How to decide on the best debt counsellor for you
Rising interest and inflation rates are forcing more people to find ways to manage debt and an increase in enquiries shows many are considering debt counselling, but there’s more to choosing the right debt counsellor than a Google search.
National Debt Counsellors’ Association chairperson, Benay Sager, says debt counselling is a process that typically lasts between three and five years. A good debt counsellor should not only help to restructure your debt but guide and support you through the entire journey.
“Deciding you need help to manage your debt is an important and potentially life-altering decision. After all, you’re putting your financial future in someone else’s hands. That’s why finding the best debt counsellor for you is critical.”
The National Debt Counsellors’ Association recommends consumers consider the following when they are trying to select a debt counsellor:
Are they registered with the National Credit Regulator?
All debt counsellors must be registered with the National Credit Regulator. You can verify a debt counsellor’s details on the National Credit Regulator website.
Do they belong to a professional association?
Check if the debt counsellor belongs to a professional body or association which ensures its members adhere to industry standards. Often the membership is displayed on the debt counsellor’s website.
“Industry associations such as the NDCA exist to improve the standards of service. It is critical that consumers check if the debt counsellor is part of an industry association – this provides an extra layer of protection for the consumer,” says Sager.
Do they use the Debt Counselling Rule Set (DCRS) when restructuring your debt?
The DCRS system is the industry gold standard and benefits consumers and creditors alike: it allows unsecured debt to be repaid as quickly as possible and allows creditors certainty about the timeline of the process. In some cases, interest rates can be reduced to 0% for unsecured credit such as credit card debt, personal loans and retail loans (depending on size of debt and ability to repay). Insisting on a debt counsellor who uses DCRS ensures that as a consumer you will repay your debt as quickly as possible and will also ensure acceptance of your restructured debt proposal by the creditors.
Are they able to explain the process and support you through it?
A good debt counsellor should be able to clearly explain the debt counselling process and answer any questions or concerns you may have. They must manage your expectations and those of the credit providers and inform you when they need your input.
They should also have sufficient resources to be able to provide advice and support throughout the process and even help you with budgeting after you’ve received your clearance certificate.
It’s important that a debt counsellor has the right support framework in place to help you through the process.
Have they thoroughly assessed your financial situation before suggesting a repayment plan?
Be wary of anyone who suggests an outcome or repayment plan to encourage you to sign up for debt counselling before they’ve done a full assessment. Even a basic assessment should include information such as your marital status, income, debt obligations and living expenses.
Good debt counsellors will do a thorough financial assessment, looking at all aspects of your finances and ability to repay back your debt. This is rare in the South African financial services industry.
Based on the assessment they can then recommend a repayment plan that is best suited for you.
“South Africa has an effective debt counselling system. Evidence of this is the increasing number of consumers who are completing the process. By following these few simple guidelines, consumers who need help with their debt can find a reliable and supportive partner who will go the distance with them.”
About the National Debt Counsellors’ Association
Established in 2017, the NDCA represents some of the largest and most experienced debt counsellors operating in South Africa, which are able to draw on local and international best practice.
Its aim is to uphold and maintain standards, improve and transform the sector through knowledge sharing and education, and inform the public about debt counselling.
Members include National Debt Advisors (NDA), National Debt Counsellors (NDC), DebtBusters, Debt Safe and Pioneer Debt Solutions, which collectively make up 40% of the sector in SA. For more information, the NDCA website is www.ndca.org.za