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A consumer that is over indebt can apply for debt counselling with a debt counsellor. The consumer will apply for debt counselling, because he is unable to make full installments on his debt.

The debt counsellor will assist the customer in the application process by negotiating a new affordable payment plan for the customer. The first action the debt counsellor will take is to notify all creditors that the customer is applying for debt counselling. The second action the debt counselor will take is to notify the National Credit Regulator that the customer is applying for debt counselling. The National Credit Regulator will then notify all the credit rating agencies.

The credit rating report will show that customer is in debt counselling. Creditors may not borrow money to any person who is in debt counselling. The customer will stay in debt counselling until he has paid off his debt or decides to ends his debt counselling himself because of a change in his financial position. The customer’s debt counsellor will notify the regulator and the regulator will inform all the credit rating agencies.

The credit rating agencies will remove the note on the customer’s credit file and the file will not show that the customer was in debt counselling. The credit file will only show if a customer is currently in debt counselling and not that he was in debt counselling in the past. So after a client leaves debt counselling there will be no trace on record that customer was in debt counselling.

We don’t know, if creditors will make notes of debt counselling, because debt counselling is still new and banks are changing policies on a regular basis. The bank will obviously know that this customer was in debt counselling before if the bank was one of the customer’s creditors. Nothing stops the bank from making a note on the customer’s file that he was in debt counselling the the past. When the client applies for a loan again after debt counselling, they will know that this customer has been in debt counselling.

It is unknow if the bank will penalize the customer, because all debt was settled before the customer came out of debt counselling. The banks might ignore that the customer was in debt counselling and only look at the customer’s current financial position.

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