You may have already taken the first step to being debt-free by choosing to meet with a debt relief adviser. The adviser, also referred to as a debt counselor, can help you come up with a financial plan to get you out of debt and be financially secure. However, before you actually go to the consultation, there are some questions you need to answer to ensure that the information you bring with you can assist in meeting your goals.
Here are 5 questions you must resolve before meeting a debt relief adviser:
1. How much debt do I have and what kind? Determine first if the kind of debt you have is eligible for a debt settlement plan. Secured loans such as auto loans and home mortgages are usually not covered by debt management plans. If you have unsecured debt such as credit card bills, hospital debt, and personal loans, then these can qualify for a debt settlement plan. Make sure to have all your bank statements and information regarding the debt so that the financial adviser can get a clearer picture of your financial situation.
2. What are my sources of income and what assets do I have? How much you and the household earn each month needs to be defined before you meet with a debt counselor. Do you have a fixed income, meaning the amount you expect each month remains constant and secure, or is it flexible, which means it depends on the amount of work you put in? Aside from these, your debt relief adviser will want to know if you have any savings such as a savings or checking account, and other investments. List down your assets such as your home and other properties, and all vehicles you own. These will assist your counselor in determining a repayment scheme that is realistic and doable.
3. What are your household expenses? This is an important question to answer especially since it will determine whether or not you are financially healthy or are in the red. Be honest about what your expenditures are and whether they are necessities or luxuries. Record how much you spend on mortgage, utilities, food, and transport expenses each month. Also take note of other expenditures such as hospital bills or tuition fees. Determine which are fixed expenses, such as rent or mortgage and insurance premium, and those that are discretionary spending. The information you provide will give your debt relief adviser an idea of how much you can afford to put away toward paying off the debt.
4. Do you recognize any financial weaknesses? Your debt did not come from a vacuum. A particular situation may have arisen such as loss of employment or a hospitalization that has depleted your financial resources. However, the debt may also be a result of poor financial habits. Assess the cause of your current difficulty in finances. Do you frequent restaurants and are you fond of fine food? Are you a compulsive or emotional shopper? When going out, do you pick up the tab for your friends? By recognizing spending that is not quite necessary, and the circumstances surrounding why they happen, you determine the root of the problem, and can take steps towards correcting it. Letting your debt counselor know about these weaknesses can guide him in helping you achieve financial stability.
5. What are your financial goals? When do you plan to get out of debt? Aside from paying off what you owe, what do you envision for yourself financially five years from now? Ten years? During retirement? Are you thinking of buying a home? Are there other debts you wish to get out of such as student loans? Which one is your priority–being debt-free or having your own house? By listing your goals according to priority, your debt relief adviser can propose solutions and give you the pros and cons of each. The debt counselor can also offer budgeting strategies and resources that will pave the way to financial freedom.
Answer these questions as completely and truthfully as you can. You should then provide this information to your debt relief adviser so he can make the most suitable plan for your predicament. Do not withhold information, as doing so may put you into a more challenging position financially or legally. As an example, if you choose to leave out some sources of income, the debt relief adviser may think you are ineligible for the plan and suggest filing for bankruptcy instead. This situation could be avoided if the information you give your debt counselor is accurate and complete.
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