Debt Counselling

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What is Debt Counselling?

Debt counselling is a formally managed debt solution which was introduced by the National Credit Act back in 2007. The process is designed to help consumers who are not able to meet their monthly debt repayments, and by entering them into a personalised debt repayment plan with their credit providers, it ensures that they take firm control of their financial situation and settle their short and long-term debt.

Debt Counselling is a remedy best suited for consumers who are over-indebted and struggling to make monthly debt repayments towards their creditors.

The purpose of Debt Counselling?

The purpose of Debt Counselling is to lower your monthly debt instalments, by formally negotiating with your credit providers on your behalf, thereby actually making it more affordable for you to pay your instalments every month.

Once under Debt Counselling:

  • Your debt repayments are reduced to an amount that you can COMFORTABLY AFFORD
  • You make ONE combined monthly debt repayment
  • We will negotiate with your credit providers to reduce interest rates and fees on your accounts – SAVING YOU MONEY
  • We will apply to get a court order on your behalf, which will provide you with LEGAL PROTECTION from your creditors
  • Your credit record will be restored, you receive a CLEARANCE CERTIFICATE and become DEBT FREE

How to know you need Debt Counselling?

Many consumers endure the stress of being over-indebted. This is due to their own behaviours or certain life situations that they have no control over.

Do these situations sound familiar?

  • Living above your means, impulse purchases and buying on credit all to often?
  • Poor or no budgeting and expenditure tracking?
  • Increase food costs, electricity,transport, and the general increased cost of living making it impossible for you to pay for living expenses every month?
  • Divorce, unplanned children, death, disability or illness has resulted in you incurring extra expenses that you simply cannot afford?
  • Retrenchment or pay-cuts has caused you to default on your monthly debt repayments?
  • Constantly worrying about how you are going to pay for your monthly expenses/debt?
  • Applying for loans so that you can pay your existing debt?
  • Harassing phone calls demanding money from due to missed payments on your accounts?
  • Are you avoiding calls from unknown numbers because it may be your creditors looking for money that you owe?

If yes, you may be in need of Debt Counselling, which will help you regain control of your financial situation.

What is Debt Counselling going to cost me?

Debt Counselling is a debt solution, which is governed by the National Credit Act. Under the Act, Debt Counsellors are limited to the below fees.

During the first 2 months, your credit providers do not receive any payment. Do not worry, this is part of the process and your credit providers are fully aware that this will be the case. Your monthly debt repayments (Rehabilitation/Rehab amount) and associated fees are based on how much YOU can afford, which is determined by your budget. All of your monthly fees are included in your Rehab payment, based on what you can afford.

Month 1 – Restructure fee

Equal to your rehab payment (max R6840) payable in your first month. Also, month one will cover your once off application fee of R57 and a fee of R57 for your credit check.

Month 2 – Sundry Fee

This includes your legal fee. Anything above the legal fee gets distributed to your credit providers.

Month 3 – Rehab payment to your Credit providers

Your rehabilitation payment is the amount you pay back on your debt every month – this includes money which is distributed to your credit providers which includes your after care and PDA fees.

How long will it take?

Debt counselling is a long-term debt solution and is best suited to over indebted consumers and should not be seen as a ‘get out of debt quick’ solution. It requires commitment to the process and by doing so, will get you debt free.

 

The debt counselling process will take approximately 60 months, depending on the type of debt you have.

Your credit record:

Undergoing debt counselling indicates that you have taken a positive and voluntary step towards remedying your financial situation. This means that it will not impact your credit record negatively. Your credit report will indicate that you are under debt counselling should you opt to go under the process.

All record of debt counselling will be removed from your credit report after you have been issued your clearance certificate. Should your application be cancelled or terminated, this information will be indicated on your credit report for approximately 6-12 months.

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