Debt counselling has come to the rescue of many over in debt customers in the last 12 months. In the current economic climate many people find that they are over in debt and unable to pay the normal monthly installments to creditors. Price inflation and loss of income has played a large role in the current financial crisis. The fact that real estate is not increasing in value, but falling in value, has played a even bigger role in the currect financial crisis.

If house prices don’t increase, people are not able to consolidate their debt or do mortgage refinance to release funds to cover living cost. Bank lending criteria is very high these days which reduces the opportunity for consolidation or take out cheaper loans.

One of the best options for over in debt customers in these trying times is to apply for debt counselling. It is interesting to see that not many people are aware that there is something like debt counselling to help their debt situation and get debt relief.

Debt counselling or debt review only came into effect in June 2007 with the National Credit Act. The National Credit Regulator or NCA makes sure that all credit providers act in accordance with the act; this includes reckless lending from greedy credit providers.

A person that is finding that they are not making ends meet at the end of each month can apply for debt counselling at a debt counsellor or debt consultant. The debt counsellor will determine if the customer is over in debt and cannot pay creditors their normal installments. The debt counsellor will contact all the customer’s creditors and negotiate new terms of payment that the customer can afford to pay each month. A debt counsellor will assess the customer’s budget by looking at the income minus essential expenses like food, transport, clothes, maintenance, electricity and water. The amount that is left after basic and essential expenses, like food, transport and clothes, is offered to the creditors as payment each month.

If the creditors don’t except this offer it can be enforced by the courts. If the court finds that your creditors lended you money recklessly without checking your financial situation, the court can order the creditors to write off the debt you owe them. The customer will be protected from repossession or any legal action from creditors.

The customer will remain in debt counselling until he has paid off all his debt to creditors or his situation changes for the better and he decides to go out of debt counselling for good.