What is debt counselling?

The sections of the National Credit Act No. 34 of 2005 relevant to over-indebtedness and restructuring of debt came into effect on 1 June 2007.  The Act makes provision for the training and registration of Debt Counsellors to assist over-indebted consumers, who are unable to honour their credit agreements in a timely manner.

Debt Counselling makes provision to assist over-indebted consumers by restructuring their debts so that they can afford to meet their monthly living expenses.  

Creditors are likely to take legal action when debtor’s accounts are in arrears, which can increase the financial burden by adding collection costs and penalty interest to any arrear amounts. Debt Counsellors protect the debtor from legal action by arranging a more affordable and acceptable repayment with each of the debtor’s creditors.

A consumer may approach a Debt Counsellor to carry out a confidential financial review of their financial affairs and officially determine whether or not they are over-indebted. This is known as a DEBT REVIEW.  

If it is found that the consumer is indeed over-indebted, the Debt Counsellor will proceed with DEBT RESTRUCTURING by negotiating better repayments, interest rates and terms with the credit providers. Once consent is reached, the consumer is presented with one affordable monthly payment which is distributed to the creditors via an authorized Payment Distribution Agency (PDA).

Debt Counselling provides consumers with the peace of mind knowing that their financial affairs are now handled by an NCR-Qualified Professional. They can rest assured that their Debt Counsellor will deal with their creditors on their behalf, and that they are protected from legal action and possible repossession of assets.