How To Apply For Debt Counselling

Once an individual has determined that he or she is in troube in terms of
debt, that is, the expenditures per month exceed the monthly income, it is
time to go about setting a course of action to right the situation before
disaster results. Most debtors will embark on either an official or
unofficial debt consolidation program that could include any or all of the
following elements: debt counselling, debt management, or consolidation
loans. Individuals should keep in mind that as taking out a loan to pay off
the creditors is just another form of debt, it is the least desirable of
these options. Instead, the first step in a program would be to make a
monthly budget that takes into account expenditures such as food, utilities,
car payments, mortgage payments, and insurance payments. All of these
expenditures have priority as they are essential to life and must be taken
care of first. After determining how much money each month is needed for
these bills, debtors will need to determine how much they can afford to put
towards those outstanding bills. If individuals show enough initiative in
these cases and report their plan to a creditor, the odds are that they may
accept the plan as is and the debtor will not have to resort to more
stringent measures of formal debt consolidation.

Formal debt processes should be avoided for the consumer for the simple fact
that, even if the measure is a relatively burden free process such as debt
counselling, there is a good chance that your creditors will find out that
you have applied for credit repair measures. In order to receive effective
consumer debt counseling, an individual must disclose information about
finances and debts and these reports will cause a negative score on credit,
affecting future applications. Again, though, there are some creditors that
may see the application as a sign of individual initiative in terms of
paying them back and therefore may still be willing to extend an individual
credit once the current situation is resolved.

The very last resort for any individual debtor is taking out a loan in order
to conslidate their bills. The worst case scenario is taking out a secured
loan, where the individual puts up collateral such as a house. ALthough a
second mortgage seems appealling due to the fact that individuals receive a
large hunk of cash quickly, the fact is that if an applicant cannot pay
their debts, they stand to lose absolutely everything. Individuals must
really think about how they came to this spot in the first place; is it
really worth a house to pay off the bills that were incured going out to eat
or on home entertainment suystems? If an individual must opt for a loan,
they should make sure it is unsecured.

When ti comes to debt consolidation and alleviation, there are a few main
parts. The first part comes in recognizing that the situation needs a
solution, and looking into options.Next, teh money and means to pay off
creditors must be found. Finally, individuals must make sure that they see
how the sitatuion occurred in the first place and take steps towards
avoiding similar mistakes in the future. Individuals who find themselves in
heavy debt must take the bull by the horns and be prepared for a lengthy
process which requires a lot of commitment in order to re-establish
financial well-being.

About The Author: Charles Parson routinely produces informative papers on
subjects dealing with business debt and credit repair.
His articles on debt counselling can be encountered on
http://www.creditenio.com/counselling.html and also other web pages.