Both debt counselling and debt consolidation are financial strategies to help relieve debt repayment stress, but they are not the same. Debt consolidation reduces the number of creditors by merging all the debt into a single loan. This does allow a single monthly payment to be introduced but unless the interest rate can be reduced and the period of the loan lengthened there is little other benefit. Also there is always the temptation for the client to go and start borrowing and spending again as this is not controlled and this just results in an even worse debt exposure situation developing.
Debt counselling does not replace or reduce the existing debt with a new loan, but is a programme that allows a consumer to continue to maintain themselves and their families via an agreed living expenses budget, while still repaying all their debt at a level that they can afford. The client also has the full protection of the law provided via the National Credit Act and the oversight of the Counsellor. The Debt Counsellor is not only able to reduce the monthly debt repayments by up to 60% but also has the ability to reduce the debt interest rates significantly in negotiation with the creditors.
When clients decide to approach Administrators for assistance the Courts are approached for an Order to allow the administrator to take over the financial life of the client. It has been our experience that once under administration the client seems locked in to the administrator who may or may not be paying the creditors. It appears that few statements as to what the status of the matter is are issued regularly and which creditors are being paid what amount, when and what the balances are. We have come across cases where the clients have been under administration for many years and have never received any communication as to the status and balances of the debt.
It is recommended that clients take advice before going into administration.
Should any client be unhappy with their administrator Killaghy Debt Counsellors would be happy to investigate and arrange for the termination of the Administration Order.
* The client has the right to have the debt review structure and pros and cons fully explained to them. This will include that once the contract between the client and the Counsellor has been signed that the debt review remains in place until the debt covered by the review has been fully repaid, Nil paid letters are received from all the creditors and the Clearance Certificate issued by the debt counsellor to all creditors and the Bureaus.
* Should the Counsellor not implement the debt review as per the National Credit Act the client may reclaim all fees paid to the Counsellor.
* Should a client not be happy with the performance of a counsellor they may opt to transfer the debt review to another counsellor subject to all agreed fees having been paid to the first counsellor.
* The client must all times provide the Counsellor with all relevant information requested.
* The client should at all times carry out the legal instructions requested by the counsellor.
* The client must pay all fees due as agreed.
* The client may not terminate the debt review.
Address: 4 Ash Road Bryanston
Killaghy Business Solutions are Registered Debt Counsellors
Debt counselling and debt reviews Johannesburg
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The first step to get started is to complete our application form. Download the form below, complete it and mail it back to us.