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The Truth About Debt Counselling

Learn to manage your debt.

Eamonn Ryan



Financial management speedometer

Thanks to the recent economic upheaval, people are more familiar with debt than they would like to be. Unfortunately, they are also applying for debt counselling for all the wrong reasons – thinking they can avoid their debts when they really need to confront them with lifestyle changes.

Debt counselling is not a ‘hiding place’

The debt counselling system is becoming bogged down by the weight of a huge number of applications, currently more than 7 000 a month, many of which are from people who should not be applying for debt counselling in the first place. According to Stats SA, the number of people who applied for debt counselling rocketed from 36 246 in November 2008 to 132 291 by November 2009.

Who should use debt counselling?

Of the flood of applications, a percentage is from people desperate for ways to escape repaying their debts and therefore opting to hide behind debt counselling. According to Stats SA, applicants are typically people who on average earn about R10 000 a month, have ten different credit accounts across various credit providers and are being threatened with imminent legal action.

That applies to a lot of us in the current economic climate, but sensible people do not seek debt counselling – it has unpleasant consequences, especially for the businessman and entrepreneur. Everything that can be done through debt counselling (except the temporary protection from creditors) can also be achieved in direct negotiation with those creditors.

This may involve repaying debts over a longer period of time, or such similar solutions aimed at stretching your cash flow, but typically means implementing the lifestyle changes necessary to achieve solvency. Gabriel Davel, CEO of the National Credit Regulator, says that this deluge of unnecessary claims is creating a bottleneck in the system and inhibiting the timeous debt counselling of genuine applicants.

“Debt counselling is meant to assist over-indebted consumers who can no longer afford to pay their monthly financial commitments, not for consumers who choose not to repay their debts.

“When certain applicants fail to fulfill their agreements with credit providers, it bogs down the system but more importantly may result in those consumers losing their assets through repossession.”

Righting the misconceptions about debt counselling

Where the misunderstanding has arisen is the protection applicants enjoy from creditors once they apply for debt counselling. Many consumers mistakenly believe this protection is permanent. Davel points out that it is only for 60 days – time for applicants to renegotiate all their credit facilities – after which the applicant is again exposed to the possibility of legal action and repossession. “When under debt counselling, you are required to pay the monthly installments agreed with your debt counselor. If you fail to make these payments, you forfeit the protection afforded you by the National Credit Act, and the credit provider has the right to take legal action against you, even when under debt counselling,” says Davel.

“It must be made very clear to consumers: even if people apply for debt counselling, they still have to repay their debts or they will certainly lose their cars or even their houses, depending entirely on their debt repayment record.”

When should you consider debt counselling?

Davel explains that debt counselling should be the very last resort for consumers as it comes with some medium-term drawbacks, such as being credit blacklisted for five years, thereby damaging one’s ability to apply for further credit or even to apply for certain jobs.

He advises consumers: “Start by letting your creditors know you are experiencing difficulty. You may be able to achieve the same results without debt counselling and its negative implications.”

Furthermore, Davel outlines what you need to know about debt counselling:

  • If you are married in community of property, your spouse will also come under review
  • Your name will be flagged at the credit bureau so you cannot incur additional debt
  • There are significant costs, both of an upfront and regular monthly nature, made to the debt counsellor
  • Once the agreement is in place you have to meticulously stick to the terms of repayment or the credit provider has the right to terminate the agreement and proceed to legal action to repossess assets.

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.


Personal Finance

10 Tips To Become A Millionaire This Year

Becoming a millionaire requires changing your mindset and implementing some changes.

Murray Newlands



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Becoming a millionaire may seem out of your reach, but it’s possible with the right attitude and guidance. The fact of the matter is your income can only grow as quickly as you do, so you need to change your mindset to achieve your goal of becoming a millionaire.

Once you have a millionaire mind, you can’t lose it, no matter what financial or business mistakes you make along the way. To get yourself there, you’re going to need some structure. To help you, I’ve outlined the top ten tips you should follow to become a millionaire this year.

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Personal Finance

If You Think These 5 Things, You’ll Never Get Rich By The Time You’re 30

Five common mistakes entrepreneurs make when starting a business and how to correct them.



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Last week, I had lunch with a millennial who wanted some advice about a business he’s starting. After the usual small talk, we got down to discussing his business plan. Within a short time, it was clear that his business idea was great, his plan for executing was fairly solid and he had gathered together a strong team to help him make it happen.

So far, so good. But, to be frank, this guy has no chance of being successful with his current mentality. What it takes to be rich (or successful in any measure) has a lot more to do with your mindset than your ideas and plans.

From the time we started in business at the ripe ages of six and seven, our Grandpa Joe taught my brother Matthew and me many lessons about the details of running a profitable business. Over the years, we learned about how to create a business plan; how to market our products and services; and how to take care of customers, vendors and employees. All this knowledge has been invaluable to us in creating and running successful businesses. But, what our grandfather taught us about attitude and mindset trumps all other lessons.

Without calling out the specific individual I spoke with recently, below are five “hypothetical” attitudes that will get you nowhere in your journey to success – and the attitudes that should replace them.

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Personal Finance

5 Habits That Lead To Millionaire Business Success

You need the right habits if you’re going to succeed.

Timothy Sykes




What do all millionaire businesspeople have in common? Well, a lot of things.

I found from a recent study that 80 percent of all millionaires still go to work every single day. They’re working people just like me. But, they have to keep themselves in work or it all grinds to a halt. So what are the habits you need to make your business a success?

1. Patience

Nothing is ever going to come easy. You can look at the likes of Steve Jobs and Bill Gates, as well as the other usual suspects, to realize that success didn’t come with their first venture. Many of them failed time and time again. It took patience for them to become successful.

I read an article recently about 36-year-old teacher Andrew Hallam who became a self-made millionaire on a teaching salary. But, in his spare time he invested smart and lived frugally.

It proves you don’t have to inherit lots of money or become an instant success to make a millionaire business.

Related: 4 Ways To Become A Millionaire Even When You Start With Little

2. Dedication

You have to be dedicated to your craft if you’re going to become successful. Going back to Bill Gates again, he started his business in the back of his garage. Now that’s dedication.

It’s what I tell all my students. If they’re not dedicated to this, then they should leave. You need to be able to push through the barren periods if you’re going to reach the oasis of success.

3. Ambition and big dreams

Have you ever heard the quote, “Shoot for the moon. Even if you miss you’ll land among the stars”?

I take that to heart because even if you aim to become a billionaire and miss you still might be a millionaire many times over. Take the Wright Brothers as an example. Not content with creating a successful glider in 1902 they went on to create the world’s first airplane in 1903, making four brief flights in Kitty Hawk. It demonstrates the importance of dreaming big because you never know what you might achieve.

Related: 12 Millionaire Habits To Start Making Serious Money Soon And Build Wealth In A Hurry

4. Learn from mistakes

Every good businessperson will mess something up. It’s inevitable. What’s important is how you learn from your mistakes over time. Do you adapt after making your mistakes?

Millionaire businesspeople always set some time aside to reflect. Then they create a plan of action for ensuring that it doesn’t happen again. Most failed businesspeople put it down to “bad luck.”

5. Focus on niches

This important! Try to take over a whole industry at once and you’ll inevitably get swallowed up by the competition. Start small and control your own niche before moving into another niche. When you master your small area, you can push on and expand.

Related: 21 Choices Millionaires Make That You Aren’t Making But Should Be

You’ll be amazed at how much easier it is to expand after you master your own niche/audience first.

Do you have what it takes? That’s the question I always ask novice businesspeople. You need a plan and you need the right habits if you’re going to succeed.

This article was originally posted here on

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