What is Debt Counseling?

A counseling service offered to address those debts that are beyond a person’s debt paying ability is called debt counseling. This facility could help one come out of serious debts by ensuring the right budgeting and repayment plan on right time and at the right place.

Debt counseling agencies not only provide their clients with wise advice, but also negotiate with creditors on their behalf, in order to work out a reasonable payment plan and thereby help you to come out of the debt web

It serves three purposes:

• First, it examines the ways to solve current financial problems.
• Second, by educating about the costs of misusing a credit, it improves financial management.
• Third, it encourages the distressed people to access the formal financial system.

What are the Different Forms of Credit Counseling?

It will give you the information and advice you need to take control of your financial future. Aside from talking about general budgeting and financial wellness, credit counselling can come in the form of:

1. Debt Consolidation
2. Debt Negotiation
3. Debt agreements

1. Debt Consolidation

Debt consolidation is when you roll multiple debts into a single payment. It’s a smart choice if you are struggling to balance multiple payments, rising interest rates, or other challenges that come along with having multiple debts.

2. Debt Negotiation

Another option is debt negotiation. This is a simple solution where you negotiate with creditors to lower the overall debt amount or the payback terms. Debt Busters can actually act on your behalf to handle all negotiations for you, making this is an easy solution.

3. Debt Agreements

Finally, a debt agreement is a legally binding agreement between you and your creditors. It’s a way to repay what you can afford, not the entire amount that’s owed. Your creditor will need to agree to the agreement, and then your interest will be frozen on your accounts. Talk to an expert at Debt Busters to determine if you’re eligible for a debt agreement.

Need for Credit/Debt Counselling in India

• With the change in lifestyle aspirations, more and more people are taking loans to fulfill their consumption needs. In many cases, the persons are not able to manage their debts and becoming defaulters. A Credit Counselling session will educate the individual to control his/her financial situation and also educate about the important things need to be taken care before taking a future debt.
• In rural areas, especially the areas which are agricultural base, the people do not have proper financial education and they normally approach to the non-institutional money lender for their debts with high rate of interest (30% to 40% pa) and hardly have they come out from the debts after paying high rate of interest. Only proper financial education can help them for better future and fulfill the dream of 100% banking facility to all the citizen of India.
• The percentage of Non-performing asset (NPA) in Banking of India is continuously increasing which is the big concern for every bank. Only proper financial education through credit counselling process can stabilize or reduce the NPA percentage.

Is Credit Counseling right for me?

There are a lot of situations when having a credit counselor is the right choice. Despite the myth that you need to be in dire circumstances to seek credit counseling, it’s actually open to people in any financial situation.

• Creating a budget
• Debt consolidation strategy
• Financial advice
• Credit building
• Mortgage assistance
• Debt payoff options

From general budgeting to debt counseling, there’s a wide range of reasons to see a credit counsellor. There’s no matter too big or too small to bring to your credit counseling meeting.

How Debt Counseling Helps?

There are two ways by which you could get help:

1. Counseling

The counseling service could comprise the advice only and nothing more. The service provider analyzes your current financial position, debt structure, and causes for such situation. Then, they would work out the possible repayment options and determine the best one. They also work out a budget for you, setting limits for your expenses and provide knowledge to deal with your finances in better ways.

2. Negotiating Debt

If simple counseling is not enough, you can get them to help you directly to negotiate and deal with creditors on your behalf. The negotiations could include lowering the interest rates, waiving the late payment penalties, options like step-up repayment, loan restructuring, etc. This option is not free and includes fees depending upon organization, debt amount, and other factors.

Methods such as debt consolidation, debt relief, DIY debt reduction approach, debt settlement, etc. are used by counselors to help you in overcoming debts.

Debt Counselling Centres in India

There are several debt de-addiction centres across the country. Debt counselling centres require you to fill up a detailed form, which includes personal information, income details, expense break-up and existing assets. A debt counsellor is no different from a doctor. Give him the complete picture without hiding any information if you want him to diagnose the problem correctly and suggest a suitable remedy. These organisations help individuals work out strategies to repay their debts and advise them on avoiding such situations in the future.

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