Hidden benefits of debt counselling in 2019
Struggling with debts? It could be time for debt counselling if you have been trying to get control of your debts yourself but failed. Debt counselling has many advantages and benefits but we will discuss all the hidden benefits no one is talking about. Some people in need of help switch off completely when they hear the words Debt Counselling, but it is a programme that might be the answer to help with overdue debt. Debt counselling furthermore, has a very bad reputation in the market place due to inexperienced debt counsellors and in effected debt counselling educational programmes. Some consumers even get scared of Debt review as they feel humiliated to ask for help.
One of the main reasons consumer use debt counselling to address their debt situation is to stop the legal action, repossessions and to get out of debt. Although this is the main advantages, debt counselling also provides other hidden financial and psychological advantages.
According to TransUnion, there are currently 7 million credit card accounts open. The credit card balance is sitting at R216 billion indicating that demand for credit remains high. The household debts increase in a two-parent house with debt obligations that multiply making it difficult to track.
With so many account payments due, it is easy to miss one payment now and again, even if you had the best intentions. Missing a single payment by a few days will result in credit score penalties and late payment fees
It gets even more complicated if the household income is not enough to cover all the debts. It becomes very hard to decide which creditor is going to get paid and to keep a history of this becomes difficult. A debt counsellor will simplify this process and will ensure that all the different debts get paid. With Debt counselling you will only have one payment to make, eliminating the need to pay several credit providers.
More of your money goes towards the capital and not on interest
Debt Review reduces the interest rates and interest saving is one of the main advantages of debt review. With the same monthly payment, paying your debt at a lower interest rate ensures that the principal debt gets allocated more money. The balance decreases far quicker as opposed to making a payment arrangement without the help of a debt counsellor. The total interest paid on a reduced interest rate account over the lifetime of the debt can be lower.
Hidden debt counselling psychological advantages
In most instances, consumers with debt problems will experience overwhelming psychological problems. For these, over-indebted consumers the income generated each month is not enough to service their debt. This can affect their emotional well-being. The hidden benefits of debt review will relieve this stress immediately and will have a beneficial impact on mental health.
The debt review program will ensure there is enough money each month to pay for living expenses. This program ensures there is enough money to cover all debt obligations in one reduced instalment. Covering living expenses and debt will assist in easing unnecessary stress. Having a plan and a goal in motion will ensure that there is regular progress on reducing debt. This will be an important motivator to take further beneficial steps to reduce debt.
The physiological advantages can be positive if stress from having bad debt gets reduced. Stress was associated with deteriorating health circumstances, including obesity, cardiopathy, Alzheimer's, diabetes, anxiety and asthma. Stress reduction can make you feel better.
Debt Counselling as an alternative to sequestration and administration
One of the most beneficial hidden benefits of debt counselling is it is a healthy alternative to sequestration and administration. Sequestration and administration are expensive and takes 10 years to get rehabilitated. The National Credit implemented debt counselling as an alternative to sequestration and administration. We will discuss sequestration and administration in a different blog article. This new law enabled over-indebted consumers to catch up on overdue debts and still manage to cater for living expenses cost-effectively. Most over-indebted South Africans can reap all the advantages of debt counselling without even understanding it. The debt review is simple, easy, legal, and successful.
Your debt counsellor will negotiate with your creditors on your behalf and will avoid the following to happen:
- Vehicle repossessions
- And/or garnish orders attached to your salary each month.
Your debt counsellor will analyse your finances and check where you are having debt issues. After analysing your finances the debt counsellor will know how to generate disposable income to pay off debts.
The goal of debt counselling is to restructure your budget to pay debts while still having enough money each month to cover fundamental living costs such as food, electricity, transport costs, school fees and Water.
Easier negotiations with credit providers
If you have too many accounts to pay all at once debt counselling will make the process of negotiation very easy. Your debt counsellor main negotiating aim is to decrease the minimum amount due to credit providers by expanding the repayment period. As the term increases and for the debt to solve in a certain period, credit providers will be open to reducing interest rates. These reduced interest rates will enable our customers to pay off their debt with a decreased and inexpensive installment.
The process of debt counselling is guaranteed
There is a guarantee that you will cost-effectively settle your debt and it will not make your current financial situation worse. This guarantee is if you stick to the restructured amount by making sure payment gets paid each month without skipping. If you decided to skip month Credit providers will terminate the debt counselling process.
Credit providers are obligated to take part in the debt counselling process ensuring that your debt counsellor can restructure your debt.
These are the main hidden benefits of debt counselling. Other hidden benefits are
- Creditor providers will stop with harassment tactics
- Instils Confidence
- Gives you Peace of Mind that your debt is being paid
- Help You Live Comfortably with all living expenses covered
- Help You Reach Your Goal of settling the debt
- There is no history that you have been under debt review after you have repaid your debt
- Helps you Change your financial spending behaviour