A formal legal procedure called debt counselling allows a consumer to be declared overindebted, after which the debt counsellor can negotiate a new payment arrangement and secure a court order approving it.
You will spend less financing charges on credit card balances and loans if you have good credit since you will be much more likely to get approved for the best interest rates. The less interest you spend, the faster the loan will be paid off and the more money you’ll have left over for other obligations.
The Objectives of a Debt Counsellor is to:
- Assess the full extent of your debt situation
- Assess your assets that may be taken into account
- Provide a debt remedy that gives you with an acceptable standard of living while repaying your debts according to your affordability – this includes retaining the home and a vehicle where possible;
- Provide you with an agreed, affordable and realistic monthly budget in order to resolve the situation in the shortest possible time;
- Provide a repayment scheme acceptable to your creditors and confirmed by the Court;
- Prevent repossession of assets where possible.
- Rehabilitate you without detriment for the future; and
- Allow you to get on with your life.
How does debt counselling help individuals manage their debt effectively?
What this simply means is that if you are over-indebted, a Debt Counsellor can negotiate with your credit providers on your behalf to get lower interest rates and reduced monthly instalments. Professional debt counselling makes your debt more manageable and should be tailor-made to your individual financial needs.
If you already have a history of missed payments or ‘defaulted accounts’ before getting a DMP your credit file will have been affected already. You have the opportunity to rebuild your credit rating after you’ve completed your debt management plan. Debt counselling with an experienced, professional team results in far better credit scores for your financial future if you stick to what is agreed on when your negotiators finalise your repayment plan.