Debt counselling is a lifeline afforded to individuals who can no longer manage their expenses within reasonable means, however it still a drastic step that should not be taken lightly. Out of all the remedies such as sequestration and bankruptcy, it is still the lesser of the evils.
In South Africa since the inception of The National Credit Act, applications for debt review have grown exponentially, as the understanding is that is an easy to way to avoid repaying creditors. This is not the case though, as debt counselling will ensure that creditors are paid. It is a measure to regain control of your expenses, and make arrangements that will allow your debts to be settled in more manageable terms.
Eligibility for debt counselling is determined by an evaluating of the applicants finances, and not everyone qualifies. When approaching a debt counsellor, it is important to be certain that is the best solution, as the withdrawal of applications and rejected application tend to slow down the system as a whole.
A debt counsellor is advised when a consumer finds they can no longer pay their creditors on time, and are facing the possibility of legal action of loss of assets, and can afford temporary protection from creditors. An applicant will be successful if they cannot make payments on time and are in fact truly over-indebted.
Approach a debt counsellor if you are in this situation, they are there to assist you and negotiate with your creditors. It is the easiest and safest step and over-indebted consumer can take.
Article written by: Andrea van Tonder 02-2013