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An Associated Press analysis of financial data from the country’s largest card issuers found Americans are falling behind on their credit card payments with the greatest rise among accounts more than 90 days in arrears. Delinquencies and defaults are going up by double-digit percentages in the last year and projections for 2008 look bleak.

There is a great opportunity for RTO dealers to provide a service that addresses the current need of a growing customer base – consumers in need of financial assistance and freedom from credit card debts and unsecured loans. That opportunity is known as debt negotiation service.

RTO and debt consolidation services share similar values of providing low cost alternative solutions to traditional financial services. Together they are natural partners to offer a compelling debt solution to consumers.

One of the major arguments for federal legislation is that RTO is a low-cost option for consumers that could otherwise not afford necessities of life - while at the same time helping to build and repair the consumer’s credit. The very nature of RTO as a customer-focused, relationship business puts the rental dealer in a unique situation to recognize consumers in financial difficulties. Whether through customers’ payment histories or daily interaction with customers, the RTO store manager is uniquely qualified and situated to recognize these customers. 

The seven main factors that contribute to bankruptcy (listed from the main cause to the least likely cause) are: a) credit card debt - 67%; b) loss of a job or a decrease in pay -50%; c) poor financial management - 37%; d) medical bills (said to be half out of 1.5 million bankruptcies) - 28%; e) business trouble - 15%; f) divorce - 13%; g) legal bills and lawsuits - 12%. 

The list of indicators store managers can use to assess potential customers in need of debt negotiation services includes:

- Having $10,000 or more in total unsecured debt

- Are living paycheck to paycheck

- Monthly expenses exceeding their income

- Are making minimum payments because that is all they can afford

- Receiving calls or letters from creditors or collection agencies

- Considered filing bankruptcy

- Adjustable Rate Mortgage (ARM) is adjusting

- Cannot qualify for a mortgage

- Ready to rid life of financial stress

EVERY SINGLE DAY multiple customers facing these financial stresses enter RTO stores. That is the nature of RTO.

Consumers have traditionally addressed mounting debt by taking a second mortgage or refinancing through debt consolidation, paying only the minimum payments on bills, filing for bankruptcy, or working with Consumer Credit Counseling. These may seem like adequate solutions, but they each have some drawbacks.

Debt Consolidation - In debt consolidation, the consumer merely transfers unsecured debt to secured debt. The consumer does not eliminate the debt, but instead lowers their interest rate. Unfortunately, with the crisis in the housing market, many consumers who used this strategy are now at risk of losing their homes. For this reason, debt consolidation is different than debt negotiation.

Making minimum payments - Paying minimum payments costs consumers much more money over time due to from paying years of compound interest rates.

Bankruptcy - Bankruptcy filings become public record and can haunt a consumer for years. With stricter guidelines for bankruptcy, this solution has become limited and can be quite costly to consumers. When RTO owners provide debt negotiation service, they are helping customers avoid bankruptcy.

Consumer Credit Counseling – While this method has the ability to lower a consumer’s interest rates and payments, they do not reduce the principal amount the consumer owes. A consumer seeking credit counseling typically eliminates his or her debt within 4-7 years.

Debt Negotiation is another solution, and one that may be new to many consumers. Debt negotiation enables customers to achieve financial freedom by

1) Immediately reducing their monthly payments by 50%

2) Reducing their debt by as much as 70% and

3) Eliminating their unsecured debt within 1-3 years.

Consumers should know that each creditor is unique and the customer’s debt negotiator should let them know the terms of any agreement in writing.

Debt negotiation is not the best solution for all consumers; it is typically best for consumers already behind on payments, those who cannot afford to pay minimum payments, have compromised credit ratings, and are in need of an experienced professional who can advocate on their behalf.

These are many questions that potential debt negotiation customers may ask you about the process. Entering into debt negotiation service needs to be a well thought out decision for the consumer.

“Providing this service could potentially increase a store’s revenue by $50,000 or more annually. We want to give an incentive to RTO owners to offer this service to their customers by providing a bonus to top producing stores,” says Ray Oribello, President of Sales & Operations for NegotiateBills. 

NegotiateBills provides training and service to RTO owners interested in learning more about debt negotiation. Contact NegotiateBills at 800-665-1566 for additional information.

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RTO Magazine is the leading rent to own industry print publication.