Pioneer Debt Solutions in South Africa in 2023

by | Apr 22, 2022

Impaired Credit Consumers 18% of SA 1x1

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Debt Consolidation vs Debt Review

Pioneer Debt Solutions

There are several debt solutions available to consumers, and it is important that you understand the difference between these solutions before deciding on which path to take. Here are some of the commonly used debt solutions:

  • Debt Consolidation Solutions: This is where a loan pays off all or most of your credit providers in order to consolidate them into one single monthly payment. The advantage with this option is that you are only required to make one monthly payment and thus avoid multiple account hassles. The disadvantage however is that you would be starting off with a new loan which means more debt.
  • Debt Review: This process was put in place by the National Credit Act in order to protect consumers from over-indebtedness; simply put if you can no longer afford your repayments then you can apply for debt review. Because this process was put in place by government, there are strict guidelines on how much money can be paid towards monthly instalments; these guidelines ensure that people do not pay more than they can afford. Disadvantages include long waiting periods for an outcome and possibly having your name marked against your credit profile.
  • Debt Restructuring: This is when you write letters to all of the creditors asking them for an extension on their payment terms or reduced interest rate, etc.; once again this would require a lot of time and effort from yourself and might not yield any results at all since creditors have no obligation to provide such services.
  • Debt Counselling / Debt Management: These terms may sound like similar processes but they are actually quite different! Debt management involves negotiating with your creditors on better repayment terms without having do deal with legalities; however, should one creditor refuse then the process will fail completely and thus there is no guarantee that it will work out in your favour (this means more time spent writing letters, faxing documents back and forth, etc.). Debt counselling on the other hand guarantees success as this process falls under government regulations – but only if certain
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The Benefits of Debt Consolidation

Benefits of debt consolidation include:

  • Consolidating debt reduces your total monthly payment on your debt
  • If you have multiple debts, consolidating them into one loan is easier to keep track of and makes it more likely that you will make all your payments in time
  • Consolidating debt protects your credit score from the negative effects that can be caused by late or missed payments combining multiple debts into one loan may lower the amount you’re paying overall and can help improve your credit score over time.

This article will discuss these benefits in detail and then compare them with other options available for dealing with debt, such as Debt Review or Debt Counselling.

Pioneering Debt Solutions in South Africa

Direct consolidation loan

Consolidation loans are offered by banks and other lenders. They allow you to borrow enough money to pay off your existing debts, which are then paid off by the lender. You then make regular monthly repayments to the lender until the loan is repaid.

Consolidation loans only work if you can qualify for a bank loan or other form of credit. If your credit score is poor or very poor, it’s unlikely that you will be able to qualify for a debt consolidation loan because most lenders will be unwilling to approve your application. A low credit score also means that you may only qualify at higher interest rates than people with good credit scores, possibly making this option more expensive in the long run compared to leaving your existing debts as they are.

Therefore, if you have a low credit score and can’t qualify for an affordable debt consolidation loan from a bank or other financial institution such as a payday lender or online lending service, it may be better not to pursue this option at all

Mediated debt consolidation

  • Mediation is a structured, collaborative process that occurs through the assistance of a third party who acts as an unbiased mediator.
  • With the help of your mediator, you will be able to make an action plan with your creditors, agreeing on an amount that you can afford to pay them each month. Your creditors will accept these payments because they understand that they would otherwise receive nothing at all.
  • The role of the mediator is to ensure that both parties understand their rights and obligations during the debt negotiation process. They will assist you in negotiating a fair settlement amount with your lenders and making sure that this agreement meets all legal requirements.
  • One session can take anywhere from 1-2 hours depending on how many creditors need to be contacted. Once you’ve completed mediation there are no further sessions required unless outstanding debts need reviewing or changes made due to unforeseen circumstances (such as loss or changes in income).
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Negotiated debt consolidation

There are many options for you to choose from. The first is

Negotiated Debt Consolidation which involves negotiating with your creditors in order to reduce the amount of interest charged and the repayment period. It is recommended that you seek the services of a debt counsellor if you plan on using this option.

Real Estate Assist’s success lies in the fact that we assist our clients with a lasting debt solution without having to go through the debt review process.

Many people believe that debt review and debt consolidation are the same, but this is not true.

There are many benefits to debt consolidation such as:

  • You will have one monthly payment instead of different amounts to different creditors
  • You will pay less interest compared to paying each creditor separately
  • You will probably save money on your monthly installments
  • There is no need for extra credit checks and you do not need a good credit record for the loan, although it helps you get a better deal and lower interest rate from the bank.

There are different types of loans available for debt consolidation such as a personal loan, a home equity loan or a mortgage refinancing (loan against your house). All these options have their own pros and cons. Real Estate Assist has helped many homeowners experience freedom from debt and keep their homes through our services which include assisting them with a unique customized debt solution without having to go through the debt review process.

Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal or property advice. We do not take responsibility for any actions taken based on the information provided in this blog. It is always recommended to seek professional advice for your specific legal or property needs. Contact us (Real Estate Assist) if you seek such advice and we will appoint a professional from our team to be of assistance.

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Please Note: We are unable to provide assistance if you do not own a property. Real Estate Assist specializes in helping property owners who are experiencing challenges with their mortgage payments. If you own a property and require support with debt consolidation without going through the debt review process, our team is here to help you explore options to unlock the equity in your home for necessary family matters.

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