The debt management process is a lengthy one; however the initial phases are quick, easy and provide the consumers peace of mind like no other.
The first step in the process that a debt management agency follows is to meet with the consumers. In order to speed things up, it is best that the consumer has all the relevant documentation on hand. Therefore when setting up the meeting, it is essential that the consumer confirm exactly what the debt management agency will need.
Before meeting with the debt management agency, always ensure that they are registered with the NCR and have the accreditation provided by them.
Upon analysis of the consumer’s finances, the debt management agency will determine if the consumer is in need of debt management or not. If the answer is yes – the debt management agency will begin the debt counselling process. This entails filing the necessary paperwork, restructuring the budget of the consumer, and informing the consumer’s creditors of the fact that the consumer is undergoing debt management. Along with this they will also negotiate new payment terms with the creditors – these terms will include reduced interest rates and smaller payments.
Once all the paperwork has been settled, the debt management agency will allocate a payment distribution agency to manage these payments on behalf of the consumers. This means that the consumer does not receive their income, but the PDA does, and they will allocate the funds in terms of the budget drawn up by the debt management agency.
Once all of this has been set in place, all the consumer needs to do is sit back and watch their debts reduce one payment at a time. When the last debt has been paid, the debt management agency will give the consumer a debt clearance certificate – thus certifying that they are now debt free.
Article written by: Andrea van Tonder 07-2013