A large number of South Africans believe that if they cannot afford to pay off their loan,
they should take out another to cover their expenses. This is certainly a misconception, and
in fact, will only lead to a worse financial situation. Another loan will mean yet more debt. If
you cannot afford the repayments of your current debt, how will further debt help your
Why debt counselling is a better option
Debt counselling is a process of consolidating your debt, and without taking out another
loan. Visiting a debt counsellor for debt counselling is a responsible step towards meeting
your financial obligations, and becoming debt free. The debt counsellor will first determine
if you are over indebted. This means that your monthly expenses far outweigh your income.
He will consolidate all your debt. Thereafter, he’ll renegotiate the amount with your
creditors on your behalf and then devise a restructured payment plan. This restructured
payment plan is approved by a court. You’ll pay one monthly amount and this is distributed
to your creditors via an independent payment distribution agency. Once all the debt has
been paid, a clearance certificate is issued to you.
Benefits of debt counselling
- Your debt counsellor will negotiate lower interest rates on your debt with your credit
providers, on your behalf, as well as extended payment terms.
- Debt counselling also provides you with legal protection from your creditors. This
means that you will no longer receive threatening communication from your
creditors as your debt counsellor will handle all formal communication on your
- Additionally, the legal protection means that your assets are protected. This means
that your house and your vehicle cannot be repossessed.
- And, importantly, you won’t be able to apply for new credit. This means that you
can’t apply for more credit and instead can focus on becoming totally debt free.
Once all you debt obligations have been met, you’ll receive a certificate of clearance stating
that you are in fact debt free. Debt counselling is definitely the better option.
Need assistance with debt counselling? Contact One Debt today for more details.