Find the right debt management company

Debt management companies have a bad reputation. And rightly so in many cases. Hello Peter is full of complaints from consumers about many these companies.

Recently, the National Credit Regulator (NCR) conducted raids on 11 debt counsellor firms in the Western Cape, who operate call centres.  It has come to the NCR’s attention that certain debt counsellors may be misrepresenting the nature and purpose of debt counselling to consumers, marketing it as a payment holiday or simply a means to reduce monthly debt repayments.

Many debt management companies disguise themselves as good guys wanting to help those in trouble, but are actually bad companies charge hefty fees to help consumer pay off their debts.

If you don't know who to turn to when you're in the red, you could fall victim to one of these debt predators. However, there are reliable and reputable debt management companies that will most likely provide you with the best options for getting out of debt and back on track financially.

First let's understand what we are dealing with here.
We have three common types: debt consolidation companies, debt management companies, and debt settlement companies.

Many companies offer different types of services to assist consumers in managing their debts. It is important for you to know your rights before agreeing to work with a company claiming it can help with any debt management issues.

There are several factors to consider when choosing a debt management company including:

See if they’re registered
Check to see if any company you’re interested in is registered with National Credit Regulator. The NCR is also tasked with registering debt counsellors. By being authorised in this way, the company has to meet minimum standards.

Check the counselors
What are the qualifications of your counselors? Are they accredited or certified by an outside organization? If so, by whom? If not, how are they trained? Try to use an organisation whose counselors are trained by well known companies.

What services do they offer? 
Look for a company that offers a range of services, including budget counseling, and savings and debt management classes. Avoid organizations that push a debt management plan as your only option before they spend a significant amount of time analysing your financial situation.

Don't do business with them if they claim it will be a quick fix. 
Getting out of debt is never a quick fix. Any company that tells you it will be quick and painless process is flat out lying to you. It can be done but it will take time and diligence on your part.

How will this work?
Find out exactly what you are getting for the fee – will the company administer payments for you? Will you have a dedicated account manager who is on hand if you have any queries? Can you refer any issues with your creditors to this account manager? Will you be assisted throughout the term of your plan?

Help you solve your problem
Before you submit to this process, you want to be very clear about what you are trying to achieve and what metrics will be used to determine success. You don’t want to sign an agreement that delivers below your expectations. Make sure your needs will be addressed accordingly.

For more, visit the National Credit Regulator. Remember before you commit to anything, you must do your homework thoroughly. These programmes are a lifesaver for some, but for others they can do more damage than they do good.