Overwhelming debts are not easy to get rid of. Some people may be able to do it themselves while some might need assistance. My friend Janet is one of those people who seemed to require debt counseling in order to rid herself of all her debts and to stay debt free for the rest of her life. Janet was working as a sales executive at a department store and as an employee she was entitled to a 20% discount on any item she bought. Anyone would think that the discount would help her save a lot of money but the perks actually caused her to lose more money. What was worse is that she was also losing money she did not have when she shopped at the department store where she worked. That was how she raked up a mountain of debts that she could not quite pay with her salary.
Janet registered into a debt counseling program organized by a debt management company near her home. Her case was taken by an accredited credit counselor. When she first met the credit counselor, she was asked questions about her finances, her debts, her salary and her monthly expenses. Her credit counselor wanted to know everything about her finances and also the details of her debts including how much was her debt in total, how much money she made in a month and also whether her debt was secured or unsecured debt. She had to disclose all pertinent information regarding her debt to her credit counselor. Janet was slightly embarrassed that she had to divulge such detailed information but she knew that it was necessary under the circumstances. Her credit counselor was going to use the information she gave to assess her situation and possibly come up with a practical solution that would benefit both Janet and her creditors.
Once Janet’s credit counseling service representative determined her type of problem they worked together to establish a debt repayment plan that suited Janet’s financial capability. Once they worked on a draft, her credit counselor proceeded to negotiate with her creditors to minimize their debt interest rate or perhaps even waive part of the interest. Creditors generally would not want to give any discount on money owed to them but under certain circumstances they might actually prefer to at least get some of their money back if not all. In Janet’s case, they were willing to reduce the interest rate and worked out a new repayment schedule where Janet would pay off her interests first. The actual amount owed would later be paid following another repayment schedule. When they reached an agreement, Janet and her creditors were expected to honor their new agreement and Janet was to follow the new repayment schedule to the letter.
Other than helping Janet pay off her creditors by acting as mediator, the credit counseling agency she signed up with also include financial education as part of their program. This was where Janet was required to attend several meetings and discussions so that they could together discuss the best ways for her to stay of debts. One of the methods they taught her was to plan a budget and follow it through. Of course, they meant cash budget. So Janet was not to use her credit cards at all. She was to start living on the cash money that she actually had instead of charging everything she could not afford to buy to her credit cards. This was actually the most difficult part of the program for Janet. She was an impulsive shopper and charging items to her credit cards became a routine that she would not feel complete if she did not charge anything to her cards in a day.
Janet’s attempt at getting herself out of debt is a continuous journey. Currently she is still following the repayment schedule worked out between her counselor and her creditors. Although she is definitely not having it easy, at least she is able to pay off her debts systematically and consistently.
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