Debt Consolidation Advice – What You Need To Know
A recent survey conducted on debt settlement issues focused strongly on the importance of record-keeping while considering the suitable advise regarding the consolidation of debts, before taking any decision. Before you plan for any kind of debt settlement policies, understand the scenarios carefully, the circumstances, as well as the requirement part. This would definitely include the costing part, associated with the increase in time, over the debt repayment period.
Considering the debt scenarios
Every single debt situation needs to be focused at carefully and individually. There are certain factors that need to be taken into consideration for the part. You cannot simply focus on the interest rate only. There are other elements playing an integral part in the process. The firms must not consider the ALL OR NOTHING approach to the consolidation part. Why? It is because it may so happen that only a part of the debt is suitable for the consolidation part. In fact, debts having the remaining terms of less than a year may not be consolidated. The chances are quite unlikely.
Debt consolidation scenarios
It may not be mandatory to provide suitability letters, but their presence can be helpful in judging the overall situation of the client. Rather than focusing on the generic templates, the real scenarios can be judged easily to handle complicated debt consolidation cases. The letters may help in judging the scenarios of the clients properly. It would judge whether negotiating an agreement be better than taking out a mortgage. If you consider the generic regulation act, it may not consider any kind of disclaimer being signed by the customer properly. Once this work is undertaken, the adviser would be responsible for any advice related to consolidation of the debts. It would clearly state that the customer’s choice may not be sufficient to avail the facility.
The importance of client interaction
It is crucial to interact properly with the client, in order to understand his/her scenario regarding the affordability part in repaying the unsecured debts. It is important to consider comprehensive conversation, with the customer and the debt adviser to make suitable recommendations that would best meet the client’s needs and requirements. However, never consider it to be political. No firm should be involved in actively discouraging those clients who prefer consolidation of debts even in scenarios of clear and perfect affordability. Also, it would be absolutely unethical to advise on a client’s personal lifestyle.
Customers who are looking for some kind of consolidation policies to clear off the debts need to seek advice from professionals. However, keep in mind that the advice provided through a reputed firm can also be complex and risky. That is the primary reason why firms should place a sort of policy, which can set out a clear and proper framework for the advisers while being perfectly mindful of the likely crossover situation, with client vulnerability. That is why the senior management needs to demonstrate more effective procedures to manage, monitor, identify and report the likely risks.
Author Bio: David Wicks is a senior policy adviser for a leading capital investment firm. He offers debt consolidation advice and tips to those clients who seriously are facing trouble repaying multiple debts.