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While the NCR’s provision for debt counseling has seen many an over-indebted individual out of the debt trap, it does come at a price, and not just the price of the debt counselor. Before applying for debt counseling you might want to weight its pros and cons.

Pros
Debt counseling is one of the easier ways to get out of the debt trap because the counselor acts on your behalf when dealing with creditors to rearrange your premiums and interest. Your repayments are organised so that you are able to pay off your debt.

The debt review process prevents your creditors from entering into litigation to claim their money back from you, so you are legally protected. The review process, however, shows your creditors that you are serious about repaying your debt.

Debt counseling has one up on filing for bankruptcy in that you are more likely able to apply for credit again in the future once your debt is paid off.

Cons
The repayments, while reduced, will mean rearranging your living expenses. To make your repayments will require you to lower your living expenses, such as transport and food costs.

You cannot apply for debt while under review. While this may seem obvious, it also means you cannot extend your credit either. Such actions will cancel the debt review process, for which you are still financially liable (i.e. you will still pay the debt counselor fees).

There are debt counseling fees involved, as per the NCR regulations. While these fees are limited, they are still fees that need to be paid over and above your debt repayments. Often these fees are worked out as a percentage of the repayments they have restructured for you, which means the more debt you have, the higher the fees will be.

As a result of the risks involved in counseling, there are criteria that must be met for applying for debt counseling. If you do not meet these criteria, consider yourself fortunate, as you have been deemed capable of paying your debt without the charges of a counselor.