15 Apr DIY Debt Management vs. Professional Debt Management Program

Posted at 12:23h in Latest News by

Professional debt management can be a lifesaver when you have too much or bad debt. Having a professional with expertise that’s got your back can save you from unnecessary worry, anxiety, and needless legal action and fees that could cause many sleepless nights. Our professional debt management program of choice (though we may be slightly biased) is debt review.

Debt review is a legal process wherein a debt counsellor negotiates for lower repayments, cut interest rates, postponed repayment dates, and extended repayment periods on your behalf. Moreover, once under debt review you may not be subject to ensuing legal action from defaulting (unless present before your debt review application) as mandated by the National Credit Act (NCA).

We prefer it to other professional debt management programs because:

  • Debt mediation is costly and has no legal framework (and so no legal protection).
  • Sequestration seizes your assets and lasts on your credit record for up to 10 years.
  • Administration orders are only applicable to debts of R50,000 or less. They also lack flexibility.
  • Judgments are difficult to rescind and have no legal limit to how long they can last for.

In contrast, debt review has a legal limit to the fees debt counsellor may charge and has case law that dictates how long debtors usually undergo the process.

What if you want to manage your own debt? This post discusses the drawbacks of DIY debt management methods like consolidation loans, the snowballs and avalanche methods, and negotiating with creditors yourself in comparison with the best professional debt management program: debt review.

Consolidation Loans

Consolidation loans are personal loans you take out to pay off all your debt at once. The only problem? Interest rates depend on your credit history. If you’ve defaulted or missed payment, you’ll likely be perceived as high risk and charged higher interest and fees, possibly making you accrue even more debt.

Debt review also consolidates all your debt. You’ll make one monthly payment to a PDA (payment distribution agency), which will distribute payments to your creditors on time and fairly on your behalf.

The Snowball and Avalanche Methods

First popularised by financier and entrepreneur Dave Ramsey, the snowball and avalanche methods involve paying off your debts from smallest to biggest and paying off your debts sorted by those with the highest to lowest interest rate, respectively.

Using these methods, your interest rates and repayments will not be reduced or negotiated. In the end, you’ll still accrue more debt than you would have from interest rates – snowball or avalanche method – than you would under debt review. This proves that debt review is a more sustainable choice in the long term.

Negotiating with Creditors Yourself

While negotiating with creditors yourself and requesting lowered interest rates and repayments may seem like a viable option, you’re likely to face an enormous hurdle: creditors are not obligated to say yes to your negotiation efforts, nor are they usually sympathetic to problems in your personal life.

They may suggest undergoing debt review or taking out a consolidation loan to resolve your debt management problems, leaving you back at square one.

Discover the drawbacks of do-it-yourself debt management vs. professional debt management services (such as debt review) with True North Debt

Need a Professional Debt Management Program?

True North Debt’s debt counsellors and debt review experts can help you reduce your interest rates, lower your repayments, lengthen your repayment periods, and postpone repayment periods, leaving you with more room in your budget for what’s important. Additionally, no creditor or debt collector will be allowed to harass you – or even contact you – as stipulated in the National Credit Act.

Choose the debt experts on your side. Choose True North Debt. Contact us today.