A good debt counsellor will be able to negotiate on your behalf with your creditors, consolidate your loans in some cases and even lower the interest rate that you pay on your outstanding loans.
But undergoing debt counselling means that someone is going to know all the intimidate details about your financial life. Before you hand over your bank statements and other sensitive information, there are some questions you should ask your chosen debt counsellor.
This guide will look at 10 questions you should ask your debt counsellor before you go through with the process.
Tip: Apply for debt counselling today by clicking here and filling out the form.
1.Are you accredited by the NCR?
Before you sign anything, or give all your details over, make sure that your debt counsellor is accredited with the National Credit Regulator.
The Debt Counsellors Association of South Africa (DCASA) says that by law of the National Credit Act (NCA), every debt counsellor should be registered. They should have a NCRDC number. This number can be verified by calling the NCR: 0860 627 627.
2.What services do you provide?
Right from the start, know how the process is going to work, and how long it is going to take. You want to know that after undergoing debt counselling that you can start leading a financially healthy life.
3.How much is it going to cost me?
There are different fees that a debt counsellor is allowed to charge you. There are application fees, legal fees, and restructuring fees. Before you get started with the process, ask them what their fees are, and how much the whole process is going to cost you. Find out when your creditors will start getting paid. Usually your first two instalments go toward your debt counseeling and legal fees.
4.Which payment distribution agency are you with?
Every debt counsellor should be affiliated with a payment distribution agency (PDA). The PDA approves your final debt payment plan, before you pay your new set of monthly instalments.
5.Are you being investigated by the NCR?
The DCASA says that the NCR is not allowed to say who is under investigation, but it is wise to ask your debt counsellor. If they are under investigation then you should consider finding a different debt counsellor, or find out what the charges are against them.
6.Is your fee structure in line with the NCR?
This goes back to question three. There are set guidelines to which a debt counsellor has to follow when it comes to fees. The NCR has a list of prescribed fees which have to be followed.
Make sure that your debt counsellor is using the NCR's guidelines, otherwise they could be overcharging you.
7.Are you planning to leave the industry?
The DCASA says that if a debt counsellor is looking to leave the industry, or sell their client book, then you have a right to know. This is because it could interrupt your counselling process and affect you and your repayment plan.
8.Can I have a joint application?
If you and your partner are both struggling with debt, then you can apply jointly. Debt Counselling South Africa (DCSA) group says that this is recommended for couples, and is compulsory for couples married in communion of property.
9.Will I have to sell some of my assets?
DCSA says that this is unlikely, but it will be discussed with your debt counsellor if it gets to that stage. Normally the debt counselling process is put in place so that people can keep their assets.
10.If I was under debt review before, can I sign up again?
However, if you were under debt review and paid up all your debts before and then got into trouble again, it will be a much easier process and the creditors and court will be much more willing to help, says the DCSA.
For more information on what debt counselling is and the prescribed fees click here.