What is financial counselling - National Debt Helpline (2024)

FAQs

What is financial counselling - National Debt Helpline? ›

Financial counsellors CAN assist you by:

The debt counsellor will evaluate the consumer's financial situation and prospects of debt re-arrangement. During this evaluation, the consumer and his/her credit providers must comply with the requests of the debt counsellor and participate in the review and negotiations relating to the debt re-arrangement.

Debt counselling can help your credit score.

Your Debt Counsellor will make sure your creditors are aware that you are under debt review and this means they can no longer take any legal actions against you.

The difference between debt counselling and debt review. Debt counselling is the service that a debt counsellor provides to an over-indebted South African consumer struggling with their debt, and debt review is a regulated programme that a debt counsellor will place successful debt counselling applicants under.

Many debt management plan (DMP) providers charge a fee for their services but some don't. It's important to remember that if you don't want to pay a fee, you don't have to.

Realistically, the debt review cancellation process can never take less than 2 months. Firstly, the court application must be prepared and a court date must be obtained. The court date is never likely to be less than 2 weeks away, as the court application must be served on the debt counsellor and the creditors.

One of the main disadvantages of using credit counseling is that it may affect your credit report. Some agencies may put a comment on your report that indicates you are on a debt management plan through credit counseling.

Why choose debt counselling? ›

You'll Make A “Get Out of Debt” Plan

A major part of credit counseling is helping consumers come up with an actionable plan to get out of debt. Your counselor will help you look at the pros and cons of different debt relief strategies including credit card forgiveness, debt management, and more.

A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.

Financial counselors help people build financial skills and improve their overall financial health. Financial counselors often help lower-income households manage current expenses, build savings, make plans to pay off debt, and navigate public assistance benefits.

In a nutshell, financial counselling helps you manage your debts and get your finances back under control. Financial counsellors are skilled professionals who provide advice and support to people struggling with bills and debt. A financial counsellor can: Assess your financial situation.

Debt relief through a debt management plan

A debt management plan allows you to pay your unsecured debts — typically credit cards — in full, but often at a reduced interest rate or with fees waived. You make a single payment each month to a credit counseling agency, which distributes it among your creditors.

During Debt Review, you cannot access new loans or credit cards. While this helps break the borrowing cycle, it can restrict your financial flexibility. This is a big ask for most people. And understandably so, stepping away from the dependency on credit is a big hurdle.

This process can take 2-3 years. Late fees, additional interest and damage to your credit score pile up as the debt settlement company negotiates, which does severe damage to your credit score.