NDA CEO answers some FAQ’s
NDA CEO, Sebastien Alexanderson answers some frequently frequently asked questions around debt review.
Are consumers currently flocking to debt counsellors?
There has definitely been an increase in the number of enquiries into debt counselling, as more and more strained, over-indebted consumers look at their options of debt relief.
The low-levels of economic growth, the Covid-19 pandemic and the subsequent lockdowns have led to a loss of – or decrease in – income. This has impacted already indebted consumers, by spurring them on to seek more unsecured debt to supplement their interrupted income. The NCR has confirmed that the size of unsecured loans, applied for by consumers, has risen by nearly 50%.
Why is this occurring?
Sadly, unsecured debt via credit cards, personal loans and retail store cards is now being utilised for basic necessities. People are using credit to survive.
Many consumers, who take home between R10 000 and R40 000 per month, are spending approximately 60% of their net income on servicing their debt.
This is unsustainably high, especially with the constant rise in basic food prices, petrol and utility tariffs. South Africans simply cannot cope. Now, more than ever, they need to be able to lower their debt repayments, so that they can ultimately become unburdened from their debt. Lower monthly debt installments should free up money, which can be used for much needed living expenses.
How can debt counselling keep creditors away?
There are definite benefits to using the services of a registered debt counsellor. Any debt counsellor worth their salt, should be able to negotiate with creditors to reduce their clients’ monthly installments, and clients would ideally be debt –free within 2 to 5 years.
It will take sacrifice, changes in lifestyle and commitment to the process, but it can and has been done very successfully. There are thousands of South Africans who have had very positive results through the process of debt review.
Working with a registered debt counsellor means less stress, aggravation and pressure, as the debt counsellor deals with creditors on their clients’ behalf.
If a client is under debt review, and gets contacted by debt collectors or creditors, they should not panic, and simply refer them to their debt counsellor. Those under debt review should always inform their debt counsellor of any contact or communication from their creditors, and forward any relevant documentation to their debt counsellors as soon as possible.
South African consumers are struggling, and the NCR-monitored process of debt review is a viable, workable debt solution.
