Page 9 - Dainfern Precinct issue 3 2022

LIFESTYLE

seeking help before things get too
dire. Some of this is certainly due to
HOW TO MANAGE a diminished ability to borrow, but
our members also work tirelessly
to highlight the significant benefits
YOUR DEBTS that come with debt counselling,
particularly in a higher interest rate
environment.”
Under debt counselling, interest
rates on unsecured debt can be
reduced from an average of 20%+
to 1 - 2%. This allows consumers
to pay back their expensive high-
interest debt faster.

There are other significant benefits
to debt counselling. These include:
• Consumers’ assets, such as homes
and vehicles, are legally protected.
• Consumers pay back what they can
genuinely afford, to reduce the debt.
it. The important thing is to keep consumer can again become credit
• Rather than having to deal with making regular payments and, if active.
numerous creditors, they deal with your circumstances change for the Sager warns, however, that there
only one person, the debt counsellor, better, to pay more to accelerate the are unscrupulous enterprises
who renegotiates all the debt. process.”
that try to take advantage of
• By renegotiating the period over While under debt counselling, impatient consumers undergoing
which the debt has to be repaid, consumers cannot be granted debt counselling and offer ‘debt
and the interest rates, monthly additional credit. This is a worthy review removal services’. This is in
repayments are reduced. trade-off as the consumer is expected violation of the National Credit Act
to demonstrate they can manage and consumers who are tempted
Sager cautions that, while there their existing debt in the first place. could lose the protection from
are many advantages to debt creditors that debt counselling
counselling and in South Africa For consumers who are in debt affords.
it is effective, well run and highly counselling, it is critical to inform
regulated, consumers need to their debt counsellor if their financial “Debt counselling has many
understand that it is not an instant situation changes - for better or for advantages, but consumers need to
solution. worse. Once a consumer pays off understand it is a commitment, not
their unsecured debt (and is up to an instant solution. For people who
“Debt counselling is a long-term date with any bond repayments, if stick with the plan and make their
commitment, not an easy fix. Just applicable) a clearance certificate monthly payments, it works well, and
as it takes a while to accumulate is issued with the approval of the the vast majority never fall back into
debt, it also takes time to reduce National Credit Regulator, and the unsustainable debt again.”

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DPL