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Many people are feeling the financial pinch in the current economic climate, so don’t feel alone. With the current global economic crisis dominating the financial world, many people, if not all, are feeling under financial pressure. However, there is something you can do about it. There is debt counselling to help you with your debt situation and get you on your way to financial freedom again.

So what, you might ask, is debt counselling? Well, to put it straight to you, debt counselling is a professional service provided to those who are over-indebted, guiding the consumer to develop healthy financial habits whilst paying off all outstanding debt with more affordable payments each month. The main goal of debt counselling or debt review is to create a repayment plan for the over indebted consumer in order for a person to pay off all debt in an affordable manner which all the consumer’s creditors will be satisfied with. The over indebt individual will not get a summons by creditor and creditor will not have to write off any bad debt that way.

If you are seeking the assistance of a debt counsellor, begin by selecting one who has been accredited by South Africa’s National Credit Act (NCA). Once you are certain that you’ve chosen the correct debt counsellor, be sure to provide the debt counsellor with all the necessary documents, compiled and completed, that he might require.

During your debt counselling session the debt counsellor will evaluate the level of your indebtedness, after which a proposal will be prepared on your behalf in order for the negotiations to begin with your creditors. Once all the creditors involved are satisfied, the payment plan will be implemented and to ensure that it is followed through, regular reviews will be scheduled with your debt counsellor.

If you are struggling to keep afloat financially in these trying times, contact a debt counsellor for an in-depth evaluation on your current financial position. With the help from trained debt counsellor you will learn to enjoy the freedom that comes with a debt-free life by starting and applying for debt counselling!

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The National Credit Act (NCA) came into effect in June 2007 and with it came the process of Debt Review or Debt Counselling.

The consumer applies for debt review at the debt counsellor or consultant. The consumer must know the debt review process and the fees that go with Debt Review. Debt counselling will have an influence on the consumer’s credit rating, but this is temporary while the consumer is in debt counselling. The consumer can decide to leave debt review status at any time.

The fees must be explained to the consumer so that he or she knows the cost. Debt counselling can be expensive, but is far better than losing your house or car to the sheriff of the court. In the current economic market you will get well below market value for your assets at an auction.

The consumer completes and signs a debt review application form after consultation with debt counsellor or consultant. The form is called a Form 16. Form 16 together with supporting documents is handed over to the debt counsellor or consultant. All details must be completed on a form 16 so that the debt counsellor has the full picture. All personal details must be entered as well as a budget will all details.

The budget is very important to the debt counsellor to determine if the customer is over indebt or not. Supporting documents are necessary to confirm account name, account number, address and creditor details with amount outstanding and monthly instalments.

The details on the form 16 are captured immediately. All creditors will be notified in 5 business days or sooner with the notice form 17.1 that consumers is applying for debt counselling. The debt counselling application is now in progress. It is not possible for any creditor to take legal action now.

The debt review process takes 60 working days. The creditor has 5 business days to provide information on consumer. The debt counsellor will check the details he received from the consumer to see if the details are correct. After 5 days, the creditor is reminded to give feedback.

Another 10 days grace is given to the creditor to reply to notice debt counsellor sent.

If the debt counsellor does not receive conformation from creditors, he may presume that the figure provided by consumer are correct. The debt counsellor will now determine if consumer is over in debt, meaning that the debt counsellor must calculate if the consumer’s monthly debt commitments are more than the monthly income.

The debt counsellor will now prepare a debt-restructuring proposal to the creditors. The proposal must be sent 25 days from date of application to the creditors. All creditors have 10 days to respond. If there is a delay from the creditors, the creditors will get a reminder and another 5 days to respond.

The proposal will be sent to the Payment Distribution Agency to start the distribution to creditors. That is the debt review process in a nutshell.

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Debt Counselling came into effect on 1 June 2007 with the introduction of the new National Credit Act or NCA.

Debt Counselling was introduced to provide a mechanism for solving the customer’s problem of being over indebt. It also provides a consistent system of debt restructuring, enforcement and judgement, which places priority on the eventual satisfaction of all responsible for the consumer obligations under the credit agreements.

The process of Debt Counselling (also referred to as Debt Review) was developed to offer a way out for consumers who cannot meet their monthly obligations under all credit agreements, after all basic living expenses have been paid.

Debt Counselling (Debt Review) can be summarised as a procedure where a person, who can no longer afford to meet all his monthly debt obligations, can apply with a debt counsellor to negotiate on his behalf with his creditors for reduced monthly repayments.  

When a person applies for debt counselling, the debt counsellor will evaluate his financial position in order to determine if that person is *over-indebted, on the grounds of the information provided. The debt counsellor will also inform the person’s creditors that he has indeed applied for debt counselling. The consumer’s creditors are then not allowed to take any legal steps for a certain period of time. This depends on the outcome of the assessment. The assessment of evaluation can take up to 60 working days to complete.   

Over-indebted means that the person does not have enough money left to meet his monthly obligations under all credit agreements, after all basic living expenses have been paid.

Should the debt counsellor determine that the applicant indeed appears to be over-indebted, he will commence with a procedure to inform all the person’s relevant creditors of his conclusion.  

The debt counsellor will then, on behalf of the applicant, enter into a process of negotiation with these creditors in order to negotiate reduced (more affordable) monthly repayments on behalf of the applicant.

The debt counsellor is allowed to charge certain fees as approved by the National Credit Regulator (NCR). Debt Counselling cost will be deducted from the monthly amount paid to the Payment Distrubution Agency. So no out of pocket money needs to be found to pay for the cost of the Debt Councelling.

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