24 January 2013

What is debt counselling?

Many South Africans can benefit from debt counselling without knowing it. As part of the Consumer Protection Act in South Africa, debt counselling is a very effective and affordable way to protect your assets and to recover your financial situation when you are in a tight spot.

The debt counselling process is made simple for consumers: You apply online and a debt counsellor assesses your financial situation. If you are declared over committed the debt counsellor will send your creditors a letter informing them that they have to contact your debt counsellor with any queries from there on out because you are under debt review.

You are then protected from your creditors and debt collectors. Your debt counsellor will approach your credit providers within the next few days to discuss your current repayment structure. They will prove to your creditors that you cannot afford your debt and that you need your debt restructured around your living expenses (which you provide the debt counsellor).

Debt counselling makes your repayments affordable so you can breathe easily knowing that you’re able to pay back your debt. Your debt counsellor can also negotiate lowered interest rates and penalty fees if you have any. Debt review is affordable because your debt counsellor’s fees will depend on your affordability and this will be included in your single repayment to a Payment Distribution Agency every month.

Debt counselling can be an option for you if you are thinking of consolidating your debt into a single repayment but you have a bad credit record and cannot qualify for loans for consolidating debt. Poor credit scorers have a hard time getting debt consolidation loans with affordable interest rates. With debt counselling your debt will be consolidated into one repayment even if you have a poor credit record.

Some South Africans look for credit consolidation when they have bad credit by reaching for short term online loans or blacklisted personal loans but these have very high interest rates and they’re not worth the trouble of consolidating.

If you’re tempted to take on a loan to pay back existing repayments or to afford basic living expenses like food or your children’s school fees you may be over indebted and debt counselling can be the perfect way of gaining control of your finances again. Apply sooner for debt review rather than later. Once you have received a Section 129 letter from a creditor that debt cannot be included in your debt review.

Debt Counsellors in South Africa:

8 January 2013

Six ways to stay out of debt in 2013

We tend to focus on getting out of debt, but preventing a debt disaster is much less stressful and much more valuable in the long run.

With one in five South Africans having impaired credit records it has to point to a number of factors for people becoming over-committed financially. Fin24.com rounded up some main tips to avoid being a part of this statistic. We’ve expanded on them in an effort to make your life easier and 2013 the year you start and keep a debt free life.

After you’ve signed up for debt management advice it’s also a good idea to follow these tips to stay within your budget.

1) Your lifestyle should rely on your salary only

Don’t live above your means. If you get a bonus save most of it and enjoy some of it.

2) Spend money you have, not the credit available to you

Don’t think of credit facilities as an easy solution. It should be a last resort, but it is all too often used as a convenient way to afford the things we desire but not really need. Avoid store accounts and opt for loyalty cards instead.

3) Increase your debt repayments in line with your salary increase

This way you free up your income faster and you can use the money towards saving instead.

4) Focus on family activities instead of going to the mall

Malls are great temptations for children where parents give in all too often. Parents also spend more when they take their children to the grocery store. So if you want to stick to your grocery list and avoid tantrums, don’t take kids shopping.

5) Avoid temptation and resist ‘sale’ signs – ask yourself whether you really need it

Avoiding malls and sticking to stand-alone stores can go a long way in avoiding this temptation as you won’t have the urged to check out every sale.

6) Budget for the next year’s expenses.

Draw up a budget for all the expenses you already know you’ll have in 2013. Children’s school fees and other monthly payments might be significantly reduced if you can pay an annual premium. This also takes some stress of your shoulders for the rest of the year.

What are your expectations for this year? Are there any other tips you would like us to add? We want to hear from you.

Related Posts Plugin for WordPress, Blogger...