What is debt counselling ?
When exploring your options to overcome your debt you are likely to have come across the term debt counselling. Debt counselling first came to the attention of those who had unmanageable amounts of debt when the National Credit Act came into effect a few years back. In the early 2000’s credit could be applied for and received much too easily with credit providers being reckless. This resulted in South African consumers being drowned in debt that they could not repay and they were soon facing creditors threatening them with legal action. Consumers would also be easily blacklisted, making it difficult for them to get credit further down the line when they were in a stable position to apply for credit.
The price of living is always on the rise and for many debt is the only way they can survive and to live a comfortable lifestyle. Today it is estimated that around 10 million South Africans are struggling to repay their debt but these days consumers have an option that just a few years back they would not have had: debt counselling.
The role of the counsellor in the debt counselling process
Debt counselling involves allowing a registered debt counsellor to handle your finances on your behalf. It involves a number of things including providing financial advice regarding budgeting and responsible spending, restructuring monthly payments to make payments easier, negotiating with the credit providers on behalf of the person with debt to reduce monthly payments and to extend the payment period, and monitoring the payments that are being made. Debt counsellors can also handle your debt repayments by enabling you to pay them a standard amount each month while they separate the amount up between the various credit providers to whom you owe money.
While debt counselling is a fantastic choice for when you are looking to escape debt it is important to keep in mind that debt counselling is not for everyone and there will be people who will not qualify for debt counselling for one reason or another. The debt counsellor that is assigned to you by the credit counselling company you approach will be able to determine whether or not you need debt counselling. If they should decide that you don’t need counselling then it is likely that you will be declined debt counselling.
What does debt counselling cost ?
Debt counselling will involve a number of fees and it is important that you discuss the fees thoroughly with the company before you sign up for their services. Know what you are getting yourself into and make sure that you will be able to afford the payments that are involved. Once you have applied for debt counselling you will not have creditors asking you for money.
When you are accepted for debt counselling you will benefit a lot from the knowledge that you will be given by the debt counsellor who will work with you. The knowledge that you will be given will help you to get out of debt and to stay out of debt. This will help you to regain control over your life and over your finances.
When you are ready to take responsibility for the debt that you have, debt counselling is a fantastic way in which to clear your name and make a fresh financial start.
Self Help from SelfGrowth.com– -SelfGrowth.com is the most complete guide to information about Self Help on the Internet.
What is the purpose of debt review?
There was once a time when those who were drowning in debt had no choice but to suffer with the black mark next to their name. A mark like this will smear your credit worthiness for quite some time. Being blacklisted happens to those who have run out of payment options as well as run out of money to make the payments. Those who are blacklisted usually cannot apply for alternative loans and their quality of living ends up taking a dramatic dive. When the new credit act came into effect a vast number of people who were blacklisted were given the opportunity to start over clean. The National Credit Act gave people a second chance to get out of debt and it gave people the opportunity to avoid being blacklisted. The main purpose of the National Credit Act, and of debt review, is to protect consumers from the damage that credit can do, especially when credit providers are too quick to hand out credit. And with the continuous rise in living expenses, going into debt contracts was and remains the go to option for many South African consumers. When you have more expenses than money as a result of day to day living, getting into debt can be an unavoidable option. Debt review has been the light in a dark tunnel for many people and it is important that people know that being under review is nothing to be ashamed of. Since the purpose of debt review is to help you to get out of debt and to protect you from the negative aspect of debt, debt review has the further purpose of preventing you from getting into more debt. This is done by not allowing you apply and receive further debt while under review. Debt counselling companies employ debt counsellors and even attorneys who are skilled and knowledgeable when it comes to handling the legal side of debt. These people are recognised and registered with the relevant institutions which gives them permission to act as debt counsellors. When you feel as though you are struggling to make monthly repayments and the credit providers are knocking at your door demanding their money, turning to debt review is a great option. Debt review will help you to get your finances sorted so that you can make the appropriate monthly payments to those who you owe money. To start the process you will have to apply for debt review. With around 100 000 South Africans currently under debt counselling and around 400 000 people having applied for debt counselling since the act was passed, it has become a popular choice.
The advantages of debt review or debt counselling
- The biggest advantage of debt review is that the consumer’s needs and financial safety are put first while the creditor will still receive payments. Debt review allows everyone to be satisfied as the consumer will be able to pay back the debt in small affordable amounts that are not smothered in interest rates while the creditor will be paid back the money, even if it takes a few years. This allows the credit provider to rest comfortably knowing that the money will be paid while the consumer can relax knowing that their assets will not be taken to pay off their debt. A creditor does however have the ability to pull out of debt review after 60 business days but the debt counsellor will work to secure a deal.
- Only one amount is paid over by the consumer each month. This amount is agreed upon by the consumer and the debt counsellor after a budget has been drawn up. The debt counsellor will take all of the consumer’s credit into account and negotiate with the credit providers to bring the monthly payment down to an affordable amount. The consumer will pay over a lump sum of money and it will be up to the debt review company to split the money up between all of the creditors. This is why it is highly important to select a debt review company that is accredited with the relevant financial bodies.
- Financial rehabilitation is a big part of the debt review process. Those who turn to debt review do so because they are unable to meet their monthly payments and find that they are falling behind each month. It is estimated that around 10 million South Africans are struggling to pay back their debt each month and they are at risk of having legal action taken against them. Debt counselling is going to teach the consumer how to manage their finances correctly and responsibly so that they will not fall into a debt trap that they cannot get out of again.
- Payment periods can be extended to allow the consumer more time to pay off their debts. Along with the negotiating of repayment amounts, the debt counsellor will also work towards rearranging the payment to give the consumer more time to make the payments. All of the negotiating and the repayment period extensions will need to be approved by the creditor before they can take effect.
- When a person is under debt review there is no chance that they will be blacklisted. The passing of the National Credit Act meant that those who undergo debt review will not be blacklisted. If a person is blacklisted they will keep that mark next to their name and possible future credit providers will be able to see that they were once blacklisted for not making the payments to creditors.
With living expenses unlikely to reduce, debt is often the only choice that a person will have. When the repayment of debt becomes seemingly impossible, debt review is there to help them. Undergoing debt counselling is the best way for a consumer to be educated about how to handle their finances responsibly and how to take control of their finances again. Bad Credit The leading online source for all credit information types. We can help you make the right choices.
Visit www.information.co.za – The Free Link Directory