Sometimes referred to as debt counselors, debt consultants are financial professionals who work with individuals and businesses to assess their current status in terms of the amount of debt they are carrying. The goal is to assist the client in finding ways to more effectively manage current debt so that the level of financial security is enhanced. To this end, the debt consultant will employ several strategies in order to help the client meet his or her goals.
While the exact methods used by different debt consultants vary, there are a few core approaches that are always present. In the preliminary stages, the debt management consultant will work with the client to get a true snapshot of the current status of the client’s finances. This means compiling up to date information on the status of each debt, including the identification of any payments that are currently past due. Along with looking at outstanding debts, the debt consulting professional will also consider the amount of net income that flows into the household or business for each calendar month. Understanding how much income is present to cover current debt obligations is key to developing an effective strategy to managing the debt.
Once all the relevant factors are identified, debt consultants often work with clients to determine the best way to position the debt. In some cases, this may involve consolidating all the debt into one debt obligation. At other times, the process may involve making a covenant to incur no additional debt and begin the strategic elimination of each debt in turn. It is not unusual for debt consultants to urge clients to physically destroy all but one credit card, making it much more difficult to make use of those open accounts. The one credit card is tucked away in a safe place and may only be used for emergency situations.
Once the current debt load is positioned properly, debt consultants work with clients to develop a workable monthly budget. Often, this means limiting or eliminating expenses that are not considered to be essentials. As part of this process, the consultant may call upon the client to change personal habits, such as limiting meals out of the home and the preparation of more meals within the residence.
Debt consultants seek to employ simple financial strategies along with common sense to assist clients in reversing the trend of sinking deeper into debt and having little or nothing to show for it. At times, this requires the consultant to be somewhat firm with the client, especially in the early stages of the process. However, working with a debt consultant can mean the difference between a having a poor credit rating and living a life that is free from the stress imposed by dealing with a mountain of debt.