What is Debt Counselling?
Debt counselling was implemented by the NCR (National Credit Regulator) to protect consumers from reckless lending and it also made provision for over indebted consumers to pay off their debts in an affordable and responsible manner without loosing their assets (National Credit Act 34, of 2005).
What is a debt counsellor?
Debt counsellors are appointed by the NCR (National Credit Regulator) to assist over indebted consumers with the debt counselling process AND to protect over indebted consumers AND to act as a mediator between over indebted consumer and the creditors.
A Debt Counsellor will:
- Send you a free consumer budged plan via e-mail that will help you to determine your level of indebtedness. You can request it at firstname.lastname@example.org
- Will meet with you to determine your level of indebtedness if you decided that you want to apply for debt counselling.
- Immediately begin your application for debt review if you are over indebted.
- Contact the credit providers and credit bureaus on your behalf.
- Negotiate with your credit providers for an affordable monthly instalment.
- Combine all your debt into a payment plan so that you only pay one fixed instalment each month.
- Providing an aftercare service during the debt counselling process.
Benefits of the debt counselling process:
- The Debt restructuring process makes provision for your living expenses so that you can still afford to support your family while under debt review.
- The consumer can pay off his/her debt in an affordable manner.
- You will not loose your assets.
- Creditors can’t take any legal actions against you while you are under debt review.
Disadvantages of debt counselling:
- The consumer will not be allowed to undertake any credit agreements during the debt counselling process.
Debt counselling fees:
- The debt counselling assessment is for free.
- The debt counsellors restructuring fees are implemented by the NCR to protect the consumer against exploitation.
- No upfront payment is necessary because the debt counsellor’s fee is included in the first instalment.
When should you apply for debt counselling?
You can apply for debt counselling as soon as you realize that you cannot pay your monthly instalments to the creditors. It is too late to place an account under debt counselling if a section 129 letter or a summons has been issued against that account. However, you can still place the rest of your accounts under debt review.
It is important to apply for debt counselling in time. Do not wait until it is too late.