What Are the Benefits of Debt Counseling

In 2021, global debt rose to a record $221 trillion, with consumer debt accounting for about half of it.

Whether at home or abroad, more consumers are taking out loans to try and make ends meet. While debt can be a handy financial tool when used wisely, it can also come with devastating consequences. It’s never fun when you’re being hounded by debt collectors because of unpaid debts.

If you’ve found yourself in a hole of debt, it’s easy to feel hopeless and helpless. Of course, the best cure for debt is paying it off, but have you tried debt counseling?

In this article, we’re fleshing out how a debt counselor can help you unchain yourself from the shackles of debt, so read on.

Develop a Clear Understanding of Your Debt Situation

Having a good picture of your debt situation is key to figuring out how to get out of it. Unfortunately, some people shy away from confronting the debt monster they’re facing, making it harder to defeat it.

When you sign up for debt counseling, you’ll get a professional who will help you determine how much you owe. They’ll also explain the different types of loans you have and their financial implications. With this information, you can, for instance, pick out high-cost loans, which you can prioritize repaying.

For instance, consulting a California Auto Repossession Lawyer (or elsewhere) can help you navigate the legal landscape and challenge wrongful repossession practices. Similarly, legal experts can assist with home foreclosure issues or predatory lending cases, offering guidance to protect your assets.

With this information, you can, for instance, pick out high-cost loans, which you can prioritize repaying. In any case, it’s important to be honest and transparent with your debt counselor. They aren’t going to magically unearth all your debts if you don’t give them all the information they need.

Draw a Repayment Plan

Most people who’re in debt are able to service their loans. They just need a better repayment plan.

A debt counselor has the necessary expertise to review your financial status and devise a debt repayment plan that works. This may involve working with your lenders to restructure some of the debts, and even pursue debt settlements.

If you’re over-indebted and unable to service your loans, the counselor can recommend suitable courses of action, such as filing for bankruptcy.

Build Your Credit

You need good credit to access loans at favorable interest rates. Yet, if you take out a loan and fail to repay it, your credit score will fall.

One of the reasons people who’re already in debt fall deeper into debt is taking up more high-interest, bad credit loans.

If your credit has fallen and you’re looking to repair it, a debt counselor can help. From the repayment plan they’ll draw, you’ll be in a better position to stay on top of your loan obligations. This way, you’ll develop a positive credit history, which is key to improving your score.

Debt Counseling Isn’t a Permanent Sentence

Even though debt counseling is for your own good, the sessions can feel humiliating and humbling. The good news is signing up is voluntary and you can cancel any time you wish.

Credit Salvage has an informative article on how to go about canceling debt counseling.

Reap the Benefits of Debt Counseling

In a perfect world, we would all be financially free. But this world is far from perfect. The reality is most of us are struggling with personal debt and other financial problems.

If you’re feeling overwhelmed, debt counseling can help. Consider it a hand that will guide you out of debt and into good financial health.

Browse our blog for more personal finance advice.