What should you do if a client's debt payments exceed 20% of their monthly gross income?

When a client's debt payments exceed 20% of their monthly gross income, it indicates a significant financial burden that needs to be addressed. Making recommendations for debt management is a crucial and effective approach in this scenario.

Debt management can involve strategies such as budgeting, consolidation of loans, negotiation with creditors, and potentially creating a repayment plan tailored to the client's financial situation. By focusing on managing the debt effectively, clients can reduce stress, avoid further financial troubles, and work towards becoming debt-free. This proactive management helps clients gain control over their finances and improves their overall financial health.

While cash flow management is important, solely focusing on it may not adequately address the pressing issue of high debt levels. Suggesting loans to cover payments could lead to a cycle of increased debt, potentially exacerbating the client's situation. Encouraging clients to ignore their debt is clearly unwise and could result in more severe financial consequences down the road. Thus, recommending actionable debt management strategies provides a constructive path for clients facing significant debt.