Quick answer: Debt counselling, also called debt review, is a legal process under the National Credit Act (NCA). A registered debt counsellor negotiates lower instalments and interest with your creditors, the new plan is made a court order, and you pay one affordable amount each month until your debt is settled.
Debt counselling was introduced by the National Credit Act 34 of 2005 to help South African consumers who are over-indebted and struggling to meet their monthly debt obligations.
The process is regulated by the National Credit Regulator (NCR). It protects you from creditor legal action while you regain control of your finances.
How the debt counselling process works
- Financial assessment: A registered debt counsellor looks at your monthly income, essential living expenses and current debt repayments to determine whether you are over-indebted.
- Lower monthly payments and interest rates: Your debt counsellor negotiates with your credit providers to reduce your interest rates and extend your repayment terms.
- Legal protection through a court order: The restructured plan is made an order of court, so creditors cannot take legal action on the debts included in it while you keep to your payments.
- One consolidated payment: Instead of paying many creditors on different dates, you make one affordable monthly payment to an NCR-registered Payment Distribution Agency (PDA), which pays your creditors for you.
Key benefits of debt review
- Asset protection: Your home and car are protected from repossession on the agreements included in your debt review, as long as you keep to the plan.
- An end to collection calls: Your creditors deal with your debt counsellor instead of phoning you.
- Money left to live on: Your plan is built around your essential expenses, such as groceries, school fees, electricity and rent, so the debt payment is one you can afford.
Take the first step towards financial relief
If you live in Johannesburg, Pretoria or anywhere in Gauteng and your monthly debt feels overwhelming, you do not have to face it alone.
Contact Gauteng Debt Counselling today for a confidential free debt assessment.