More consumers look to debt relief counselling
DISTRESSED consumers are increasingly turning to debt counselling to help them get a handle on their finances.
The National Debt Counsellors' Association (NDCA) says it has noted a more than 30% increase in the number of people making enquiries about counselling.
Association chairperson, Benay
Sager says the increasing numbers are not unexpected, given the effect of the ongoing lockdown and its associated restrictions on an economy that was already struggling before the pandemic.
‘Loss of income, salary reductions, bonuses and incentives that have been reduced or not paid at all, combined with payment holidays coming to an end and already high levels of household debt, meant people who were previously just about getting by, no longer could,’ said Sager.
He, however, warned that while counselling is effective, it is not a quick-fix solution.
‘Debt counselling is a long-term commitment. Just as it takes a while to accumulate debt, it takes time to reduce it.
‘The important thing is to keep making regular payments and, if your circumstances change for the better, to pay more to accelerate the process,’ he said.
He warns that while undergoing debt counselling, consumers will not be granted any more credit.
‘For people who stick with the plan and make their monthly payments, it works well and the vast majority never again fall back into unsustainable debt,’ said Sager.
He outlines the significant benefits to debt counselling, which are:
• Monthly repayments are reduced by renegotiating the period over which the debt has to be repaid and securing lower interest rates
• Consumers make only one payment for all their debt obligations
• Consumers' assets, such as homes and vehicles, are not at risk
• Rather than having to deal with numerous creditors they deal only with one person - the debt counsellor - who renegotiates all the debt
• The debt is restructured to ensure the monthly payments are affordable and there is some money left to cover essential expenses. In terms of the National Credit Act, the process is legally protected.