It is easy for the modern South Africans to get into the trap of debt. You borrow money because you are unable to cover all of your living with your salary.

But the personal loans which you take out must be repaid so your disposable income becomes smaller. As you take out more online loans, they become more expensive due to higher risk.

Is there a way out of this situation?

Yes, there is. In fact, there are different solutions which you can use.

Debt Counselling for Getting Out of Financial Trouble

One of the best strategies for getting rid of debt involves the use of debt counselling services.

A debt counsellor is a financial specialist who will help you manage the repayment of your existing debt in an effective and affordable way. The specialist will negotiate more flexible debt repayment terms for you.

These can include lower interest rates, extension of the loan terms and postponing of the repayment of the loans. The counsellor may suggest debt consolidation as well. In any case, the professional will assist you not only with securing the better terms but with managing your finances so that you can avoid getting into more trouble in the future.

A debt counsellor will help you repay existing debt

The reality is that you are able to repay your existing debt as long as you find the right way for doing this. This is what the debt counsellor will help you with. When you work with an experienced certified professional who has helped many people get out of debt, you will be able to use a solution which is specifically tailored for you.

It will match your income and spending. It will even save you money. That way, you will have extra cash for managing your finances in the most effective way without falling into traps.

The counsellor will assist you with preparing a monthly budget and with controlling your expenditure so that you can repay your debt in full and on time without experiencing any financial difficulties.

Meet with the debt counsellor

You should meet with the debt counsellor in person and bring copies of all relevant financial documents such as your most recent pay slips and bank account and credit card statements. The more thorough the information is the better.

Personal meetings are important as you will feel more comfortable about asking questions.

The counsellor will use the provided information and obtain your credit history as well. The specialist will perform detailed analysis of your current financial position using all the necessary details. The analysis will help the professional come up with the most effective solution in your situation.

Two types of debt counselling services – free & paid

The free services are available via non-profit and non-governmental organisations devoted to helping people in need. These services can be quite useful, but there are limited options for the user. You cannot select the counsellor that you will work with. Other restrictions may apply as well.

If you decide to pay for using a debt counselling service, you can select the counsellor that you will work with. You can base your choice on education, certification, experience and achievement. You have to pay special attention to the fees charged by the counsellor. Find out exactly how much the service will cost you and when you will have to pay for it, in advance or after you use it.

In any case, you have to ensure that it will fit into your budget.

Your debt counsellor will analyse your current position.

There are various ways for getting out of debt and not every one of them is suitable in any given situation. That is why your debt counsellor will analyse your current position to determine the most effective solution for you. Consider the main ways in which your problem can be resolved.

The counsellor can negotiate a lower interest rate on your loan directly with your mico lender. Counsellors who have strong relationships with lenders can do this with ease, especially if the current interest rates are lower and the borrower is in a very difficult situation.

Debt consolidation is one of the most widely used solutions

You will take out a new home equity loan with lower interest rate to repay your entire existing debt. That way, you will have to make a single monthly payment, which is smaller compared to the total amount which you are currently paying.

If you are struggling with the repayment of your credit card debt, the counsellor can suggest that you use a 0% interest credit card to repay it.

In this way, you will clear your debt right away and eliminate future interest payments automatically. You just have to ensure that you will repay all of your debt before the 0% interest period expires.

In most cases, you will have between half a year and a year to do this.

A good counsellor will not promise wonders

You should certainly not sign up for the services of the first debt counsellor that you come across, but choose a specialist carefully.

You should start by asking people that you know whether they can recommend an experienced expert. If you have any friends who have managed to get out of debt via counselling, you should go to them straight away. You should perform an online search as well. That way, you can compare different specialists and their credentials.

When you find a good candidate, you should meet the professional in person so that you can get an idea of whether you will receive the help that you require. You would want to hire a debt counsellor with higher education in finance and relevant professional certification issued by a reputable body. You should evaluate the service provider based on experience and achievement as well.

You should ask all questions which are important for you and pay great attention to the answers. A good counsellor will not promise wonders, but explain what you will be able to do given the circumstances.

Overall, debt counselling will give you the strategy which you need for getting out of debt and achieving financial stability.

It is up to you to use it effectively.