A debt credit service is credit that is provided to pay off debts and close accounts. The remaining credit is then paid off by the consumer in one easy monthly instalment. This relieves the stress of remembering all the various monthly bills that need to paid, as well as reducing the monthly amount spent on debt.
Debt counsellors agree that applying for debt credit is a fair start to chipping away at an overwhelming amount of debt, however in some cases it may too late to apply for another line of credit. Consumers may have to apply for debt counselling instead, and pay off their creditors through an arrangement set up by the debt counsellor.
There are various forms of debt credit available to consumers ranging from unsecured loans, to micro loans, to secured loans. Before applying for credit, a consumer must weigh up their options carefully and determine if they qualify for debt credit. An applicant will normally be rejected if they already have a poor credit rating due to lapsed payments and defaults, as these are clear indicators that debt counselling is required.
In South Africa, banks are willing to extend home loans or provide small personal loans to pay off creditors. There is also a number of independent lenders who will assist the consumer with the provision of debt credit. As a consumer it is important to read the fine print and determine the final amount being paid, as well as any possible changes in interest rates or hidden fees.
Debt can be relieved if it is tackled smartly and in time with a proper plan. A debt counsellor can advise the right way to manage debts, and it may not always be debt review.
Article written by: Andrea van Tonder 02-2013