What is a Debt Counsellor?

In an era where financial stability can seem like a tightrope walk, understanding the role of a debt counsellor and the process of debt counselling can be a glimmer of light for many over-indebted consumers in South Africa.

This article explores what debt counsellors do, delves into the process of debt counselling, evaluates its effectiveness, and provides key takeaways to help you determine whether this financial process is the right choice for your circumstances.

Debt counselling was introduced in 2007 in line with the National Credit Act 34 of 2005. This change in our legislation was monumental as it allowed for consumers who are over-indebted to become debt free safely, whilst protected under law.

At the same time, this pivotal moment resulted in the need for individuals with the right expertise to help consumers through the debt review process. Thus, ‘debt counsellor’ as a profession emerged. Note that it is important to ensure that your debt counsellor is registered with the National Credit Regular (NCR).

A debt counsellor is a professionally trained individual certified to help people who are struggling with debt management. Their main objective is to assist clients in regaining financial stability. This process begins with a thorough assessment of the client's financial situation, including income, debt, and living expenses. From there, the counsellor develops a customized plan designed to manage debts more effectively.

Debt counsellors negotiate directly with creditors on behalf of their clients to arrange more manageable repayment plans. This can include reducing monthly payments, lowering interest rates, and extending the term of the debt. They also provide valuable education on budget management and financial planning to prevent future debt problems.

Debt counselling is a formal process aimed at helping individuals who are overwhelmed by debt to overcome their financial troubles under the guidance of a debt counsellor. It's designed for those who have enough income to make regular payments but struggle with high interest rates or the logistical challenge of handling multiple creditors.

During the debt counselling process, all of the client’s debts are consolidated into a single repayment plan. This makes it easier to manage finances and ensures that all creditors and the clients alike, are treated fairly. The process can also protect clients from legal action taken by creditors, as long as they adhere to the terms agreed upon during the debt counselling process.

Opting for debt counselling can be a wise decision for those feeling overwealmed by their financial obligations. It's particularly beneficial for individuals who:

• Are struggling to keep up with multiple debt repayments.
• Want to avoid bankruptcy and its long-term financial consequences.
• Need professional help to negotiate with creditors.
• Are seeking to learn financial management skills to avoid future debt issues.

However, debt counselling does come with certain drawbacks. It may impact your credit score negatively in the short term, and during the counselling process, you will not be able to access additional credit (e.g., taking out new loans).

Sandton Debt Counselling has a strong team of financial experts, whom, along with your debt counsellor, will help you through the debt review process. If you choose to place your trust in us, you’ll be dealing with an NCR registered debt counsellor who is highly skilled and trained to assist you.

We have also been in the top 10 companies nominated by the National Debt Review Awards and Nadia de Weerdt, our head debt counsellor, heads the Western Cape region of the Debt Counsellors Association of South Africa (DCASA). This should make you feel just a little bit more confident that we really do know debt review and how to do it the right way. 

Deciding to work with a debt counsellor can significantly alleviate the stress of handling overwhelming debt. Here are the key points to remember:

1. Debt counsellors offer personalized advice and negotiation services to help manage and repay debts in a more sustainable manner.
2. Debt counselling consolidates debts into a single repayment plan, simplifying personal finance management.
3. It’s suitable for those who have sufficient income to cover a revised payment schedule but are unable to cope with their current debt situations.
4. The process can protect from legal actions by creditors, provided that the payment plan is adhered to.

Understanding these facets of what a debt counsellor does and what debt counselling entails can help you decide whether this service is suitable for your financial needs. By engaging with a professional like Sandton Debt Counselling, who can offer guidance and support, many find the path to financial recovery and stability becomes much clearer.

Read our informative articles covering the questions ‘do I have to see a debt counsellor in person?’ and ‘do I need a debt counsellor?’ If you’re ready to free yourself from the shackles of your financial restraints, get in touch with a debt counsellor at Sandton Debt Counselling by completing our "call me back form" now.