STOP FIGHTING YOUR DEBT COUNSELLOR!

Work with your debt counsellor, not against them.

When a consumer starts their debt counselling journey they put a lot of trust in the Debt Counsellor they have chosen to assist them. This professional knows a lot about how banking works, the National Credit Act and also the court system. They are there to create a reasonable plan and see you through the process.

It seems unlikely then that a consumer could start working against this very same professional that they are paying fees to each month but strangely it often happens. How can you end up working against the same person that you have asked for help and how can you avoid falling into traps that so many have fallen into in the past?

AT THE START

When you begin your debt review the Debt Counsellor that you have asked for help will spend many hours learning more about your debts and your financial habits. They may spend days negotiating with credit providers in advance of your matter going to court. Much like a personal trainer at the gym will try to push their clients to make an effort to get fit, a professional Debt Counsellor will try to motivate you to cut out bad spending habits, adopt new ones and switch to a realistic monthly budget.

What are some ways that you may be working against your Debt Counsellor even at this early stage?

To effectively help you the Debt Counsellor needs to know all the facts.

Now, it is a relief for most people to start to talk about their debts and how it is affecting them and their family. Many of us are very shy about our debts and even somewhat ashamed. It is sadly not uncommon for consumers who are looking for help to downplay certain debts and even to leave out certain expenses or obligations when talking to their Debt Counsellor. This is one way that we can undermine the process right from our first meetings with our Debt Counsellor. So, have you told them everything?

LOW LEVELS OFCOMMITMENT

For many people starting debt review, they fail to realize that they have been making bad financial decisions for a long, long time. In our minds, we often feel like we are the victim and circumstances alone have put us into his tricky situation. We forget that it was us who spent all that money and failed to live within our means.

True, circumstances may have suddenly shifted dramatically leaving us with big expenses but we need to acknowledge that we are still part of the problem. We also have to realize that debt review is a serious solution to a serious situation and that we need to fully commit to the process.

Many people feel like they will start the process and then once their situation gets a little bit better they will quickly leave the process and go back to their debt addiction and bad spending habits. A surprisingly large amount of people seem desperate to go and again take on more debt that they cannot afford, at the very first chance they get.

Debt review is a way to get out of debt…not to get out of some debt and then go out and get another huge amount of debt. It is about changing the way you look at debt and credit use. If you are not 100% committed to getting rid of all your debts then you are already mentally working against your Debt Counsellor since they will be asking you to make sacrifices that you will superficially agree to now but never intend to keep.

YOUR SPENDING & SAVING

Your Debt Counsellor will look at how you have been spending money each month and ask you to reduce your spending. They will suggest a budget amount that they feel allows you to cover your daily needs and even save a little towards bigger annual expenses while still paying off your debt.

You are not going to like the figure they give you. It is going to seem too little. This is because not only have you been over spending but to get rid of all your debt you are going to need to change how you shop, where you shop, when you shop. You are perhaps going to have to change where you live and how you get around. Fortunately, a good Debt Counsellor won’t just throw a figure at you. They will also sit and talk with you about how you can adjust your habits to fall within that budget.

If you overspend each month during the process and start to use the funds in your budget that are meant to be put aside for annual expenses (like your car license or replacing tyres or paying for new school clothes in Jan) then you are fighting against your Debt Counsellor.

They have asked you to make some serious cuts and get smart about shopping and spending and you are refusing to make the big changes needed to stick to your budget.

It is like someone reading about a diet and then saying they will try it but then cheating on the diet every chance they get. Will they successfully reach their weight goals? No and neither will you if you refuse to adjust to your new budget figure. You need to mentally and emotionally embrace your suggested budget to make the process work.

TALK TO MY LAWYER

Some greedy credit providers and collections agents (who work on a commission basis) may contact you while you are in debt review and try to tell you to leave the process for one reason or another. A common trick is to say that no payments have been received. They try to erode your confidence in the process and your Debt Counsellor.

They ignore the fact that debt review is a legal process and should be done via the courts. They do not want to wait until your attorney is present to try to talk to you. Instead they secretly try to offer you what seems like a good deal to draw you away from the legal protection that debt review provides.

If you start to negotiate with credit providers on your own without your Debt Counsellor or your attorneys then you are working against them. They have a detailed plan that involves every debt that you have and fits together as one united solution and you may be undoing all their hard work by making arrangements outside of the courts. Avoid doing this. If contacted by a collections agent explain that your matter is at court and they need to talk to your attorneys and should leave you alone. Feel free to record them on your mobile phone if they persist.

COMMUNICATE

Many times a debt restructuring plan will be made over several years. Paying off debt over time is pretty normal but under debt review it is not uncommon for debts to be paid over 5 years or so (maybe more). It would be naive to think that so much time can go by without you running into a variety of challenging situations. They may have to do with family member’s health, your accommodation or your work situation.

When you run into these challenges along the way you may fall back into bad habits of trying to throw money that you don’t have at the problem. This is because for years you were able to do so while using credit. Now with your changed financial position you should exercise caution.

When you run into these challenges you should immediately contact your Debt Counsellor. Your Debt Counsellor will make suggestions on how you could deal with the challenge in such a way that you can still stay under debt review and protect all the progress you have already made. If you do not pick up the phone when these hard times come along then you are working against your Debt Counsellor and sabotaging your chances at financial freedom.

MAKE YOUR PAYMENT

This may seem like the most obvious thing to do. If you are thinking about not making your payment or making only part of your payment then prepare for a world of chaos to follow. You are really about to complicate your life and you will be heading back to the old situation where you were getting hounded by collections agents and attorneys all the time.

If you miss a payment and then expect the debt review to somehow carry on as normal, you are fooling yourself. If you expect that the Debt Counsellor will, for some reason, “take your side” and help force the credit providers to accept your breaking the court order then you are once again fooling yourself.

True, the Debt Counsellor gets a small fee out of your overall repayment each month (which would otherwise go to the credit providers – so it is their money too) but they are not there to help you break a court order.

By missing a payment you are directly fighting against your Debt Counsellor and the process. So, always make your payment.

WORK WITH YOUR DEBT COUNSELLOR TO MAKE A SUCCESS OF YOUR DEBT REVIEW

There are many small ways where you can do things to ensure the success of your debt review. If you are regularly communicating well with your Debt Counsellor; if you are sticking to your budget and even saving a little; if you are mentally and emotionally invested in the process and willing to make your payments no matter what, then you will eventually be totally debt free.

Like a person who works along with their personal trainer at gym, the results will come. Soon you will look and feel great. Sticking with the debt review process and not getting distracted by empty promises of collections agents or even misleading adverts about ‘getting out of debt review’, will ensure that you break your credit addiction.

So, take a moment to think about some of the things we have discussed and ask yourself if there are things you need to watch out for and avoid. Don’t shoot yourself in the foot and sabotage your debt review. Rather focus on your future, pay off your debt and soon all these financial stresses will be a distant memory.