The Truth About Debt Counselling

The Truth About Debt Counselling

Truth vs myth

We thought it was time to share the ‘Truth About Debt Counselling” – At Debt Free with Armani we assist people every day who have excessive amounts of debt; we find that being in this situation causes people to make decisions that self-sabotage, cause more stress and in some cases even more debt.  We thought it might help you to know how others in the same situation as you think and act. Do any of these sound familiar?  We have included the truths and some advice that may help you.

THE MYTH: “I cannot consider Debt Counselling, I will end up with a terrible credit record.”

THE TRUTH: Your credit report will show that you have applied for debt review until a clearance certificate is issued.   When all your debts are paid, a clearance certificate is issued, and all history of Debt Counselling will be erased from your credit report.

THE MYTH: “If I start Debt Counselling I am stuck in it- what if my financial situation improves?”

THE TRUTH:

  • You can choose to voluntarily withdraw from the process at any time BUT once you have exited the process, your credit providers can immediately take legal action against you for the full outstanding amount owed to them.  Also, the Debt Counselor will remain the debt counsellor on record up until all debt is settled. Your debt review status can only be updated once the debt is settled.
  • If you receive an increase, bonus or any extra income you will be able to pay extra on your debt. 

THE MYTH: “I will have to sell my assets”

THE TRUTH:  This is unlikely. It might be wise to sell some assets that you do not need but this will be discussed with you and where needed you can consult with a financial advisor. Normally the debt review process helps consumers keep assets like their home and car. This is commonly called “good debt”.

THE MYTH: “If I enter debt counselling I will never get out of it”

THE TRUTH: Each consumers situation is different, but many consumers can finish repaying their debt within 60 months. In most cases, this means they have paid off all their smaller debts and only have a bond left. At this point, you make direct payment arrangments with the bank account and your debt counsellor issues your clearance certificate.

THE MYTH: “What will people think, I cannot tell anyone about my situation”

THE TRUTH: The only person that needs to know is your debt counsellor and they most certainly will not judge. We recommend interviewing debt counsellors, choose a debt counsellor that will make you feel comfortable. You want someone you know, who is trustworthy to lean on through the process.

HOW PEOPLE SELF-SABOTAGE

  1. Ignore the signs that they are headed for trouble – There are a few common signs that you are headed down the slippery slope of possibly becoming over-indebted. If you are ignoring the signs below it might be time to stop and take stock of your situation:
    1. You Use Credit Cards to Buy Everyday Items
    2. You Stop Taking Phone Calls as it Might be the Lenders
    3. You Borrow Money to Make Monthly Payments
    4. Your Work Performance Has Taken a Hit Due to Debt
    5. You Embrace Alcohol or Narcotics to Escape the Real World
    6. You Lie to Friends and Family About Your Spending Habits
    7. Your Savings is Nil
    8. You Pay Your Bills Late
  2. Delaying getting started – If you fall behind on your debt, additional interest and penalties get added to your debt. This means the longer you take to apply for debt counselling the more debt you might have which may result in a longer debt counselling period.
  3. Ignoring phone calls and demands from the people who you owe money to – Some people think that if they ignore the phone calls, texts and emails they will eventually go away.  They won’t stop!  They may take legal action and this will stay on your record.
  4. Try to take out more debt to cover existing debt – Don’t do it… You will eventually end up with more debt you are able to handle.
  5. Trying to hide the situation from a partner or spouse – Don’t put additional pressure on yourself by acting as if all is ok. Stop buying items that you cant afford to create on ”All – good” perception for your spouse. Be honest and find a solution together.

Being in debt is one of the most stressful situations anyone can face, but you do not need to take this journey on your own. If you don’t feel comfortable talking to friends and family, choose a debt counselling firm like Debt free with Armani, where building a solid relationship is very important to us, you will always have someone to contact for advice and support and more importantly, you won’t feel alone.

If you are thinking do I need debt counselling? Call us or email us now for free advice.  We can save you up to 60% on your debt repayments and give you the room you need to breathe and live again.

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