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We’ve taken the guesswork out of Debt Counselling. From important facts to the ins and outs of the debt counselling process, we’ve covered it all.

What is Debt Counselling?

Instituted in June 2007 with the implementation of the National Credit Act, Debt Counselling is a highly effective credit management solution focussed on helping over-indebted individuals to meet their commitments in a way that suits both their Credit Providers and their pocket. It offers protection against legal action from Credit Providers and the everlasting effects of being placed under administration. It also provides individuals with a way to repay their debts while ensuring that they still have the ability to meet daily living expenses. In short, if you are struggling to meet your monthly repayments and face possible legal action, Debt Counselling could offer you the solution you need.

Which of my debt qualifies for Debt Counselling?

Debt where legal action has not commenced can be included when you apply for Debt Counselling. It is important to understand this statement. All existing credit agreements, at the point of application, should be included. (Not only debt entered into from 1 June 2007). Certain contracts such as Gym Contracts are not deemed to be credit agreements and cannot be included.

What is a Debt Counsellor?

A Debt Counsellor may act as a bridge between you and your Credit Providers in order to alleviate financial stress. A Debt Counsellor must assess if you are over-indebted or if any of your credit agreements are reckless. He/she will use the information provided by you, but will also verify the information with the Credit Providers and a Credit Bureau. A Debt Counsellor is qualified, registered and regulated by the National Credit Regulator.

What is the Debt Counselling process?

The process is made up of the following easy-to-follow steps:

Provide your details

You provide the Debt Counsellor with comprehensive details of your income, monthly budget and debt commitments.

Debt assessment

The Debt Counsellor will use your information to assess your situation.
Once an initial assessment is completed, and the information indicates that you are over-indebted, the Debt Counsellor will contact you.

Create new budget

A new budget will be drawn up and agreed upon. You will then be provided with the details of the costs and your new interim repayment plan. Once those steps are completed, your application will be accepted.

Negotiate with credit providers

Once your credit providers, as well as the Credit Bureau, are contacted to verify the debt, the repayment plan will be submitted to the Credit Providers for approval. This plan may include making use of the negotiated fee and rate concession’s agreement made with Credit Providers. The reduction of fee and rate concessions, as well as the extension of terms, will assist in the negotiation of a repayment plan. It is vitally important that a reasonable plan be made.

Approval of payment proposal

Once the negotiations are over, a court order will be obtained from the magistrates’ court. You will then be well on your way to a less stressful financial future.

Implement new payment plan

You will commence payments from the very first payday after you apply for Debt Review. The agreed-upon repayment plan will require only a single monthly payment until your debt has been repaid.
Once you have applied for Debt Counselling, your Credit Providers cannot commence with any legal action for a period of 60 business days. This allows time for the Debt Review process to be completed.
Post loan payment

Once you have repaid your debt in terms of the rearrangement agreement, you can request a clearance certificate from your Debt Counsellor. You’ll then be free to apply for new credit. All records of the Debt Counselling and agreements that were covered by it will be removed from the Credit Bureau.

Important facts about Debt Counselling

Debt Counselling does not provide you with a payment holiday. You must make payments every month from the first month you apply.

During the debt repayment period your name will be listed with the Credit Bureau as being under Debt Counselling. During this period you will be unable to take on new debt.

Once this process is completed you should be able to access responsible, new debt if required.

It is best to ensure that you do not miss any repayments as this will mean that the process is cancelled and your Credit Providers are allowed to commence with legal action.

How long will it take?

The National Credit Act has laid down the following requirements:

• The customer must complete the application for a Debt Review and all supporting information within 10 business days.

• Credit Providers have 5 business days to verify information.

• The entire process has to be completed within 60 business days, although the Court Order may only come later.

• The length of time it takes to repay your debts will vary depending on your unique situation.

What are the benefits of Debt Counselling?

The benefits of Debt Counselling are:

• No additional charges to consider – Debt Counselling fees are included in your monthly repayment.

• One affordable payment per month, which is lower that existing instalments.

• This payment makes provision for essential living expenses so you can breathe a little easier.

• The cost of this process is much less than that of foreclosure, administration, judgement and sequestration.

• The National Credit Act protects you from being blacklisted (if you are not listed already).

• Once the process has been initiated, your Credit Providers cannot take legal action against you for a period of 60 days.

• There is a defined end date to your debt woes in sight, while you mend your credit profile.

• No need for further financial stress and at the same time gain relevant debt management skills to ensure sustained financial rehabilitation.


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