Busting the 7 Biggest Myths About Debt Counselling

Debt counselling (or debt review) is a valuable tool for over-indebted individuals in South Africa, yet it is often surrounded by misconceptions. These debt counselling myths can prevent people who desperately need help from seeking it. At CDS Consulting SA, we believe in providing accurate information to help you make informed decisions about your financial future. Let's debunk seven of the biggest myths about debt counselling:

Myth 1: "Debt review will ruin my credit record forever."

• Fact: While a note indicating you are under debt review will be placed on your credit record, this is a temporary status. Once you successfully complete the process and receive a clearance certificate, the flag is removed. While your access to new credit might be limited during debt review, it's often a necessary step to avoid more severe negative consequences like judgments and defaults that can have a longer-lasting impact.

Myth 2: "I will lose my house or car if I go under debt review."

• Fact: Debt review primarily focuses on unsecured debts like credit cards, personal loans, and store accounts. As long as you continue to meet the agreed-upon repayments on your secured assets like your home and car (which are typically excluded from the restructured plan), you will not automatically lose them due to debt review. Your debt counsellor will work to ensure your essential assets are protected while addressing your unsecured debt.

Myth 3: "Debt counselling is only for people with very large amounts of debt."

• Fact: There is no minimum debt amount required to apply for debt review. If you are genuinely over-indebted and struggling to meet your monthly debt obligations, regardless of the total amount, debt counselling can provide a solution.

Myth 4: "Debt counselling is a quick fix."

• Fact: Debt review is a structured process that requires commitment and discipline. It is not a quick fix, but rather a journey towards becoming debt-free. The duration of the process depends on the amount of debt and the affordability of the restructured repayment plan. However, it provides a sustainable path to long-term financial recovery.

Myth 5: "All debt counsellors are the same."

• Fact: The quality and experience of debt counsellors can vary. It's crucial to choose a registered and reputable debt counsellor who is transparent, communicative, and acts in your best interests. Look for a company like CDS Consulting SA with a proven track record and positive client testimonials.

Myth 6: "My creditors will never agree to a reduced repayment plan."

• Fact: Registered debt counsellors have a legal framework within the National Credit Act to negotiate with creditors. While creditors are not always thrilled about reduced payments, they generally prefer a structured repayment plan through debt review over the possibility of you defaulting completely. The court ultimately approves the restructured plan, making it legally binding.

Myth 7: "Debt counselling is too expensive."

• Fact: While there are fees associated with debt counselling, these fees are regulated by the National Credit Regulator (NCR) and are typically incorporated into your restructured repayment plan. The long-term benefits of reduced monthly payments and becoming debt-free often outweigh the costs.

Don't let these debt counselling myths prevent you from seeking the financial help you need. Contact CDS Consulting SA today for a clear and honest assessment of your situation and learn how debt review can help you take back control of your finances.