The benefit of receiving debt counselling is that nobody could repossess your car, house or assets whilst you are involved in the process? What many have misperceived is that counselling removes your obligations toward you debt. It is simply a debt restructuring process that allows you to keep your hard earned assets while settling your creditors over a new negotiated period that you can afford.

South Africans, like so many of our counterparts in other developed countries got carried away with excessive credit and this reckless spending has come back to haunt us. For some, so badly that we cannot afford our monthly payments anymore. More than 150 000 South Africans are expected to be under debt counselling by the end of 2009.
The first step in addressing the situation is forget about the shame issues, to acknowledge the problem and to be pro-active in solving it. The Debt Review process is part of that solution of helping people take control of their finances again.
Who are Debt Counsellors?
Debt counsellors are registered under section 44 of the National Credit Act 34 of 2005 and are individuals who have undergone specific training in order to qualify and be registered. When applying for Debt Counselling always make sure your counsellor is properly registered.
Their key function is ;
To assess a consumer's state of indebtedness
To facilitate debt re-arrangement with credit providers
To make recommendations to credit providers and Magistrate’s Courts on behalf of over-indebted consumers
Who can apply?
Anyone who, after deducting living expenses from their net salary, has less cash left over than the instalments on their total debt, may apply for counselling. Very importantly, is that the applicant must carefully consider their living expenses and cut back on all unnecessary luxuries.
What does it cost?
An initial fee of R50 only for assessment and if the Counsellor agrees that you are indeed over indebted, they will then undertake your case. Fees of up to R4000 are then payable – but NOT upfront. Their fees will be deducted from your first instalments. DO NOT make any upfront payments and report anyone who asks for these.
What are the first steps?
You will have an interview with the Debt Counsellor and he or she will explain the whole process to you, as well as provide you with a written document laying out the regulations, steps etc.
You will also be advised as to what documents you need to provide them, as well as preparing a full budget of your monthly expenses, copies of statements of all outstanding accounts and so on.
This you will then bring with you to your next meeting
Second Stage
The Debt Counsellor will asses your situation and concur that indeed you are over indebted or if the debt counsellor finds that the borrower is not over-indebted, a letter of rejection will be given to the borrower, and the credit providers will be allowed to continue with the legal proceedings.
Once a person applied for debt counselling, the counsellor had to notify all the credit providers and the credit bureau within five days. The consumer would then not have access to any more credit.

Third Stage
Having found the debtor to indeed be in-indebted, then:
  • The debt counsellor can make a proposal to all credit providers on how the debt can be reconstructed.
  • In cases where the credit providers are not prepared to agree to the debt counsellor's proposal on how the debt should be restructured, the debt will be restructured via the court.
  • If the credit agreement is declared reckless, i.e the creditor have credit recklessly, certain obligations by the borrower may be terminated or suspended by the court.
  • The debts would then be rearranged by either lowering interest rates, extending repayment periods or the lender forfeiting the interest and accepting only the capital amount.
Fourth Stage
The total amount agreed to a repayment to your creditor is paid over to the Debt Counsellor on a monthly basis who will make the necessary distribution.
While you are undergoing debt counselling, your creditors cannot take legal action against you or repossess the goods you bought on credit.
The fact that you are under debt review is noted on your credit record and during this period, you are not allowed to make any more debt.
In Closing
Remember that debt counselling does not only protect a consumer’s assets but also his/her credit record! A consumer would qualify for credit as soon as their debt was settled and they had obtained a clearance certificate from the debt counsellor.

During our economic circumstances of the last 12 months, we have picked up a lot of experience in assisting homeowners who felt they have had no option but to sell. Please feel free to contact us if no need any assistance or referral to a Debt Counsellor.

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