How Financial Advisors can Help with Debt

Financial advisors can help you turn a dire situation into an affordable one. With expertise in helping their clients shape their finances in time for the future, this comes in three forms of solution. Investment management, income tax preparation, and estate planning.

Forming a budget

How you manage this debt is a key factor in the method an advisor can help you plan going forward. For someone overwhelmed in debt, the first vital step is stopping the loss of cash where it doesn’t need to be lost. An experienced advisor can draw out a plan for the client’s cash flow and point out where the issues lie.

Understanding the plan of action

You should bring all relevant documents to the meeting. This means your advisor understands the full picture. It can be a difficult meeting at first, you’ll need to show the advisor the full extent of your spending habits, past money decisions. Remember that this is needed in order to organise how to manage all of these components.

After this stage, the advisor can draft the improved budget plan covering the vitals, ensuring all excess is not added to the sums needed to pay. This is often referred to as ‘excess trimming’.

Re-structuring

Debt comes in different forms because the ways in which people slip into it, are varied leading to varied outcomes. Some are gentler than others, such as mortgages holding lower interest rates. On the other scale, credit cards with high-interest rates build higher interest rates. These are unsafe forms of debt.

After analysis, the debt in question is looked into, a strategy for new budget and management is devised. The accounts most expensive are placed on top, the lesser, placed at the bottom. To visualise this, think of a client needing to pay off a certain amount each month to remove current debt. In the concluded budget, the main body of the money goes to paying off debt taking up space. Paying the lesser interest accounts is important to also ensure they do not fall into a status that demands fees.

The different solutions

Re-structuring debt looks at the routes available to re-shape debt into more affordable, easier to navigate scenarios. There are a number of large scale and lower scale solutions. Be prepared to be open to the realistic solutions. Have an understanding of the approach your advisor is prepared to take. Some advisors advise and leave their clients to do the work for themselves. Some take a more integrated approach. Most clients search to use a settlement firm or debt relief company to handle the work for them. There are different services available for these reasons.

You can be re-assured further with an extra advantage. When the new budget takes effect, the accounts change to current, meaning balances slowly dip. Their credit score rises with it – opening the floor to re-discussed terms with creditors (at lower interest rates) and may even decrease apparently irrelevant things such as insurance premiums.

Leave equipped

The client should leave the meeting understanding/in possession of a written plan that explicitly details the advised path of action. Ideally the advisor should mark milestones to tick off red flags that clients should keep an eye out for. As a result, the client can check their progress and catch any potential missteps within early day period.

Finding a quality advisor

Choosing a financial advisor is a committed decision. They will have a vital role in your life while debt is an issue for you. Make sure that the person is credited to give advice. They should be specialised and have their expertise lie in insurance and personal finance. Landing on an advisor holding an active membership in the National Association of Personal Financial Advisors [NAPFA] is a good practice too. It reduces the risk of any backlash that could influence their advice.

Who to turn to

If you need any help finding a certified reliable advisor, call us on 0141 816 0394.