Consumer spending is the backbone of the economy, but too much of anything causes trouble – specifically when someone discovers he/she has over-financed the fun. Or maybe a person was in excellent shape until a major illness, unemployment, or accident curtailed his/her earning ability.
Consumers flooded with red ink would be happy to know about options that can get their ship upright or, in other words, control their monetary obligations. Debt management plans and debt counseling ensure stable and smooth futures. To know about each, please go through the given discussion.
What is Debt Counseling?
Debt counseling involves training by a professional who offers insights to get the debt-plagued people back on track.
The providers of the best debt counseling services in South Africa said their foremost goal is to analyse the financial situation. Is the person in serious trouble? Or does he/she just needs to get organised?
The analysis paves the way for a meeting that details one’s household finances, data about what they owe, other expenses, potential balloon payments, assets, income – practically everything that can impact their financial health.
One needs to describe their goals. Do they wish to get debt-free within a particular period? Or do they have extra plans – saving for a property, for kids’ college, for a trip abroad, for retirement, etc.?
The counselor takes all this into account before formulating the plan of action. The solutions generally range from making and sticking to a budget to proposing bankruptcy.
A non-profit debt counseling session does not cost money, so a person has nothing to lose by contacting a professional.
What is Debt Management?
A debt management plan or DMP is one of the solutions suggested by a debt counselor. Rather than tackling the varied recommendations on their own, people decide to surrender the entire caboodle to a debt management team.
DMP has impressed larger segments of the population because one can qualify without a loan and a good credit score. It also does not compel the consumers to negotiate complex terms with their creditors.
DMP is pretty straightforward and downright invincible. After a person has enrolled, the agency will contact the credit card companies to develop a reasonable payment plan with low interest rates. The person has to pay a single monthly sum which is less than the total minimum payments he/she was paying until then. The creditors are only satisfied with a solid repayment strategy.
The objective of a debt management plan is to repay the creditors in full within 3 to 5 years. The people will surely come out debt-free by complying with the plan, flaunting a credit score that would cause envy among peers.
Conclusion
The experts providing the best debt counseling services in South Africa said debt counseling is a reasonable way to decrease consumer debt. A resourceful, disciplined, and proactive individual can adhere to the counselor’s plan and improve their financial wellness.
On the contrary, debt management is perfect for individuals who cannot keep pace with the changing interest rates, multiple payment dates, risk of late fees, and the urge to spend money limitlessly.
No matter which course one opts for, he/she must always start the journey by getting in touch with a non-profit organisation.
