4 Things You Need to Know About Debt Counselling
Did you know that South Africa is one of the countries that have the most indebted consumers in the entire world?
If you have too much debt, which you cannot afford to repay on time and your total repayments add up to more than your current income, after subtracting your living expenses, than debt counseling might just be the right solution for you. You must have heard the term “debt counseling” before, just like everybody else, but what does it mean?
Understanding what you’re getting yourself into, even if it is one of the most recommended methods to help you get out of debt, is still very important.
Debt counseling is just one legal process that helps anyone who is over-indebted, to get them out of debt, by providing them with a solution to repay their debt.
This solution is most popular, as it is regulated by the South African National Credit Act of 2007, which is a law specifically put in place as a support mechanism, to help residents get out of debt legally, providing them with the necessary protection throughout the entire process.
Debt counselors are assigned to consumers, should they seek help from debt counseling companies. These professionals will help negotiate a new payment plan, which is structured to suit your financial needs.
4 Things you need to know about debt counseling
- Legal action against you will be prevented during the period of debt counseling you receive. When you are over-indebted, you will qualify for a debt review and be protected for 60 days from the date of your application. If you keep to the payment arrangement provided by your debt counselor, you cannot be contacted by your creditors.
- Your application for debt counseling can be rejected if your financial status and debt are reviewed, and you are found to be able to repay your debts, without requiring help from a debt counselor.
- Obtaining credit is a big no-no during the repayment period.
- Contrary to popular belief, debt counseling isn’t free. It requires you to pay a restructuring fee, a legal fee, a consent fee and in some cases, a monthly after-care fee.