Debt advice

Helene Mueller
eCollect support team

A debt advice can be acquired by consulting with a professional debt help agency, operating either on a charity basis or on a paid tenet. Debt guidance is typically needed by subjects in debt (individuals or corporations), when they have fallen behind with their regular payments and therefore- fallen in a debt situation as well. If a debtor cannot keep up with his debt payments, he will usually look for professional debt advice and assistance. Debt advice is apposite when a consumer or a corporate debtor needs a budget solution for the sake of job loss, income decrease, unexpected bills and taxes, connected with medical aid, hospital expenses, home bills, unpaid local fees and taxes, etc. A debt consulting institution will guide the indebted subject through the bad debt situation and propose the most convenient repayment plan for him. Such agency will also provide personalised budget management plan and thereby will reduce the risk of the debtor falling into past-due liabilities again in future.

Debt advice & debt help plans

Debt help plans are part of the debt advice scheme. They apply for unsecured personal or commercial past-due monetary obligations. As secured debts are guaranteed by a collateral, a debt advice company cannot offer the debtor a repayments plan, but only a budget counselling to avoid overdue payments in future. When a debt is followed by a collateral, the creditor has the right to request a foreclosure document from the court and take possession of debtor’s real estate property. Therefore when a lender has lent a secured amount, he will rarely agree to negotiate with the subject of debt about postponing or reducing the regular debt payments.

It is considered that default advice are needed from the moment a consumer realises he cannot afford to pay the debt amounts anymore or when he has difficulties in meeting his required instalments. Usually, a creditor will evince understanding if the debtor shows the willingness to pay, no matter he does not have the sufficient funds to repay the amount owed. When a consumer seeks professional debt advice from a third-party agency, this organisation will represent him in front of the lender.

Debt advice & debt counselling methods can also include qualifying for legal aid, if the debtor cannot afford to defend himself at court or if he does not have the financial means to pay for professional debt help. Such schemes’ aim is to provide accurate advice regarding debt problems and also prepare an individual and personalised budget plan. Some agencies also offer negotiation procedures with the creditors as part of their debt help services. Debt advice can be given over the phone or by a meeting in person with the debtor.

A debtor can seek an advice from a counselling agency when he is experiencing certain confusion or difficulties about creditor’s demands or about the hired by lender debt collection agency’s requests for repayment. If a debtor is not sure about his rights as a consumer or he needs to consult about current debt situation, he can advise with government organisations, regulating debt collection laws and acts. These institutions will counsel the subject of debt and propose a solution if the creditor / DCA (Debt Collection Agency) is not acting ethically or is harassing debtor’s rights.

No sufficient monetary funds debt advice

When a subject in debt has low income or no financial funds to repay his debt obligations, a debt advice organisation can offer different suggestions and schemes, which can help the debtor get out of the bad debt situation and clear his liabilities towards the creditor. If the lender is open to debt negotiations, an advice agency can propose the following reimbursement outcomes:

  • Debt settlement plans – They consist of lowering the total debt amount. In return, the debtor should perform single-transaction payment. The full default sum can decrease by 30% a more, depending on creditor’s benignancy;
  • Request for stopping an eviction order – When a foreclosure has already been filed to court by the creditor, a debtor can seek help from a debt advice company, which can represent him at court and can entreat the court to postpone the order. A subject in debt can be qualified for such scheme, if he cannot manage with his current payments in time, but can continue to repay his obligations if they are reduced to a certain amount in accordance with his budget. If the court agrees to cease the order, the advice debt company can continue with preparing a debt management plan for the consumer;
  • Debt management schemes – Used if the consumer has the resources needed to recover his obligations, but only if the conditions regarding the monthly amounts change. When a debt help company negotiates with the lender about settling such scheme, the same agency will also carry out the preparation of individual management plan, in compliance with consumer’s financial status and income state. Repayment of the monetary liabilities will prolong in accordance with the monthly debt amounts’ reimbursement.

Used literature & external links