Being indebted is nerve-wracking. It’s like having an enormous load on your shoulders 24/7. The prospect that the situation will remain unchanged for years to come (depending on the size of the debt), is even more horrifying. “Default” and “bankruptcy” start recurring in your mind, and they seem so incredibly efficient that you’re inching towards destroying your own life.
Naturally, every person who is in debt looks for methods of getting rid of it. Financial tools like debt consolidation and refinancing can help, to some degree, but sometimes give birth to even more debt. In this case, would debt counsellors make any difference?
Could these professionals affect your financial situation for the better? Yes, they could, but their help is focused on credit card debt more than on other types of debt. Let’s see when you need debt counsellors by your side.
When Should You Hire Debt Counsellors?
- When your debt doesn’t go down even if you pay
This can be a consequence of exorbitant interest rates. In other words, the debt grows faster than you can pay it. In this case, debt counsellors can discuss with your lender and negotiate another payment schedule or change the sum you have to give back on a monthly basis.
You may be inclined to believe that you can do this on your own. You’re half-right. You can definitely negotiate by yourself, but it will take a lot longer to reach a favourable consensus.
A debt counsellor knows exactly how to turn things to your advantage, because he is familiar with all the details and the hidden mechanisms that drive loans, implicitly lenders. Unless you’ve worked in economics, especially in the credit domain, there’s no chance that you know everything about loans and how to make them more fit for your current economic situation. Needless to say, debt counsellors excel at this.
- When you start considering bankruptcy seriously
Yes, bankruptcy sometimes helps dissolve debt, but not always. Moreover, declaring bankruptcy will smudge your credit file forever. You cannot take it out. The financial implications of bankruptcy are too severe most of the times.
What’s more, your debt might not clear out even when you’ve declared bankruptcy. That is to say: you are still eligible (maybe even more), to have your assets liquidised by your lender, i.e. your house or car confiscated. Bankruptcy creates more problems than it solves.
Instead of doing this, you can count on a debt counsellor. He will study your financial files and will be able to create a budget and a new repayment plan. Bear in mind that bankruptcy does not free you from repossession anyway. It might free you from the debt, but you can still lose everything due to the liens. Yes, we’re repeating ourselves, but it is totally justified by the severity of the misfortunes that bankruptcy can create.
You can see why it’s so important to get professional counselling instead of doing anything stupid, thinking you’ve got the situation under control. To be honest, you’re more likely to suffer in the aftermath of bankruptcy than you’d do if you’d stick to your loan and pay it up slowly. A debt counsellor will tell you the very same thing.
- When you want to refinance
Refinancing is great, but it does not work 100% of the times because it simply makes no sense, financially speaking. Instead of getting you out of debt, as promised, refinancing can easily enlarge the amount of money you have to pay back. For instance, this can happen when you choose a refinancing method that does not work in your situation. You can take a debt consolidation loan instead of a bad credit loan, to give you an example. Or a bad credit loan instead of a debt consolidation loan.
If you consider refinancing, it is best to talk to a debt counsellor first. He will know if that is a good idea, how it’s going to work for you and if you should go with another alternative. You must realise that no matter how much you think you know about refinancing, there are always aspects you have no clue about.
Final Thoughts
The main reason why the vast majority of people do not ask for help from debt counsellors is because they think they can do it all on their own. And that, to a certain extent, is true, because you can do everything a debt counsellor does.
It’s just that you’re less likely to do it with the same proficiency and knowledge on financial matters. For example, they might suggest getting a bad credit loan, and this can aid you in paying off existing debt.
For more information on why and how they can do that, visit https://badcreditloanss.net.au, where your situation will be carefully reviewed by professional debt counsellors.
