Debt Counselling Services


Debt Counselling Services

Pros and Cons of Debt Counselling Services

There are many different options when you are struggling with debt. Debt counselling services are just one of those options and could be the best one for you. However, before you decide to contact them, it is important to consider the pros and cons. This will help to make sure that you do get out of debt with as few problems as possible.

Search for Reasonable Ways to Get Out of Debt

The first benefit of debt counselling services is that they can help you find the best and most reasonable way to get out of debt. They will look at your particular financial situation, at the money you have coming in and all your outgoings. They will help determine whether debt consolidation will help you benefit or whether you need to look into other management plans.

Help to Reduce Your Debt

Another benefit is that they can help you reduce the amount of debt that you are in. The debt counselling services will talk to your creditors and arrange for lower rates of interest and lower the amount that you have to pay back. This could be through a debt management plan where you only pay a set amount for a set period or by paying off each individual lender. This is often better than filing for bankruptcy, where your assets will be removed to help clear as much debt as possible.

Only Deal with Unsecured Debts

The services generally only deal with unsecured debts, including personal loans, credit cards, store cards and utility bills; they will not handle secured debts like mortgages and car loans. This can work as an upside and downside as it will depend on the debt that is causing you a problem. The majority of people suffer from unsecured debt problems so it will likely work out as an advantage to you.

Will Harm Your Credit Rating

Using these types of services can really harm your credit rating. However, this is not generally as bad as opting for bankruptcy. The problem is that lenders will see that you have had problems with your financial obligations in the past and debt management solutions remain on your credit file for six years.

You need to consider the pros and cons before accepting debt counselling services. They can help lower the amount that you have to pay and offer a plan that is more manageable. However, they will affect your credit rating negatively.