What is Debt Counselling / Debt Review?

Debt Counselling is a debt relief measure available in South Africa provided for in terms of Section 86 of the National Credit Act 34 of 2005 as amended (the NCA). This process is intended to assist over-indebted consumers who are struggling with debts, by offering:

* Budget advice

* Negotiations with credit providers for reduced payments

* Restructuring of their debt

* Assessment of income and expenses

Who provides debt counselling?

A Debt Counsellor who is registered with the National Credit Regulator (NCR). To confirm if a Debt Counsellor is registered with the NCR, please call 011 554 2700.

Will a consumer be negatively listed (“blacklisted”) for being under debt counselling?

No.

A consumer who is under debt counselling will have a debt counselling indicator/flag placed on his/her credit bureaux profile. This is not negative, but an indication that the consumer has been declared over-indebted and placed under debt counselling.

Will the interest on the consumer’s account stop when he/she is placed under debt counselling?

No.

Interest does not stop. But the debt counsellor may negotiate lower interest rates with your credit providers.

How long does a consumer have to be under debt counselling?

A consumer will be under debt counselling until a clearance certificate is issued by the debt counsellor only when:

* All short-term debts (e.g. personal loans, retail accounts, credit cards, etc.) are paid in full; and if

* Consumer has a bond – bond payments must be up to date.

Is Debt counselling the same as Debt Administration or Debt Consolidation?

No

Debt Consolidation: When you have different debts/loans, you can apply for a single new loan which will combine all the amounts into one single amount. This new loan will pay off your other debts and you will then only be responsible to pay one monthly instalment for the new loan instead of many different instalments.

Debt Administration: Is a legal debt relief measure, which aims to assist a consumer to pay off his/her debts. If your total debt is less than R50 000, you can apply for debt administration, as this will help you pay off your debts in reduced monthly instalments. The process is governed by Section 74 of the Magistrate’s Court Act and not by the NCA.