Why you should go under debt counselling in 2024

You should go under debt counselling in 2024 if you are struggling to make your monthly debt repayments. It's an opportunity for you to:

• Protect your home and your car. 
• Pay ONE affordable, reduced monthly debt repayment for all your debts. 
• A chance to rebuild/ improve your credit score. 

What is debt counselling in South Africa?

Debt counselling, also known as debt review, was introduced by The National Credit Act (NCA) and is regulated by The National Credit Regulator (NCR). Debt counselling offers a lifeline to over-indebted consumers in South Africa who find themselves grappling with the burden of unpaid debts. 

Is debt counselling a good idea?

Debt counselling in South Africa is not just a good idea, but it is often the best solution for individuals who are overwhelmed by their financial obligations. With the rising cost of living and the economic challenges faced by many South Africans, it is not uncommon for individuals to find themselves drowning in debt. Debt counselling offers a way out of this vicious cycle and provides much-needed relief to those who feel trapped by their unpaid debts.

Debt counselling in South Africa is not just a good idea, but it is often the best solution for individuals who are overwhelmed by their financial obligations.

Benefits of debt counselling

One of the main benefits of debt counselling is that it helps individuals come up with a realistic and manageable repayment plan. A Debt Counsellor will assess the client's financial situation, including their income, expenses, and outstanding debts. Based on this assessment, the Debt Counsellor will negotiate with creditors on behalf of the client to reduce interest rates and extend repayment terms. This not only makes the debt more affordable but also ensures that the individual has a clear roadmap towards becoming debt-free.

Another advantage of debt counselling is that it offers legal protection to individuals who participate in the programme. Once a person enters debt counselling, their creditors are legally prevented from taking any legal action against them, such as repossession of assets like their house and their car. This protection provides individuals with the peace of mind they need to focus on repaying their debts without the constant fear of legal repercussions.

Who qualifies for debt counselling?

To qualify for debt counselling, you must be considered over-indebted. A few indicators that you may be over-indebted are:

1. You use credit to buy necessities like groceries or electricity. 
2. You've received a Section 129 Notice (A letter of demand).
3. You struggle to sleep at night because you're worried about money and how you will pay for all your bills. 
4. You borrow money to pay your bills. 

Read: How you do you know you're over-indebted?

How much does a Debt Counsellor cost?

The first thing that's important to note is that you should never pay fees directly to a Debt Counsellor. Your fees should be managed by a Payment Distribution Agency (PDA).

When it comes to the cost of debt counselling, usually your monthly repayment for the first 2 months is equivalent to your debt counselling fees. This monthly repayment will be based on your current financial situation, including your total debt amount and income, as well as the time it will take to complete the entire process. This means there isn't one standard fee for debt counselling. 

It's important to note that your credit providers agree to your first 2 months payments going to your Debt Counsellor for administration of the repayment plan which includes the negotiation of reduced interest rates and going to court on your behalf.  Credit providers will receive their payments from month 3, but you are covered from month 1.

Does debt counselling affect your credit score?

Debt counselling is actually a way to rehabilitate your credit score. When you are under debt counselling, no further negative information will be added to your credit report. 

It's important to note, however, that a debt review flag will be put on your credit report, indicating that you can no longer take out any further credit. This is only temporary and will be removed once you've successfully completed the programme. 

Once you have successfully completed the programme, this is also a chance for you to slowly start rebuilding your credit score. 

Debt counselling can be your lifeline

In conclusion, debt counselling is not only a good idea but an essential lifeline for over-indebted consumers in South Africa. It offers a practical and effective solution to the burden of unpaid debts, providing relief, assistance, and a clear path towards financial freedom. If you find yourself struggling with mounting debts, seeking debt counselling may just be the best decision you can make for your financial well-being.

Meerkat was voted as one of the Top 10 Large Debt Counsellors in South Africa. We're a financial wellness company committed to empowering South Africans to do MORE with their money. We've already helped thousands of people, we can help you too!

MyMeerkat FSP is an authorised financial services provider (FSP 50979) and registered Debt Counsellor NCRDC 2613.