Loans have become an integral part of us. We rarely see someone without a loan these days. There are excellent loan offers in the market too. While there are good loans which help you build assets in the long run, there are also bad ones which destroy your financial health. However, no debt is good if you cannot repay it. This piece of information is aimed at those who have fell into debt trap or are likely to do so in the future.
What is Credit Counselling?
Sometimes, when you cannot solve something yourself you need a help. Help is essential especially if it’s a complicated product like a loan. This is exactly where credit counseling comes into play. RBI defines credit counseling as something that explores the possibility of repaying debts outside bankruptcy and educates the debtor about credit, budgeting and financial management.
What does it do?
Credit counselling would not just help you solve financial troubles but also educate you about concepts of financial management, proper use of credit and so on. Credit counsellors are experienced people from financial institutions who would help you on a case to case basis. They would first assess your case and then bring out possible solutions for you. They would also educate you on the possible issues you might face with your personal finance and offer solutions accordingly.
What it doesn’t do?
Credit counselling does not help you with investment, tax planning, retirement planning or portfolio management. It is specifically aimed at the area of debt management. Credit counsellors will not advise you outside this.
How can they help you?
Credit counselling centers can help you in the following ways:
1) Settlement – They would advise you to go for a settlement with the financial institution such as bank, Credit Card Company, etc.
2) Negotiation – They will negotiate with the bank on your behalf for a better rate or restructure the existing loan.
3) Other advises – They may advise you to clear off the highest paying debts first to reduce your debt burden or to prepay the debt in parts accordingly.
Credit Counselling Centres
1) Abhay Counselling Centre – It is an initiative by Bank of India. It has its presence in Mumbai, Chennai, Wardha, Gumla.
2) Credit Sudhaar – Creditsudhaar.com offers credit report, credit score and a comprehensive analysis of your credit health for an attractive price of Rs. 470. This will also let you know the eligibility for future loans.
3) Disha trust – It is an initiative from ICICI bank. Centers are located in major cities like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Jaipur and Kanpur.
4) Grameen Paramarsh Kendras – It is an initiative from Bank of Baroda especially aimed at helping the rural population.
Prevention is always better than cure. Before you fall into a debt trap, it is advised to check your financial health. In case your EMI’s are more than 40-50% of your income, it is a clear sign that your finances are strained. If that is the case, you can approach a credit counselling centre of your choice for immediate help.