Not enough income to pay your debts? This is how debt counselling can help
You take out loans because you do not have enough income to cover your monthly expenses.
Virtually any person in New Zealand can get into the debt trap. Then you are unable to repay your debt and borrow even more money. Every new loan which you take out is more expensive because of the higher risk which the lender assumes for providing cash to a person with growing debt. There is a way out of the debt trap. You can actually resolve the problem in more ways than one.
Debt Counselling as a Solution
One of the most effective methods for getting out of debt is the use of debt counselling services. The job of the debt counsellor is to assist you with managing the repayment of your debt. The major benefit of working with such a specialist is that they will negotiate more lenient debt repayment terms for you. The counsellor can secure lower interest, longer loan term with smaller monthly payments or postponing of the repayment. Debt consolidation can also be recommended by the specialist. You will get help with managing your finances so that you can repay your entire outstanding debt and avoid problems in the future.
Debt Counselling Benefits
There is a way for you to repay your existing debt and the debt counsellor will help you find it. You will be able to use a strategy which is especially designed for your needs by the specialist. It will correspond to your current income and pattern of spending. You will be able to save money on the monthly payments as well. With more cash every month, you will certainly have room to breathe when it comes to covering your living costs. The expert will assist you with monthly budget management as well. You will get assistance with planning and controlling your spending so that you can repay your entire debt timely without having to deprive yourself of important necessities.
Working with a Debt Counsellor
In order to analyse your current financial situation, the debt counsellor will need your pay slips and bank account and credit card statements for the past month. You should provide copies of these documents plus all the additional information required by the specialist. When you meet with the professional, you should listen carefully and ask as many questions as necessary.
The debt counsellor will use the information on your income and expenditure plus the information from your credit record to analyse your current standing. The analysis will enable the specialist to produce the most effective solution for you. That is why the quality and quantity of the provided information are crucial.
The credit counselling services fall into two categories, which are free and paid. The free services are provided by charities and other non-profit organisations whose goal is to assist people in need. They are professional and very helpful. However, they are not flexible. You cannot choose a counsellor, for instance. There may be other restrictions as well.
If you use a paid debt counselling service, you will be able to choose which professional to work with. You can take into account factors such as experience, achievement, certification and education when making a choice. You have to find out how much the service will cost you. Request a full list of all fees and charges and check when they are due. You have to be certain that you will be able to afford the service.
Debt Management Solutions
There are different strategies for getting out of debt and you will have to choose the best one for you. The debt counsellor will help you with this by analysing your present financial situation. Take a closet look at the main methods which you can use for eliminating debt.
An experienced debt counsellor can negotiate a lower interest rate for you. Such professionals have long-term relationships with lenders and this enables them to secure the most favourable deals for their clients. You will have even better chances of getting lower interest if the current rates are lower than the one set on your loan.
Debt consolidation is perhaps the most popular of all strategies. It involves taking out a home equity loan which is used for the repayment of the outstanding balances on all unsecured loans and credit cards. Since this loan is secured, it has lower interest rate. The lower rate and the longer term will result in smaller monthly payments.
The main strategy for repaying credit card debt involves the use of a 0% interest credit card. When you transfer all of your outstanding balances to this card, you will automatically save on interest payments. This will make it easier for you to repay your debt. This strategy is effective only when you plan things so as to repay your entire outstanding debt before the 0% interest period is over. You will typically have anywhere from 6 to 12 months to get rid of credit card debt.
Choosing a Debt Counsellor
You should select a debt counsellor carefully as your financial wellbeing will depend on this person to a great extent. You should ask people who have used debt counselling services to share their experience and recommend a specialist. You should run a search online as well. Use the convenience of the internet to compare different service providers and their credentials and experience.
Once you find a specialist who looks good on paper, you should arrange a meeting to get a better idea about their expertise, experience and ability and willingness to help you out. You will benefit from hiring a debt counsellor who has a degree in finance or a related subject plus professional certification issues by a well-established organisation. You have to get an idea of how the professional has helped other people in your situation to assess their experience and achievement. A truly professional counsellor will give you an idea of what they will be able to do for you instead of promising things which seem too good to be true.
Use debt counselling for getting out of debt in the most effective and most comfortable way possible.