Have you recently been declared debt-ridden by the NCA (National Credit Act)? Do not be confused and worried. A large number of debt management companies are there in South Africa that can rescue you from this perilous situation. So, once you have chosen a debt management company, you will be able to pay off the loans with either of the debt management plans.

Firstly, let’s take a look at the two of the most popular debt management plans offered by most of the South African debt management companies.

  • Debt Counselling

This legal procedure involves forming a new strategy which will cover all the loans you have taken previously. This way you will be able to manage your expenses and gradually pay off the debts on a monthly basis. The rate of interest is also significantly lower than the actual interest rate.

  • Debt Consolidation

The process of debt consolidation requires all the debts to be consolidated under one loan. You will be required to take a new loan through which the previous debts will be paid off. In this case also the debt manager will negotiate the interest rate with your creditors. It is a monthly pay off scheme.

Debt that can be cleared by a debt management plan:

  • Credit cards
  • Personal loans
  • Auto repossession
  • Educational loans
  • Medicinal loans
  • Gas cards
  • Phone bills
  • Electricity bills

Eligibility Criteria

To be a part of the debt management plan, you need to be acknowledged first by the NCA as a person under debt. You should also have a steady source of income.

The Procedure

  • At first you will have to fill up an application. It generally asks you to state your name, address and contact information.
  • You will have to provide your income and expenditure details.
  • Statements of all the loans you have taken and copies of your pay slip will have to be shared with the debt manager. All of these loans will be calculated together.
  • After the debt manager has gone through all the details, s/he will devise a plan under the debt counselling or debt consolidation process.
  • The debt manager will contact your creditors and decide upon a rate of interest that will not put a strain on your resources.
  • The debt manager will also inform the credit bureau that you are under the debt counselling or debt consolidation process.

Advantages of a debt management plan

  • You do not have to worry about different pay off times. It is once a month payment scheme.
  • The interest rates are usually lower and late fees and over-limit fees are also generally waived off.
  • You will be able to pay off the loans faster as the interest rate is diminished.
  • Once the credit bureau has been notified, you will not be hounded by your creditors.

Your credit score will actually improve once you have enrolled in the programme. This is the most effective way of becoming debt free.

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