Debt is an uncomfortable thing, especially for the debtors, who are in arrears with payments to be made and who can no longer make up their own resources. Most of these people run against a hamster wheel and get deeper and deeper into the debt trap. In certain situations, it may therefore be useful to turn to a debt counseling service. Here constructive solutions are often sought to free the person from debt and bring it to a financially secure track. Debtors are not always responsible for debt, very often due to sudden illness, unemployment, separation or divorce. Even the death of the life partner can be a problem in unsecured circumstances. Debt counselors help reduce current debts, provide advice and help with paperwork.
State-recognized debt counseling
“Debt counselor” is not a protected profession, so anyone can call themselves as such. There is therefore no minimum qualification and no state recognition. Thus, there is no proof of quality for debt counselors. However, the counseling centers can be differentiated between public, commercial lawyer counseling centers.
The public debt counseling
Even the public counseling offers debt counseling, officially for anyone who can not get out of the debt cycle. In most cases, these consultations are free, but also difficult to get. Due to high demand, a longer waiting period must be expected, often involving several months. And even then, not all services are provided that bring the debtor out of his debt. A certain self-commitment must therefore exist.
The commercial debt advice
If you are looking for a debt counselor yourself and do not want to use public offers, you usually have to pay for one. Commercial advice centers offer the services only for a fee, but on a larger scale. In addition, there are many service providers in this field who have government recognition as debt counseling. However, many of them do not have them and are not authorized to issue the necessary documents or certificates to the debtor. For example, for the opening of a personal bankruptcy, a certificate is required about the failure of an out-of-court settlement attempt with the creditor. For this, a lawyer would be needed who can issue these.
The legal debt counseling
A lawyer’s debt counseling is a recognized advice from a lawyer. He can quickly get an overview of the debtors’ situations and is trained to reach out-of-court settlements. If no agreement is possible, he accompanies his clients into private or standard insolvency. He can issue the necessary advice notes and documents that are needed. Unfortunately, this debt counseling is not free, but the debtor can apply for state support accordingly. Legal aid is also generally granted unless the debtor has a certain income.
Advantages of a debt counseling
Debt counseling ideally puts the debtor back in a positive light, especially among the creditors. So it can happen that the creditors renounce part of the outstanding claim and agree on a small part of the principal debt. At the same time, debt counselors check whether the debtor has other options to receive money.
Target of debt advice
The goal of debt counseling is on the one hand the regulation of debts, on the other hand, the debtor should be able to continue to secure his elementary needs. Under certain circumstances, this will only be achieved through insolvency proceedings, with the final discharge of residual debt. What many do not know, debt counselors not only help when there are already infinitely high outstanding claims. They also help people who are on the verge of losing sight of their finances.
Procedure of debt counseling
First, a debt counselor provides an overview of the economic situation of the indebted person. So the existing documents are sorted and evaluated, claims are compiled and a plan is created. Now it is determined whether the debt is too high to avoid bankruptcy, or whether there is a possibility to repay the debt still can. If the insolvency is unavoidable, the debt counselor will take the necessary steps. Furthermore, the consultant checks the creditor claims in terms of amount and deadlines and calculates whether the interest and costs are really correct. He then contacts the creditors to discuss the issues with them. A debt settlement plan can help avoid personal bankruptcy.
Of course, a debtor does not take over everything on his own, even the debtor has to cooperate and openly explain the debts and revenues. He should also abide by agreements and recommendations.