Managing Your Debt Review: The Do’s and Don’ts
When you’re faced with a debt review, it’s hard to know what to expect, especially when it comes to what you’re allowed to do, and what not. There might be many things you need to purchase or continue financially wise, but you don’t know whether you’re allowed to, or not.
The first thing to be sure of is the reason why your debt is being reviewed. The number one reason is that you cannot pay back your debt, which is precisely why you need a professional to analyse your financial situation and the debt that is owed. It is because most people don’t know how to go about managing their debt after they’ve made it.
When signing up for debt counselling, it’s also important to know what you’re getting yourself into.
How to Manage a Debt Review
If a debt review is considered a professional approach which involves a debt counsellor to make a financial analysis, which after, he/ she helps the consumer to manage their financial affair, as well as create an adequate payment plan for them.
When you’re placed under debt review, it means your income cannot cover payments that need to be made, due to having too many expenses, creditors you owe money to, or perhaps even losing your job and not being able to repay your creditors.
When your debt is being reviewed, you are not blacklisted. You are, however, making it known to creditors and your financial institution, that you can’t pay them back and that you are seeking professional assistance to pay them back. When creditors notice your debt review status, they generally lower your payments and adjust the agreements accordingly.
What You Should Not Be Doing
During this period, the number one thing you should be wary of is not to make more credit, take on more expenses or even use the credit you still have, as this will only get you into more debt.
What you also shouldn’t be doing, is save money that could’ve been used to pay your creditors. You should also stop living a luxury type of lifestyle and give up unnecessary expenses for a while.
What You Should Be Doing
You must cut your expenses as far as you can, as paying back your debt should be your number one priority until everything is paid back. Any money, apart from your primary income, which you receive, must be paid to your creditors. The same goes for your savings and investments, which should also be paid to your creditors, to cover all your debt.
It’s important to remember that debt reviews don’t last forever and there is a way out if you remain disciplined with payments and adjust your lifestyle accordingly, at least until it’s all over.