Debt counsellors are trained professionals who have expertise in negotiating with creditors. They have a good understanding of the debt review process and are familiar with the legal framework and regulations that govern debt repayment.
They have the expertise, experience, and relationships with creditors to secure better repayment terms and reduce the emotional stress and anxiety that often comes with negotiating with creditors.
Debt counsellors are neutral third parties who can act as a mediator between the individual and their creditors. Debt counsellors have established relationships with creditors and are familiar with their policies and procedures. They know how to navigate the negotiation process and can often secure better repayment terms than an individual could negotiate on their own.
Negotiation with Creditors
At the negotiation stage, the debt counsellor will work with the individual’s creditors to try and reach an agreement on the proposed repayment plan. During this stage, the debt counsellor will act as an intermediary between the individual and their creditors, negotiating on their behalf to try and secure the best possible repayment terms.
The debt counsellor will first contact all of the individual’s creditors and provide them with a copy of the assessment report and proposed repayment plan. The repayment plan will typically include reduced monthly payments and an extension of the repayment period, allowing the individual to pay off their debts over a longer period.
In some cases, a debt counsellor may be able to negotiate with creditors to lower interest rates or waive certain fees, which can help reduce the total amount of debt owed. Lower interest rates are not a guarantee when you enter debt review, as it ultimately depends on the negotiations with your creditors. However, debt review does often result in lower interest rates, as creditors are more willing to negotiate with a debt counsellor than with an individual debtor.
The creditors will then review the proposed repayment plan and provide feedback to the debt counsellor. They may accept the plan as proposed, suggest modifications, or reject it altogether. The debt counsellor will work with the creditors to address any concerns or objections they may have and negotiate on the individual’s behalf to try and reach an agreement that is acceptable to all parties.
You will make one affordable monthly payment to a Payment Distribution Agency (PDA), which will distribute the funds to your creditors according to the negotiated repayment plan.
If an agreement cannot be reached during the negotiation stage, the debt counsellor may refer the matter to a Magistrate’s Court for a ruling. The court will review the proposed repayment plan and make a decision on whether it is fair and reasonable based on the individual’s financial situation.
The negotiation stage of the debt review process is critical because it allows the debt counsellor to negotiate on the individual’s behalf, helping them to secure a repayment plan that is affordable and manageable. It also gives the individual’s creditors the opportunity to provide input and feedback on the proposed repayment plan, ensuring that it is fair and reasonable for all parties involved.
While it is possible to negotiate with your creditors yourself, it is usually better to have a debt counsellor negotiate on your behalf. They have the expertise, experience, and relationships with creditors to secure better repayment terms and reduce the emotional stress and anxiety that often comes with negotiating with creditors.