If you are considering using the services of a debt counsellor to help ease the heavy burden of over-indulging in credit, make sure you are informed before you apply formally. Debt counselling is not free, and you are not necessarily going to be approved for this service, as there are stringent guidelines as to what conditions have to be present for you to be able to go to debt counselling.
It is also important to note that debt counselling is by no means a free ride to leave your troubles behind, you are still required to pay back whatever money you owe.
Check If You Qualify
The NCA regulates you can and who can not receive debt counselling in their regulations. While anyone is free to apply for debt counselling, only those who are unable to repay their minimum instalments will qualify. Ensuring you qualify before you apply will save you penalty fees if you are rejected, so do your homework before you make a formal application.
Calculate Your Costs
Getting debt counselling will cost you more money, although the NCA stipulates what a debt counsellor is allowed to charge. Your charges will be in:
• An application fee of R50
• A rejection fee of R300 (excluding VAT).
• The debt counsellor’s fee which will vary in amount between people according to your debt and what your debt counsellor charges
• Aftercare fees
Credit Crunched
If you are over-indebted, and you are able to qualify for debt counselling, you will no longer be able to apply for any further credit until your current debt is settled, as per the NCA who prohibits any credit from being given to those under debt review or debt counselling. This will apply until you are issued a clearance certificate by a debt counsellor. It is important to find a debt counsellor that aims to get his clients cleared as soon as possible, as many debt counsellors will not do this because the incentive is much stronger to retain their clients and keep making money from their repayments.
Creditors Can Still Catch You
While debt cancelling is supposed to relieve a consumer from creditors litigating, a creditor is still able to withdraw from the debt counselling agreement and pursue legal action, within 60 days of your application. While you can hope that most creditors will accept the new terms of repayment, is not a guaranteed safe haven for you.
They Are Not All Created Equal
Debt counsellors, as with any trade, differ greatly in their skills, abilities ethical standards and experience levels. While you would hope to find a uniformed approach to such a serious matter, taking your debt to a highly reputable and experienced debt counsellor can make or break the experience and throw you to the wolves, or offer your salvation.
Ensure you find the right debt counsellor for your personal financial freedom here in our online directory on Snupit.