The global recession, and a variety of other factors, have caused many people to be in a situation that they are unable to meet their monthly debt repayments.
Creditors then start to chase the debtors for money, and this can be quite a nasty experience.
The advent of debt counselling has been helpful to many people to be able to manage these repayments more effectively, and still be able to pay the month to month living expenses.
The first step is to list all the outstanding unsecured loans.
This will give a good idea as to how much is owed and what the bill is costing each month to service.
The smaller amounts should be paid off first as this will free up some cash to pay the larger amounts.
The credit records will look better as these will reflect as having being paid.
It is also a quick way to reduce the total amount that is due.
While this may temporarily affect the credit score it is not forever.
Once people start to rebuild the credit score by working financially with money the scoring will improve quite quickly.
Any other type of credit, such as credit cards that can be paid off should be tackled next before commencing on the program.
Getting rid of as much of the money owing as possible means not having to labor for years on end trying to become free of debt.
The unsecured high amount debt should be included in this program.
Now that the program is in place with the company, it is important to stick to the agreed upon amounts without failing to make the monthly payments.
Failing to make the monthly payments can lead to a lot of unwanted problems.
Full and frank disclosure is required with the company that is going to be facilitating the debt counselling process.
Every month it is important to make sure that the company is going to be paying the loans off.
Consumers are responsible for their own credit scoring and the credit scoring will be affected if payments are not made regularly each month.
Allowing the companies to make the monthly payments places a lot of power in the companies hands and there can be risk to the credit scoring if the payments are not made.
When working with the company it will be necessary to complete an application form.
This is where all the details regarding the creditors and amounts owing will be listed.
Clients can work with the consultants via email, telephone or in person.
The consultants will assess the information that has been provided to them and then determine whether the clients are over indebted or not.
Clients are deemed to be over indebted when their monthly expenses and loan repayments are more that the monthly income.
The company will then liaise with the various creditors regarding the outstanding money.
They will also notify any credit bureaus that clients have gone under review.
Consumers are protected while under review as no legal action can be instigated against the consumers.
The debt counselling company then negotiates an acceptable repayment plan with each of the creditors.
If the creditors and consumers agree to the repayment plan then a consent is granted.
If there is no agreement between the two parties, then the matter will have to go to court.