It’s no secret that debt has become a widespread epidemic in South Africa, and in light of the recent statistics from the National Credit Regulator – of the 20.08 million credit-active South Africans, a total of 9.76 million consumers have impaired credit records. In fact, South Africans are paying 76% of their monthly salary towards their loans and debt repayments. When you add this percentage to increasing food inflation, fuel and utilities, you could easily say that millions of South Africans are teetering on the edge of insolvency.

What is Debt Counselling?

In 2005, the South African Government decided that something drastic needed to be done about the debt crisis in South Africa. This led to the formation of the National Credit Act, which was implemented in 2007. Owing to The National Credit Act, instead of resorting to garnishee orders, repossession or bankruptcy, consumers now have the option of negotiating with their creditors for a reduction in debt repayments and interest rates through a registered debt counsellor.

How the Debt Counselling Process Works

Once you’ve made an appointment with your registered debt counsellor, you will need to fill out an application form which will assess your current financial position. It’s important to understand that you need to qualify for debt review and the debt counsellor will need to verify whether you are over-indebted or not. Also take into consideration that not all debt companies offer a FREE assessment, so make sure that you enquire about this before the consultation. It’s important that you come prepared to your consultation, so bring along the following documentation:

  • Copy of your ID;
  • Copy of your current payslip;
  • 3 months’ bank statement;
  • Summary of your monthly expenses and all debt obligations;
  • Latest copy of your creditor statements; and
  • Summonses, legal letters and demands.

Once your debt counsellor has received all of the necessary documentation, they will assess your financial situation and get you to complete an application form known as form 16. The entire debt counselling and review process is not a FREE service, so your counsellor will explain the entire process, as well as the legal implications and the fee structure in detail to you.

Debt Counsellors Negotiate to Reduce Your Entire Debt

Once you have qualified, your debt counsellor will compile and restructure an entirely new workable budget that will leave plenty of room for you to pay all of your monthly living expenses, such as your bond, car payment, school fees, food, electricity and any other necessary expenses. While the role of a registered debt counsellor is to act as a bridge between you and your creditors, their key negotiating aim is to reduce the minimum amount payable by extending your repayment terms. Not only will they negotiate to get you to make ONE reduced payment each month until you’ve paid off all of your debt, but they will also negotiate to reduce your interest rates by up to 100%. But before this can be signed off, they must get your creditors to approve the restructured amount.

You will be Under the Protection of the NCR

Once all of the above has been approved, you will officially be under the protection of the National Credit Regulator (NCR). What this means is that no creditor will be allowed to make any further contact with you. All those intimidating calls to your work will stop and they will also be forced to cease on any legal action. If you are under a garnishee or in the process of having your car or home repossessed, this will immediately be brought to a standstill. In fact, your assets will be safe and your employees will never need to know about your financial situation.

Debt counselling has been a lifeline to millions of over-indebted families, couples, single parents and students throughout South Africa. At No More Debt, we can offer you the opportunity to bounce back from your debt and take back your financial freedom, so you can once again be considered a reliable debtor in the eyes of the credit bureaux. To learn more, contact us today.