Debt counselling was introduced in South Africa in 2007, when the National Credit Act (NCA) came into effect. The aim of debt counselling is to assist over-indebted consumers to use their income efficiently, thus paying off their debt in a manner that is acceptable for both the consumer and the credit provider.
A consumer is regarded as over-indebted when he or she is unable to make the monthly debt repayments after all living expenses and statutory obligations have been deducted from his or her salary.
A debt counsellor will determine whether a consumer is over-indebted, in which case the debt review process will start. The review happens over a period of 60 days during which all the credit agreements that a consumer has entered into, and is still paying off, are scrutinised and a restructured payment plan is set up for all creditors. During this process all creditors are informed of the fact that the person is undergoing debt review, which prevents the creditors from repossessing any assets of the consumer as well as preventing legal action against the consumer.
Obligations of consumers
Debt review is not an easy way out of debt for consumers. It is a difficult process and various sacrifices on luxury items have to be made by consumers when undergoing the process. Furthermore, just as the law prevents creditors from taking action at this stage, the law expects various conditions to be upheld by the consumer, including (but not limited to) not entering into a credit agreement with any facility for any reason while under debt review. Also, the consumer is expected to make the monthly payment as per the restructured payment plan. Should a consumer not comply with these instructions while under debt review, the process may summarily be cancelled, which opens the consumer up for legal action and repossession of assets.
Excluded credit agreements
It is very important for consumers to note that any agreement where legal action has been taken, that is a summons has been issued and serviced, can NOT be included in the debt review. This means that the law will take its course on that agreement, which could result in a judgment against the consumer.
Undergoing debt counselling should be seen as a lifeline when you are lost in a sea of debt, and should be entered into sooner rather than later. Consumers should not wait until a summons is issued; by this time it is too late. Rather take action NOW and contact a debt counsellor to assist you.
Our Employee Wellbeing Programme (EWP) is available 24 hours a day if you want to find out how to get out of debt. Call us on our EWP number or email us at
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