Is there a way to settle outstanding debt without going under debt counselling?

A South African consumer struggling with debt approached DebtBusters, to see if there is another way to settle outstanding debt, without going under debt counselling?

I have approximately R300 000 worth of debt, which comprises personal loans and credit card accounts, which I would like to settle.

However, is there a way to settle my debt by consolidating it all into one loan, without having to enter into the debt counselling process?

I know debt counselling is a great debt solution, however I would like to go another route before. 

DebtBusters advises the following:

Fortunately, there are two different options you can try to settle your debt before joining the debt counselling process. However, the only way that this would be possible, would be through a pre-existing bond or bettering your financial situation.

  • If your financial situation changes for the better, allowing you to settle part of your debt, Capitec Bank would be able to consolidate a debt for up to R230 000. This would be payable over a maximum debt repayment term of 72 months. However, interest rates on debt consolidation loans are generally higher than other loans, which can mean that it will take longer for you to settle your debts. Debt consolidation differs from debt counselling, as the interest rates on your accounts will be reduced to a much lower amount.
  • If you have a home loan and there is a possibility of there being equity in the property, you can potentially extend your bond and use the equity in order to pay off your existing unsecured debt. In order for this to happen it is required that you have a clean credit record and that your repayments are up to date.

However, if you do not qualify for either of the two above options, as the interest rates on the consolidation loan may be too high or if there is no equity in your property in order to pay off your unsecured debt, the best alternative is debt counselling.

Debt counselling is a structured debt management solution, enforced by the national credit act in 2007. The process is implemented in order to extend the debt repayment terms and reduce current interest rates, by negotiating with credit providers.

Although debt counselling differs from debt consolidation and releasing equity from your homeloan, it is an effective process that will assist you with eradicating your debt and will give you a second chance to build a brighter future!