Debt counselling, or debt review, was introduced by the National Credit Act (NCA) in 2007 to help over-indebted consumers with their debt. The process was established to prevent consumers from being blacklisted.
With debt counselling, you can legally reduce your monthly instalments through an affordable repayment plan as agreed to by your creditors.
Debt counselling is ideal for over-indebted consumers. If you’re struggling to afford all your debt repayments, as well as your monthly living expenses, you may be over-indebted.
If you’re struggling to manage your monthly debt repayments, debt counselling could provide you with immediate financial relief.
Here are 4 reasons why debt counselling may be the perfect solution for you.
1. You are struggling to make monthly debt repayments
Debt counselling is a legal process available to consumers to assist you in the case that you may ever become over-indebted. To check whether you are over-indebted, use our simple debt calculator for a quick calculation. If you find that your monthly debt repayments and living expenses exceed your monthly income, you may be over-indebted.
Being over-indebted means that you don’t have enough money to support your family. This causes unnecessary financial, emotional and physical stress.
With debt counselling, your monthly debt repayment amount will be reduced, which will help you afford your other monthly living expenses. You can finally support your family financially and take a break from unnecessary emotional stress.
If you find yourself missing repayments regularly and juggling credit and your income to manage essential living costs, you need to take action now. It can be difficult to get the legal help you need if your creditors take action before you do.
2. You can’t keep up with all your debt accounts
Do you feel overwhelmed when you look at your finances? Are you maxed out on your credit limits? Are you taking out numerous lines of credit such as temporary loans to manage your living expenses?
Sometimes it’s difficult to keep track of all our debt accounts, especially if we’re stressed out. And when we struggle to keep up with our finances, it’s easy to miss a payment and end up paying more fees on top of your interest.
So how do you manage all your debt repayments?
Debt counselling simplifies that process for you. With debt counselling, you only have to make one single reduced monthly debt repayment. The Credit Act requires that Debt Counsellors use an accredited Payment Distribution Agency (PDA) to manage repayments to prevent mishandling of funds which means your money stays safe. Your PDA specialises in collecting funds from consumers under Debt Review and distributing those funds to credit provider obligations and will pay all your creditors on your behalf.
You’ll never miss a payment again and you can be assured that all your creditors will be paid on time every month.
3. You must have a regular income
To make a reasonable reduced monthly offer amount to your credit providers, you need to have a regular income.
When the National Credit Act (NCA) initiated debt counselling as a debt relief solution, they intended to help as many consumers as possible. However, the debt counselling process is ideal for consumers who are employed. There’s a simple reason for this.
If you can’t cover your monthly debt repayments your creditors will start taking serious legal action against you.
To prevent this from happening, the NCA insisted that consumers have to be employed before entering the debt counselling process. An income provides creditors assurance that you’ll make the necessary reduced monthly contributions.
4. Be okay with putting debt aside
For you to truly benefit from this process you’ll have to be okay with putting debt aside for a while. You won’t be able to pay off all your debt if you keep making more debt.
As part of the debt counselling process, your name will be flagged with all the credit bureaus which will prevent you from accessing more credit.
Once you have met all your outstanding debt obligations, the debt review flag will be lifted as soon as you’ve completed the debt counselling process. Your debt counsellor will issue you and the credit bureaus with a clearance certificate and this will lift the flag. You will be creditworthy again and free to rebuild your credit score.
If you’ve come this far in the post chances are you’re struggling to keep up with all your debt repayments, and you may even be over-indebted. We have provided debt relief to more than 30 000 South African and are ranked as the #1 debt counsellor in SA.
If you’d like to get your finances back on track leave your contact information below and one of our consultants will contact you shortly.