The South African Banking Risk Information Centre (SABRIC) has warned consumers to be careful of false promises from Debt Counsellors who may be abusing their profession and the debt review process. Luke Hirst, MD of Debt experts DebtBusters, says ‘Yes, I agree that some debt counsellors are not offering clients the full information upfront and […]
26 January 2015
Ian Wason, Chief Executive of Debtbusters says credit providers are beginning to invest in debt counselling systems to improve their debt counselling processes. “This is testament to the fact that they are beginning to see the benefits of debt counselling, not only as a viable way to get money back from defaulting customers, but also as a strategy for retaining customers in the long-run,” says Wason.
IDM group, which includes DebtBusters and Consumer Debt Help, performed very strongly on all fronts in 2014. “Our clients’ distribution to credit providers through the Payment Distribution Agent has grown from R77m in 2011 to an estimated ~R550m in 2014 with ~90% p.a. growth. Debt counselling is proving to be a viable and sustainable strategy for credit provider collections,” says Wason.
DebtBusters attributes part of its success to it being one of the few debt counsellors in the industry using The Debt Counsellors Rule Set (DCRS) effectively. Now recognised and embraced by Credit Providers, DCRS is responsible for improving operational processes for the debt counsellor and credit provider and obtains the best results for clients.
“It’s a win-win for all parties,” says Benay Sager, chief of operations for the IDM Group. “Once someone enters into the debt counselling process, they immediately begin to make progress on paying off their debts. DCRS makes debt more affordable for clients to pay back. Through the process of reducing interest rates and extending repayment terms, an individual’s debt repayments can be reduced by up to a 3rd of what they were originally required to pay before going under debt counselling.”
The latest IDM Group Debtometer report confirms this. “In Q3 of 2014, DebtBusters successfully negotiated for clients to pay on average 37% of their net income towards debt counselling, down from 108% before entering into the process,” says Sager. Although debt counselling extends debt repayment terms to 60 months, Sager says that higher income earning clients without a house or car, get debt free within 2-3 years.
Wason believes that debt counselling rehabilitates individuals by teaching them how to work with their money and gives them the confidence they need to handle their own personal financial affairs. He believes that as a debt counsellor he has an obligation and responsibility to teach individuals how to work with their money.
This philosophy has driven Wason to revolutionise the industry and shift the focus of the IDM Group to financial rehabilitation. “We have developed and launched and online Portal Smartcents (www.smartcents.co.za), which helps DebtBusters clients to track their debt counselling process, and access financial health tutorials and financial planning products. Education and rehabilitation is a vital key to assuring our cash strapped clients take the right steps to a brighter financial future. We educate our clients that taking out ‘bad’ debt or using debt as a band aid to remedy their debt problem in the short term is not sustainable in the long term,” says Wason.