Demystifying debt review (part one)

by | May 24, 2021 | Personal Finance

There are lots of myths surrounding the debt relief option of debt counselling in South Africa. Most misinformation is there because of the lack of financial literacy and education available to consumers. We sat down for a candid discussion with the CEO of National Debt Advisors, Sebastien Alexanderson – and he responded to some questions put forth on the process of debt review. Over the next few weeks, we will be unpacking this piece by piece

Why does debt review have a bad reputation? What do unscrupulous debt counsellors often do, and what is the best practice for this profession?
Let’s face it – breaking up is hard to do, even with our debt. When your current circumstances no longer allow you to borrow anymore money – you are left with very little options for getting out of debt.

We already know that we need to consolidate our debt, in order to get better rates – but did you know that you could also consolidate using a reputable debt counsellor?

Most of us do not know the law, or how the banks work internally – this sees us making payments every month but the balance never seems to clear. This happens, because without proper negotiations and checks and balances in place, the creditors often fail to lock in the agreed upon repayment. This happens all the time and it can even happen in debt review.

Once a year debt counsellors are meant to do an annual review with all their clients. It is at this time that most debt counsellors will request an updated balance from your creditors, giving the creditors a chance to correct any misalignments.

Most people go wrong when they enter debt counselling with a temporary commitment and leave within the first 6 months – before they have a chance to reap any of the rewards. Just like putting on weight is easier than getting it off! Getting out of debt is a way of life, and not a quick fad diet. You need to be committed about becoming debt free, and for at least the first year, pro actively work with your debt counsellor. Inform your debt counsellor of any change of circumstance, details and communication from creditors and debt collectors.

In my many years of service to the industry, it has been my experience that most people receiving bad service often exit too early from the debt review programme, and this affects their already bad financial situation even further. Some also choose a debt counsellor who is not equipped to handle the work load during your journey to financial freedom – and this is not a good thing either. Do sufficient research when choosing a debt counsellor.

If debt review is not a quick fix solution for all consumers, how do you know it is right for you? What do consumers need in place to ensure that debt review is a success?

There is nothing worse than receiving a call from a someone when the sheriff is at the door and the car about to be towed away. Once things have reached this point and a judgement has been granted – it is very difficult for us to help an over-indebted consumer. Debt review is not a quick fix – rather it is a fresh start at a new life and hopefully one where you can accumulate some savings and learn to live without credit cards and store cards in the future.

Nobody wakes up in the morning wanting to go under debt review, but it is definitely an option you should explore when you are on the brink of, or already falling behind with your debt installments. Waiting too long before acting, can be the difference between financial freedom and repossession of your assets.

All you need is a regular income you can rely upon, a willingness to succeed in overcoming your debt problems and a reputable debt counselling company.

Number one in the country
National Debt Advisors has been voted SA’s number one debt counselling company in the country. If you are feeling the financial pinch and skipping payments, make contact with us today.

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