The Challenge of Helping Your Clients Miss Payments
How Helping Your Clients Pay Less Hurts Debt Counsellors
At present, Debt Counsellors across the country are trying to assist their clients to reduce their debt review payment or even to skip a payment (or 3). Due to the Pandemic and lockdown consumers are naturally having a tough time and will not be able to make their regular payments. It is basically impossible and if credit providers think the can then they are deluding themselves.
Helping Every Client
This means that every Debt Counsellor is busy asking all their clients for supporting documents and going through all their clients’ finances to see (1) if they can pay something or (2) if they should propose no payment for a few months to credit providers. This is a LOT of work. It is basically trying to redo all the work they did over many years in a few days. This is a crushing workload.
Helping Clients Not Paid Their Debt Counsellor Either
Each month, on average, Debt Counsellors receive around R125 from each client. This small monthly amount (called after care) helps them cover costs associated with each client’s matter and can help add up over time for an annual review of the client’s situation (such as is needed right now). This payment is paid to the Debt Counsellor via the consumer’s PDA who process their monthly debt repayment.
By working so hard to help consumers avoid making payments or pay a reduced payment this also means that the Debt Counsellor is doing more work than ever to help reduce their own income to almost nothing in the weeks ahead.
Less Income For Debt Counsellors
At present, due to a lot of uncertainty consumers are hesitant to sign up for debt review. Since 50% of all fees ever paid for an entire debt review* are paid in the very first month, this means that Debt Counsellors are not earning these monthly cash boosts from new clients to help run their business and pay their support staff.
‘At present, due to a lot of uncertainty consumers are hesitant to sign up for debt review’
This means that Debt Counsellors are earning less from new clients and will now be cutting off their aftercare fees from existing clients. They are slowly ensuring they get little or no income by working harder than normal and most from home or remotely.
Debt Counsellors too are having to review how they operate and will operate in the weeks ahead. They are not only having to encourage clients to claim from UIF, insurance, TERS etc to try to manage their finances they are also themselves having to look at all these options for their own business and staff.
* for the majority of those who enter debt review and stay for 36 months or so