Debt counselling and debt administration are both ways in which consumers can reduce their debt, but it’s easy to get confused between debt counselling and debt administration so let’s take a look at the differences between the two.
Debt counselling: the idea with debt counselling/debt management is to help consumers reduce their debts and come to an agreement with their creditors in a cost effective way.
Debt administration: Under debt administration, the distribution of payment happens through lawyers and it can only commence once all their fees have been paid for. In some cases, it can take as long as a year before your creditors actually start receiving payment.
Debt counselling: Any amount of debt can be dealt with and handled when under debt counselling.
Debt administration: If you want to opt for debt administration, your debt cannot exceed R50 000.
Debt administration is a formal agreement with creditors done through the court and it usually stretches over a period of five years. During this time your creditors are not allowed to get repossession or attachment orders against .
You can make use of debt administration to get rid of garnishee orders, but it will be replaced by one garnishee order.
Unlike with debt counselling, you cannot apply for debt administration if you have any assets that can be sold in order to repay debt.
If you are struggling with debt, then debt management is usually your first port of call. However, it is best to discuss your specific situation with a debt expert in order to establish what the best way to proceed in your specific situation is.