The Debt Review Process and How It Can Help You

Many people today end up in debt one way or another. The ever-rising cost of living is unforgiving to personal finances and, with time, your bills, mortgage payments, car payments and other loans may catch up with you. One thing to know is that you are not alone. Everyone is battling to meet their financial commitments one way or another and debt review is one of the ways to turn your life around. Debt counseling or review is one last effort that you can take towards getting a handle on your finances before you are blacklisted.

The Debt Review Process and How It Can Help You

What debt can do to you?

Debt can be quite damaging to your credit reputation. If you default on one or more payments, you will be black listed and considered a huge risk by many lending institutions making it difficult for you to get financing when you need it. Some creditors may also take legal actions against you such as auctioning your property to pay off the pending bills. It is necessary to begin the debt review process as soon as possible before things get out of hand.

What is debt review?

Debt review is a process that began a couple of years ago. While undergoing debt reviews, creditors cannot take any legal action against the debtor. You will receive financial help, coming up with a reasonable payment plan to offset your debts. The review process favors individuals with a regular income who can abide to an installment payment system, usually on a monthly basis. When you apply for review, you will be assigned a personal debt counselor who will help manage your debt. Debt counselors help many people who are drowning in debt.

The debt review process

  • Finding a debt counselor

You can find debt counselors through referrals, newspaper ads or simply through the national credit regulator site. Ensure that the debt counselor is licensed and accredited by the law.

  • Submit your information to the debt counselor

In order to come up with a solution for your debt issues, the debt counselor has to review your current financial situation. You need to provide identification information, pay slips, monthly payments and a monthly expense budget to the counselor for review. Cover all the basics including things such as food and fuel.

  • Debt counselor recommendation

Based on the information you provide, the debt counselor gives a recommendation on the next step to take. The counselor can decide whether you are over-indebted based on your current income as well as what you need to live on from your income in order to service these debts.

  • Listing under debt counseling

In order to prevent any legal action from being taken, the debt counselor will contact your creditors and credit bureaus to inform them that you are under debt review.

  • Repayment proposal

The debt counselor offers the creditors proposals for repayments for legal consent. The proposal often addresses issues such as reduction of fees, waiving penalties and payable interest. In case the creditor rejects the proposal, the debt counselor can go to court to get an approval. Once the proposals have been agreed upon, the debt counselor’s agency will take a sum of money from your monthly income to service the payments agreed upon in the repayment proposal. Click here to know about your debt reviews and more of what he has to say about managing debt.