Understanding debt consolidation
Debt consolidation is a debt solution that was instituted by the National Credit Regulator and is stipulated and protected in the National Credit Act. This is available to the overindebted and combines all your monthly debt payments while negotiating with all your creditors for reduced payment amounts.
This solution focusses largely on rehabilitating your debt and allowing you to repay it in a manageable and financially safe manner. Once declared overindebted and signed up to the debt consolidation process the following will happen:
You will be protected from having to communicate with your creditors because your assigned debt counsellor will be tasked to do so. You will also be protected from any defaults, judgements, and other legal action. This will hold true as long as you uphold your payment arrangements.
How do I know if I need debt consolidation?
Many South Africans struggle in silence with their debt, unaware of the fact that they may be a candidate for debt consolidation. Here are a few common indicators that this may be a solution for you:
- You cannot keep track of which credit providers you are paying every month and how much.
- You are unable to manage your monthly expenditure.
- You find yourself taking out loans to survive the month.
- The majority of your income is allocated to your debt.
- You may have a judgement or default against your name.
Before you get started
It’s important to understand what you are signing up for and how it may affect your finances going forward.
Debt consolidation can help you make a saving on everything from service fees, administration charges, debit order charges, and even insurance costs. It also helps to repair your credit score, which may in all likelihood have been damaged due to mismanaging your debt.
This process also may mean that you will be unable to access any further credit while you are undergoing the debt consolidation process. This will allow you to make headway with your existing debt without adding any additional financial strain.
To further understand debt consolidation, click here.
Struggling with your debt can have far-reaching effects on your wellbeing. For many South Africans, this financial strain is their reality, but it doesn’t have to be yours. For trusted, professional help in managing your debt from trained debt advisors who care, take the first step today.
