Debt counselling was introduced by the National Credit Act to help over-indebted South Africans get out of debt by coming up with a repayment plan that is affordable for them and accepted by all their creditors.
The debt counselling process is designed to assist South Africans struggling with debt through negotiating with creditors for a reduced payment, offering budget advice, and restructuring debts so you don’t get overwhelmed.
Who is debt counselling for?
Debt counselling is a formal procedure designed to get consumers out of debt. The process provides an opportunity for a consumer to be declared over-indebted. Not just that, the process further ensures that your debt counselor can negotiate a reduced payment plan with your creditors and get a binding court order to support the new repayment plan.
For South Africans who find themselves in the vicious circle of debt and unable to find a lasting solution, debt counselling wouldn’t be such a bad choice. But before you opt for a debt counselling service, please ensure you do your due diligence by making sure that your preferred debt counselor is registered with the National Credit Regulator as well as having an NCDRC number.
Once you have been declared as over-indebted and accepted into debt counselling, here are some things that will happen:
- You’ll enjoy protection from any legal action for at least 60 days. This will kick off right from the day of the application. And so long you meet up with the negotiated repayment plans, you shouldn’t have anything to worry about.
- You’ll stop getting those annoying calls from creditors as they will now have to liaise with your debt counselor.
- You’ll be listed as being under debt counselling at the Credit Bureau.
Note: Being under debt counselling means that you’ll not be able to get new credit. The only time you’re eligible for new credit is after you must have completed debt counselling and been issued with a Clearance Certificate to that effect.
Why debt counselling?
Because many people borrow more than they can comfortably pay back, they end up putting themselves in serious financial trouble. But guess what? Debt counselling can help over-indebted South Africans resolve their mounting debt. But before you decide if debt counselling is for you, here are some pros and cons you should consider.
Pros of debt counselling
- By signing up for debt counselling, you’re protected from any form of harassment from your creditors, as they aren’t allowed to contact you directly.
- There is no permanent record suggesting that you have gone through debt counselling.
- You only have to make one monthly repayment, regardless of the number of loans you have taken.
- Your debt counselor will draft out a budget for your basic needs before provision is made for debt repayment.
- You’ll never have to pay more than you can comfortably afford
- You’ll get some tips from your debt counselor on how to cut costs and save more
- No more incessant calls from creditors demanding payment.
Cons of debt counselling
- By signing up for debt counselling, you’ll not be eligible for any type of credit.
- Debt counselling does cost some money. But not to worry, these fees are set by law.
- Because debt counselling involves negotiating a reduced monthly payment that is comfortable for you, it may take some time before you exit debt counselling.
Before deciding if debt counselling is for you, it’s always a wise move to get a detailed credit report. This should give you an idea or two on how bad your credit score is. Armed with this information, you can decide if you need the services of a debt counselor, or you’ll work on improving your credit score by yourself.
How can a debt counselor help you?
If you’re heavily indebted and don’t know what to do, opting for debt counselling will help you greatly. Here is how your debt counselor can help you get your life back by resolving all your debt problems.
- Your debt counselor is responsible for assessing the full extent of your over-indebtedness
- Asses all your assets
- Provide a debt repayment plan
- Your debt counselor will work with you to come up with a monthly budget for a basic living while also dedicating some cash towards debt repayment.
- Come up with a monthly repayment plan that works for you.
- Come up with a payment plan that is acceptable to your creditors
- Your debt counselor will prevent the repossession of your assets whenever possible.
- Help you get your life together.
What is expected of you?
If you ever decide to opt for debt counselling, here are some things that are expected of you:
- You must be honest and open with your debt counselor.
- Make sure you correctly declare all your assets and liabilities. This should include incomes and debts as well as bonuses and salary increases.
- Endeavor to pay the stipulated debt counselling fee.
- Make sure you stick to the negotiated repayment plan and pay as at when due.
- Keep in touch with your debt counselor throughout the agreed period.
- You must agree to debt remedies like releasing some assets, surrendering your credit cards, and closing accounts.
Debt counselling application process
Contrary to what many people think, applying for debt counselling is super easy. And guess what, we are here to guide you every step of the way. Here are the steps you need to take for debt counselling:
Before you start the debt counselling process, you’ll first need to get your debt assessed. The exciting part is that this process is free and only takes a couple of minutes. All you have to do is complete the online debt assessment by providing us with some background about your financial situation.
Assessing your situation
After providing us with details of your financial situation, our team of professionals will assess your situation and come up with a rescue plan. During this phase, your debt counselor will determine whether your current monthly expense and debt are more than how much you make monthly.
You’ll be placed under debt review
To help resolve your mounting debt, your counselor will place you under debt review. This option is super important if you want to get out of debt quickly. Plus, opting for debt review will protect you from creditors as your counselor will liaise and take over communications with all your credit providers.
Pay only one negotiated monthly repayment plan.
This is one of the perks that come with debt counselling. By opting for debt counselling, your counselor will negotiate with all your creditors and come up with a single monthly repayment plan that you can afford.
Getting a court order
If you have successfully completed all the steps above, you can finally have peace of mind knowing that your mounting debt will soon become a thing of the past. Plus, your counselor will ensure that your repayment plan becomes a court order that is binding on all parties. Thanks to this, you can kiss goodbye to constant harassment from all your creditors.
What are the requirements for debt counselling?
For over-indebted South Africans, here are some documents you must have for debt counselling.
- A copy of your ID or passport
- A recent copy of your last payslip
- A recent copy of creditor statements and credit cards
- You’re expected to have three months of bank statements for all your bank accounts
- Credit card statements for all your cards
Why you should take debt counselling serious
Many South Africans who are over-indebted are now living in the shadow of themselves as their mounting debt is making their lives almost miserable. More so, the constant harassment from creditors isn’t making things easier either. But good enough, debt counselling is here to give you a new lease of life. Besides helping to negotiate a repayment plan that works for you, debt counselling also protects you from any type of legal action instituted by your credit providers. More so, you only have to pay only one agreed monthly fee that is both affordable and leaves you with something you can rely on for basic monthly expenses.
Are you tired of your mounting debt?
If you’re tired of your mounting debt, don’t wait another second; simply apply for debt counselling by filling the online form and get all the protection you need. Plus, the process is easy and stress-free and takes only a couple of seconds.
With us at your service, you’re sure to live a debt-free life sooner than you ever expect.
And guess what? We also provide a free personalized and no-obligation debt assessment for everyone who opts for debt review. How cool can that be?