Debt Counseling Services
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Consumers seeking debt counseling services may be overwhelmed by delinquent charge card accounts, past due mortgages, or outstanding car loans. Buying on time, but not making timely payments ensnares many consumers who simply lose control of spending and soon find themselves facing financial woes. And falling behind on payments is no laughing matter. Harassing phone calls from creditors, threats of wage garnishments, or eviction notices and foreclosures can all drive debtors to the brink of bankruptcy. But before cash-poor debtors decide to take the plunge, contacting debt counseling agencies may help alleviate the pressure. Expert money managers are adept at helping debtors reestablish creditworthiness and bring balance to household budgets. Seeking professional counseling before credit problems get out of hand can deter debtors from taking a trip to the bankruptcy courtroom. Financial consultants provide personal budget planning and help delinquent borrowers devise plans to repay outstanding charge card accounts. Counselors may negotiate with creditors, such as mortgage companies and automobile lien holders, to reduce or defer payment on past due accounts.
While debt counseling services are committed toward helping consumers get relief from debilitating money problems, they also require a commitment from debtors to comply with resolution plans and not incur additional obligations while implementing workout plans. Some debtors simply have never learned how to manage money and have developed long-term habits which must be gradually broken in order to prevent repeating harmful buying patterns. A "shop 'til you drop" philosophy may feed a shopaholics need for instant gratification, but in order to get free from the addiction of consumerism, out-of-control shoppers need to put the brakes on buying. Financial management professionals can assess weaknesses in consumer buying patterns and help debtors amend their ways when it comes to out-of-control spending. Counselors may recommend cutting up credit cards to overcome the temptation to overspend.
Money managers can also work with creditors, such as mortgage companies and auto lien holders, to place delinquent payments at the end of long-term installment agreements. Deferring payments can save a debtor's credit report and keep negative entries from being filed. Debt counseling services actually benefit lenders by educating and rehabilitating poor credit borrowers. In the event of default, lending institutions really don't want to repossess homes or automobiles because they are not in the business of real estate or car sales. When homes and cars are repossessed, lenders have to sell property to try to recoup loan balances. Most property is sold at less than the amount owed on a delinquent account; and suing debtors for remaining balances after the sale seldom pays off the loan. By educating and rehabilitating high-risk borrowers, debt counseling services help prevent costly loan defaults. "Without counsel purposes are disappointed: but in the multitude of counselors they are established" (Proverbs 15:22).
People may assume that every adult knows how to manage personal finances, but that is not always the case. A credit card in the hand of an irresponsible individual is like placing a loaded gun in the hands of a child. Neither of them realizes how dangerous a loaded weapon can be! Not every housewife is a whiz when it comes to handling money and not every business owner knows how to balance the books and keep the company in the black. Sometimes, just sitting down with a counselor and going over income and expenses helps consumers get a handle on personal and corporate finances. Counselors will begin by assessing needs versus wants. Rent and mortgage payments, food, utilities, transportation, clothing, and insurance are all necessities. "Wants" include dining out, renting video games, getting a manicure or pedicure, playing golf, or indulging in a weekend excursion out of town. If expenditures don't fall into the category of needs, they can be eliminated. Consumers may also provide debt counseling services personnel with a listing of delinquent accounts, including past due federal and state income taxes, student loans, and unsecured and secured loans.
Once financial counselors have a complete picture of debtor assets and liabilities, they can construct a budget and repayment plan to meet monthly living expenses while satisfying creditor claims. Payment of secured loans usually takes precedence over unsecured accounts with no collateral. The goal of debt counseling services is to avoid the loss of collateral, such as a home, car, boat, or camper due to repossession or foreclosure because of a lack of payment. Unsecured creditor claims, such as charge account purchases, can be negotiated. Card issuers may be willing to reduce interest rates or late fees assessed against accounts, or settle for less money than is actually owed.
Professional debt counseling services exist to provide consumers a way out of overwhelming money woes, hopefully without filing bankruptcy. The federal government requires bankruptcy petitioners to attend a credit counseling course from approved agency six months prior to filing for consumer debt protection. Once debtors realize that filing petitions mars consumer credit reports for up to ten years and prevents future financing, they are more willing to implement other methods of debt resolution. Independent consultants and debt counseling services present the pros and cons of bankruptcy to debtors, along with viable budgeting and repayment plans. To avoid falling off the wagon of creditworthiness again, consumers should apply sound financial management principles: Take care of personal needs first, don't buy what you cannot afford, get rid of most of the frills, and make consistent and timely payments on household bills, installment loans, and charge accounts. By following some good advice on how to handle debt, consumers can stay free of bankruptcy and rebuild good credit.
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