Debt. It can feel like a heavy burden, affecting more than just your finances. It’s not just about the numbers and due dates; it’s the constant, gnawing anxiety that accompanies each financial decision. The weight of which can feel suffocating.
If you’re struggling with endless bills and feel like you’re losing the battle with your finances, debt counselling could be the helping hand you need. It can offer hope and a way forward.
So, What Exactly is Debt Counselling?
Introduced as a formal debt solution by the National Credit Regulator (NCR) in 2007, debt counselling is a process designed to assist individuals who are struggling to meet their monthly debt obligations. It involves working with a professional debt counsellor who assesses your financial situation, negotiates with creditors on your behalf, and sets up a realistic repayment plan. This plan not only protects your assets but also ensures that your repayments are manageable, and that you become debt free.
Do I Need Debt Counselling?
To qualify for debt counselling, you must be overindebted. This means you can’t pay all your debts with your current income or savings. If you find that your income isn’t enough to cover both your daily living costs and your debt payments, or if you’re using credit cards, overdrafts, or loans to buy everyday things like food and utilities, these are clear signs that you are overindebted.
To quickly assess if you need debt counselling, consider these questions:
- Are you regularly missing payments?
- Are you relying on credit to cover basic expenses?
- Is your debt increasing despite payments?
- Do you have little to no savings?
- Are you unclear about how much you owe?
- Do you experience anxiety or stress over finances?
- Are creditors or debt collectors contacting you?
- Are You Using New Debt to Pay Off Existing Debt?
- Is your Debt-to-Income ratio high? Login to your credit report here to check.
- Do you have an income so your debt counsellor can negotiate with your creditors?
How do you score out of 10? If several of these points apply to you, it might be worthwhile to consider seeking debt counselling. A debt counsellor can provide a structured repayment plan, negotiate with creditors on your behalf, and offer guidance on managing your finances more effectively.
Curious about how much debt counselling could reduce your monthly repayments? Explore our interactive debt reduction calculator to get a clearer picture of your potential savings.
Debt Counselling: What to Expect
The duration of the debt counselling process varies, typically ranging from 3 to 5 years. This timeframe is influenced by factors such as the total amount of debt, your monthly income, interest rates, and any changes in your financial circumstances. Understanding these factors can help set realistic expectations and prepare you for the journey ahead.
Factors Influencing Your Debt Counselling Journey
- Total Debt: The amount of debt you owe is a primary factor in determining the length of your debt counselling.
- Income and Repayment Capability: Your monthly income and how much you can realistically afford to repay play a crucial role in shaping your debt repayment plan.
- Interest Rates: Lower interest rates could shorten your time under debt counselling, while higher rates might extend it.
- Financial Changes: Any positive change in your financial situation can accelerate the process, enabling you to clear your debts faster.
- Commitment to the Plan: Your dedication to making timely repayments is pivotal in how quickly you can become debt-free.
A Future Without Debt
Remember, the ultimate goal of debt counselling is to help you regain control over your finances and lead you towards a debt-free future. Although the journey may seem lengthy, it’s a structured and effective approach compared to facing mounting debts alone.
If you’re considering debt counselling or have questions about the process, our team of registered debt counsellors is here to provide a personalised assessment and guide you towards financial liberation. Request a call back here.