Debt Counselling Advantages and Disadvantages
If you’re considering debt counselling, it’s best to weigh up the advantages and disadvantages before deciding to sign up. At National Debt Advisors (NDA) we care about your financial well-being. This is why we decided to compile a list of debt counselling advantages and disadvantages, giving you all the information you need to make a well-informed decision.
ADVANTAGES OF DEBT COUNSELLING
- All of your debt repayments will be consolidated into one reduced monthly repayment plan
The great thing about debt counselling is that instead of paying numerous accounts, which you can easily lose track of, your debt counsellor will work out an amount that covers all of your repayments. This includes all your legal fees and debt review costs, with lower interest rates.
- Your assets, including your home and car, will be protected from repossession
If you’re fearing that your home and car will be repossessed because you’re in too deep, you’re not alone. Debt counselling will protect your assets from being repossessed as a result of defaulting on repayments.
- Credit providers will no longer harass you with phone calls and threatening lawyers letters in the mail
Instead of avoiding calls from numbers that you don’t recognize, in fear of creditors calling to demand payment or threaten you with legal action. Your NDA debt counsellor will communicate with the credit providers, making them understand your situation. This approach helps us to negotiate a better repayment plan to suit your pocket.
- You can’t apply for new credit while under debt review
Once placed under debt review, you will no longer be at risk of getting deeper into debt. The National Credit Regulator will flag your credit profile, barring you from taking out more credit. This flag will be removed from your credit profile once you have settled all your debt.
DISADVANTAGES OF DEBT COUNSELLING
- You may not qualify for debt counselling
If, after assessing your income and expenses, your debt counsellor determines that you are not over-indebted, you will be issued with a rejection letter and you will then have to pay a rejection fee. According to the National Credit Act (NCA), one of your options is to personally approach a magistrate’s court to apply for a court order that declares you as over-indebted.
- Not all debt counselling firms are legitimate
Your efforts to financial freedom may turn out to be in vain if you opt for an unscrupulous debt counsellor. If you have any doubts, simply ask for their registration number and looking them up on the National Credit Regulator’s (NCR) website. Professional debt counselling firms are required by law, to register with the NCR.
Feel free to confirm NDAs NCR authorisation number: NCRDC2351. Rest assured, NDA is compliant with the National Credit Act and all of our services are regulated by the NCR.
- Costs involved in debt counselling
Your debt counsellor is required by law to ensure that the costs involved in debt counselling doesn’t cut into your living costs. The purpose of debt counselling is to provide you with financial relief by offering lower monthly instalments and interest rates. At NDA, we will disclose our fees to you upfront and in full before finalising anything.
- Debt counselling may not cover all of your debts
If one of your credit providers has already commenced legal proceedings against you as a result of defaulting, your debt counsellor will not be able to include these debts in your new debt repayment plan.
In light of this, always be sure to contact NDA as soon as you begin to struggle with your payments, so that all of your instalments can be reduced.