Debt counselling, otherwise known as debt review, is a debt solution targeted at South African consumers who are over indebted and struggling to manage their finances.
The National Credit Act (NCA) introduced the formal debt rehabilitation program, debt review, in order to prevent consumers from being placed into personal administration and having to deal with the long term effects.
The process was also implemented in order to make sure that debt counsellors follow strict and ethical guidelines when assisting clients with gaining their financial well-being.
Debt review is the process whereby a debt counsellor assesses a client’s outstanding debt and implements a restructured debt repayment plan. This will be done through the process of renegotiating interest rates with credit providers in order to reduce them, as well as by extending the debt repayment terms.
A new affordable monthly budget and payment plan will be drawn up by a debt counsellor, which will provide the client with the correct guidelines and means to live off.
In addition to this, the debt review process entails that the client makes only one monthly debt repayment to a payment distribution agency, which will then pay all the clients credit providers. This reduces the stress of having to keep up to date and on top of multiple debt repayments.
Most importantly, when under debt review, clients are legally protected by the National Credit Act (NCA) and creditors are no longer allowed to hassle them.
See a practicle example below.
A practicle example of debt counselling
Sindi is facing financial difficulties and approached us for assistance.
Her monthly budget is:
Salary after deductions: R11,300.00
Monthly living expenses: R7,000.00
Debt repayment liability: R7,689.00
Sindi is living on a monthly shortfall of R3,389.00 and this is causing her to have to borrow money close to the end of the month in order to meet her expenses, only increasing her indebtedness.
We assisted Sindi and ensured that she has R7,000.00 available each month to cover her expenses.
Sindi's monthly debt repayments have been brought down to below R4,200.00 and interest rates on these account are now less than half of what they were.
Sindi is now meeting all her monthly commitments out of her salary and actively paying off her debt.
Debt Delete can do this for you.