A long term solution for overindebtness 

Many South Africans have fallen into the trap of debt and are unable to keep up with their repayments. In cases such as these, debt counselling can help you find a suitable long term solution. 

Debt always starts small but finds a way of quickly building up as you take out loans for various purposes, open up accounts and apply for credit cards so you can enjoy the benefits that they offer.

The next thing you know you're short of cash at the end of the month and you end up taking out a payday loan to help you pay for the essentials. These online loans must then be repaid so your next paycheck won't be able to cover it either. As you take out more online loans, they become more expensive due to the higher risk the lender takes on to offer you a loan.

What's the best way to get out of debt?

There is not best way to get out of debt. There are a range of available options and some will be better for you than others. It really all depends on your individual circumstances and the extent of you debt. 

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 with all of your creditors.

These terms can relate to 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 only if 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 create and use a solution which is specifically tailored for you and your individual needs.

Debt counselling will match your income and spending. It will even save you money. In this way, you will have extra cash for spending and will be managing your finances in the most effective way without risking falling into further debt. 

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.

What to expect with debt counselling in South Africa

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 accounts, short-term loans and credit card statements. The more thorough the information is the better.

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 who need it most. 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, as your case progresses or after your debt has been settled. In any case, you have to ensure that it will fit into your budget.

Coming up with a debt counselling plan

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.

What are my options with debt counselling?

The counsellor can negotiate a lower interest rate on your loans directly with creditors including all the South African banks and popular micro lenders. 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.

You can take out a new home equity loan with lower interest rate to repay your existing debt. That way, you will only 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 must insist on a long term solution 

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 that has experience and is passionate about what they do and passionate about helping people. 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.