Overcoming Debt Problems with a Debt Counsellor
Almost every person who has made purchases on credit has struggled with debt problems at one time or another
. Some are able to manage a debt repayment plan on their own and get out of debt. Others struggle with repayment and need professional help in order to repay their creditors and avoid ruining their credit or facing a foreclosure. Everything from a mortgage to a car payment to a credit card statement is a form of debt. The person who can go their whole life avoiding any form of debt is the exception, especially when the economy worsens and people need help with basic needs such as groceries and clothing. As more people turn to credit cards or take out second home loans, the more debt counsellors are seeing a need for their services. It's much easier to fall victim to debt than it is to climb out of the seemingly gaping and endless hole.
Making a Plan
The first consultation you have with a counsellor will allow you to make a plan to reduce your debt. This may involve paying off small debts completely, renegotiating your credit terms with creditors, or having small amounts removed from your bills or spread out over a longer period. Creditors take debt problems seriously because individuals who are unable to pay their bills are a risk for their company. If you can't pay, the creditor never receives its money and they are out the money put forward for your purchases. If everyone just stops paying, the creditors aren't making any money and will go under. So they are usually willing to work out some sort of renegotiated payment plan so that they don't lose out on all their money.
Consolidating Your Debt
Your counsellor may suggest consolidation. This means that all of your credits are renegotiated and then consolidated into one payment. This is often handled by the debt counselling service that takes responsibility for your payments and then requires that you pay them the renegotiated fee, working out acceptable monthly payments. This form of debt repayment can ruin your credit for a short time and make it harder for you to acquire larger purchases such as a home or car, but it could get you out of long-term debt.
Debt consolidations are not for everyone so choose your options wisely.
Bankruptcy
This is often a last resort and one option that debt counsellors work to avoid. Bankruptcy ruins credit ratings and makes it next to impossible to acquire large purchases. While it releases you from all debt, the disadvantages far outweigh the advantages. Your counsellor will discuss all other options first and only suggest bankruptcy if it's truly your only way out. The goal of most debt counsellors is to help you overcome your debt problems through financial management and planning rather than bankruptcy.
Overcoming Debt Problems with a Debt Counsellor
By: Chris Jenkinson
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