Is it time for a Debt Counsellor?
Debt, it’s an ugly word and certainly not something most of us want to talk about. If you find yourself constantly getting calls from bill collectors, perhaps it’s time to consider a debt counsellor.
What do Debt Counsellors do?
First of all, a debt counsellor does not settle your debts. If you have no means of income, or are so far in debt that you can’t pay for basic necessities, it may be better to seek help from a bankruptcy attorney. If, like many South Africans, you are working full time but struggling to keep your head above water, a debt counsellor can step in and make the process of getting back in the black easier and less stressful.
Most counsellors will perform a debt review, requiring you to lay out all the bills you currently owe. This, along with an assessment of your monthly income, will give them the information they need to negotiate with bill collectors. The debt counsellor will often create a barrier between you and the collector. Many offer one-pay plans that allow you to make a single monthly payment to the counselling agency instead of to each individual creditor. This means the phone calls will stop.
Often a debt counsellor will also try to get creditors to forgive late payments, waive penalty fees, and lower interest rates. Depending on whether your debts have been passed off to a collection agency, a creditor might even be willing to bring your account current, despite missed payments. This actually save both parties money as a collection service often takes a percentage of whatever it collects.
In more desperate situations a debt counsellor might suggest a debt-consolidation loan. This option should be considered last, as it means taking out a loan sizable enough to cover your current debts. The advantage is the extra time to pay the money back and a substantially lower interest rate.
Of course all debt counsellors will offer a thorough debt review that comes with advice on how you can budget more wisely. They will help you track your spending and offer solutions on how to make ends meet. Ultimately, they are there to provide resources to help you get, and stay, out of debt.