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Advantages Of Debt Counseling And Why You Need It

April 20, 2012 | Comments: 0 | Views: 146

The default by debtors in the fulfillment of their financial obligations to creditors is rampant. When the news on the recent global financial crisis hit the papers' headlines, it was reported that the crisis could be attributed largely on the large portfolio of debts, especially real estate mortgage loans, that have remained unpaid when due. This crisis led to the fall of even the financial institutions that are perceived to be, ironically, most established. On the part of the defaulting debtors, the ill effects of their default include forfeiture of their property and past payments, with a sure decline in their credit that could adversely affect chances for loan and utility applications in the future.

When put in a predicament of growing and defaulting debts, what most debtors often fail to realize is the availability of professional services, through debt counseling, being offered by experts in finance who can help them survive their own crisis. Sadly, the many other persons who may be aware of these services sometimes doubt the worth and effectiveness of debt counseling. With this line of thinking, however, persons fail to realize that a debt counseling program may be the best solution that can relieve them of their financial dilemma.

Debt counseling presents several advantages which must be considered by distressed debtors in deciding whether or not to avail of the service. Based on the programs normally offered by debt counselors, among these advantages to debtors are the following:

Reduce interests and charges

During debt counseling, finance professionals present to their clients the effective means and techniques to negotiate successfully with creditors. Should the debtors so desire, debt counselors may also be the ones to negotiate directly with creditors, thereby often facilitating the execution of settlement agreements. The efforts should result in the reduction of interests and charges, which additional amounts often cause the debtors' failure to repay their loans. Higher interest and charges only prevent debtors from covering payment of their principal loans.

Lower monthly payments

Debt counselors also provide their clients with information on debt consolidation. Under this scheme, several debts are consolidated, and the monthly payments required of debtors are lowered because of better terms and longer periods for loan repayment.

Allows Elimination of Debt

With better terms for repayment and various schemes that are obtained through debt counseling programs, debtors who once again become steadfast in the satisfaction of their debts can eventually fully satisfy their financial obligations. This, after all, is the ultimate purpose of debt counseling. Since the entire process should not end with the counseling, debtors need to realize that the efficacy of a program shall largely depend on their will to execute whatever plans come about from the sessions.

Helps improve credit rating

Clients who are able to eliminate their debts after everything that is learned during the debt counseling sessions will then be able to improve their credit rating. This credit rating is important considering that most financial institutions share information on individuals' credit, which can largely affect opportunities for future transactions.

The author helps people when it comes to getting debt counselling. To learn more visit

Source: EzineArticles
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