When Making Minimum Payments Becomes Unmanageable

If you’ve become overindebted and cannot afford to pay back what you owe, services like debt consolidation and debt counselling can help you reduce your debt burden and lower the amount owed each month.

Because certain stigmas are attached to these services, they might sound like drastic steps to take, but they can save you from facing even worse consequences, such as sequestration.

Let’s take a look at your options:

Debt Counselling

Debt counselling is a process whereby you meet with a debt counsellor who will assess your debt situation and help you figure out a way to settle everything. 

The process is designed to help you regain control over your finances without resorting to legal action. 

The debt counsellor will review your financial situation and help you figure out a repayment plan that suits your unique situation. If you follow the professional guidance and support offered to you, there is a good chance that you will be able to overcome your debt problem.

In many cases, debt counsellors can help you negotiate reduced interest rates and extended payment terms with creditors. However, this is not always guaranteed.

Debt Review

Debt review is a more formal legal process, sometimes known as debt restructuring. It’s aim is to help over-indebted individuals find a way to financial freedom while still honouring their commitments to creditors. 

When you’re placed under debt review, the debt counsellor formally negotiates with creditors to find ways to restructure your debt into more affordable repayment plans so that you can pay what you owe in a manner that suits your means. 

New payment plans are legally binding and are generally consolidated into a single monthly payment distributed to creditors.

Debt review legally protects you against creditor harassment and further legal action while reducing your debt burden and preventing asset repossession.

Debt Consolidation

Debt consolidation is a useful tool when you’re faced with numerous debts you’re struggling to pay off. 

How it works: we consolidate all your debt repayments into one affordable debt repayment

Have you heard of consolidation loans? A consolidation loan pools all your debt into one new loan at a higher interest rate. Normally, if you are overindebted you might not qualify for a consolidation loan, this is why we recommend you to rather consider debt counselling. 

If you’re not able to meet your debt obligations, contact Zero Debt for all questions related to our debt consolidation, debt counselling, and debt review services. 

FAQs

1. What should I do if I can’t manage my minimum debt payments?
If you are unable to manage your minimum debt payments, services like debt counselling, debt review, and debt consolidation can help you reduce your financial burden by creating manageable repayment plans or consolidating your debts into one payment.

2. What is debt counselling, and how does it help?
Debt counselling is a process where a debt counsellor assesses your financial situation and helps you create a repayment plan suited to your needs. This service can help you regain control of your finances by negotiating lower interest rates and extended payment terms with creditors.

3. How does debt review work?
Debt review is a formal legal process where a debt counsellor negotiates with your creditors to restructure your debt into affordable repayment plans. This protects you from legal action, prevents asset repossession, and consolidates payments into a single monthly amount.

4. Can debt consolidation reduce my debt repayments?
Yes, debt consolidation combines multiple debt repayments into one affordable monthly repayment. It simplifies debt management and can make your financial obligations more manageable.

5. Is a consolidation loan the same as debt consolidation?
No, a consolidation loan pools all your debt into a new loan, often with higher interest rates. If you are overindebted, you may not qualify for a consolidation loan, which is why debt counselling is often a better option.

6. Can debt review protect me from legal action by creditors?
Yes, when you are under debt review, you are legally protected from creditor harassment and further legal action, ensuring your assets are safeguarded.

7. What are the benefits of debt counselling over sequestration?
Debt counselling avoids the severe consequences of sequestration by helping you manage your debt without legal proceedings. It keeps you in control of your financial future while protecting your credit profile.

8. How do I know which debt solution is right for me?
The right debt solution depends on your financial situation. A debt counsellor can assess your debts and recommend whether debt counselling, debt review, or debt consolidation is the best option for you.