What Is Debt Counseling?

We take you through the process of debt counseling.

If you are truly drowning in debt, there are alternatives to debt counseling that will help your financial situation.

What is debt counselling?

If you are drowning in debt, a debt counsellor can speak with your creditors about more agreeable terms.

If you are struggling to make ends meet after making some poor purchasing decisions, getting a new more affordable agreement with your creditor will be more helpful than if they were to take more drastic measures like garnishing wages or freezing your accounts.

Your debt counselor

As your debt counselor will work closely with you throughout the process, this also builds accountability between the both of you.

What is the debt review process?

  • Give all your details: The first thing you are going to do is provide your debt counselor with details of your monthly income, expenses and debt commitments.
  • Debt assessment: To qualify for debt counseling, you need to meet certain standards. To be deemed over-indebted, the total amount of your debt needs to be serious enough so that you might need help with either refinancing or consolidating it - which is essentially what debt counseling involves!
  • Create a new budget: Once you've accepted the need for debt advice, you will speak to an advisor who will discuss your circumstances and work out a new repayment plan (with interest). Then you'll need to officially accept all the changes, and finally make repayments according to the new schedule.
  • Negotiating repayment: Next, your counselor will reach out to specific creditors on your behalf. Before anything can move forward, you'll need to have some documents ready. Your counselor will ask you to provide proof of income for you and any help with monthly payments. If you are already behind on payments currently, this is an important step so that the term extensions are handled properly right off the bat.
  • Plan approval: Debt review is a legal process that can help you sort out any financial problems you may be experiencing. As part of the process, not only are you able to have a better understanding of what needs to be paid off, but there are also ways in which you can restructure your payments so they are easier for you to handle. But perhaps most importantly of all, debt review is a way of making sure everyone involved is protected from fraudulent practices or other potentially harmful circumstances that could have an adverse effect on each party's relationship with one another.

Debt consolidation

These alternative forms of “debt consolidation” are designed to help financially risky people manage their personal finances by restructuring their debt according to a legally approved plan.

But, don't stop there! Research all the possibilities so you can find the best route for success because sometimes debts can be consolidated with other debts or certain individuals, but not both at the same time.

If you find that the amounts listed as debt exceed those of your monthly income, you might be over-indebted. If you’re like most of us, you may find it incredibly challenging to juggle all of your recurring living expenses – and it might be even more difficult to stay up to date with your bills. It’s not uncommon for people to miss their payments and run into financial trouble as a result.

Debt counseling helps you develop a plan to pay back all of your debts, consolidate them into one payment, or deal with other financial problems that are causing stress in your life. For more information on the debt counseling process, contact Credit Health.

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