Debt counselling
Debt counselling is an assistance and education process whereby consumers are taught how to manage their debt and how to avoid becoming over-indebted again. A person is over-indebted when he or she is unable to meet their debt obligations timeously.
When a consumer is over-indebted, he may apply for a debt review. When he does, his debt counsellor will alert his creditors and the credit bureaus of the fact that he/she have applied for debt counselling. If he qualifies for debt counselling, he loses a measure of direct control over his finances. His appointed debt counsellor will negotiate with the consumer’s banks and creditors to agree on a suitable debt management plan that is acceptable to the consumer and his/her creditors.
The over-indebted person’s bank accounts are frozen and new repayment terms are negotiated with his creditors. Banks and creditors usually accept lower repayment interest rates from people who are under debt counselling.
One of the things a debt counsellor can do is to arrange for one larger consolidation loan to pay off all the smaller, multiple debts. One large loan attracts lower interest than several smaller ones. The debt counsellor may also try to extend the repayment period to achieve lower monthly repayments. Many agencies claim that they could have over-indebted customers out of debt within three to six years. As a measure of comparison, a person who is debt-free under debt counselling in five years may have taken close to twenty years if he were to repay those debts at the agreed terms.
Some creditors are willing to “cure” accounts. If a person has defaulted on his repayments and is overdue, the creditor could agree to reinstate the good faith status of the account after three consecutive, timeous payments under debt counselling.
Consumers are also taught sound debt management principles and techniques as part of the debt counselling process. Consumer education would often avoid another occurrence of over-indebtedness.
Consumer Assist:
- provides consumers with simple, easy to understand information on the debt review process, and
- introduces consumers to experienced Debt Counsellors who have agreed to adhere to the Consumer Assist code of conduct:
- to act in the consumers' best interest
- to comply with NCR fee structure
- to offer service excellence
- to always act with integrity
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 For more information contact our call centre on 0861 21 22 23.
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