Financial Debt Counseling
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Firms which offer financial debt counseling can help consumers avoid a trip to the bankruptcy courtroom. Statistics indicate that seven out of ten Americans are in debt; and due to an increasingly unstable economy, the numbers could grow drastically within the next several years. Middle class families struggle to juggle balancing the household budget and buying gas at the pump; while corporate moguls battle to keep companies afloat amidst mergers, takeovers, and failures. Indebtedness seems to know no bounds and reaches all sectors of the population -- from the poor house to the White House. It seems as if Americans from every socioeconomic sector are struggling to keep their heads above water. Higher debt-to-income ratios nationwide are facing many families to file bankruptcy just to stay afloat. But professional financial counseling offers a lifeline for struggling consumers facing overwhelming indebtedness and a viable plan to stabilize personal finances.
Money management professionals are expert at helping debtors devise personal and business budgets, clean up negative credit report entries, become more knowledgeable about bankruptcy law, and develop debt reduction and repayment plans to satisfy creditors. Financial advisors are adept at showing debtors not only how to avoid bankruptcy, but also how to re-build creditworthiness while repaying outstanding accounts. Court-ordered courses geared toward educating consumers contemplating bankruptcy may seem like a last ditch effort for desperate debtors. But, the U.S. Federal Bankruptcy Court has substantiated evidence that once debtors complete a comprehensive financial education course, they are less likely to proceed with filing for consumer debt protection. When individuals realize how filing Chapter 7, 11, or 13 petitions can adversely impact future creditworthiness, many seek alternative resolution methods. And that's really where financial debt counseling comes in handy. Most consumers don't have a clue about budgeting or how to deal with delinquent accounts that have gotten out of hand. But financial debt counseling can clear the cobwebs and bring balance back into a family budget. "I have taught thee in the way of wisdom; I have led thee in right paths. When thou goest, thy steps shall not be straitened; and when thou runnest, thou shalt not stumble. Take fast hold of instruction; let her not go: keep her; for she is thy life" (Proverbs 4:11-13).
Money managers can readily assess consumer accounts and help set priorities for clearing up delinquent balances. Financial planners recommend making and maintaining a monthly budget, which includes setting aside funds for rental or mortgage payments, vehicle maintenance, food, childcare, utilities, and lastly, entertainment. If at the end of a budgeting session, consumers have more month than money, then it's time to streamline expenses and eliminate some frills. Counselors may recommend paring down a personal budget by subtracting items that are easy to live without. Eating out more than three times a week, getting manicures and pedicures, indulging in movies and take out pizza are just some activities which can easily be curtailed to save hundreds each month. Consumers who are facing bankruptcy will need to employ sound principles of financial debt counseling to prioritize payments according to secured and unsecured accounts. Secured accounts are those which are backed by collateral to "secure" payment. Unsecured accounts have no collateral and therefore, no leverage when it comes to collecting. Advisors may recommend paying off secured creditors first and then tackling unsecured accounts when monies become more accessible.
If they want to boost credit scores, cash-strapped consumers should refrain from incurring more debt while attempting to clear up negative reports. At this stage, each new revolving account is actually a charge against poor credit consumers. Financial debt counseling agencies will also advise against having too many inquiries while consumers work hard to eliminate negative entries. Slow pay, or no pay, each account must be addressed. Financial debt counseling companies may suggest that clients include a statement in credit reports substantiating the reason why accounts are seriously past due. Statements may indicate extenuating circumstances, such as job layoffs, chronic illness, divorce, or plant closures, as legitimate reasons for delinquent or long-standing unpaid accounts. Whatever the reason for lingering bills, submitting a statement will provide future lenders with a reason to work with poor credit consumers. Discrepancies such as consumer reporting errors and notations of discharged accounts, which have been settled but yet remain on reports, should be addressed one at a time. Counselors will contact each creditor and have discrepancies and errors removed. Debtors who have previously filed bankruptcy should also be aware of the statute of limitations which regulates the amount of time a petition remains on a consumer report. After seven to ten years, bankruptcy cases should legally be expunged from a consumer's record.
When working with financial debt counseling agencies, debtors should give advisors as information as complete as possible. Counselors are not mind readers and the more they are aware of all assets and liabilities, the better the advice and the more effective the resolution process. Debtors need not think that divulging a previous bankruptcy will prevent counselors from helping to remedy poor payment histories. Due to increased financial woes nationally and globally, most money managers have experienced every conceivable scenario; in other words, they've been there and done that. Debtors don't have to fear being embarrassed over past mistakes. Counseling companies will also help alleviate the pressure of indebtedness, fielding creditor claims and impeding harassing collection calls. Financial debt counseling agencies are a debtor's best ally when it comes to detecting poor spending habits that led to indebtedness and developing a relatively painless repayment plan. Armed with the wisdom of professional debt resolution counselors and a determination to refrain from incurring more liability, consumers should be able to avoid bankruptcy court and wipe the slate of un-creditworthiness completely clean.
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