ money to purchase stocks and bonds. The advantage

offered by this type of investment is that it is diverse and not dependent

on the performance of a single stock or bond. The mutual fund itself does

the diversifying for you for much less of an investment than if you were
buying each stock individually. A mutual fund is managed full​time by a

Fund Manager who decides which stocks to buy and sell every day. Their job is

to maximize the return from your investment while maintaining the appropriate risk level.

The Earlier, the Better

Using the following example, let’s look at how much money you would have by

the time you retire. This example is based on beginning a savings plan at different

stages of your life. You would contribute $75 each month and earn a return of

11% on your investment (this is the historic rate of return for stocks). All figures

are approximate.
Age Years Investing At Retirement
20 47 $1,160,223
30 37 $403,005
40 27 $136,321
50 17 $42,399

The future is uncertain. According to the actuaries (special statisticians) at the

Social Security Administration, the Social Security Trust Fund should be depleted

by 2042. People are living longer, and, if Social Security disappears, many are

going to be in a tough spot.

The most important thing you can do to protect your future is to begin saving at

a young age. As you can see in the example above, the difference in beginning

to save at the age of 20 as opposed to 30 can be more than $750,000, even with
a modest monthly investment. If Social Security does go away, that $750,000

would come in pretty handy, wouldn’t it?

End of the * Debtor Client Counseling Section

The second section of Module 2A focuses on Credit Granting and Lending Procedures.
Lending

Underwriting Guidelines for the Average Credit Application

It is important as a Certified Debt Specialist to have an understanding of the background and procedures used by those granting credit.

Background:

The lender reviews a loan applicant's financial history to determine the likelihood of receiving on-time payments. Each lending institution will have slightly different

underwriting policies, but all will be similar. The primary items reviewed are:

Income
Debt
Credit
Savings
Ratios

Income

Income is one of the most important variables a lender will examine because it is used to repay the loan. Income is reviewed for the type of work, length of employment,
educational training required, and opportunity for advancement. An underwriter will look at the source of income and the likelihood of its continuance to arrive at a gross

monthly figure.

Salary and Hourly Wages - Calculated on a gross monthly basis, prior to income tax deductions.

Part-time and Second Job Income - Not usually considered unless it is in place for 12 to 24 straight months. Lenders view part-time income as a strong compensating

factor.

Commission, Bonus and Overtime Income - Can only be used if received for two previous years ( sometimes 3 years). Further, an employer must verify that it is likely
to continue. A 24-month average figure is used.

Retirement and Pension Income - Must continue for at least three years into the future to be considered. If it is tax free, it can be grossed up to an equivalent gross

monthly figure. ( eg. Multiply the net amount by 1.20%).

Alimony and Child Support Income - Must be received for the 12 previous months and continue for the next 36 months. Lenders will require a divorce agreement and a
court printout to verify on-time payments.

Notes Receivable, Interest, Dividend and Trust Income - Proof of receiving funds for 12 previous months is required. Documentation showing income due for 3 more

years is also necessary.

Rental Income - Cannot come from a Primary Residence roommate. The only acceptable source is from an investment property. A lender will use a % of the monthly rent
and subtract ownership expenses. The Rental Schedule of a tax return is often used to verify the figures. If a home rented recently, a copy of a current month-to-month

lease is acceptable.

Automobile Allowance and Expense Account Reimbursements - Verified with 2 years tax returns and reduced by actual expenses listed on the income tax return
Schedule .

Education Expense Reimbursements - Not considered income by most lenders. Only viewed as slight compensating factor.

Self Employment Income - Lenders are very careful in reviewing self-employed borrowers. Two - Three years minimum ownership is necessary because two - three
years is considered a representative sample. Lenders use the average monthly income figure from the Adjusted Gross Income on the tax returns. A lender may also

add back additional income for depreciation and one-time capital expenses. Self-employed borrowers often have difficulty qualifying for credit due to large expense write
offs.

Debt
An applicant's liabilities are reviewed for cash flow. Lenders need to make sure there is enough income for the proposed payment, after other revolving and installment
debts are paid.

All loans, leases, and credit cards are usually factored into the debt calculation. Utilities, insurance, food, clothing, schooling, etc. are usually not.

If a loan has less than 10 months remaining, a lender will usually disregard it.
The minimum monthly payment listed on a credit card bill is the figure used, not the payment made.
An applicant who co-borrowed for a friend or relative is accountable for the payment. If the applicant can show 6 to 12 months of on-time canceled checks from the

co-borrower, the debt will not usually count.

Loans can be paid off to qualify for a mortgage, but credit cards sometimes cannot (varies by lender). The reasoning is that if the credit card is paid off, the credit

line still exists and the borrower can run up debt after the loan is closed.
A borrower with fewer liabilities is thought to demonstrate superior cash management skills.

Credit
Credit

Most lenders require a credit report from the credit bureau. They will order the report. The credit report also searches public records for liens, judgments, bankruptcies

and foreclosures. With Credit report in hand, an underwriter studies the applicant's credit to determine the likelihood of receiving an on-time mortgage payment. Many
studies have shown that past performance is a reflection of future expectations. Hence, most lenders now use a national credit scoring system to evaluate credit risk.

On the positive side, the lending process is very forgiving! An applicant with 12 plus months positive credit, will usually qualify for a loan. However, the guidelines require
an applicant to explain why payments were previously late and why current circumstances are different. In addition, any unpaid judgment, collection or charge off must be

paid prior to closing. Here are some rules of thumb most lenders follow:

12 plus months positive credit will usually equal an approval, depending on the overall credit.
Unpaid collections, judgments and charge offs must be paid prior to closing a loan. The only exception is if the debt was due to the death of a primary wage earner,

or the bill was a medical expense.

If a borrower has negotiated an acceptable payment plan, and has made on time payments for 6 to 12 months, a lender may not require a debt to be paid off prior to
closing.

Credit items usually are reported for 7 years U.S and 6 years Canada. Bankruptcies expire after 10 years U.S. and 6 years Canada.
Foreclosure - 3 years must elapse to be considered for a loan program.

Bankruptcy - A borrower is eligible for a loan 2 years after discharge, provided they have reestablished credit and have maintained perfect credit after the
bankruptcy.

The good credit of a co-borrower may not offset the bad credit of a borrower.
A low credit score may require an Alternative Credit program.

Misinformation on a credit report can be repaired!

If a borrower falls behind on a payment, the creditor should be contacted as quickly as possible. Most creditors will work with a borrower who makes an initial good
faith effort to communicate with them.

Savings

Lenders evaluate savings for three reasons.

1. The more money a borrower has after closing, the greater the probability of on-time payments.
2. Most loan programs require a minimum borrower contribution.

3. For Mortgage loans lenders want to know that people have invested their own into the house, making it less likely that they will walk away from their life's
savings. They analyze savings documents to insure the applicant did not borrow the funds or receive a gift.

Lenders look at the following types of accounts and assets for down payment funds:

Checking and Savings - 90 days seasoning in a bank account is required for these funds.
Gifts and Grants - After a borrower's minimum contribution, a gift or grant is permitted.

Sale of Assets - Personal property can be sold for the required contribution. The property should be appraised and a bill of sale is required. Also, a copy of
the received check and a deposit slip are needed.

Secured Loans - A loan secured by property is also an acceptable source of closing funds.
Retirement Savings - Any amount that can be accessed is an acceptable source of funds.
Sweat Equity and Cash On Hand - Generally not acceptable. Some lending programs allow it in special circumstances.

Sale Of Previous Home ( For Mortgages) - Must close prior to new home for the funds to be used. A lender will ask for a listing contract, sales contract, or
closing statement.

Debt to Income Ratio

A measure widely used by lenders to gauge the financial stability of loan applicants
is called the debt to income ratio. A high debt to income ratio jeopardizes the

applicant’s chances of securing loans for major purchases, such as a car or a

home. Maintaining a low debt to income ratio makes it easier for a consumer to

qualify for the lowest interest rates and best terms.

The debt to income ratio is represented as a percentage and compares your

monthly debt payments to your gross monthly income.

The first step in calculating your debt to income ratio is to figure out your gross
monthly income (before taxes). Next, list the current minimum payments on all

credit cards and loans. Be sure to include the following:

• car payments and other installment loan payments

• bank/credit union loans

• credit lines

The debt to income ratio can be calculated as your monthly debt payments ÷
your gross monthly income. Example: Monthly debt payments = $700,
Gross monthly income = $3,200.

Debt to income ratio = 700 ÷ 3200 = .218 Note: To get a percentage,

multiply 0.218 by 100. This would be 21.8%. Round up to 22%.

Generally, the lower a debt to income ratio is, the better the consumer’s financial
condition. The following are examples of the different percentages:

Note: All answers are providing that the consumer’s FICO score is above 700.

10% or less: Should not have trouble getting loans. May qualify for lower

rates.
11%–20%: Again, should not have trouble getting loans. Time to scale back

on spending.
21%–35%: Although the consumer may not have trouble getting new credit

cards, they are spending too much of their monthly income on debt repayment.
36%–50%: They may still qualify for certain loans, but it will be at higher

rates. It is time to develop a plan to get out of debt.

More than 50%: Very difficult to qualify for financing. If you do qualify, it will
be at the highest interest rates allowed.

Why Use Gross Income?

When qualifying for a high ticket item, such as a home, gross income allows you
to afford “more of a home.” Although you can qualify for a larger mortgage

amount, you must always remain conscious of what you can actually afford.
Let us return to Andy, a consumer who does not take affordability into

consideration.
• Andy has an annual gross income of $70,000.

• His gross monthly income is $5,833.

• He qualifies for a $188,500 mortgage.
• His monthly payment is $1,254.

Looking at this scenario, it does not look like Andy will have any problem making
his monthly payment, but remember, this is his gross. Let’s take a look at what his net income (take home) would be.

Andy has an annual gross income of $70,000

He is in a 30% tax bracket.

He pays $21,000 a year in Federal tax.

He pays $2,800 a year in State tax.

He pays $4,340 a year in Social Security.

He pays $720 a year in Medical insurance.

His net income would be 70,000 ? 21,000 ? 2,800 ? 4,340 ? 720 = 41,140.
$41,140 is what Andy would bring home each year, or $3,428 a month.

Andy's monthly mortgage payment would be 36.5% of his net income.

Let's take a closer look at what Andy's budget would be like by taking into

consideration all of his expenses.

Home: $1,884 (55%). This includes mortgage payment and other related home expenses.

Travel: $550 (16%)

Debt: $350 (10%)

Savings: $214 (6%)

Other: $430 (12.5%)

Because he applies for the maximum mortgage he can qualify for, Andy can't

save all that much. His total for Home is 19% higher than it should be. Because

his expenses are not really bad, he can still save money, but only 6%. If he runs

into an emergency down the road, he may have trouble getting through it.

You should always take into consideration your net income. This is what you will

have to work with when meeting all of your financial obligations. If Andy took
have to work with when meeting all of your financial obligations. If Andy took

this into consideration, he might have chosen a more modest home and been

more comfortable financially.

Good vs. Bad Debt to Income Ratio Example

Let’s take a look at two consumers earning the same income and how their debts
would affect their debt to income ratios.

Consumer A: Income is $3,500 a month, monthly debt payments are $650.

Math: 650 ÷ 3500 = 18% debt to income ratio. Good.

Consumer B: Income is $3,500 a month, monthly debt payments are $1350.

Math: 1,350 ÷ 3500 = 38% debt to income ratio. Bad.

Next, we are going to see that when FICO scores are used in conjunction with
debt to income ratios, the interest you would be charged is affected.

FICO Scoring

The credit bureaus apply the FICO scoring methodology to their proprietary credit files to

produce unique credit scores. For instance, these are the branded credit scores of the two

major bureaus: Equifax's ScorePower and Experian's PLUS score. The major bureaus

also apply the VantageScore methodology and sell that score under Vantage’s brand. In

addition, many large lenders, including the major credit card issuers, have developed

their own proprietary scoring models.

The FICO score ranges form 300 to 850, and VantageScore rates consumers from 501 to

990. In both systems, a higher score is preferred. Simply based on the range comparison,

the consumer’s VantageScore will always be higher than the FICO score.

_____________________________________________________________________________________

The FICO Formula

Fair Isaac can consider more than 20 factors when calculating a credit score, depending

on the consumer’s unique credit history. As the information in a credit report changes

over time, so does the importance of the individual factors that determined that score.

For some consumers, one factor may be more important than it is for other consumers

with a different credit history. However, every FICO score does include five main

components:

Source: Fair Isaac Corporation

1. Payment history (35%) – this is the primary factor in a FICO credit score. Lenders

want to know whether the borrower has used credit responsibly in the past. Consistent,

on-time payments of credit obligations increase one’s credit score and access to credit.

Obviously, late payments will negatively affect credit scores. There are three factors that

FICO considers when determining the affect of a negative credit item:

• Date – more recent events have a greater impact on the FICO score. Over time, a

negative incident impacts the score less.

• Frequency – a succession of negative incidents in a short time lowers the FICO

score more than fewer and more sporadic incidents.

• Severity – a negative incident is classified according to the severity of the default;

a debt that is 120 days past due affects the credit score more than one that is 30

days overdue. Severe negative marks also include accounts that have defaulted,

accounts in collections, tax liens, judgments, and bankruptcy filings.

2. The debt amount (30%) – FICO adjusts based on the amount and types of debt

obtained. Mortgages and student loans are perceived as investments in the future,

whereas most installment loans and all revolving credit are seen as indicators of

discretionary spending patterns. FICO also adjusts based on the percentage of available

credit being used. As discretionary debts are paid down, the FICO score improves

because the proportion of available credit to debt rises. Consumers should maintain the

widest gap possible between their credit limits and outstanding balance of revolving debt

in order to have the highest FICO score.

3. Length of credit history (15%) – a longer credit history is a better indicator of future

behavior and has a greater effect of credit scores that a short history. FICO considers

these factors:

• Length of time since the account was opened

• Length of time by specific type of account

• Length of time since last account activity

4. New credit & inquiries (10%) – Applying for and opening new credit accounts can

reduce the FICO score if done in a short period of time. To distinguish whether a

borrower is only shopping around for lower rates or opening new credit accounts, the
FICO formula considers these factors:

• The number of new accounts applied for

• The number of new accounts approved

• The time passed since the credit application

• The time passed since a new account was opened

5. The types of credit obtained (10%) – too many active credit card balances can lower

the FICO score. Lenders view consumer installment loans as normal and necessary as

those loans typically purchase homes and automobiles. Consumers should have a

balance mix of credit account types to attain the highest FICO score.

The FICO methodology places more value on current behavior. Current credit managed

responsibly can counteract the detriment of older credit trouble over time. Current late

payments are indicators of a loan going bad and the credit score lowers in anticipation.

FICO uses this eight-bar chart to compare consumers:

Source: Fair Isaac Corporation

The range of FICO scores are grouped under their system, with standard loan terms and

interest rates set for each group. Therefore, it is more significant for the score to move up

or down a group than it is to move any number of points. For example, a score of 699

would receive the same loan terms as a 650 score; however, raising it one point to 700

would gain the borrower a significantly better loan package. The higher groups have the

best loan terms, while the lower-rated groups pay higher interest.

FICO Score/Debt-to-Income Ratio Example

One of the first big​ticket items you will buy is a car. Let’s take a look at the
effects of a good FICO score and a low debt to income ratio versus a low FICO

score and a high debt to income ratio. For the purposes of this example, we will

be using a car valued at $20,000.

FICO Score Debt-to-Income Ratio Interest Rate Mo. Pmt. Total Interest Paid
720 to 850 (High) 18% (Low) 5% $460.59 $2,108.19

500 to 589 (Low) 38% (High) 19% $598.00 $8,704.14

As you can see, by having a low FICO score combined with a high debt to

income ratio, you would have to pay $137.41 more per month and over $6,500 more in interest for the same car.
Vantage Scoring

The Vantage Score

The nation's three major credit bureaus – Equifax, Experian, and TransUnion –

collaborated to develop Vantage Score in response to lenders’ requests for a model that

could more reliably score more people. The Vantage Score system was designed to

deliver:

• A highly predictive, generic consumer credit risk model

• Improved risk assessment

• For the first time, a consistent algorithm across the three reporting companies

• An expanded universe of consumers who can be scored

• A score that is logically scaled for easier use and understanding

All three bureaus use the same formula to calculate the Vantage Score. However, there

are discrepancies between the resulting scores due to the different data set reported to

each bureau.

The Vantage Score model asks six primary questions:

Source: Vantage Score

1. Has the consumer consistently paid accounts on time in accordance with the terms

of the loan or credit arrangement?

Payment history accounts for 32% of the Vantage Score. Creditors only report late
payments after 30 days, and then in 30-day increments, which means that a payment that

is one day late can affect the score as much as one 59 days late A history of late

payments -- even by a few days -- can lower a score significantly.

2. What percentage of total available credit is currently on loan per lender?

The Vantage Score rewards consumers who maintain low balances on revolving credit

cards debt and open lines-of-credit – available credit represents 23% of that score.

Experts recommend that consumers use no more than 30% of available credit from any

one credit card or credit line in order to achieve a high score.

3. How much of the total credit available is currently being used?

A similar calculation looks at total credit available from all lenders and the total

percentage accessed. That number, knows as credit utilization is 15% of the

Vantage Score. Consumers who have "maxed out" their credit cards and other lines-ofcredit

will see lower Vantage Scores because of their lack of liquidity and may not be able

to obtain additional or low-cost credit access.

4. What is the total of current and delinquent account balances?

The consumer’s total outstanding debt, current and delinquent, is assessed at 13% of the

Vantage Score. Credit balances provide insight into the borrower’s financial liquidity and

prudent credit practices.

5. How long is the credit history?

A long and stable history of prudent credit use is ideal under any credit-scoring model

and accounts for 10% of the Vantage Score. The score increases as long-term credit

relationships are maintained with a diverse mix of credit accounts.

6. How many recently opened credit accounts and credit inquiries are on file?

Recent credit (7%): The Vantage Scores considers whether a consumer that opens a

number of credit accounts in a short time period is experiencing cash flow problems and

attributes 7% of the score to that conclusion. If the consumer is also utilizing a high

percentage of existing credit availability, the impact to the score is worse. Even

researching one’s credit options can lower a score – a large number of credit inquiries in

a short time trigger a deduction. However, the methodology does not penalize for

comparison rate shopping on big-ticket items, such as homes and cars.

The Vantage Score assesses the previous 24 months of credit history to predict the

likelihood of future credit delinquency (90 days late or greater) on any type of account.

The Vantage Score also groups consumers into tiers based on the score received to guide

lenders in their credit offers. The groups and associated score ranges are:

901 - 990 A “Super Prime”

This group includes the top 11% of the population. It is regarded as a very low credit risk

and receives the most favorable credit terms.

801 - 900 B “Prime Plus”

801 - 900 B “Prime Plus”

The top 40% of the population, these borrowers are considered good credit managers and

are provided good credit terms.

701 - 800 C “Prime”

This is the top 60% of the population. As a group, they are considered credit worthy and

receive reasonable terms from lenders. Even a little positive documentation provided to a

credit bureau can elevate this profile to the next higher group.

601 - 700 D “3on-Prime”

The next largest group, this profile represents that 38% of the population viewed as

higher risk, and who, therefore, receive less favorable terms to compensate for the risk

taken – if they receive credit at all.

501 - 600 F “High Risk”

This lowest-scoring group includes 19% of the population and lenders are alerted that

extending credit to its members is very risky. Most lenders do not to lend to this group.

The 4 C'S Of Credit

CHARACTER- the personality traits or morals of these individuals determine whether they intend to pay and pay on time. Checking into his/her past gives an insight as to

their reliability.

CAPITAL- the borrower's financial statements (assets less liabilities). Demonstrates stability during times of financial duress as these resources can be liquidated to pay

off debts.

CAPACITY- depends on income, obligations and outstanding debts. Credit references, account history, credit limits, promptness of payments and general reliability
indicate one's capacity.

CONDITIONS- the general economic environment as well as the individual's future job prospects.

Most people remember underwriting guideline by thinking of “The 4 C’s of Credit”.

Establishing a Credit History

Excerpts from Federal Trade Commission Article:

How To Build A Credit History And Establish Credit (article)

Building a good credit history is important. If you have no reported credit history, it may take time to establish your first credit account. This problem affects young people
just beginning careers as well as older people who have never used credit. It also affects divorced or widowed women who shared credit accounts that were reported only

in the husband's name. If you do not know what is in your credit file, check with your local credit bureaus. Most cities have two or three credit bureaus, which are listed

under "Credit" or "Credit Reporting Agencies" in the Yellow Pages. For a small fee, they will tell you what information is in your file and may give you a copy of your credit

report. If you have had credit before under a different name or in a different location and it is not reported in your file, ask the credit bureau to include it. If you shared
accounts with a former spouse, ask the credit bureau to list these accounts under your name as well. Although credit bureaus are not required to add new accounts to

your file, many will do so for a small fee. Finally, if you presently share in the use of a credit account with your spouse, ask the creditor to report it under both names.

Creditors are not required to report any account history information to credit bureaus. If a creditor does report on an account, however, and if both spouses are permitted
to use the account or are contractually liable for its repayment, under the Equal Credit Opportunity Act you can require the creditor to report the information under both

names. When contacting your creditor or credit bureau, do so in writing and include relevant information, such as account numbers, to help speed the process. As with all

important business communications, keep a copy of what you send. If you do not have a credit history, you should begin to build one. If you have a steady income and

have lived in the same area for at least a year, try applying for credit with a local business, such as a department store. Or you might borrow a small amount from your
credit union or the bank where you have checking and saving accounts. A local bank or department store may approve your credit application even if you do not meet the

standards of larger creditors. Before you apply for credit, ask whether the creditor reports credit history information to credit bureaus serving your area. Most creditors do,

but some do not. If possible, you should try to get credit that will be reported. This builds your credit history. If you are rejected for credit, find out why. There may be
reasons other than lack of credit history. Your income may not meet the creditor's minimum requirement or you may not have worked at your current job long enough.

Time may resolve such problems. You could wait for a salary increase and then reapply, or simply apply to a different creditor. However, it is best to wait at least 6

months before making each new application. Credit bureaus record each inquiry about you. Some creditors may deny your application if they think you are trying to open

too many new accounts too quickly. If you still cannot get credit, you may wish to ask a person with an established credit history to act as your cosigner. Because a
too many new accounts too quickly. If you still cannot get credit, you may wish to ask a person with an established credit history to act as your cosigner. Because a
cosigner promises to pay if you don't, this can substantially improve your chances of getting credit. Once you have repaid the debt, try again to get credit on your own.

Re-Establishing Credit (Article)

Remember receiving your first credit card? For many, just being considered “worthy” of a credit card was reason for joy. But having the ability to purchase a new stereo,

or whatever, without cash in hand was cause for great jubilation!

Chances are, however, when the credit card issuer mailed you the glimmering new plastic card (with the extensive terms of agreement in print scarcely readable with a
magnifying glass), they failed to include a user's manual. Nor were they required by the Surgeon General to include a warning: “Misuse of a credit card could potentially

destroy your good credit rating, bring you to financial ruins, cause marital discord and adversely affect your relationship with relatives, friends and associates.”

This sector, therefore, is designed to offer some assistance to individuals who have misused their credit privileges, or for whatever reason, are in need of credit repair.

While enrollment in a debt management program may ultimately resolve a debtor's financial obligations and “improve” his or her credit history through the process of re-
aging past due accounts “enrolled” in the program, the fact is, past credit history typically remains on one's credit file for up to 7 years, and bankruptcy and other public

records up to 10 years. Unbeknown to most people, under certain provisions, some adverse information can be reported indefinitely.

It must be understood that credit reports do not just report an individual's “credit” history. Credit reports typically includes the individual's name and/or any alias' used,

spousal name, social security number, past and present addresses and employment history (including salary), detailed account information including a monthly

transaction history provided by most creditors and credit card issuers, information reported by landlords, utility companies, insurance companies, doctors, hospitals,
lawyers and other professionals. Public records are also included, such as bankruptcy filings, lawsuits, court judgments, foreclosures, judgment liens, tax liens,

mechanics liens, and criminal arrest and convictions. Inquiries by creditors and others are also listed on one's credit report.

Derogatory information on your credit report can severely damage your chances of qualifying for a loan or a line of credit, be it for a credit card, a mortgage or any

consumer goods or services. Additionally, it can even affect your chances of getting a good job or renting a place to live. Today, most banks, creditors, landlords, and a
growing number of employers, rely on credit reports for obtaining information and making decisions. In an age when credit files are easily stored in computer files and can

be transmitted on request worldwide in a matter of moments, establishing a good consumer report is not only smart, but essential for most consumers wanting a better

life.
If your credit report reflects favorably upon you, you are to be commended. If, however, your report is tarnished like that of millions of others, which most often is a direct

result of misuse of credit cards, than perhaps it's time for “plastic” surgery. Regardless of how bad your current credit record looks, with a sincere desire and a concerted

effort to turn it around, in time your credit report will improve. Many creditors are happy to extend credit to people who have taken definitive action to resolve their

financial problems and have re-established a history of good credit.

Credit repair is the process of re-establishing and maintaining a good consumer report. First, you need to review your credit report to see what it contains. Next, you need

to analyze it to determine its accuracy. Then, you must take corrective action. This means taking steps to bring delinquent accounts current, paying off or settling

accounts , and in some cases, adding a brief statement to explain the reason for a derogatory entry. Taking corrective action also means “disputing outdated, incorrect
and misleading information”. During the repair process, and as soon as possible, you also need to add positive information to your file to reflect a good payment history

and to show stability. Lastly, once established, you need to maintain a good credit record. Naturally, this means making timely payments to your creditors. As accounts

are paid off, however, it is important to keep a few credit accounts active to ensure that positive information is added routinely. And, by all means, to ensure accuracy,

review your credit report annually.

(End of Article)

It is important to understand that your clients’ Credit Reports will be significantly improved through the Arbitration and Settlement of the problem debt. Debts which are
settled are reported as such on the Credit Report and are no longer reported as “Outstanding” or unpaid.

You should also educate your clients on the process of reviewing and correcting the other information on their Credit Report, and adding any other statement to their

report as necessary. (Credit Repair)

Some clients may be faced with the last resort of BANKRUPTCY as the only real solution to their Debt problems as Settlement is just not possible due to lack of funds to
accomplish the settlement.

To give appropriate advice to your client you need to be familiar with the Act governing Bankruptcy .

Due to the size of the Act the following Internet addresses are provided to direct you to the information regarding the legislation governing Bankruptcy :

In the U.S. - http://www.law.cornell.edu/topics/bankruptcy.html

In Canada – http://laws.justice.gc.ca/en/b-3/5653.html

There are many hundreds of other excellent resources for this information online as well.

The following are Terms and phrases used by the Credit Bureaus in Credit Reports and are Internationally recognized.

Words Used In A Credit Report

AGE - Subject’s Age JUDG - Judgement

AKA - Also Known as LIAB - Liabilities
B - Both or Buying L/P - Date of Last Payment
BAL - Balance M - Male, Married, or BDS Birthdate Subject
BKRPT - Bankruptcy MAR - Marital Status
BKRPT - Bankruptcy MAR - Marital Status
BUS - Business MR - Months Reviewed
BUS/IDCode - Bus. Industry Code N/RES - Non-responsibility
CA - Current Address NSF - Check insufficient funds
CDC - Consumer Debt Counseling NV - Not Verified
CF - Co-Applic. Former Employer O - Own or Rent
CHKAC - Checking Account OPD - Orderly Payment of Debts
D - Divorced OPND - Date Opened
DAPA - Debtor Assist. P - Separated
DEF - Defendant PD - Date Paid
DEP - Dependents PD CL - Paid Collection
DIS - Dispute P/D - Past Due Amount
DLA - Date of Last Activity R - Revolving Charge
DV FD - Divorce Filed RPTD - Date Reported
DV FL - Divorce Final RT - Rating
EF - Former employ.- Subject S - Single or Subject

EC - Employment –Co-Applic. SAT - Satisfied

E2 - Employment –Subject 2nd Former SAVAC - Savings Account
FA - Former Address SECLN - Secured Loan
FAD - Last date file accessed SINCE - On file since date
FORCL - Foreclosure SP MT - Separate Maintenance
GARN - Garnishment SSS - Social Ins./Sec. # subject
H/C - High Credit ST JD SSC - Social Ins./Sec. # Co-App
I - Installment UP CL - Unpaid collection
ID - Identification Information VER - Date Verified
IND - Individual VLDEP - Voluntary Deposit
INQS - Inquiries VOL - Voluntary
INV DIS - Involuntary Discharge VOL DIS - Voluntary Discharge
INVOL - Involuntary
INVER - Indirectly Verified

Pay Habits

The Pay Habits used to standardize reporting are illustrated by two elements. The type of Account is indicated by a letter, followed by the Usual Manner of Payment,

which is indicated by a number ( ex. R1 ).

Type of Account

There are three TYPES OF ACCOUNTS. They are as follows :

1. An “O” represents an “OPEN” account. Eg., An account to be paid after one billing. An account expected to be paid in one payment, such as a 30 – day account. An
account in which the entire amount to be paid within certain limits, such as 60 or 90 days with no interest or service charge.

2. An “R” represents a “REVOLVING” account. Eg., An account with regular monthly payments based on the amount of the balance due.

3. An “I” represents an “INSTALLMENT” account. Eg., An account with a fixed number of specified payments – specified as to amounts and time, and including interest
charges. An example is a vehicle loan over 3 years.

Usual Manner of Payment

Credit grantors classify the USUAL MANNER of PAYMENT with the following numbers. These numbers signify how the customer paid the account in the month

reported.

Usual Manner of Payment

“0” = To new to rate, approved but not used

“1” = Pays (or paid) within 30 days of billing, pays account as agreed
“2” = Pays (or paid) in more than 30 days, but not more than 60 days, one payment past due

“3” = Pays (or paid) in more than 60 days, but not more than 90 days, two payments past due

“4” = Pays (or paid) in more than 90 days, but not more than 120 days, three or more payments past due

“5” = Account is at least 120 days overdue, but is not yet rated a “9”
“6” = This number is not used for rating

“7” = Making regular payments under a consolidation order or similar arrangement

“8” = Repossession ( indicates if it is a voluntary return of merchandise by the customer)

“9” = Bad debt, placed for collection or skip

Debt Re-payment Strategies - Certified Debt Specialists and their clients should be well educated on debt re-payment strategies outside of a Debt Settlement Program.
Getting out of credit card debt is not as easy as getting into it. Most financial advisors will tell your client to put away their cards and pay off what they can, starting with

the cards that have the highest interest rate first. Other strategies include transferring balances to a card with a lower interest rate and getting a debt consolidation loan.

Financial advisors also will tell people that these are only temporary measures to ease the symptom. They won’t solve the underlying problem unless they stop spending

more than they can afford. Simply put, "pay off the debt, then figure out exactly what you can spend and stay within that limit".

Financial advisors may also warn your clients not to turn to any of the widely touted repayment schemes that look tempting on the surface, but can create more

problems than they solve.

One such temptation is a home equity loan. These often come with points, fees and other hidden costs, even though they are easier to obtain than a home mortgage

loan. Many advisors tell people not to put their home in jeopardy to pay off credit card debt, (turning unsecured credit card debt into a debt secured by their home) which
is what they do if you don’t meet their payments. This kind of loan, with its unexpected costs and real downside, won’t solve the problem of undisciplined spending. It

merely makes it easier for you to lose your home.

Dipping into retirement savings is also a bad idea, not only because people will face a 10 percent early withdrawal penalty but also because they will be taxed at a

normal rate for any funds they withdraw. That means they are paying a huge penalty to pay off their credit card debt and also robbing themselves of funds they may need
for their retirement.

Taking a cash advance on one credit card to pay off the debt on another is also a bad and potentially costly idea. Cash advances come with a fee, often about 3 percent
of the amount advanced, and high interest rates that start immediately

Yet another bad idea is taking an advance, or loan, against the next paycheck. Finance companies make these loans easy and with good reason. Both fees and

interest are high. This is no solution for re-paying credit card debt, only one that perpetuates the problem and makes it worse, especially if one gets into a cycle of

borrowing against each next paycheck.

A detailed explanation of various alternatives to debt settlement are:

1. Consumer Credit Counseling

With Consumer Credit Counseling, a client can have their interest rates reduced and be debt free in 5 years. They send your monthly payment into the credit counseling

firm, and they distribute that payment to all creditors.

Advantages:

Save money versus paying minimum monthly payments on high interest credit cards

Can eliminate some late charges and over the limit fees
One simple monthly payment

Disadvantages:

If you’re concerned with a lower monthly payment, credit counseling typically offers minimal if any relief.

Total cost in credit counseling is typically 3 times the cost of FDR’s “New Deal” program

Length of program is typically 2 years longer than FDR’s “New Deal” program
A high percentage of consumers drop out of credit counseling programs because they are difficult to manage

Most credit counseling firms are funded by your creditors, which gives them the incentive to make you pay as much as possible

2. Debt Consolidation - Home Equity Loan

With a home equity loan, or second mortgage, a consumer borrows money against the equity in their home and repays it in equal monthly payments for a set period of

time.

Advantages:

One simple monthly payment

Typically a home equity loan offers lower interest rates

Disadvantages:
Monthly payment may still be too high for some consumers

If your loan is secured (you signed over collateral), you could lose your home or car if you default

May not qualify if a) you’re asking for a lot of money; b) your credit history has negative marks, especially in the 6 months prior to applying for the loan; and/or c) you
don’t have enough equity in the property the bank wants to secure the loan with.

3. Unsecured Debt Consolidation Loan

A debt consolidation loan is one of the most common solutions used by consumers suffering from overwhelming debt burdens. With a debt consolidation loan, a bank

pays off some or all of the debts owed by a consumer and in turn the consumer pays back the bank with interest.

Advantages:
One simple monthly payment

Disadvantages:
The interest is typically extremely high.

Lenders interpret these loans as a sign of being overextended (see the first sentence of this section if you’re wondering why)

4. Bankruptcy - Chapter 7

In a Chapter 7 bankruptcy, your client asks the court to erase their debts completely. In exchange they must turn over all their non-exempt property (or its equivalent in
cash) to a court-appointed trustee, who in turn sells their property to pay back their unsecured creditors.

Advantages:

All collections activities must cease once upon filing

If their wages are being garnished, bankruptcy can stop it

If they have no assets (or exempt property), then they don’t have to pay anything to become debt free.

Can remove some liens from their property

Provides debtor with a fresh start

Disadvantages:

Extremely intrusive and unpleasant experience---the bankruptcy trustee must approve almost every financial transaction they make while the case is open, which can be

several months

Impacts their credit for up to 10 years, stays on court records for 20 years

Private employers have the right to refuse employment to anyone who has ever filed bankruptcy
Emotionally depressing, sense of guilt and failure associated with bankruptcy (this shouldn’t be the case, especially since most bankruptcies are the result of unexpected

financial hardship, not month long shopping sprees).

In October of 2005, Congress changed the bankruptcy laws, making fewer consumers eligible for Chapter 7
Despite popular belief, a person cannot get rid of student loans or back taxes in a Chapter 7 bankruptcy (unless they meet very specific requirements)

5. Bankruptcy - Chapter 13

In a Chapter 13 bankruptcy, your client sets up a court approved plan to repay their debts. Under the plan, the court determines their monthly disposable income, which

they must pledge to a court appointed trustee , who in turn distributes it to their creditors for up to 5 years.

Advantages:

If they ’ve fallen behind on car, mortgage payments, taxes, and student loans they can pay back those missed payments throughout the plan.
Like a Chapter 7, all collections activities must cease after they file a Chapter 13 bankruptcy.

One simple monthly payment

Disadvantages:

Impacts their credit for 7 years, stays in court records for 20 years
It’s still considered a bankruptcy by future employers, lenders, etc.

Required to pay back a good portion of their debt plus interest and the trustee’s monthly fee

What the court deems “disposable income” can be very strict.

Paying all of their disposable income for 5 years can be extremely difficult----roughly 50% of all Chapter 13 bankruptcies are never completed.

6. Making Credit Card Monthly Payments

Advantages:

If your client is expecting a significant increase in income, a big tax refund, the sale of some valuable property, or a winning lottery ticket, then paying the minimums can

buy you some time before you finally able to pay off the debt.
Preserves their positive credit history, which makes up 35% of their credit score

Disadvantages:
Disadvantages:

They can lose their job or get sick, the real estate market could crash, which leaves them with only one option---bankruptcy.

If they can only pay the minimums, it’s probably a sign that they owe too much; amount owed accounts for 30% of your credit score.

It’s the most expensive route by far. If they owe $30,000 in credit card debt, then it could be 20-30 years and over $100,000 before they ’re finally debt free.
If they ’re late on even one payment, then their interest rates could jump up to as high as 32%.

Highly stressful and unhealthy to have to worry about being able to make the minimum payment every month.

Note: Give the following advice to the potential client that you believe is in the financial position to benefit and who has the disipline required to complete a re-payment

process outside of a structured debt settlement program. :

1. Budget your expenses: You should create a budget for your household. Your income should always be more than your expenses. When you have encountered debts

cut down all those extra expenses so that you can save more money. If you cut down on entertainment or clothing you will be able to save a lot of money which will
become helpful in paying of your debts.

2. Doing part-time jobs: you can also do part time jobs to earn more money. These can even be working in a nearby restaurant or mowing neighborhood lawns.

Whatever money you will earn will help a lot in paying off your debts faster.

3. Once you have realized that you cannot pay back the money to your creditors, stop creating more arrears. This will make the situation difficult for you.

4. Borrowing money from your relatives or friends: this can be very helpful, your relatives and friends are usually the people who will be ready to help you anytime

when you are in need. You can borrower money from them to pay off your arrears and then pay them back when things are back on track and your financial life is stable.

The following are examples that you can share with your potential client regarding 3 different proven re-payment strategies outside of a debt settlement program. Many

potential clients have already attempted similar stategies without success for various reasons but these options should be discussed:

Total debt: $25,000.00

Interest rate: 18% avg.

Minimum Payment calculated at 2.5% of balance

*no new debt during the re-payment period

Total current minimum payments: $625.00 mo.

Plan #1- Focused on

Income and Expense

You make only the minimum payments. Unfortunately, the minimums on most credit card accounts are calculated based in part on your account balance. This means

your minimum payments will shrink, stretching out the time you are in debt and maximizing the amount of interest you pay on the debt.

Using the example above, the payoff for this debt management strategy would be the following for this debt ($25,000.00)... (* calculations courtesy of bankrate.com)

Total time 36 yrs, 9 mos

Total interest $36,925.11
Total Paid $61,925.11

Plan #2- Ignore Your

Shrinking Minimums

You make your minimum payments, and continue making the original minimum payments, ignoring the shrinking minimums on your statements. Changing your debt re-
payment strategy to use this single improvement, your repayment of the debt would look something like the following...

Total Time 5 yrs, 2 mo.

Total Interest $13,465.57
Total Paid $38,465.57
Money Saved $23,459.54

Time Saved 31 yrs., 7 mo.

The Importance of
Extra Contributions

You would think this is a great way to speed up the debt re-payment plan above (#2). Your minimum payments go mostly to interest. People who earnestly want to

improve their positions financially will find extra contributions each month to help pay off their debt.

Since your extra contributions go directly to principle, you should cut years off the repayment of your debt very quickly (and save interest). Look what a contribution of
$50.00 extra each month does (compared to the example above)...

Plan #3- Adding $50.00 month to payment

With this debt re-payment strategy, you will...

Make all of your minimum payments

Ignore shrinking minimum payments

Do Not add any new consumer debt

Agree to a monthly "additional payment of $50.00 "

Total Time 4 yrs, 7 mo.

Total Interest $11,766.12

Total Paid $36,766.12

Money Saved $1,699.45 (by adding $50.00 every month)

Time Saved 7 mo. (by adding $50.00 every month)

Important Note: Give the above advice to the potential clients that you believe are in the financial position to benefit and who have the disipline required to complete the
re-payment process. Many potential clients have already attempted a similar stategy without success for various reasons but this should be discussed.

End of Module Two (A) » Module Two (B)