The National Credit Act (NCA) of 2005 introduced debt counselling as a measure to assist consumer struggling to service their debt. Debt Sage has been helping many consumers become debt free through taking advantage of debt counselling. There numerous advantages for debt counselling and we discuss them here.
I am glad you asked. If you are considering to apply for debt counselling, it is very imperative to understand what the advantages of debt counselling are before signing up. The advantages of debt counselling are discussed below.
After a consumer has finished paying off their debt, a debt counsellor issues them with a clearance certificate implying that they have satisfied all their obligations under debt counselling. The consumer's listing on credit bureaus is lifted and is able to apply for new credit.
Credit bureaus do not keep the consumer's record as having been under debt counselling. When the debt counsellor has issued the consumer’s clearance certificate, the consumer's record with credit bureaus is expunged. In terms of the National Credit Act 34 of 2005, a debt counselling order reflects on one’s credit report within the period prescribed in section 71(1) of the Act or until a clearance certificate is issued /
When one applies for debt counselling, the debt counsellor approaches the courts to obtain a court order from the courts which makes binding the restructuring plan that was negotiated with the credit providers. This stops any repossession activity.
The restructuring plan involves relooking and reducing interest rates with the credit providers. This benefits the consumer. Interest rates for credit cards, retail/ store cards/ personal loans can be reduced to 3-5% (DCRS rules based)
When under debt counselling, the consumer pays one easy affordable amount that pays their debt. Debt counselling consolidates your debt into a single manageable payment.
When under debt counselling, all collection activity stops.
All the fees payable while under debt counselling are worked into the consumer's repayment plan. This makes the debt counselling program affordable to the consumer.
There are disadvantages of applying for debt counselling. Here we discuss the disadvantages of debt counselling.
However, if one is deep in debt, advantages for debt counselling outweigh the disadvantages of debt counselling.