Debt Counselling

December
5

Marrying into debt: What does it mean for you?

Everyone would love to start their marriage on a clean slate. But we all have burdens from our past, and sometimes these burdens are financial. So what does it mean for your future if your new spouse is overindebted?

Will you be liable for their debt?

Depending on the type of marriage contract you and your spouse signed, you may be responsible for the debt. If the marriage is in community of property (COP), everything that is accumulated within the marriage – including debt – is considered jointly owned. However, if you enter into a marriage with the accrual system, you will not be liable for the debt that was incurred before the marriage.

Will it affect your credit rating?

It’s not uncommon for a married couple to purchase assets together, especially things such as a house. When you jointly apply for mortgage, your creditors will perform a risk assessment on both of you.

The creditor will check your credit reports, and if they see that your partner has a bad credit history, your combined credit score will drop. This increases the chances of your application being rejected. If approved, the costs of repayment could even be higher because of the risk you pose to the creditors.

Will you have to adjust your spending plan?

When your partner is over-indebted, it is likely to put strain on your household income. This means you and your partner may have to limit your spending to only the essentials. That dream honeymoon might have to take a backseat because you still need to help your partner get out of debt. You might even have to postpone starting a family because your joint income may not be enough to support new mouths to feed.

Will your ability to take out credit be impacted?

If your partner decides to file for bankruptcy later in the marriage, it will be impossible for you to get credit until your spouse is rehabilitated. When you are married in community of property, your assets and liabilities become one estate. So when one party is declares insolvency, the other becomes insolvent too.

How can you help your partner get out of debt?

  • Your partner needs all the support you can provide. Help them pay the debt if you can.
  • Help your partner cut down on spending. Encourage them to stick to necessities, such as food and rent.
  • Encourage your partner to earn an extra income if possible.
  • Refer your partner to a reliable debt counsellor for debt restructuring.

DebtBusters can give you and your partner a fresh start. We can consolidate the debt and have the repayments reduced. Dial 086 999 0606 or email to info@debtbusters.co.za to speak to one of our consultants.

November
21

How does life look after debt counselling?

So, you’ve reached the end of the debt counselling journey – a fantastic achievement. Like many who have been part of the programme, you are probably wondering what’s next and how your life is going to change after the programme.

Here is what you should expect:

Once all the necessary paid up letters from your respective credit providers have been received, your debt counsellor will issue you with a clearance certificate which is also known as a Form 19. This certificate confirms that you have settled all your accounts listed under the debt counselling agreement and that all of your accounts are paid up – this excludes your home loan, which just needs to be up to date with payment.

Once all the paid up letters have been obtained, the clearance certificate must be issued within seven days of finishing the programme. The debt counsellor will ensure that the credit bureaus receive the certificate so that you are no longer flagged under debt counselling.

Can you apply for credit?

Since you have been rehabilitated, you can apply for credit as soon as the debt counsellor hands you your clearance certificate. Your status as someone who was under debt counselling will not have a negative impact on how the creditors perceive you. If anything, they will perceive you as a responsible consumer who realised that they were overindebted and acted accordingly.

It is highly advisable that you set up a realistic budget and draw up a financial plan before you attempt to take out any new credit. Your debt counsellor and/or a financial advisor will be happy to assist you with this budget as well as a sustainable financial plan for the future.

How will your credit score be affected?

Naturally, your credit score will be low after debt counselling. But you can rebuild it by ensuring that you pay your accounts on time. Creditors always look at your payment history when they are risk profiling you for credit. Make sure that service agreements such as DStv, Telkom accounts, and phone contracts are up to date.

After you have completed the debt counselling programme, pull up your credit report to see if it is updated. If not, immediately inform the bureau, so that they can correct any mistakes. Those mistakes could cost you your credit score.

Can you apply for debt counselling for a second time?

You can apply for debt counselling any time you feel over-indebted. However, the debt counsellor must also do an assessment to determine if you are indeed over-indebted.

DebtBusters has a trained team of consultants who will help you negotiate debt settlement discounts with your creditors. If you are struggling to pay your monthly instalments, do not hesitate to call us on 086 999 0606.

November
8

How long does the debt counselling process take?

You may be familiar with the term “debt counselling”, but perhaps you have questions around the process and specifically how long it takes to complete.

While the general time frame is 60 months or between 3 to 5 years, it is dependent on how much debt you have and how much you can afford to repay per month. This is because each case is assessed individually and based on what you can afford.

The debt counsellor will then negotiate with your credit providers to lengthen the repayment timeframe, and to lower the interest rates and fees on your debt. Lengthening the payment terms will allow you a longer time in which to pay off your debt. This will result in lower monthly instalments. The lowering of interest rates and fees on your debt will also save you a considerable amount of money in the long run.

The main goal of debt counselling is to lessen your monthly debt instalments, making it more affordable for you to pay it every month while still allowing you to afford your living expenses.

Once you are under debt counselling, you will make one combined reduced monthly payment as opposed to paying each credit provider individually. Your debt counsellor will then get a court order or a consent order on your behalf, which will provide you with legal protection from your credit providers. This means they will no longer be authorised to call and harass you about any outstanding debt.

Another factor in the process is your commitment. What this means is that if you are not committed and diligent about making your debt repayments, you will fall further behind and essentially take far longer to reach your financial goals. Undergoing debt counselling requires you to be disciplined and cooperative in ensuring a smooth process.

But it is a small price to pay in exchange for protection from losing your assets, as well as the clearance certificate you will receive at the end of the process to certify your debt freedom.

In addition, should your financial position change while under debt counselling and you are able to pay larger amounts or a lump-sum amount, it can be arranged that you conclude the process even sooner.

Chances are you didn’t land yourself in hot water with your finances overnight, so it’s only fair that you allow the rehabilitation process to also run its course.

November
8

Debt counselling versus debt consolidation – let’s explain

If you’re struggling with managing your debt, you may be considering debt counselling or a debt consolidation loan as possible solutions to ease the financial strain. It is important to understand the difference between these two debt solutions, as although both are aimed at making managing your debt easier, they are two differently designed processes.

The five need-to-know differences are:

  1. The process:

Debt counselling allows you to consolidate your debt without having to take out an additional loan. The debt counsellor will negotiate lower interest rates and fees with credit providers on your behalf, and arrange a restructured, combined monthly repayment amount.

Debt consolidation requires you to combine all your debts by taking out a bigger loan to cover your smaller loans. The idea is to make it easier for you to manage your debt by making one repayment towards the consolidation loan each month, rather than worrying about paying various credit providers each month.

  1. Taking out credit:

Debt counselling prevents you from taking out any further credit while you are under the debt counselling process. This is for the consumers own good as the debt counsellor will restructure your repayment plan so that you have enough money to afford your living expenses each month, and taking out more credit will only hinder your financial situation further.

Debt consolidation allows you to apply for further credit. While this may seem ideal, many people are not disciplined enough to steer clear of wracking up more debt and managing it properly. This could result in a consumer becoming over indebted and needing to go under debt counselling.

  1. Protection from creditors:

Debt counselling gives you full legal protection from creditors, as outlined in section 86 of the National Credit Act. This means that all communication will go through your designated debt counsellor.

A debt consolidation loan on the other hand means that creditors are still free to contact you.

  1. Your assets:

The debt counselling process is designed to protect you from the repossession of your assets.

A debt consolidation loan will not protect your assets from repossession as part of the agreement.

  1. Qualifying criteria:

The debt counselling solution is designed for those who are gravely in arrears with their debt repayments and struggling to manage it.

For debt consolidation, the minimum criteria is a clear credit record and no existing arrears on debt repayments. Further, for debt consolidation to work, consumers must be sure that they are able to afford the monthly instalment every month, which is typically not possible for debt counselling candidates.

If you’re in over your head when it comes to managing your debt, you may need to consider contacting a trusted debt management company. At Debtbusters we will find the best debt solution for you and walk you through the process – one step at a time.

August
30

Three Common Myths about Debt Counselling – Busted!

To many South Africans the term “debt counselling” is seen as some sort of financial curse word. That if spoken, it swallows any hope you have of a healthy credit record. (Which is a complete myth!)

But how did one of the best debt solutions inherit this stigma?  And what are the other common myths that may be keeping you from becoming debt-free?

Myth 1:  Debt counselling is the last resort and is exclusive to those with really bad debt

Fact: Debt counselling is a positive rehabilitation process and is focused on taking the strain off you. Tens of thousands of people engage with DebtBusters monthly, so you are not alone!

Also, debt counselling is not reserved for the “worst-cases” – simply being over-indebted or needing help to manage your credit rating better is enough reason to seek help and assistance.

If you’ve ever had a creditor threaten legal action against you for failing to meet your repayments you could be a candidate too.

What many people fail to understand is that debt counselling is there to protect you and assist you to ultimately become debt free.

The last resort is actually sequestration and is relevant when you cannot afford debt counselling and will end up costing you far more in the long run.

Myth 2: You must pay a fee upfront

Fact: If this is the case, run!

According to the National Credit Regulator (NCR) debt counselling fees are typically the same for all debt counselling companies and there are no upfront fees.

Although some fees are collected in the first few months of the debt counselling process, they will all be included in your monthly, affordable payment.

All fees included in your repayment plan is what you agree to before the process officially starts. It’s also regulated by law and your debt counselling process is only solidified after a court order has been granted by a Magistrate.

It is important to note that your fees are dependent on the debt owed.

Myth 3: Being under debt counselling means you are ‘black listed’

Fact: When you are under debt counselling you are temporarily prevented from applying for any credit as your profile is flagged at the credit bureau. It is a way to assist consumers to take a breather and focus on getting financial freedom.

Once the process has taken its course you receive an “all clear certificate” which instructs all credit bureaus to update your profile. Once this is done your profile will no longer reflect that you were ever under debt counselling and you will be able to access credit again.

Debt counselling can be daunting because it’s never easy to admit that you need help, especially when it comes to money, but you’d be surprised how more and more people are recognising that is the responsible and wisest step.

August
14

Withdrawing from Debt Counselling

Prior to 2015, if a consumer wanted to exit the debt counselling process , they would have to contact the respective Debt Counsellor and request cancellation, in which case a Form 17.4 (voluntary withdrawal from debt counselling ) would be issued to all parties involved and the consumer would be able to successfully withdraw from the debt counselling process.

However, in 2015 a revised set of guidelines were issued detailing new instructions on how consumers under debt counselling could exit the process, and subsequently remove the debt counselling flag from their credit profile.

It is important to note that a Debt Counsellor may no longer terminate or withdraw a client from the debt counselling process.

 This means that a Debt Counsellor can no longer issue a Form 17.4, but they are allowed to suspend their service if they feel that the client is not co-operating (e.g. non-payment, no relevant proof, etc.).

As per the revised guidelines, a client can only exit the process once all obligations stated in the debt counselling agreement have been satisfied (excluding a home loan, which must just be paid up to date and not be in arrears).

In addition to this, if a court order which protects the re-arranged credit agreements has already been obtained, then the client may approach the court to get the court order rescinded or apply for a new order to declare they are no longer over-indebted.

That is the only way they would be able to exit the process and liaise directly with creditors from there onwards. Upon receipt of the order, the Debt Counsellor will notify credit providers of the withdrawal by issuing a form 17.W (c – for rescission, d – for no longer over-indebted) and update the NCR system. Once updated, a consumer’s status will reflect on the Credit Bureau’s side, who will update the consumer’s credit status.

If however, the court order has not yet been issued and the 17.2 form (a document stating you are over-indebted and the Debt Counsellor has accepted your request to go under debt counselling) has not yet been sent to the credit providers, a client may still request termination of the process. If the 17.2 form has already been sent, the client must then approach a magistrate/high court or get assistance from an attorney to obtain a 17.W (d) for exiting the process.

 

June
3

Why going on a credit diet could be the best thing for you

When consumers ask for our help, there seems to be one particular element in the process which make them hesitant to sign up for the debt counselling process: Not being able to get more credit during that time…

The thousands of client who have successfully completed the process will however all agree – they would not have been able to take back financial control otherwise.

Part of DebtBusters’ main priority is to create a platform where the consumer’s financial situation and their relationship with debt is discussed and a solution is offered.

While many embrace the opportunity to start a process where they can take back financial control, we also know there are still over 10 million over-indebted people in South Africa which need help.

These are all people who like the benefits that debt counselling offers them in the form of lowered monthly instalments, reduced interest rates and legal protection from creditors. They just struggle a bit to get past the idea of not being able to take out any further credit during the course of the debt counselling process.

We would like to ease the minds of consumers with these concerns by highlighting why going on a so called credit diet may be the best thing for you in the long run.

The long and the short of it

As the old adage goes “too much of anything is a bad thing”, and we understand how some types of credit can work for you. There is nothing wrong with wanting a home loan to purchase property as an investment and applying for vehicle finance so that you have means to get to work and back, take the kids to school, etc.

The problem arises when a consumer has taken out credit to the point that they cannot afford the monthly repayments and this results in an unstable financial situation.

Balance is key, and by cutting out credit for a set duration of time you will be able to focus on paying off your existing debt and achieving a healthy financial balance in your life.

This can be a great learning curve and will give you time to plan wise financial decision making for the future.

If you are already over indebted, taking out further credit can only make the situation worse and will make the debt hole deeper.

Going on a credit diet will allow you to focus on your current debt obligations and you will complete the process faster this way. Any additional or lump sum of money that you come into during the process can be put towards settling your debt and this will accelerate the process even more.

Remember with a lowered monthly debt instalment and reduced interest rates you will be able to live comfortably without the need to take out any further credit. A credit diet is not a life sentence, it is a temporary restriction to help you regain financial health and achieve financial stability so that you can move forward with your financial journey to grow and build wealth.

Take the first step to a financial healthier you today! Click here for a free, no-obligation consultation with one of our Debt Specialists.

June
1

The Clearance Certificate: The ultimate goal in your Debt Counselling journey

Debt counselling is a journey which requires dedication and commitment for up to five years of your life, so we know receiving a clearance certificate at the end of the journey is a momentous occasion for both our clients and our staff who walk side by side them during this time.

DebtBusters has already issued close to one thousand clearance certificates in the first quarter of this year!

We feel great pride towards our clients for sticking to the debt counselling path and completing the process because we know the sacrifice and dedication involved. Receiving your clearance certificate not only marks the official end of your debt counselling journey, it is also a new financial start for you and your family!

What to expect:
Your clearance certificate is a letter that will be issued by DebtBusters, stating that you have settled all of your debt as per your debt restructure plan. The National Credit Act states that you are eligible to receive your clearance certificate when all of your unsecured debt is paid up, your bond/mortgage or long-term agreement payments are up to date and all of your debt counselling fees are paid up.

DebtBusters will also issue the clearance certificate to all of your credit providers and the credit bureaus. Once the credit bureaus have received your clearance certificate, they will be able to remove the debt counselling flag off your profile. They will also remove your default listings and judgements. Only your payment history will remain.

Tracking your journey
We know that our clients wait in anticipation for the day they receive their clearance certificate, so we have made it easy to track this process through our client portal Smartcents. By logging on to Smartcents, you track your individual debt counselling progress and can see how close you are to receiving your clearance certificate. You can also use this portal to log a query, view your payments and account balances.

And after?
DebtBusters is here to support you through and beyond your journey to debt freedom. We know that starting the post debt counselling chapter can be daunting, and that is why we are here to assist you beyond your debt counselling journey. We offer further financial advice and guidance to find the best financial products which will ensure you are in the best position to flourish financially.

April
25

Start your journey to financial freedom…today!

Celebrating our country’s 24th year of democracy is one thing, but if you are caught in a web of debt as an individual, that freedom does not mean much….

Take that first step to really experience financial liberation and let us assist you with the debt counselling process.

Debt counselling is a closely regulated solution for those who are struggling to keep up with their monthly debt obligations. The National Credit Act introduced this process in 2007 with the aim of helping struggling consumers in a constructive and cost-effective way.

Debt counselling (or also known to some as debt review) provides consumers with a number of benefits, but most importantly it ensures them peace of mind knowing that they now have full control over their financial situation and are on the path towards financial freedom. This unlocks many opportunities to build a brighter financial future.

Through DebtBusters, a qualified debt counsellor will formally review your finances, and develop a suitable monthly budget for you. DebtBusters will also negotiate with creditors on your behalf to reduce interest rates and fees on your debts, as well as extending payment terms so that your debt repayment plan can be restructured into an affordable and money-saving plan. The process of debt counselling will also provide you with legal protection from creditors so that you can sleep peacefully at night knowing your assets are safe and that you can stop expecting those scary calls from creditors.

You will not be able to take out credit while you are under the debt counselling process, and some people view this as a disadvantage, but the reality is those who are already heavily over-indebted should not be thinking about taking out any further credit. They should rather focus on paying off the existing debt – which the process of debt counselling allows one to do.

Debt counselling is a means of giving consumers a fresh start. Without the worries of your debt on your mind, you are free to focus on your future goals and plans.

January
24

Don’t stick your head in the sand: the consequences of ignoring debt

Debt can very easily spiral out of control; it’s easy to take out, but can be significantly harder to pay off. When the debt hits the fan, many people tend to stick their heads in the sand by ignoring it. Feeling overwhelmed by debt can be scary, but you will not do yourself any favours by ignoring it. The problem will not go away, it will only get worse unless you take steps towards taking control of your debt such as seeking professional help from a debt counsellor.

What exactly will happen if you ignore letters, emails and phone calls from your creditors? Firstly, it is very important not to avoid or ignore letters or emails from your creditors, as if you let them mount up, it will become increasingly difficult to go through them. Furthermore, you could miss important notices such as your creditor telling you that they’ve passed your debt to a debt collection agency, default notices, or judgments.

You will have a strict deadline to reply to some of these communications and the last thing you want is for legal action to be taken against you, especially if you have assets to lose such as your house or car. You should ensure that all of your creditors have your correct address and that you notify them if you ever move house and change address.

You should also avoid ignoring phone calls from your creditors. It may seem like a stressful and inconvenient task to deal with your creditors over the phone, but your creditors should always speak to you politely and truthfully over the phone. You may feel relieved after speaking to a creditor over the phone if you explain to them that you can’t afford to pay what they want and arrange to pay what you can afford.

It is important to note that you do not have to speak to a creditor if you don’t want to. Anything important your creditors have to tell you will always come in writing, so you can request they email you instead.

If you feel like there is no way out of your debt troubles, it is important to seek professional help rather than ignoring the situation. A debt counselling company such as DebtBusters can assist you with free,  no obligation advice going forward. DebtBusters can also offer you a host of highly effective debt solutions to help lighten the burden and guide you to debt freedom. These solutions involve negotiating lower interest rates with credit providers and providing you with legal protection.

Ignoring your debt will only make your situation harder in the long run. Rather seek professional help and advice to guide you out of your debt troubles and on the path towards debt-freedom.