What is Debt Counseling?
Article by Francisco M Lakay
Debt Counseling is the service offered by a debt counselor to consumers who are over-indebted due to financial mismanagement, untimely retrenchments, or any other reason. It helps you to get out of the debt trap, thereby taking control of your personal finances again. A debt counselor or advisor is a person or company registered with the National Credit Regulator (NCR in South Africa), who assists people with debt-related problems, providing them with budgeting advice and act as mediator with the credit providers to whom the outstanding debt is owed. Over-indebtedness is defined as the predicament where your expenses and debt exceed your income each month; i.e. you earn less than you can pay, thereby spiraling into greater debt without even acquiring any new debt.
Lifestyle debt, which has taken on massive proportions over the last eight years, has been the one major reason for over-indebtedness. People would tend to buy lifestyle products, such as the latest technological gadgets, rather than to invest for the future. Now in the midst of a recession consumers struggle to meet their monthly expenses, due to a higher cost of living.
Debt Counseling is not a way to escape your repayment responsibilities, as some consumers mistakenly stop making payments to their credit providers after applying for the debt review process. Once you applied for debt counseling, the debt counselor notifies all the credit providers and the credit bureau within 5 days. You also will not have access to any more credit until all your debt has been paid in full. At this point in time the debt counselor would issue you a clearance certificate stating that your debt has been paid in full. You would now be able to start applying for credit again, bearing in mind your previous encounter with over-indebtedness.
Are you unable to keep up with your debt? Is your credit providers hassling you? Afraid you might lose everything? Get help from a debt counsellor to consolidate all your outstanding debt. Visit Debt Counseling today for more info.
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Francisco M. Lakay is the author of the site Debt Counseling that gives you insight into understanding your position as an over-indebted consumer.
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