How does the Debt Counselling process work?

The Debt Counselling Process:

In terms of the National Credit Act (NCA) you may formally apply to a Debt Counsellor for debt relief if you are unable to meet your financial commitments under credit agreements on a monthly basis. The Debt Counsellor must assess if you are over-indebted. The process is as follows:

Step 1

Provide details of your income, monthly budget and debt commitments to the Debt Counsellor. You will need copies of your pay slip, ID and the latest statements of all your debts.

Step 2

The Debt Counsellor will do an initial assessment to check if you are over-indebted and then arrange for a consultation with you. This could either be a face to face or a telephonic consultation.

Step 3

During the consultation, the Debt Counsellor will verify your budged and your existing debt commitments. A new budget will be agreed upon to determine the amount available for debt repayment. At this stage the Debt Counsellor will also provide you with details of all the costs involved, as well as an interim debt repayment plan. TAKE NOTE - This is the point in time when you officially apply for Debt Counselling.

Step 4

The Debt Counsellor will contact all your Credit Providers as well as the Credit Bureaus to verify your debts. You WILL also be listed on the Credit Bureaus as being under Debt Counselling and the listing will stay there until you have repaid your debts in full, only where after the listing will be removed. The Debt Counsellor will, where possible, negotiate the proposed debt repayment plan with your Credit Providers.

Step 5

If Credit Providers accept the proposed debt repayment plan, it will be made an order of the court by the local Magistrate's Court, refered to as a "Consent Order". However, if one or more of the Credit Providers do not accept the proposed debt repayment plan, the Debt Counsellor will have to submit it to a Magistrate for a order in terms of the National Credit Act.

Step 6

The Debt Counsellor will provide you with a final debt repayment plan, which is also submitted to a Payment Distribution Agency (PDA). The aim of this is to collect a single payment from you and ensure that the correct amount in terms of the final debt repayment plan, is paid to all your Credit Providers on a monthly basis. This will continue until all your debts have been paid in full, together with interest and legal fees, where applicable.