CREDIT COUNSELING: PUTTING A HANDBRAKE ON YOUR RUNAWAY FINANCES
For those who have experienced out of control finances, a credit counseling service is like pulling the handbrake on your runaway car. A counselor will not only slow down your slide into the financial debt abyss, they can also help you to do a handbrake start back up the steep slope of recovery, by suggesting ways in which to improve your situation.
When our business failed following the birth of my fourth child, I felt real despair, as the business had effectively stripped our family resources. We unwisely started the business with insufficient capital, so coming to a standstill to recover from the birth of my son, robbed us of cash flow and cause severe financial hardship. Although I was capable of managing our finances, I was so worn out with the new baby that I realized we seriously needed someone to come alongside us and help us.
I had heard that the local shire council had financial counselors available for this purpose. I contacted them and they made an appointment for us. This was the best decision we ever made and I will explain why.
Firstly, the counselor was able to objectively look at our situation and see where changes could be made to ease the pressure a little. I was surprised to learn that we were not in as bad shape as I thought. This was a huge encouragement to me. I didn’t realize that many people spiral out of control when they reach the point we were at, with dire consequences for their credit history.
Secondly, they contacted creditors on our behalf and negotiated time to pay arrangements. This was a huge relief for me, as all we really needed was a few months grace to gather income and I was feeling very pressured by constantly having to fob off creditors. The real risk when you get to this point is to ignore creditors attempts to contact you, as often you have no news about when you can pay. The counselor clearly showed us that this type of behavior burns your relationships with the credit provider and leads to serious consequences.
Thirdly, they were able to access pools of funding that we were unaware of and paid some of the bills out for us. This included applying for grants from trust funds set up for this specific purpose.
Fourthly, they were also able to access our credit history and check to see if we had done any damage to our credit rating through the events that had taken place. This revealed that we had acted quickly enough to prevent serious issues, which was a huge relief to me.
Finally, they helped us to put into place a budget to manage our way out of our situation. Part of this process was to discuss with us options for changing some of our credit relationships. They explained that different banks offer different rates and the advantages and disadvantages of debt consolidation. This was possibly the most important and relevant to us, as having an outside influence renegotiate the budget helped for my husband and I to work together, where as previously it was always a struggle.
I am very pleased to say that we came out of this time without going bankrupt, which was a very real possibility had we continued the way we were going. I cannot stress enough how greatly we appreciated the helpful advice, guidance and assistance of the financial counselor, not to mention the emotional and practical support. They certainly were the safety equipment on our financial vehicle at a time when we were well out of control!