3 Signs You Need to Work with Debt Resolution Consultants Key Takeaways :
Debt is an important aspect of the financial world. It becomes important to understand the nature of debt; otherwise, it may lead to insolvency and bankruptcy. If you are unable to pay your credit card bill on time, require a loan to settle previous loans, or struggling to make minimum payments. In these conditions, you may require a debt resolution consultant Debt has always been considered bad in financial portfolios, but that’s just a common misconception that everyone has. If you want to build your assets or multiply your investment fields without using your own money, then that’s when debt comes in handy.
You can get a house on a mortgage and put it on rent, or you could acquire an appreciating asset that meets your financial goals. That is where a lack of proper debt management comes in. Many people think that debt is just borrowing money to buy a car, a house, afford an education, and so on.
That is where most borrowers fall into a debt trap, which leads to bankruptcy just because they have poorly managed their debt money. That’s where debt resolution consultants play a vital role.
That being said, in this brief article, we will shed light on 3 signs that will help you understand how debt resolution consultants can manage your debts effectively.
What Does Debt Consultants Do? As mentioned above, many people fail to analyze the nature of debt which leads them into a vicious debt trap. In which they have no other choice but to borrow money from other lenders and pay off the borrowed amount.
As a borrower, if you fail to analyze and understand your debt tolerance level then you are just one step away from bankruptcy. These debt resolution consultants are experts in understanding your current financial condition and would further guide you to clear your debt.
They also help you organize your funds so that, in the future, you won’t end up in a financial crisis. Many people mistake debt resolution for debt consolidation, debt resolution is about resolving your debt, and debt consolidation is about reducing the total number of creditors.
But being in a state of being unable to pay off your debt doesn’t necessarily mean a bad thing. There are several stages or scenarios that, as a debtor, you might face, but not all cases require you to seek assistance from debt consultants.
3 Signs You Require a Debt Consultant There are 3 major signs or, let’s say, conditions, in which considering the advice of a debt consultant might be a wise choice.
High Debt to Income Ratio There’s a golden rule for taking on debt “Never exceed your borrowing amount more than your income”. Yet many debtors ignore such factors and end up owning more than they earn.
It’s one of the main causes that lead to debt traps and bankruptcy. In such conditions, you cannot even spend on your day-to-day necessary expenses as your entire income gets depleted on your mortgage payment.
You can easily calculate your debt ratio by simply calculating your total debt such as credit cards, mortgage payments, and loans. Then divide your loan amount by your income and multiply it by 100.
Formula = Total debt/Total income*100
If your percentage comes out to be near 100 or more than 100, then you should immediately consult with an expert.
Unable to Pay Credit Card Bills on Time By the end of the month, when you check your credit card bills and they seem unpayable, it’s time to get aid from debt consultants.
If your credit card bills or part of your bill accumulate over time, then it negatively impacts your credit score. Credit cards usually have high APRs and often charge late fees, which will disrupt your financial status.
Even if you are relying on a credit card for your daily expenses, it’s also a sign of poor financial management. Well, there is nothing wrong with relying on credit cards until you pay your bills on time. You can check your interest amount by using a credit card calculator.
If you are constantly finding yourself in a situation in which you are paying high interest on credit card bills, then you should get a piece of advice from a fiduciary (financial consultant).
Requirement of Payday Loans Unforeseen circumstances like medical emergencies, divorce, accidents, and even cases of theft can happen to anyone. But the main issue is when you are required to take a loan from small financial institutions known as payday loans.
You can borrow up to $3000 from them and they charge up to 500-600% APR which is quite high. If you don’t have any emergency reserves, or exhausted your savings, and are constantly borrowing from payday loans, then it’s a critical situation.
Paying such a high-interest amount is absurd and you should avoid such scenarios. You should go and seek immediate advice to get relief and create a path towards a better financial future.
Pros and Cons of Debt Resolution Consultants Taking assistance from debt consultants doesn’t mean the resolution of your debt problem. There are several advantages and disadvantages that you should weigh.
Pros Cons Expert adviceSolution as per your financial conditionBetter debt management Streamlining your paymentsSave money and timePay your debt fasterAvoids bankruptcy High feesImpact on credit scoreRigid methodsTax implications
Conclusion These debt consultants may improve your financial condition and their service is synonymous with that of financial advisors. But it’s up to you to follow their advice; they can only suggest to you how you can eliminate your current debt rather than how you can generate other income sources.
There are also many factors that one should consider, such as paying high fees, the potential negative impact on a credit score, and following rigid methods suggested by consultants. However, opting for a debt resolution consultant might be the optimal choice, as in such conditions, advice from financial experts is required.
