To make your journey out of debt a successful one, you will have to find ways to stay out of debt as well. Reminding yourself of the sacrifices you made to get out of debt is not always enough and before you know it, you’re swiping credit cards or taking out loans, each decision taking you closer to being out of control again.
Debt counselling offers an ideal solution of an effective debt repayment plan for many over-indebted South Africans. A debt counsellor’s repayment plan may differ in the finer detail, but trained advisors take over-indebted individuals from financial failure to financial success.
This process is done by implementing the debt review program from the application process (start) to the issuing of a Clearance Certificate (finish). Many South Africans continue to believe certain myths regarding debt counselling and it reflects a distorted and negative view of a valuable process.
So we decided to ask a few of our debt-free clients to comment on the experience they had with the debt counselling process. With this we can shed some light through the feedback provided by clients and debunk some common myths South Africans tend to believe about debt counselling.
All debt counsellors are the same
Every debt counsellor has their own set of procedures, values and outlook when it comes to assisting individuals with their debt counselling process. Debt Counsellors should therefore not be generalised and South Africans should not assume that all debt counsellors operate in the exact same way.
Although the majority of the debt counselling process is regulated by the National Credit Regulator, each debt counselling firm is unique in the way:
- They handle client care.
- Position their brand in the market.
- The ‘behind the scenes’ processes/systems that differentiate each debt counselling firm.
- It’s the manner in which each firm adds value for their clients and how they handle statutory and procedural requirements.
- It’s the core values, their systems and approach to solving a client’s debt problems.
When selecting a debt counsellor, pick one who speaks to your own core values, and with whom you can relate as an individual. You’ll be building a close relationship with your debt counsellor, and might be dealing with him/her for a few years to come. It’s for this reason that your selection is important.
Nothing can be learned from the debt counselling process
To quote a debt free client: “What I have learnt through the debt counselling process is that you have to save money where you can. And don’t spend more than you earn.” There’s a lot to learn during the debt counselling process, from managing future finances to how one can appreciate financial freedom. Debt counselling establishes a behavioural change when it comes to a client’s finances. The effect of debt counselling is quite drastic, but what the client will gain in the understanding of their finances is priceless.
Debt Counsellors just want to make money
Debt Counsellors provide various skills and services to make sure clients attain their Clearance Certificate (Form 19 in terms of the National Credit Act) at the end of the debt counselling process. The tasks involved, can include the following: consolidating debt into one affordable instalment, giving clients cash flow relief from their next paycheques, dealing with credit providers and keeping them off the client’s back, implementing a reasonable payment plan, clearing clients from credit bureaus and also enabling clients to continue to provide for their family’s vital living expenses.
Firstly, all debt counselling fees are regulated by the National Credit Regulator. Debt Counsellors cannot simply charge what they want. Most Debt Counsellors are champions for their clients – they are always on the lookout for how they can save their client more money.
On the other hand, debt counselling is extremely administrative intensive. The amount of work that needs to be done in order to set a client on his/her merry debt-free way is staggering. From the application to negotiations, to correspondence and proposal acceptances to court orders, dealing with ad hoc creditor issues and finally issuing a Clearance Certificate.
One cannot get credit after debt counselling
Credit applications can’t be denied because of your debt counselling history. Once you’ve been issued a Clearance Certificate that has also been processed by the creditors as well as the credit bureaus, you can apply for home loans, vehicle finance and other credit related applications.
Debt counselling as a solution to over indebtedness has a rehabilitative spirit. The whole aim is to get the client credit active again, but, in a responsible way. Many clients who went through the debt counselling process applied for credit with great success.
If a credit provider denies access to credit, a client has the right to a full explanation as to why the credit is being denied. From there on appropriate measures can be taken.
Losing one’s assets
Through provisions in the National Credit Act, debt counselling offers protection for your assets. The debt counselling process has been specifically designed to allow clients to repay their debt, home loans and vehicle financing, without losing their assets. Once you enter the debt counselling process all credit providers are prohibited from taking further action against you on the accounts that are included in the debt counselling program. Take Mr Geldenhuys for example: “… my debt counsellor prevented that I lose any assets.”
Your car, for example, cannot be repossessed by credit providers whilst you are under debt counselling. The only way that credit providers are allowed to take your vehicle is if you sign a letter in which you voluntarily surrender the vehicle, or if they can present you with a legitimate court order of the high court. These are the only ways through which your asset/s can be taken away.
Easy come easy go
A debt-free client admits: “In the beginning it was hard but then it became easier.” Managing debt is not as easy as one-two-three, but with the assistance of a debt counsellor, clients are given room to breathe as an approved debt counselling program is implemented on their behalf. This enables the client to pay off their debt in one affordable payment each month. Clients should therefore be committed to bite the short-term bullet to be debt-free in the long run.
Managing your debt is not the easiest or fastest process, but if you find yourself in an unavoidable over-indebted position, debt counsellors are there to assist you and also point you in the right direction – a debt-free life. Contact us to help you with our effective debt review program. “After paying off debt with DebtSafe’s more than able members of staff, I am now debt free. I would recommend DebtSafe to any one that needs professional assistance” – a former client and now debt-free South African.