Borrowing money from financial organisations is normal for most people. Whether it is to make ends meet during a tough financial period, or it is for a long-standing financial goal, most people will borrow money in their lifetime. If all goes well, one pays off their loan in the agreed time period with the lender and life goes on. But sometimes things do not go as planned and debt begins to get out of control. Debt Counselling is one of the possible options that one can take to walk the journey of paying off debt.
"Debt Counselling is a formal legal process that provides for a consumer to be declared over indebted and for the Debt Counsellor to negotiate a restructured payment plan and obtain a court order confirming the new repayment plan. The Debt Counsellor must be registered with the National Credit Regulator and have an NCRDC number" - National Credit Act.
What this simply means is that if you are over-indebted, a Debt Counsellor can negotiate with your credit providers on your behalf to get lower interest rates and reduced monthly instalments. This makes your debt more manageable. However, like any other decisions in life, before making it you have to weigh the pros and cons. Below is useful information you can note when deciding on debt counselling.
Debt counselling pros
When you are in debt counselling, creditors cannot take action against you
There is no permanent record of having undergone debt counselling
There is only one monthly repayment to be made
Your budget will meet your basic needs first before provision is made for debts
You will never pay more money than you can reasonably afford
A debt counsellor will suggest ways of cutting costs and saving money
You will no longer get calls from your creditors demanding payment
Debt counselling cons
You are not allowed to have more credit while undergoing debt counselling
It does cost a little bit of money, but the fees are set by law