A debt counsellor helps over-indebted consumers to become debt-free using a regulated debt counselling process. A good debt counsellor must be registered and accredited by the National Credit Regulator.
Debt counselling is a process whereby a debt counsellor offers to negotiate with creditors on behalf of an indebted consumer. This may result in a reduction of the installments and the period of each credit agreement being extended.
The debt counsellor may also appeal to the creditors to lower the interest rate(s) on the credit agreements to allow easy payoff of all the credit.
For an over-indebted individual, declaring bankruptcy is a good decision for initiating the debt relief process. This requires advice from a reputable debt counsellor. However, there are many debt counselling programs or plans offered by different counsellors.
Therefore, choosing the right debt counsellor may be confusing. When choosing the right debt counsellor, you should consider the following factors:
Cost of counselling
First, you should not pay any fee for referral to a trustee or a debt counsellor since most of the credit counselling agencies and trustees offer free initial consultations.
Ensure that you understand the services provided by the counsellor and the cost of each service. When declaring bankruptcy and filing a case with a trustee, you should not make any payment until your proceeding(s) has been filed with the authority.
In case you are seeking for a debt management plan, ask your counsellor if there is any need to set aside an amount for negotiating a debt settlement with the creditors.
A debt counsellor, whether credit counsellor or trustee, should be paid if they are able to provide good services.
Accreditation
Your debt counsellor must be accredited professionally. If you choose to consult a credit counsellor, make sure the credit counsellor and the credit-counselling agency are accredited. A trustee in bankruptcy is one of the best debt consultants.
Licensed by the federal government, most trustees are authorized to offer good advices concerning debt relief choices. These include consumer bankruptcy and proposals. They must ensure that both the creditors and debtors’ rights are treated with high level of respect.
Reputation of the debt counsellor
A reputable debt counsellor will present all the choices before making any decision. Most credit counselling agencies and trustees offer a free consultation during the first visit.
This should not entice you to make a quick decision. Take some time to examine the reputation of your potential debt counsellor. Ask for all information about debt counselling from friends, relatives or even workmates.
Education and training
The best debt counsellor should have the necessary training and experience to advise you on how to handle your bankruptcy case.
The trustees are the most educated and highly trained debt consultants. Most of them hold a university degree and an accounting designation.
In addition, all of them must pass a rigorous law and bankruptcy course before acquiring a trustee license. All trustees must follow a strict code of ethics, which guides them to offer you all the debt relief choices.
Note: Based on the National Credit Act, a debt counsellor may not work for a debt collection agency, credit bureau or credit provider.
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