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Debt Review in South Africa

Debt review or counselling is NOT a loan.

Companies that offer debt management services negotiate with creditors on your behalf to lower monthly payments and interest rates, as well as to waive or minimize penalties.

A payment schedule that permits you to pay off your debt in three-to-five years is agreed upon by both parties.

It’s part of the debt consolidation package meant to help consumers take back control of their finances and reduce their unpaid bills at the same time.

Credit cards, medical bills, and school loans are examples of unsecured debt.

Your monthly payments will be reduced, and you’ll save money in interest and fees.

Enrollees deposit money each month with the credit counseling agency to pay off their debts in accordance with a set payment schedule agreed by the counselor and their creditor(s).

Before deciding to participate in the program, you will know what your monthly payment will be.

It is determined by comparing household income and expenditures to arrive at the monthly payment amount.

Advantages of a Debt Review in South Africa.

  • No financing required for credit card consolidation.
  • In terms of bills and payments, it will help you keep more organized and on time.
  • A realistic monthly budget and a financial objective are established.
  • Payments that are made on time and in a timely manner might boost your credit report and score over time.
  • There is a strong incentive for creditors or collectors to cease calling you.

Considering a Debt Counselling Plan

You should consult a credit counseling agency before enrolling in any debt counselling plans.

These organizations range from nonprofits to for-profits, with some offering free therapy sessions and others charging fees.

Your credit counselor can assist you in enrolling in a debt management plan if you feel it is suitable for you.

He or she will negotiate interest rates with your creditors and create a payment schedule that you will examine and agree before the plan begins.

After essential living expenditures including rent, mortgage, utility bills, secured loans, and living expenses have been paid, the leftover money can be split among creditors in a fair and equitable manner.

Subsequently, you’ll make a monthly payment to your credit counseling agency

The organization will then transfer the funds to your creditors in accordance with the payment plan that was agreed upon.

It will cost you very little money to join a debt management program.

You should only have to pay a tiny one-time set-up charge and a minimal monthly maintenance fee after your counseling sessions.

Any credit counseling agency that charges an application cost, membership fee, upfront fee, or per-creditor fee should be avoided.

Follow these tips after enrolling in a plan to verify that it is working for you:

  • What debts and payments will be paid through the DMP and which ones must be paid on your own each month? Make a note of this information.
  • Monthly payments to the counseling service should be made on schedule.
  • Make sure the counseling service pays your payments on time and according to schedule by reviewing your monthly accounts.
  • It’s common for debt management plans to solely address unsecured debt.

Step-by-Step Process for Debt Counselling

In order to locate a debt management company that you feel comfortable working with, you need do some research online.

Debt counselling and management are offered by charity and for-profit businesses.

Because their credit counselors are trained and accredited by the highly renowned National Foundation for Credit Counseling, charities are viewed as more trustworthy.

Write down all of your income and spending for the month before you call.

Use current pay stubs and bank statements, together with a list of all bills paid and unpaid, to be as precise as possible while preparing your budget.

This information should be readily available when you phone the business.

A competent debt management firm will guide you through each step of the process:

  • The interviewer will ask you about your income and spending in general, including rent, electricity and credit card payments as well as any other financial responsibilities you have.
  • An experienced credit counselor will run a credit report on you during the session and check the accuracy of the information with you.
  • A “soft draw” implies your credit score will not be affected.
  • In addition, the counselor should give free educational materials that may be used in the future.
  • The counselor will assess your situation and offer suggestions.
  • However, if your cash flow is still strained, the counselor may suggest a debt management program.
  • It’s up to your creditors to decide whether or not they want to accept your budget plan if you choose to join in the program.
  • You and the creditor must come to an agreement on the final conditions, which include the monthly payment, costs, and the length of time before the debt is paid off completely.
  • Each month, you’ll receive statements from your creditor and the credit counseling organization, respectively.
  • Compare the two statements to ensure that the payments have been correctly credited to your account.
  • Your monthly payment remains the same if one loan is paid off before the others.
  • If there are any money left over, they are divided among the remaining creditors in order to pay them off quickly.

Please contact the credit counseling organization in charge of the agreement if you have any concerns regarding the terms or conditions.

As your point of contact with creditors, they are able to help you resolve any difficulties that may arise.

Without incurring any penalties, you can pay off your debt early in the event of an urgent financial emergency.

Facts to Consider When Choosing Debt Review Programs

  • MPs are three- to five-year degree programs.
  • Discipline and devotion are required to achieve this goal.
  • Any concessions granted by creditors, like as interest rate reductions and the removal of late fees, are lost if you leave the program.
  • During the course of the program, you will be requested to cancel all of your credit card accounts.
  • Certain agencies allow just one card to be used in an emergency, however this might be a barrier for some people.
  • Remember to follow up with your creditors and confirm that they have approved your credit counseling agency’s debt payment plan.

Debit Review in South Africa Pitfalls to Avoid

Before agreeing to terms or signing any papers, do your homework on the debt management business.

Look for a reputable company.

Don’t be fooled by “credit repair” businesses that claim to improve your credit for a price.

Without the assistance of a third party, all customers have the right to have incorrect information erased from their credit reports.

Most essential, while determining which debt management plan is the most effective, learn about the company’s services and prices.

Never put your faith on verbal assurances.

Everything should be in writing, and contracts should be carefully reviewed.

Below is a list of debt review companies in South African that are reliable to consider.