What Is The Debt Counselling Process?

If you’re having difficulty paying your bills and loans on time, debt counselling can help you get your finances back in order. The primary objectives of credit counselling is to provide you with the necessary tools to get you out of debt, prevent debt problems, and liberate you from spending habits that may result in debt.

The debt counselling process

If you are consistently late in making your car, mortgage, or credit card bill payments, your credit rating will be adversely affected.

When you seek debt counselling services, you work with a licensed insolvency trustee to analyse your current debt situation and devise a plan to not only get your finances back in order, but also stay out of debt permanently in the long-term.

The typical steps are:

1. Assessment of your financial situation

   By examining your situation, your trustee can better understand your current finances and devise a plan to help you alleviate debt.

2. Organization of finances

   When people accumulate debt, they tend to lose track of their finances – and often fail to understand how to allocate funds towards debt repayment. This results in a greater shortage of available income. Your debt counsellor will help you to understand much money is going towards bill payments or loan repayments, and the monthly deficit for each debt. You will then separate your expenses and payments into different categories, namely: critical, necessary, and unnecessary.

   With a clear picture of your spending habits, you can determine which expenses to prioritise or completely eliminate.

3. Establishing a plan

   This is the primary goal of your Insolvency Trustee. After organising your payments in order of priority, your debt counsellor can devise an effective strategy to help you manage various expenses based on your current earnings. This plan could include expense cut backs or eliminations, payment schedule adjustments, negotiations with creditors to reduce interest rates, the filing of a bankruptcy and so on.

   Most importantly, your debt counsellor will help you find the best approach to debt resolution, and provide you with the necessary tools to take action moving forward.

Who needs debt counselling?

Any individual who is facing unmanageable debt and seeking to regain control of their finances should visit a debt counsellor. Every person’s financial situation is different, so you may find that you need other services, such as debt consolidation or debt settlement, to be integrated in your debt counselling. Working with a Licensed Insolvency Trustee will help you devise the best long-term strategy that is uniquely tailored for you.