Article by Alex Jonnes

It was my wife who first introduced me to debt counseling and I thought it would be just another agony uncle whom I would have to deal with. However, it was not late that I was proved wrong. It was through debt counseling that I survived the deadly debts to recount its benefits.

Debt counseling is the advice offered through experts on several debt related issues. Debt counseling has a two-pronged strategy. While the advice focuses on ways to counter the current debt load, the borrower will also be informed of methods to prevent debts from originating. Thus, debt counseling plays defensive as well as a preventive role.

The defensive strategy will be employed for situations where the debt load is sufficiently large. In my case, the debt load was substantially large. My personal savings and monthly income would have lessened the burden a little. But, there were other expenses too that needed to be paid through the same limited income. By channeling my income towards debt settlement, I would only have paved way for newer debts.

Debt counseling showed the way out. Large number of people in the UK owe their freedom from debts to debt counseling. In fact, the very first lesson that I learnt from debt counseling is that I was not the only person who had debts. There were many others who have even messier finances. The statistics are really appalling. How come so many people, belonging to so rich a country as the UK, be so vulnerable to debts? However, people do incur debts. A desire to have almost every material comforts, often pushes people to spend rashly. On most occasions, the expenditure is without any consideration for the sources of payment.

However, as the pressure of the creditors mounts, the very first priority of debt counseling will be to design a way out for the debtors. Presently, there are a number of debt elimination options available in the UK, namely debt consolidation loans, debt consolidation mortgages, debt consolidation through remortgage, home equity loans and credit cards. Each option has its own set of advantages and disadvantages, and it will be really difficult to make a choice for one of these. Through debt counseling, borrowers can also get help during the product selection process.

Since I had a large debt load, the debt counselors suggested that I take up a debt consolidation loan. They did not force the product on me. This is one of the peculiarities of debt counseling. The debt counselor presents an impartial view of the various products. However, not all debt counselors adopt a similar view. Most of them will sell their products in the guise of debt advice. Borrowers need to stay clear of such advisors. As in medical sciences, second opinion is always beneficial during selection of debt settlement products. There are a large number of profit and non-profit agencies and individuals who provide genuine and professional advice. Some of these, like Independent Financial Advisors are bound by the rules laid down by the Financial Services Authority to offer genuine advice.

The preventive role of debt counseling is more of an advisory nature. The aim of this exercise will be to instill debt sense in the people; though this will prove a Herculean task, given the strange relationship of people with debts. The role may take the form of a face-to-face meeting with an individual, or a conference wherein a number of people are addressed at one time.

During these sessions, the debt counselor advises borrowers of ways to deal with debts. Debt consolidation loans and debt consolidation mortgages can at the best relieve individuals of debts for sometime. However, if the individual does not improve his spending habits, he will again have a large debt load. Through preventive debt counseling, the debt counselor aims to strike at the roots of the debt.

Some of the principal debt counseling tips include:

*Do not spend more than what you earn.

*If the expenditure is necessary, then a provision needs to be made for its payment.

*Every individual must prepare a priority list showing the importance of each expenditure.

*Try to generate newer sources of income.

*If a debt has been incurred, then it must be repaid with priority.

Preventive debt counseling tips are not new to people. They may have heard of them from their parents or recited them in moral science classes, but all these lessons vanish while spending. A workable debt counseling method must be practical enough to be implemented. The borrower’s finance needs to be studied exhaustively for finding an effective solution. No debt counseling is complete without the borrower’s participation. Consequently, borrowers need to tread safely on any debt decision that they make.