22 Oct Debt Mediation versus Debt Counselling
Before entering into a debt management agreement, it is incredibly important that time be taken to gain comprehensive insight and legal perspective. For over indebted consumers, the various options available to them can be overwhelming to consider, which is where our Credit Rehab team offer guidance and support.
Two solutions that are available to consumers are Debt Mediation and Debt Counselling, both presenting their own set of benefits (or potential downfalls, if not properly understood). At Credit Rehab, we provide transparent financial solitons and are guided by the National Credit Act, that is geared towards promoting social and economic welfare to all South Africans and protecting consumers active in the credit market fairly, reasonably and responsibly. Through our services, we ensure that each client is well on their way to a life free of debt.
For South African consumers facing debt, factors like our countries harsh economic climate, being constantly harassed by debt collectors as well as potentially falling victim to reckless lending, have already caused immense strain in their lives. While the stigma of being over indebted has certainly decreased, many creditors show no compassion and many families go through asset repossession and lose everything because of debt. Our Credit Rehab team make it our mission to protect you and provide you with the best available solutions to paying back your debt, while still being able to support your family and live comfortably from day to day.
In order to understand the differences between Debt Mediation and Debt Counselling, we will take a closer look at both debt management services:
Debt Counselling: In order to qualify for Debt Counselling, an affordability assessment first needs to be conducted, which determine if you are over-indebted. Through Debt Counselling, a new and reasonable debt payment plan is drawn up and negotiated with your existing creditors. This payment plan adheres to rules that are outlined by your creditors, as well as the National Credit Regulator and National Debt Mediation Association. These rules look after you the consumer as well as your creditors. Debt Counselling can restructure your credit profile and clear your name.
The Debt Counselling process not only protects you from legal action (such as asset repossession), but also allows you to attain financial freedom in the best possible time frame, while still benefitting from making more manageable monthly payments.
Debt Mediation: Also referred to as a Voluntary Debt Mediation Solution, this debt management solution has presented a few flaws and has also been rejected by the National Credit Regulator, as it does not protect the consumer in all respects. Debt Mediation can allow relief from short-term debt or small portions of your existing debt.
In certain cases, Debt Mediation has proven to be beneficial, in that consumers are able to pay back their debts through a new payment plan that is more manageable, even if they do not present as over indebted. Since Debt Mediation is not legally binding (no court order is obtained) it does not protect the consumer from legal action. Consumers undergoing Debt Mediation can cancel the process at any time.
Check in with our Credit Rehab team of financial and legal consultants today, for solutions to overcoming debt.