Struggling With Debt Repayments? Here’s Why You Should Consider Debt Counselling.

According to statistics, South Africans spend an unbelievable 76% of our monthly income on repaying debt. This leaves a mere 24% of our earnings for other expenses. Life is getting more expensive every month with rising petrol and food prices, and it’s clear that South Africa is in a debt dilemma.

It comes to no surprise with the amount of debt South Africans are in that we’re failing to pay it back. Unfortunately, in order to keep up a certain lifestyle, people tend to take out loan after loan, which then becomes unmanageable and before long they start missing payments. Not knowing what to do, people avoid phone calls from lenders, legal action is taken, and they are ultimately blacklisted.

If this is you, considering Debt Counselling might benefit you greatly.

The Advantages

One of the primary benefits is that you don’t have to negotiate with the creditors yourself. A debt counsellor will do the negotiating on your behalf and settle on a repayment you can afford.

By going this route, debt counsellors advise the credit bureaus that you have applied for debt review and your profile will be updated. This means you will no longer have to deal will creditors phoning you non-stop and pursuing you with summons and judgements, which negatively affect your credit rating

The Consequences

You will have to pay a once-off upfront fee as well as monthly after-care fees. These fees are included within your monthly instalment, meaning if you can afford a certain amount, these fees will be calculated within the agreed amount. So no extra fees after you have agreed on an amount.

Once you start with debt review, it isn’t easy to withdraw, and you’ll need a court order stating you are no longer over-indebted or you’ll be required to settle all outstanding debt. Additionally, there will be a withdrawal fee payable to the debt consultant before a clearance certificate can be issued.

Clients can’t apply for any further debt while under debt review, so they won’t be able to use any of their credit cards, store cards or overdraft facilities. But this also aids in the fact of debt rehabilitation, being taught again to work with your cash flow and not to be used to swipe a credit card or other credit facility anymore.

What alternatives are available other than debt review?

An alternative is to change your lifestyle, but it’s one that customers are often not willing to consider. By selling additional transferable assets, cutting down on luxury spending, as well as budgeting effectively, you will be able to pay off some debt if not all in a short timeframe. This will also help prevent the same financial problems from occurring in the future.

In most cases, going through debt review is a practical way of getting back control of your finances. Which ever option you choose, remember that getting out of debt is never a short term endeavour and will need total commitment to succeed.