Who needs to apply for debt counselling?
Just about anyone can apply for debt counselling. Some people are fine today and something happens and they need debt counselling tomorrow. Others slowly get into a worse and worse financial situation and they will need to apply for debt counselling.
To some, life happens. Others are in the wrong department or wrong company at the wrong time and get retrenched, or fired. Some people’s income decreases and they can’t afford all their debt, some are in their own businesses, some are agents who work on commission, like estate agents whose income has been badly affected by the economy.
Some have had no increases at work, or increases less than inflation, so they can buy less with the same money every year, and it catches up after a while.
All these people have one thing in common – their debt plus expenses is more than the money they earn.
In reality, all people from all walks of life might have to apply for debt counselling in their lifetime.
When you get into a tight financial situation, is the worst thing you can do to take another loan?
Many people, when they realise that things are going wrong financially, do what 60% of South Africans do, they take another loan.
READ MORE: Should I take out a personal loan?
This is the worst thing that you can do, because when the loan money is finished, you are back where you were before the loan plus you have another loan installment to pay.
We have been doing debt counselling for 11 years now, and we have seen people in a terrible state and a few years later their debt is finished and they start living again.
A lot of people struggle on, and just-just make it every month because they have too much debt and they pay off one loan and take another one, and never get out of debt.
These are the people who should be doing debt counselling.
What is the debt counselling process?
The first thing we do is an assessment of the debt and the living expenses .
Then we work out by how much we can reduce the debt payments, which is normally about one third less. For example, we have managed to reduce R23 100 to R14 900 and another smaller one was R5 500 to R3 100. This makes a huge difference in people’s lives.
Not just because they can afford to live now, but because there is now a plan to get rid of the debt in a few years. Normally we work it out for about 5 years, but the average South African finishes their debt review in just over 4 years.
Can people get credit again after they have been in debt counselling, and how long does it take?
Yes, you can get credit as soon as all your debt is paid. Getting out of the process is not perfect, it can take 2 weeks or 2 months.
Many people when they finish debt review have learned to work with cash, and not loans, and use very little credit going forward.
Most people need a home loan or bond, or a loan to buy a vehicle. The only other thing you need is a credit card which stays locked in the safe and is only used for emergencies.
ALSO READ: How to stick to a budget
If you are thinking of debt counselling, contact RD Debt Counselling for an honest straight forward assessment of your debt situation.