An individual at a time can avail multiple loans on his name. Each loan has its own significance and serves specific needs. For example, if you want to buy your dream home, you can opt for a home loan with attractive interest rates. Similarly, if you want a latest high end gadget, there are consumer durable loans available at your disposal.
Due to easy availability of such loans and attractive schemes from different lenders in the market, one cannot resist opting for such loans. There are a lot of credit card lenders as well. In today's world, you get at least three to four calls on a daily basis from different credit card lenders and they offer you a lot of attractive schemes in relation to credit cards that people go for it. These days owning 4 to 5 credit cards are a normal thing.
Due to such wreck less nature on financial front, a lot of us end up getting into this financial jive. Multiple loans and financial products like credit card can lead to a lot of problems in the future. For paying of one debt, you take another one and again are back to square one. Your credit score gets hampered and you again try to get a loan for low cibil score.
Let's take it that you are in the same situation as mentioned above. Lenders and creditors harass you on a daily basis. You are mentally frustrated and are trying to find a way to evade this problem but you cannot find a concrete solution for this jive. You consult your friends on this and one of them suggests you to get help from a debt counselor. Who is a debt counselor? Who would that be? And how can he help?
A debt counselor is a person or entity who helps you understand the intensity of all your debts and helps you clear your debts in a very efficient way. Many people take support of debt counseling, when they know of their financial condition being critical.
A debt counseling session would typically give you an insight of how to manage your funds. By having them onboard, a debt counselor would try to understand all of your line of credit and which one is critical. When mentioned critical, which loan has high contribution to your credit score and which loan contributes less. For example, a car loan would contribute less as compared to a personal loan to your credit report. After understanding all these financial factors the counselor will then see, how the loans can free foreclosed, is there a need of filing bankruptcy? Or can we go for a rearrangement of debt.
There are factors which qualify you for debt counseling. Taking your financial case is solely on the discretion of the debt counselor. Hiring a debt counselor is not cheap. There are a lot of charges involved in the counseling process.
A counselor can help you rearrange your debt from your existing creditors. The consumer and creditors meet together at a counseling agency, which then collaborate on a plan favoring the consumer. In this process the creditor is willing to grant some more time to repay the loan or in some cases the late fees are waived off. If you make all your payments on time after the rearrangement of debt, the lender might give you another loan considering your god track record of repayments. This procedure can happen with almost all type of line of credit.
Even if you have made all your payments on time after the rearrangement plan, make no mistake assuming it will help you get your credit scores up. Once a financial transaction is recorded in your report, it stays on the report for up to 10 years. A debt rearrangement is also recorded in your report which will give your future lenders second thoughts, before providing you a line of credit.
We all face a time when taking a loan for some need is inevitable. Just don't make this a habit, as this habit can drown you and it is very hard to come back to financial stability.