Feeling overwhelmed with debt and not sure what to do? Debt relief advisers are there to assist you in managing your finances and learning various options to overcome debt. These financial advisers are experts in getting finances in order, and they can map out a plan for you that takes into account your income and expenditures. Debt relief advisers can also identify financial weaknesses and work with you to stabilize these conditions.
But where do you find one? And more importantly, how can you be sure that you will get a good debt relief adviser? Here are 6 things to consider:
1. Are you looking for debt advice or guidance?
Though the two may seem synonymous, financial advice is different from financial guidance. A debt relief adviser will offer a specific option to suit your situation, while an organization that provides guidance will only inform you of options available for debt relief. Also, a financial adviser would examine your banking statements, income and assets, as well as record of expenses in order to come up with an appropriate debt management plan.
2. Types of debt relief advisers
The type of adviser you should get will depend on what you need. Two common types of debt relief advisers are those that come from debt settlement companies and those from credit counseling agencies. The main difference between the two is an adviser from a debt settlement company will work with you and the creditor in negotiating a reduction to your overall debt, resulting in savings for you. A credit counselor, on the other hand, usually does not ask to reduce your debt, but he can renegotiate your monthly payments to make the amount lower.
3. Qualified adviser
Your best bet in getting a good debt relief adviser is someone who comes from a debt services company who has been in business for a number of years. Check the reputation of the company by looking for accreditation by the American Fair Credit Counsel, and other financial accreditation. This will give you an idea of the kind of debt relief adviser you’ll be getting, and how reputable and experienced the company that they are working for is.
4. Will you be getting the right advice?
How do you know if the advice given by the debt relief adviser is the most suited to your needs? The options provided by your debt adviser should be affordable and sustainable for you. They should be able to tell you the risks associated with the service you opt to enroll in, as well as the cons of such a choice. The debt relief adviser should take into account any taxes you may need to pay if you get a reduction in overall debt payment, and calculate the actual savings to you, deducting the debt management company’s charges and other costs. That said, even before you meet with a debt relief adviser, you should be clear about your expectations and financial goals, and you should assess your ability to meet any repayment schedule offered.
5. You need to prepare before meeting the adviser
The only way you can make an informed decision about your financial status when meeting with a debt relief adviser is if you do your homework, too. Before seeking an adviser, ask the following questions:
- How much debt am I in and if there are several, which of those I owe do I need to pay for first?
- What are my sources of income aside from my salary? Do I have savings and other assets?
- What are my monthly expenditures?
- How much risk am I prepared to take in order to lower my debts?
- What is stopping me from paying off my debts?
6. The cost of the advice
Though a company may advertise that their debt counseling services are free, more often than not, getting results means the company will charge you a percentage of earnings. Although a debt management company cannot charge you upfront yet, it will do so once the debt is settled. The adviser may collect a service fee of around 18-25% of your enrolled debt, or a percentage of total savings. Compared to exorbitant interest fees and penalties on debt unpaid, however, this is still quite reasonable.
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