Debt counselling, also known as debt review, is a service designed to help individuals manage and repay their debts in a structured and affordable manner. It is typically aimed at people who are over-indebted and struggling to meet their financial obligations. A debt counsellor works with the individual to negotiate with creditors and develop a repayment plan that is feasible based on the person’s financial situation.
Debt Relief: Debt counselling provides a structured plan to manage and reduce debt, helping you regain control of your finances.
Protection from Creditors: Once under debt review, creditors are prohibited from taking legal action against you, giving you breathing space to focus on repaying your debts.
Reduced Repayment Amounts: Debt counsellors negotiate with creditors to lower interest rates and extend repayment terms, making monthly payments more affordable.
Financial Guidance: Debt counselling includes financial advice and budgeting assistance, helping you develop better money management skills for the future.
Credit Impact: Entering debt counselling will be recorded on your credit report, which can limit your ability to access new credit until the debt review process is completed.
Extended Repayment Period: While monthly payments are reduced, the overall repayment period may be extended, meaning you could be in debt for a longer time.
Fees: Debt counselling services typically come with fees, which, although regulated, add to your overall debt repayment costs.
Limited Access to New Credit: While under debt review, you are restricted from taking on new credit, which could limit your financial flexibility during the process.
