Personal debt is not only a very common problem in
Western countries; it is a very difficult problem to prevent, or overcome,
at an individual level. It is, indeed, very personal. For that reason, many
people may want to keep quiet about it, and maybe not even tell close family
that there is, or is about to be, a money problem. They would probably
benefit from some help, but who do they go to for debt advice?
Prior to
actually receiving debt advice, most people will go through three phases:
Firstly, acceptance that there is a debt problem; Secondly, deciding whether
to seek advice from a third party about the problem; and Thirdly finding out
where to get advice and then seeking it.
Acceptance of a Debt Problem
Personal debt is something that many people may not even be aware of as a
problem, even when it is. They may be in a revolving debt situation, whereby
they keep borrowing more to make repayments on existing loans and credit
card debts. As each facility reaches its maximum, they may seek another
credit card, to add another creditor to their revolving debt cycle.
Eventually, the debt roundabout stops, and creditors come after their money.
If acceptance of the problem has not be there before, suddenly a person may
be forced into acceptance.
Deciding Whether to Seek Debt Advice
Once the debt problem is accepted, or acknowledged, by an individual,
they then have to decide if they need to seek advice.
Some people may be aware that they have a problem, and for a variety of
reasons, may think that they can get by without any outside advice. They may
think they do not need help as they can sort the problem out themselves. It
is also quite common for some people to be too ashamed and embarrassed to
admit that they have a debt problem, especially if they live in a country
where being in debt has a social stigma attached to it, such as the UK.
Others may just think that getting debt advice is either too expensive, or
that they will be conned out of their money, or both.
Eventually, though, the weight of the debt burden forces most people to
consider seeking advice on their debt situation. The pressures from
creditors may become so overwhelming that even the most reluctant may seek
some sort of expert debt advice or counseling.
Who Can Provide Debt Advice?
The next stage can be as difficult for many people as the earlier two:
finding somebody appropriate, trustworthy and knowledgeable, who can be
relied on to provide sound financial advice in a way that benefits you, and
will help you extricate yourself from the burden of debt.
As with any problem, it is best to share with those close to you; indeed,
with debt, they may well be affected anyway, so they should know. While you
have been quietly suffering with debt worries and keeping it to yourself,
your spouse or close friend may know somebody who can give free and useful
advice, as well as share the emotional burden.
Should there be nobody in your close circle who is able to give you
useful advice, which is normally the case, then you need to consider your
local options.
The local options for debt counseling and advice will depend on where you
live. The local laws may vary greatly, and it is important that you consult
somebody who is aware of current regulations on consumer debt, and the
treatment of debtors by creditors. That way, you may have your worries eased
about your creditors coming to your house, and taking your possessions as a
way of recovering their money. You will be aware of any legal protection you
may have in your country or state, and act accordingly to protect yourself.
For those who live in the UK, there is a free option for debt advice: the
Citizen's Advice Bureau (CAB). The CAB have specially trained people who
concentrate mainly on consumer credit counseling work. They will provide the
advice you need on your rights, help you assess the debts, and then write to
your creditors on your behalf. Having an advisor who will contact your
creditors, and deal with them on your behalf, can reduce the personal
pressure enormously.
In other countries, options will vary. What can discourage many from
seeking advice about their debt problem is a fear that they will be cheated
by an unscrupulous counsellor. Debt is an industry that, unfortunately, does
attract some who prey on the unfortunate. They may lure customers with
claims of being able to clear a bad credit record, when in fact it is not
possible to do so. They may tempt people in bad debt with consolidation
loans, demand a high up front payment, and then get a high commission on the
loan as well.
Such sharks are quite easy to avoid if you shop around for the best
counselling services at a reasonable cost. The following tips may help
wherever you live:
1. Check with local and central government agencies to see if there are
any free debt advice services. If not, ask if there is a licensing system
for legitimate advisors, and stick to those.
2. Be wary of outrageous claims to clear your debt, and requests for
large upfront payments.
3. If you decide a consolidation loan may help, shop around carefully,
and select the lowest interest rate option, with no upfront charges.
Once you have found an advisor, be sure to take their advice, and
co-operate in every way you can to allow them to improve your debt
situation. It will be worthwhile in the long run.
