There are many different programs available on the market today for helping with debt relief. Debt counselling, debt management, cheap re-finance deals, and much, much more. The problem is that these debt programs all have the same issue, which can make getting out of debt a bit difficult and stressful. Can you guess what this problem might be?
It’s probably not what you’re thinking. It’s not the fees, interest rates, or the quality of the companies behind these debt solutions. No, the number one problem with most debt programs is that they require FIXED monthly payments without exception. This major flaw is the main reason that very few people make it through a credit counselling program or a Chapter 13 bankruptcy plan.
Do you earn the exact same amount of money each and every month? The answer to this is most probably no. That’s not hard to understand. For instance, salespeople very rarely make the exact same amount of money every month. They earn commission on the volume of trade they generate, which in most cases, varies. You could be a retail assistant. In most cases, business is seasonal, and the amount of work available is dependent on the time of year. Overtime hours come and go depending on company workloads. Part-time jobs may offer hours that vary widely from week to week. And so on.
Similarly to the amount of money you bring in, the amount that you spend is always different every month. You may think that this is not possible, but this is the reason why people get into debt. You may have a set budget for your month then you are hit with an unexpected expense. You may have been expecting some money from somewhere, but that doesn’t happen on time. You have already budgeted for everything that you are going to pay out and made the commitments. Oops.
Unexpected expenses often occur, becoming the cause of a dent in your monthly budget, which can lead to problems such as missing out on finance agreement payments and so on. This can lead to incurring bank charges and penalties, and in some cases triggers a chain of unpaid monthly instalments.
Debt counselling programs seem like a good idea, but sometimes, they can lead to big problems. People often enter these programs with good intention, and are often happy to make the agreed payments on a monthly basis. They may be alright for a couple of months, then the boiler blows up. A new boiler costs around $1,000. What happens to your budget when you are hit by an unexpexted expense like this? That’s right. The budget is thrown straight ouit of the window. You are back to square one cause you cant keep up the payments of your program.
Other situations like, loss of employment, sickness, accidents at work etc can also play a big part in upsetting your monthly budget. These are just some of problems that can lead on to getting into more debt.
Ok. So we have established that debt counselling is not the best method for getting out of debt. It works only if you can guarantee that you will make all the payments on time. However life has no guarantees. So what should you do? You can look into debt settlement, or debt consolidation. These programs are a good alternative to bankruptcy, and if things are that bad, it is recommended that you check out these programs. It’s not for people who can pay their bills in full without hardship. But it can be a real blessing for those seeking relief from a crushing debt burden.
Debt settlement and debt consolidation are good programs which give you flexibility and full control of your finances. What is debt settlement? Debt settlement is a program where an account is set up for you to deposit any extra cash that you generate every month. Once you have reached a target deposit, your debt advisor will negotiate a settlement figure with your creditors. The best way to tackle this is one step or debt at a time. Before long, you will learn how to spend wisely and you will be out of debt, leading to a more secure financial future.
Again, debt settlement is not a magic potion. It’s not the cure for every debt problem. But if you need to skip a month, or adjust up or down a little to reflect what’s going on in the real world, it doesn’t mean the end of the program. It’s truly a shame that the financial “experts” who have set up the bankruptcy rules, consolidation loan terms, credit counselling plans, and debt management programs haven’t figured this out yet. If they would just recognize this fundamental problem, then the success rate on their programs would increase dramatically and they could stop misleading the public about what works and what doesn’t in the world of debt relief.