Have you just realized that you're in a financial squeeze and can no longer pay your debts? With that insight, you've already taken the first step toward improving your financial situation. Get help from professional counseling. That's what debt counseling is for, and it helps you get through your current financial emergency. Debt counseling is part of general social counseling and helps people who are overindebted.

When does debt counseling make sense?

Debt counseling
Anyone who is overindebted should get help. Overindebtedness means that you can't pay off accumulated debts in the near future with your regular income. The most important goal of counseling is to promptly secure the basic living costs of the person seeking advice and their family. These include housing, food and electricity. Another goal is support with paying off debt and negotiating with creditors in order to reach an out-of-court settlement. For example, a smaller installment payment can be agreed on. To make sure these installments are actually manageable, the counselor and the debtor draw up a debt settlement plan right at the start. It includes a list of creditors with their claims, a statement of the debtor's assets, proof of their income and any maintenance obligations. Then it's calculated which installment payments are possible without having to file for insolvency.

What is the exact process of debt counseling?

Debt counseling
To ensure a smooth process, the debtor should prepare well:1. The prerequisite is an appointment at a reputable counseling center that complies with the insolvency regulations. 2. Various documents need to be brought to the first meeting. Outstanding bills, enforcement notices, reminders, contracts and a list of creditors and their claims are important. If the exact debt owed to a creditor isn't known, a statement of claim must be requested from them. 3. The initial counseling session clarifies how this situation came about. The debt situation is discussed, and the debtor's income and expenses are reviewed. Measures to safeguard livelihood in the case of rent arrears are dealt with first. After that, it's agreed what result is to be achieved. 4. As things proceed, a household budget is used to analyze how big the gap between income and expenses is and where something could be changed to ease the current situation. 5. Next comes the attempt at debt relief. Creditors are written to with a request for installment payments, a deferral of the claim or a debt settlement.What does this counseling cost? Public and volunteer counseling centers or lawyers offer debt counseling. For debtors who are already at the end of their financial rope, it's important that they receive counseling free of charge. However, public and nonprofit debt counseling centers that work free of charge often have long waiting times for the first appointment. Given the large number of requests, the waiting times are understandable. For debtors, it's usually not obvious whether a counseling center is free of charge. So at the first meeting, ask what costs arise for further services. Lawyers and private service providers also offer debt counseling, but it comes at a cost.Debt counseling accompanies the debtor into consumer insolvency if necessary. The prerequisite is an attempt at an out-of-court settlement.