“We all strive for financial freedom. The only way to obtain financial freedom is to do financial planning,” says Adri Kleinhans of TC Debt Counsellors.
The “debt stress” consumers experience as a result of the increasing cost of living, the number of dependents and the slow growth in the economy make planning difficult.
For most consumers, debt is a necessary evil, especially to obtain the means to purchase a home and car.
According to Kleinhans, the age group with the largest amount of debt in South Africa is between 31 and 55, who collectively owe 53% of all outstanding debt.
The beauty of the debt counselling process, according to Kleinhans, is the monthly debt instalments reduced to one affordable instalment without the consumer losing their assets, such as their houses or cars.
Once a person is under debt review, banks and cash loans cannot sue the consumers or garnish their salaries.
TC Debt Counsellors have also successfully applied to have debt written off if it is found that the bank or cash loans recklessly provided credit.
Credit providers are obliged to follow the National Credit Act (NCA) when granting loans.
Kleinhans says that banks and cash loans far too easily extend loans without doing proper affordability assessments.
This amounts to reckless credit, which can be written off by a court.
Affordability assessments are to ensure that consumers have sufficient funds for living expenses and to determine what they can afford towards debt payments.
Debt counselling, unlike administration orders, make reduction of interest rates possible and this also helps towards reducing the monthly instalments.
Debt counselling also helps to prevent blacklisting for any specific debt that is under debt review.
However, it is essential to note that one has to apply for debt review as soon as you fall in arrears to avoid summonses and blacklisting.