What Is Debt Counselling, Exactly?
Debt counselling is something that is relatively new in South Africa, so there’s absolutely no need to feel embarrassed if you’re not sure exactly what it is, or how it could help you.
The truth is, if you’re struggling financially, buried under what seems like a mountain of debt, this could be just the solution you’ve been looking for. Let’s take a quick look at what it is, and how it is meant to benefit the average person.
The National Credit Act 34 of 2005 was introduced into South Africa with the specific aim of regulating the credit industry, which was rife with misconduct and exploitation. It is meant to help people who are in financial crisis, and prevent the more dishonest type of opportunists from exploiting you.
In other words, it is a very good thing, and it’s meant to help and protect you, as a consumer.
You’re already there: Get hold of a properly certified and accredited Debt Counsellor (That’s us). It’s always a good idea to ask to see the appropriate NCR documents, and make sure they are real. We’ve got you covered there, feel free to check out our certification.
The friendly Debt Counsellor will ask for certain financial information from you, such as your pay slip, ID documents, records of all your debt, of course, and a few other things. There’s no need to worry – all of this is kept strictly confidential.
The hard work is all done by the Debt Counsellor. Once he has reviewed your financial situation, he will get back to you and explain everything.
If you are over-indebted (which is why you are here in the first place) the Debt counsellor will offer advice, create a realistic plan to solve the problem, and get you a court order to protect you from action by your creditors (the people you owe money to). Check out our free, easy-to-use debt calculator to work it out for yourself if you want to.
You then systematically pay back the money that is owed, in a way that allows you to live, and pay your bills. You are not allowed to take on more debt until the process is completed.
Once the last payment is made, you get a certificate which says that you are clear of any debt, and you can once again take out a loan, if you need to.
That’s it, quite simple. But why go through all of this?
The Benefits of Debt Counselling
Will I be Blacklisted?
The name “Debt Review” or “Debt Counselling” might sound negative, at first, or even a little scary. You might think that it involves being blacklisted or flagged as a credit risk.
In fact, quite the opposite is true. Debt review is really the quickest way to get a clean Credit Record. Once you start the process, the NCR will protect you from being blacklisted.
While you are going through the different steps in the process, you will be unable to take on more debt ““ but that’s a good thing.
If you are drowning in debt, struggling to keep your monthly repayments, then Debt Counselling also offers the following advantages:
Instead of facing a long list of debts that are overdue, and being caught off guard by additional charges and interest, debt counselling simplifies things. Your Debt Counsellor will consolidate all of your overdue accounts, and debts into one lump sum, so you only have to concentrate on one debt.
This process actually reduces the total debt you need to repay. Your Debt Counsellor negotiates a longer payment term, and works out your budget so that you still have enough left over to live on.
You no longer have to decide who you will repay this month, and who you will need to avoid phone calls from.
One of the best things about being under Debt Review is that your creditors can no longer hassle you for money. Once you are signed up, your Debt Counsellor will inform all your creditors that you are under review, and instruct them to refer all enquiries to the DC company. They can’t contact you directly anymore.
Provided you hold up your end of the bargain, and keep up with your single, realistic monthly payment, you can sleep peacefully, knowing that your telephone won’t be ringing off the hook with creditors demanding payment. The only person you need to talk to will be your friendly Counsellor.
The system is designed to help people get out of impossible debt situations, but also to relieve some of the pressure on our over-burdened legal system. Once you are under debt review, there is no risk of legal action being taken against you. It is very unlikely that you will ever need to appear in court, and if you do, it will be merely to establish certain facts. Your debt counsellor will take care of all the legal matters on your behalf. It’s a win-win situation for the legal system, and for you.
Even more encouraging is the fact that creditors will not be knocking on your door to repossess your assets. If you qualify for Debt Counselling, you can start putting your life back together again, free from financial nightmares.