Page 19 - IFV_Issue 5_May_2022

Lifestyle

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

more people are pro-actively seeking
help before things get too dire. Some
of this is certainly due to a diminished
ability to borrow, but our members
also work tirelessly to highlight the
significant benefits 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. Photo by Steve Buissinne on Pixabay
There are other significant benefits to
debt counselling. These include:
• Consumers’ assets, such as homes and

The Villager • Issue 5 2022 • 17