Debt consultants are otherwise known as debt counselors and their key role is to assist individuals and corporations to assess their financial status and plan for optimum management in the future. Such consumers usually seek the services of a debt consultant to not only deal with their current debt load, but also to safeguard themselves against any such future situations.
With the expert advice of debt consultants, a beleaguered consumer can begin a process of organization and consolidation of the total debt, have a single window repayment, get a fair idea when they can be free of debt, avoid being stressed about managing multiple creditors and arrive at solutions for writing off completely un-repayable debts. They can also avoid being black-listed by reputable financial institutions so that they remain credit worthy.
In many countries, debt counseling, review or credit counseling are mandated by law and in the US, it is a statutory requirement for anyone who files for bankruptcy. Some debt consultancies work on a charitable or voluntary basis while others run for-profit organizations.
The actual functions of debt consultants are:
Current status: A debt consultant can prepare a detailed map or overview of the client's current financial status. The present debt position, status of debts that are past the due date and legal aspects are assessed, along with an understanding of any funds in-flows, household or personal income, assets, real estate, etc which can be mobilized are all taken into account. Balancing the net income against the net debt helps to understand and plan for comfortable repayment options.
Positioning: In many cases, the debts can be consolidated into a single repayment window or a single obligation. This may involve lengthy negotiations with separate creditors with assurances that each separate debt will be serviced within this frame-work. Sometimes, tough measures like forcibly removing all credit cards, or leaving just one, may be required to prevent additional liabilities.
Budgeting: Once debts are consolidated, consultants can work to get a monthly budget in place. This can mean curtailing personal habits, changing the previous life-style, eliminating the frills, etc and can be difficult for both consultant and client. It also requires a firm commitment to make repayments, remain debt-free and avoid repetition of such situations.
Education: Apart from these, a good debt consultancy service also offers debt and credit education so that the consumer is assured that the financial crisis will not recur again. This means helping the consumer to plan for the future, make the right type of investments and create the right kind of budget and income generation plan.
Based on these, any person who finds themselves in a financial crisis can pick a good debt consultant and emerge comfortably from personal or corporate debt.
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