Quick Guide to Debt Counselling

Debt can be a way to help secure one’s financial future. However, it must be used wisely.
Unfortunately, many consumers today find themselves unable to repay the debt they have
incurred and can be called overindebted.

Signs that a person is overindebted:

  • Borrowing from one creditor to pay another
  • Having no emergency fund or savings plan
  • His disposable income does not last until his next payday
  • Making late payments, or skipping them altogether

This may sound familiar. As such, it is likely that assistance is required before the situation
becomes out of control. As such, debt counselling is available to help over indebted consumers
get back on track.

What is debt counselling?

In 2007, the National Credit Regulator (NCR) introduced debt counselling to assist consumers
who are struggling to pay their debt.

It is a process that can help an overindebted consumer restructure his debt obligations. During
the process, the consumer’s debts will be consolidated. Furthermore, he will pay one
instalment through a payment distribution agency who distributes the funds to the creditors on
his behalf.

How does debt counselling work?

Once a meeting with a debt counsellor has been scheduled, he will assess whether the person is
overindebted. Thus, the debt counsellor will need the client’s proof of income, bank
statements, a list of his creditors, and a list of his monthly expenses.

After assessing the client’s indebtedness, the counsellor will assist him to create a repayment
plan. Then, the counsellor will allocate reduced instalments to your creditors, while ensuring
the client is still able to afford his necessities. The counsellor will assist with getting restructured interest rates and a different term for the debt. He will negotiate with the
creditors on the client’s behalf.

How long does debt counselling last?

Debt counselling can last for up to five years. However, it does depend on the extent of the
client’s indebtedness, and the amount he needs to pay. Yet, if the client’s circumstances change
and he is able to increase the installments, he will be able to complete the debt counselling
process sooner.

Is it worth it?

Debt counselling has assisted thousands of overindebted consumers over the years. The
process allows a person to repay his debt, while still being able to afford the daily cost of living.

To find out more about debt counselling, speak to a consultant at One Debt right away.