It was my wife who first introduced me to debt counseling and I
thought it would be just another agony uncle whom I would have
to deal with. However, it was not late that I was proved wrong.
It was through debt counseling that I survived the deadly debts
to recount its benefits.
Debt counseling is the advice offered through experts
on several debt related issues. Debt counseling has a
two-pronged strategy. While the advice focuses on ways to
counter the current debt load, the borrower will also be
informed of methods to prevent debts from originating. Thus,
debt counseling plays defensive as well as a preventive role.
The defensive strategy will be employed for situations where the
debt load is sufficiently large. In my case, the debt load was
substantially large. My personal savings and monthly income
would have lessened the burden a little. But, there were other
expenses too that needed to be paid through the same limited
income. By channeling my income towards debt settlement, I would
only have paved way for newer debts.
Debt counseling showed the way out. Large number of people in
the UK owe their freedom from debts to debt counseling. In fact,
the very first lesson that I learnt from debt counseling is that
I was not the only person who had debts. There were many others
who have even messier finances. The statistics are really
appalling. How come so many people, belonging to so rich a
country as the UK, be so vulnerable to debts? However, people do
incur debts. A desire to have almost every material comforts,
often pushes people to spend rashly. On most occasions, the
expenditure is without any consideration for the sources of
payment.
However, as the pressure of the creditors mounts, the very first
priority of debt counseling will be to design a way out for the
debtors. Presently, there are a number of debt elimination
options available in the UK, namely debt consolidation loans,
debt consolidation mortgages, debt consolidation through
remortgage, home equity loans and credit cards. Each option has
its own set of advantages and disadvantages, and it will be
really difficult to make a choice for one of these. Through debt
counseling, borrowers can also get help during the product
selection process.
Since I had a large debt load, the debt counselors suggested
that I take up a debt consolidation loan. They did not force the
product on me. This is one of the peculiarities of debt
counseling. The debt counselor presents an impartial view of the
various products. However, not all debt counselors adopt a
similar view. Most of them will sell their products in the guise
of debt advice. Borrowers need to stay clear of such advisors.
As in medical sciences, second opinion is always beneficial
during selection of debt settlement products. There are a large
number of profit and non-profit agencies and individuals who
provide genuine and professional advice. Some of these, like
Independent Financial Advisors are bound by the rules laid down
by the Financial Services Authority to offer genuine advice.
The preventive role of debt counseling is more of an advisory
nature. The aim of this exercise will be to instill debt sense
in the people; though this will prove a Herculean task, given
the strange relationship of people with debts. The role may take
the form of a face-to-face meeting with an individual, or a
conference wherein a number of people are addressed at one time.
During these sessions, the debt counselor advises borrowers of
ways to deal with debts. Debt consolidation loans and debt
consolidation mortgages can at the best relieve individuals of
debts for sometime. However, if the individual does not improve
his spending habits, he will again have a large debt load.
Through preventive debt counseling, the debt counselor aims to
strike at the roots of the debt.
Some of the principal debt counseling tips include:
*Do not spend more than what you earn.
*If the expenditure is necessary, then a provision needs to be
made for its payment.
*Every individual must prepare a priority list showing the
importance of each expenditure.
*Try to generate newer sources of income.
*If a debt has been incurred, then it must be repaid with
priority.
Preventive debt counseling tips are not new to people. They may
have heard of them from their parents or recited them in moral
science classes, but all these lessons vanish while spending. A
workable debt counseling method must be practical enough to be
implemented. The borrower's finance needs to be studied
exhaustively for finding an effective solution. No debt
counseling is complete without the borrower's participation.
Consequently, borrowers need to tread safely on any debt
decision that they make.
About the author:
Alex Jonnes is associated with Easy Debt Consolidations. He is
Masters in Business Administration and writes on various finance
related topics. To view his writings, please visit
www.easy-debt-co
nsolidations.co.uk
