Increasing economic pressures have resulted in many consumers finding themselves struggling to manage their own personal finances. Even those who have carefully planned for an acceptable level of debt which they believe they can tolerate have found these levels becoming increasingly unmanageable, particularly if personal circumstances change, suddenly, such as loss of a job.
In recognising the growing number of individuals who are struggling with their debt, the South African government has worked towards creating a fair and appropriate framework to balance the needs and requirements of all parties, within the debt arena.
Blaming the Banks
Arguably, one of the primary reasons why debt counselling is becoming so important is the fact that individual consumers simply do not understand the arrangements which they have with the - very astute - commercial banks. In this respect, many banks have been criticised for encouraging individuals to hold too much debt. Indeed, one of the primary focuses of debt review and debt counselling is to unravel the often deliberately complicated loan structures, which individuals find themselves falling foul of, in order to achieve debt relief.
National Credit Act
One of the most influential moves, in terms of debt counselling and helping consumers deal with debt, has been the enactment of the National Credit Act which came into force, in June 2007. This Act has the specific role of assisting individuals in dealing with their debt and the ability to apply for debt counselling is something that was established, as part of this innovative new legislative procedure.
Debt Solutions & Benefits
By applying for debt counselling through the official channels, consumers can find themselves having support against aggressive creditors. This may be particularly useful, if consumers are being threatened with legal action, without having the opportunity to put forward a more manageable debt recovery plan. In essence, this debt counselling process can level the playing field for consumers who feel bullied by the large organisations to which they owe money.
Debt Counselling Process & Debt Solutions
In reality, the process of debt counselling can benefit all parties, as it can act as a mediatory style approach that may allow the two parties to come together, to make a long-term plan that assists in reducing the debts owed, in the most efficient way.
Obtaining Debt Counselling
Although it is widely recognised that the debt counselling procedures that have been put in place by the government are beneficial, obtaining these counselling services is not always an easy process.
Essentially, debt counselling is available to anyone with an income, whether this income derives from employment or from self-employed work. The income of the individual must be sufficient that they can meet their monthly bills (outside of the debts), as this then gives the debt counselling process a chance to work with the individual to create a plan that is realistic and sustainable.
Although the process is efficient, it does not happen overnight and the debt counselling application itself can take up to 60 working days.
Regardless of the positions in which consumers find themselves, the key to dealing with debt is to take action. Opting to obtain debt counselling is one of the most structured and safest ways of obtaining debt relief. But first, a debt review is imperative, in order to tackle the problem which will simply not go away, unless it is dealt with - promptly.