The role of the Debt Counsellor in Negotiations
- Debt counsellors are trained professionals who have expertise in negotiating with creditors. They have a good understanding of the debt review process and are familiar with the legal framework and regulations that govern debt repayment.
- They have the expertise, experience, and relationships with creditors to secure better repayment terms and reduce the emotional stress and anxiety that often comes with negotiating with creditors.
- Debt counsellors are neutral third parties who can act as a mediator between the individual and their creditors. Debt counsellors have established relationships with creditors and are familiar with their policies and procedures. They know how to navigate the negotiation process and can often secure better repayment terms than an individual could negotiate on their own.
How Debt Counsellors Negotiate Better Terms?
At the negotiation stage, the debt counsellor will work with the individual’s creditors to try and reach an agreement on the proposed repayment plan. During this stage, the debt counsellor will act as an intermediary between the individual and their creditors, negotiating on their behalf to try and secure the best possible repayment terms.
What Happens During the Negotiation Process?
- The debt counsellor will first contact all of the individual’s creditors and provide them with a copy of the assessment report and proposed repayment plan. The repayment plan will typically include reduced monthly payments and an extension of the repayment period, allowing the individual to pay off their debts over a longer period.
- In some cases, a debt counsellor may be able to negotiate with creditors to lower interest rates or waive certain fees, which can help reduce the total amount of debt owed. Lower interest rates are not a guarantee when you enter debt review, as it ultimately depends on the negotiations with your creditors. However, debt review does often result in lower interest rates, as creditors are more willing to negotiate with a debt counsellor than with an individual debtor.
Creditor Responses
The creditors will then review the proposed repayment plan and provide feedback to the debt counsellor. They may accept the plan as proposed, suggest modifications, or reject it altogether. The debt counsellor will work with the creditors to address any concerns or objections they may have and negotiate on the individual’s behalf to try and reach an agreement that is acceptable to all parties.
If an agreement cannot be reached during the negotiation stage, the debt counsellor may refer the matter to a Magistrate’s Court for a ruling. The court will review the proposed repayment plan and make a decision on whether it is fair and reasonable based on the individual’s financial situation.
How do payments work when I’m under debt review?
You will make one affordable monthly payment to a Payment Distribution Agency (PDA), which will distribute the funds to your creditors according to the negotiated repayment plan.
The Advantage of a Professional Debt Counsellor
While it is possible to negotiate with your creditors yourself, it is usually better to have a debt counsellor negotiate on your behalf. They have the expertise, experience, and relationships with creditors to secure better repayment terms and reduce the emotional stress and anxiety that often comes with negotiating with creditors.
