Now that tax reform’s signed into law by President Trump, how will the new policies affect businesses offering debt reduction services? In short, it may drive more consumers their way. This answer may seem counterintuitive, given that most Americans will enjoy at least a modest (though temporary) tax cut. Even with a little more money in their paychecks, we still think more consumers will look for debt reduction services.
We expect some recent policy changes to impact delinquent borrowers with student loan debt above $10,000. Other tax reform changes will impact consumers living in areas with high state and local taxes within one year.
Full Debt Relief No Longer Available for Many Defrauded Students
First, let’s talk about U.S. Secretary of Education Betsy DeVos’ new policy regarding for-profit colleges defrauding students. This policy alone could increase applications for student loan debt relief or consolidation services. How? Well, the new DE policy reduces how much debt relief defrauded students can expect from the federal government. According to CNN Money, those who attended fraudulent for-profit colleges can now only receive partial debt relief based on income.
This change in policy will affect, for example, thousands of former Corinthian College students seeking relief. (The school officially shut down in 2015 after paying a $30 million federal fine for overstating its job placement numbers.) Only students earning less than 50% of what their peers from a similar program at another school do will now qualify for full debt relief. Under DeVos, the department recently turned down 8,600 requests for student loan debt relief. Between 2015 and December 2017, the DE forgave almost $450 million in outstanding student loans. However, this high number isn’t one that we expect to see again under the current administration.
While this policy includes no changes to the 2016 Borrower Defense to Repayment law, going forward, relief will be tiered. Critics say this is unfair, because many Corinthian students did not complete their programs due to the school shutting down. Still, this policy change will likely drive more consumers to seek student debt relief or consolidation services from private firms.
New Tax Burdens for High SALT States Should Increase Demand for Debt Reduction Services Going Forward
In addition, many people with outstanding credit card debt living in high SALT states may seek out debt reduction services. (SALT stands for State And Local Taxes.) You may recall reports detailing the crush of homeowners rushing to pay 2018’s tax bills after the law passed in December. Then, the IRS announced it would only accept 2018 property tax deductions if the taxes were assessed in 2017. It’s clear, then, that thousands of consumers are already worried about shifting tax burdens under the newly enacted policy.
These burdens are now a reality due to two key provisions in the law: eliminating home equity loan interest deductions, and capping SALT tax deductions at $10,000. This cap means anyone with high SALT may experience a higher federal income tax bill in the years to come. These individuals, already pushed to the limit, may seek out debt reduction services to manage their financial liabilities.
More Consumers are Taking Out Personal Loans to Pay Medical Expenses
Recent industry data shows medical expenses still drive many consumers to seek out debt reduction services and personal loans. In fact, debt consolidation took first place in approved loan applications (35%). Medical debt came in third (9.9%), but many people are still putting medical expenses on their credit cards.
According to Federal Reserve data, credit cards are still the most popular consumer lending options available. Today, 65% of unsecured personal lending involves borrowers getting approved for new credit card accounts. But credit cards charge monthly interest, which slowly increases medical costs beyond the original amount over time. As a result, borrowers strapped for cash and over their limit may look for other solutions to pay down bills, including debt reduction services.
How Debt Reduction Services Can Scale Up Quickly to Meet Demand
Curious about how to get the most-qualified leads for your debt reduction services business? You’re not alone. LeadingResponse partnered with several national companies offering debt reduction services and other customized solutions, like credit counseling, bankruptcy and resolution.
So why partner with LeadingResponse? We screen prospects to ensure they meet your company’s exacting criteria before delivery. But we also have support teams and consultants focused on every aspect of the buyer’s journey for our clients to ensure lead quality, including:
- Marketing analysts that generate audience-targeting models prior to launch, then track all active campaigns in-house to ensure peak performance
- Sales and customer support teams to identify growth opportunities, answer questions, and incorporate client feedback
- In-house user experience and design professionals that a/b test all campaigns for conversion rate optimization
- Online advertising and marketing staff with over 300 years’ collective experience working to attract the best prospects on a variety of different platforms, including social media, email, PPC/CPC and SEO
- Mass tort attorneys and financial advisors to meet all our clients’ strict fiduciary and legal requirements
- Dedicated consultants that provide personalized customer support and help you identify conversion pain points
We know that your company can buy leads from anyone. Only LeadingResponse fully invests in the conversion process after delivery for companies that partner with us.
Additional Optimization Services Offered Exclusively for LeadingResponse Clients
In addition, our partners get access to special services that help LeadingResponse stand out from other competitors. First is the completely free, yet optional Lead Management System (LMS) software that helps you track prospects as they’re delivered in real-time. Law firms use the LMS to track lead quality separately from already-closed retainers stored in their CMS. Other clients use the LMS to generate custom reports and gain retargeting insights. You don’t have to use the LMS to get leads delivered to your business, but clients who do report significantly higher client conversion and retention rates.
Last but not least our US-based call center, which you can put to work immediately cold-calling new contacts. While this service isn’t free, our agents are available to work 24/7, 365 days a year. Currently, our call center staff boasts a 70% contact rate and initiates calls within six minutes, when leads are hottest and more likely to convert.
Ready to find out what LeadingResponse can do for your business? Contact us today with your questions, and the right person will get back to you within one business day.