If the bills can no longer be paid and the indebtedness threatens, a debt counseling can help very effectively. The experts of debt counseling help with their expertise to find their way into a debt-free future. There are many different reasons why debts arise in the first place: The loss of a job, divorce and separation, fateful blows or simply many thoughtless purchases can easily lead to major payment difficulties.
If the receivables end up with collection, the sum can easily double. If you are unable to meet your own payment obligations then you must expect the bailiff’s visit and further enforcement measures. So that it does not come to the utmost, an appointment should be arranged in time with the debt counseling.
Debt counseling – the first step in a debt-free future
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If monthly expenses and fixed costs exceed monthly income, more and more over-indebtedness threatens. Debt settlement through debt counseling offers a great perspective to affected families and individuals. Expert assistance in debt regulation is not only very important from a financial point of view: impending over-indebtedness can have a very negative psychosocial or legal impact.
The first important step of debt counseling is to get an overview of personal income and expenses. Excessive expenses must be eliminated until the personal financial situation recovers. There are often supplementary insurance policies that are not absolutely necessary and can be saved properly. For example, existing life insurance policies can be shut down for a while or even sold.
The proceeds can then flow into debt settlement and debt settlement. Debt counseling is a very important contact point during this time: Here, the experts are examining whether there is a realistic possibility of getting rid of debt without filing a personal bankruptcy. Debt counseling regulates liabilities by negotiating settlements and deferrals with individual creditors.
At a glance – the first consultation with debt counseling:
- Overview of the current financial situation of the debtor.
- Overview of the individual income and expenditure of the household.
- How did the current financial debt situation come about? Background knowledge for the debt counselor / debtor advisor.
- Getting to know the current life situation of the indebted person.
- Checking whether enforcement measures are imminent.
- Defining the further steps for debt settlement.
Step by step into debt freedom – what options are there?
The goal of debt counseling is to obtain debt freedom for the individual or family. After the first consultation, the individual requirements must be checked well. In this context, it must be remembered that with each additional day late payment, further interest on the original claim add up. Together, the goals are defined. In order to obtain debt freedom, a balance of interests must be achieved with all creditors involved.
Debt freedom can only be successfully achieved if individual creditors also receive transparent regulatory proposals. What is important is a comprehensible and realistic proposal that takes into account the debtor’s personal, social and economic situation. The guideline for the financial capacity of a person, are and remain the statutory seizure limits. In this way, the personal livelihood and living space of the debtor are not endangered.
Based on the existing debt and the number of creditors, a corresponding payment plan is created. Already this overview of the existing liabilities as well as the payments to be made on a monthly basis are enormously helpful to the debtor. Thus, the demands are no longer so burdening and overwhelming: the debtor has a perspective for debt freedom. Furthermore, the debtor gets valuable tips from the employees of the debt counseling center for the correct handling of financial resources. In this way, those affected learn from the current imbalance and avoid future slip into new debt.
Creditor and debtor – the debtor advisor as a neutral intermediary
Debt counseling provides a neutral link between the creditor and the debtor: it is about finding the best solution for both parties to eliminate the liabilities incurred. There are different regulatory measures for this:
1. Deferment of claims
Those who are only temporarily unable to pay can clearly benefit from a deferral. Such a case exists, for example, if it is clear that in a few weeks, a new job with a regular salary receipt can be started. Then, at this point in time, the payments can be resumed, thereby redeeming the receivable.
2. Installment agreement
If the existing debt clearly exceeds its own income, installment payments can also be a good repayment option. In this way, the receivable, including accrued interest, can be settled in monthly adjusted installments.
3. Comparisons and bad debt allowances
In such cases, the creditor may waive part of the claim due to the special circumstances of the debtor’s life. The remaining balance is then paid in monthly installments or by a one-time payment. For example, the money for the one-off payment may come from the family or relatives, but also from own saved funds. A one-time payment is basically always more useful, as there is no further default interest to add up to the claim.
4. Complete remission of claims
Due to the corresponding social, personal or financial forecast of the debtor, the creditor can also waive the entire claim. Claims can be issued, in particular with public authorities or authorities, based on appropriate regulations.
As a neutral party, debt counseling mediates between the debtor and the respective creditors. The employees of the debt counseling service take over all written correspondence and all negotiations for debt settlement. Thus, the debt advice center represents a debtor to his creditors competent and serious.
Avoiding over-indebtedness – that is why debt counseling is so important
Reminders, letters from debt collection agencies, dunning notices and even enforcement orders bring indebted persons into partially hopeless situations and lead to overindebtedness. Those who can no longer pay most of their debts and bills are considered over-indebted. In such cases, creditors have the opportunity to enforce their interests in court and institute enforcement measures against the debtor.
It is at this point that debt counseling has a very important function: it advises the indebted person about their rights and obligations and helps to reach a good agreement with the creditors.
It is very important to visit a debt counseling service in good time to avoid over-indebtedness. The first written reminders and requests for payment are a serious signal that should not be ignored. Already here, the debt counseling can start and prevent that it comes to even greater problems and thus significantly higher amounts of claims. Indebted persons must take into account that reminders accumulate, interest on arrears is added and the original demands thus become ever higher.
If the reminders of the individual creditors are not taken into account, collection agencies are charged with asserting the claims. Thus, additional fees and costs to the debtor. If you do not know whether the claim asserted by the debt collection is even justified, you should also turn to a debt counseling service. Collection agencies must not unfairly press anyone. Here the employees of the debt counseling provide competent and neutral and thus help to find amicable solutions.
Anyone who does not respond to written requests for payment and has set payment deadlines without confirmation must expect a dunning notice. This is issued by the creditor to the responsible for the debtor remand court. This court examines neither the correctness nor the content of the submitted claim. Anyone who has doubts about the validity of a reminder should urgently seek a discussion with a debt counseling service. Here, the experts can check the letter and help with the other necessary steps.
Anyone who does not object to the order for payment within a 14-day period must expect to receive a writ of execution. This forms the basis – for example for the bailiff – to initiate seizure measures. This is a very critical situation for data subjects. In order not to get into this situation, a debt counseling service must be activated in good time. Only in this way can burdensome life situations and over-indebtedness be avoided.
The conclusion about debt counseling:
Debt counseling helps professionally, quickly and before over-indebtedness threatens. The experts effectively help to gain an overview of their own financial situation and to find a good path to a debt-free future. In many cases, private insolvency proceedings can only be avoided with the help of debt counseling. Concerned people have to get help in time to counter negative consequences.
The debt counseling service contacts the individual creditors, works out payment plans and thus helps to find amicable solutions for all parties. Also, a debt counseling by a specialist lawyer is very useful and expedient: Based on his legal experience of many years, he can lead the negotiations profitably and thus effectively help the debtor. Having a debt counselor at your side, you have a significantly better position than an individual. Often, creditors use the debt counseling service more often than they talk to the debtor. Relieving regulatory plans are thus achieved, and indebted persons are therefore faster debt-free.
The use of a debt counseling service is in many cases free of charge. In some cases you can obtain a so-called advisory assistance certificate for a debt counseling by a specialist lawyer at the competent district court. Thus, the costs for debt counseling are limited.