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The Truth About DEBT COUNSELLING In 8 Minutes

In today's article, you will learn the truth about debt counselling and how this NCR regulated debt management plan can be one of your options when coping with debt.

We examine the following factors to help you decide whether debt counselling might be helpful to you:

How does this process benefit those who need it?
Debt counselling fees.
What is the impact of debt review on your credit report?
What debt counsellors do.
The qualifications you should expect from your debt counsellor.

**Who can benefit from debt counselling?**

Debt counselling: what is it and what is involved in this process. This process focuses on the restructuring of accounts and assisting consumers with better money management techniques. It also supports consumers with budgeting and enabling consumers to solve their financial problems without losing their assets.

This debt management plan is simply a plan of easy repayment arranged through a debt counsellor. For those with financial problems, it is one solution. If you participate in this monetary management plan, you can consolidate your accounts, such as credit cards, revolving loans, unsecured loans, cars, and bonds into an affordable monthly payment. The reduced amount will be paid to your debt review company's distribution agent so that they can ensure that your accounts get paid for by you.

Based on your financial situation, a debt counsellor will help you determine the best course of action. You can entrust them with financial responsibilities. There are many benefits to using this financial program, including reduced payments and reduced interest rates. The payment distribution agent of your debt review firm will distribute your monthly repayment among your creditors as part of the debt review process.

Debt counselling offers the following advantages:

Debt counsellors negotiate with creditors on your behalf and work out repayment plans for your benefit.
One monthly payment replaces several payments, and we work out repayment plans for you.
Financial assistance and education. By gathering and adding your financial information, your debt counsellor will help you gain a clear understanding of your financial situation. No matter how big the problem seems, a debt counsellor won't let you panic. As a result, they will immediately help you develop a plan to deal with your financial problem.
Take Control of Your Life. There are many reasons why consumers find themselves with financial problems. Many people struggling with serious problems do not possess the tools needed for responsible money management. Most people have never learned about how to create a budget and to stick to it. Many consumers in South Africa haven't learned how and why to save. Many blacklisted consumers lacked an understanding of the financial costs of using credit cards, loans, and payday loans.

Become debt-free and start enjoying life. During your initial session, your Debt Counsellor will assist you in setting up a budget that works for you and your family. It involves setting aside money for future needs and account repayments. We'll talk about your goals in life and your priorities for the future. Afterwards, we'll demonstrate how you can achieve your goals with your current income through effective planning and strategy. After the financial assessment, you'll feel more confident with the management of your finances. Once you figure out what the problem is, you'll know what to do to fix it.

You can consolidate the payments of several creditors into one monthly payment with a reduced interest cost. You can rest assured that your finances will get taken care of in the best way possible. You will be guided through the entire process by a knowledgeable guide
Debt counsellors will deal with collection agencies and harassing phone calls. During the solution-finding process, you'll have someone to stand between you and your creditors.
There is a possibility of greatly reduced interest rates.
The goal of debt review is to address the underlying issues that may be causing your financial difficulties. To do this, you need to have a competent debt counsellor review your budget. Additionally, the debt review service can help you review your expenses and help you modify the behavior that caused you to get into financial difficulties.

You Might Need Debt Review If You Experience These Six Signs

It may be time to consider debt review if you exhibit the following signs of over indebtedness.

You may use a credit card to pay your accounts.
Are you always low on cash? When you cannot pay your monthly minimum account payments because you do not have any money available.
Multiple loan applications. As you continue to use your credit cards, you apply for more loans and consolidation loans.
You want to increase your credit limits. You increase credit card limits, overdraft limits, clothing accounts limits, and make use of store cards to buy food from stores like Woolworths and Game.
Is your credit card usage too high? You apply for as many credit cards as possible with the hope of getting approved.
You borrow from family and loan sharks. Every month, you borrow money from a close family member or friend and payday loan companies to cover living expenses.

The following two issues should be taken into consideration when deciding whether to use debt review:

Consumers can only take advantage of this program if they are either employed or self-employed. Sadly, unemployed consumers cannot use this process.
This process affects credit records. Debt review is considered an efficient tool for managing debts without affecting a credit report negatively. The statement is untrue. An Indicator will appear on a credit report similarly to other debt recovery programs, such as administration and sequestration.

Having unmanageable finances and a poor credit profile means that you struggled to pay your account obligations on time in the past. This history indicates that you will find it challenging to make timely payments in the future. Making use of this program to alleviate debt will be the best option. Struggling consumers will not be eligible to qualify for any future new credit. Having a temporary debt review indicator reflecting on a credit report will not be too harmful.

So, you have weighed up the pros and cons of debt review and decided to make use of this life-changing process. Next, you might ask, how much is the process going to cost me? The fees are a crucial aspect that we will explore in detail in the next section.

How much will debt counselling cost me?

If you are overindebted and cannot pay your monthly accounts, this regulated process is a recommended option endorsed by the NCR. There will be fees associated with this process.

Calculate the monthly debt counselling cost on your own by following the steps below:

Five percent of the monthly restructured instalment will accrue as fees. The maximum monthly aftercare fee that gets charged is R450 per month.

For example,

Monthly Installment	Aftercare Fee	Installment payable to creditors
R2 000,00	R100,00	R1 900,00
R4 000,00	R200,00	R3 800,00
R6 000,00	R300,00	R5 700,00
R8 000,00	R400,00	R7 600,00
R10 000,00	R450,00	R9 550,00
R12 000,00	R450,00	R11 550,00
R20 000,00	R450,00	R19 550,00

If you make a restructured monthly instalment of R12000 each month, you'll be charged 450 Rand in fees before the PDA will pay your creditors.

Other Costs

Admin fees – R350 once-off payable on application
Application Fee – R50 once-off payable on application
Reckless lending fees – R1500 once-off payable in the first month
Tribunal Fees – R750 Once-off

All once-off fees other than the aftercare get deducted in the first month.

Keep in mind that under debt review, you will receive reduced interest rates. The lower interest rates you will receive from debt review will cover most of the costs associated with aftercare fees.

For a comprehensive guide regarding the fees, you may visit an article we published earlier in the year by clicking here

What should you consider when considering debt counselling?

This process does not impose any limits. Individuals with debt exceeding R50,000 and a monthly income exceeding R7500 may need to seek assistance. Consumers who earn less than R7500 per month and have less than R50 000 in debt might be eligible for a debt forgiveness program. You can contact the National credit regulator for more information. National credit regulator website

In what way will debt review affect my credit report?

A notice will appear on your credit report. You will see a notification at the top of your credit report indicating that you have applied for debt counselling. This notice will remain there until all rescheduled amounts owed get paid in full. The restructured debts themselves will be fully updated as if there were no defaults once a clearance certificate is issued.

Disadvantages of Debt Review

As with any other aspect of life, debt review has its disadvantages. Debt review offers more advantages than disadvantages to someone who is deeply in a monetary crisis. Below we have outlined the disadvantages.

Not all accounts are eligible for the program, such as tax and outstanding municipal accounts.
You may not get any new credit facilities under section 88(1) of the National Credit Act
This program is not revocable once a court order has been granted. Reference: Case Janse van Vuuren Judgment - 3 September 2019
If the consumer misses a payment while under this process, the creditor terminates their participation in the debt counselling process. The credit provider will then take legal action to recover outstanding debt.
Your finances will have to be restructured jointly with your spouse if you are married in a community of property.
If you pay lower monthly instalments, you might have a longer time paying off your accounts.
Debt Counselling is not a free service.

Will debt counselling get you out of debt?

Those with excessive financial problems can benefit from this process instead of sequestration. With the help of a debt counsellor, you will receive financial education, credit analysis, and a working budget. In most cases, when an overindebted consumer engages the services of a debt counsellor and is serious about paying off their debt, this process has proven to be a successful method of dealing with and paying off accounts.

You can pay off your accounts under this protected process without risk of legal action or repossessions under the National Credit Act, but this process is voluntary and needs commitment.

Failure to comply with a restructured debt review court order will result in your creditors ceasing to assist you in repaying your accounts. As a result, you must deal with your finances yourself.

On the other hand, if you committed and use the services of a reputable debt counselling firm like Credit Salvage, debt counselling is an easy, cost-effective way to repay the debt over time.

The qualifications and duties you should expect from your debt counsellor.

Debt counsellors should be highly trained and certified. The National credit regulator regulates debt counsellors appointed under the national credit act. With over a decade of experience in clearing and assisting thousands of consumers, we are trusted members of the National Credit Regulator.

Make sure your finances are handled by a professional. It is crucial to work with a debt counsellor who is familiar with the nuances of debt and credit.

Is Debt Counselling not for you and do not have excessive debts to deal with?

Having a poor credit history despite being financially stable and not having a financial problem makes it difficult to obtain new credit. Do you feel down because of your low credit score? You might be having trouble qualifying for credit facilities, and your credit score isn't as good as you'd like, so you are wondering how you can improve it.

Credit bureau clearance is available to consumers who are not in financial problems but desire to enhance their credit rating.

You can also complete our contact form, and one of our consultants will contact you. If you want to clear your credit record, we now offer a simple online credit repair application. Please click the picture below to be directed to our credit repair online application page.

Conclusion - Debt counselling program with Credit Salvage can help you get the help you need

As discussed previously, debt review will help with any debt issue that has reached the point of unmanageability. This service is available for anyone who has credit cards, personal loans, payday loans, revolving loans, or other forms of debt.

At Credit Salvage, you are welcome if you would like advice on handling your money and reducing or eliminating your outstanding accounts. No matter how much you earn or what your employment status is, we are here to help. Everything we do for you will be confidential, and we will never pressure you or judge you.

You can be confident that we will provide you with a debt-free financial future if you are committed to this process. Our goal is to help you avoid financial problems in the future. Managing your money wisely and successfully will become second nature to you. You will be able to create a safety net that protects you against unforeseen problems. You will gain a friend in us who will encourage you, support you, provide you with the information and tools you need