Over-indebtedness can cause anxiety, drain your income and put your assets at risk. Working with a reputable debt counsellor can protect your assets, unlock cash flow to help you with everyday expenses, and reset your finances to a healthy position within a few years.
Most FAQs
When do you need debt counselling?
If you answer “YES” to most of these questions the chances are good that you need help.
- Experiencing financial problems?
- Struggling with debt and loan repayments?
- Accounts in arrears?
- Battling to cover your monthly expenses?
- Determined to avoid bankruptcy?
- Unable to save any money?
- Receiving section 129 Letters of Demand?
- Creditors hounding you for payments?
Let’s turn “YES” into “NO”.
What debts are included in debt counselling?
- Home loans
- Vehicle finance
- Credit cards
- Overdrafts, store cards
- Personal loans
- Micro loans
Do you qualify for debt counselling?
Debt counselling may be an option for you if you have regular income and if your take home pay is not enough to pay for your ongoing expenses and debt repayments. A debt counsellor can help you with this calculation.
What can a debt counsellor do for you?
Negotiate on your behalf.
Debt counsellors have mandates to negotiate your terms and interest rates with most credit providers. This means that they can negotiate their clients’ credit interest rates from 21% down to 3%, on average, which paves the way for an affordable payment plan.
Qualified experts.
Qualified debt counsellors know that you are feeling stressed and even helpless. They will calmly assist you with a debt assessment to see if you’re actually over-indebted. If you are, they can propose a debt restructuring plan which can be negotiated with your credit providers to make your debt repayments more affordable.
Unlock cash and protect your assets.
Lower interest rates and an affordable, convenient repayment plan (involving a single monthly payment) mean that you will have more cash to live on, and your assets are protected.
Assessment of creditor’s lending criteria.
Debt counsellors will assess your credit agreements to establish if your situation has been caused by reckless lending. This means that if a creditor failed to conduct a thorough assessment to ensure that you could afford the credit, a court can be approached to have the debt written off.
Are debt counsellors credible?
Debt counselling is a regulated and a formal debt management solution introduced by South Africa’s National Credit Act of 2007.
To ensure that you work with a trustworthy and credible debt counsellor, check they are registered at the National Credit Regulator (NCR)
The NCR was created by our government to oversee the credit industry in South Africa and enforces compliance with the act. Part of the NCR’s role is to ensure that vulnerable consumers are not taken advantage of but are protected through sound advice from registered debt counsellors.
What are the steps in the process?
There are basically four steps.
Assessment of your financial situation.
After you’ve made contact, the debt counsellor will assess your outstanding debt and your overall financial situation. Your credit report is also used with your permission as part of the assessment. This gives them a picture of your full debt, overall financial situation, and the income available to service a payment plan.
Development of a debt repayment plan.
Next, the debt counsellor will develop and propose a restructured repayment plan. Most debt counsellors will arrive at one monthly payment which they then disburse to your credit providers.
A reputable debt counsellor also has the tools, industry knowledge and excellent relationships with the banks and creditors to get to the lowest possible repayment amounts.
Negotiation with creditors.
The debt counsellor will then officially approach your creditors and advise them that you are now under debt review. They will then negotiate your interest rates and repayment terms with each creditor to ensure that you are paying as little as possible while still ensuring the creditors get what they need.
Approval and implementation of the repayment plan
Once the restructured repayment plan has been agreed to, it will be implemented. Good debt counsellors will also provide you with a budget which helps you to afford your living expenses.
Confirmation of agreement.
To make the arrangement with creditors binding so that your cashflow improves and your assets are protected, the debt counsellor will obtain legal protection through either a Consent Order or through a Magistrates Court. This is managed by the debt counsellor’s legal team on your behalf.
